The Urban School Site Acquisition Process:
from Initial Search through Approved Project
By Jerry Suich and Michael J. OíNeil
Acquiring land for a new or expanded public school site in an urban school district is a complex process. While heavily regulated by the State, it is, however, a process that can be broken down into easily understandable tasks. Each of these tasks can be tracked separately and simultaneously to achieve efficiencies in cost and time schedule.
The approach to targeting land for a school site should be based on common sense. Preferably look for underdeveloped land -- in parcels to be assembled if necessary -- within the intended attendance area of the new school. Check with all available sources to identify possible sites. Once your universe of sites is completed, consider putting together a preliminary report which you can take to your Board.
Note that the site approval processes must be completed before close of escrow on the property (when title to the property transfers to the school district). There are at least five different processing tracks for public school site acquisition: ordinary due diligence requirements; CDE requirements; DTSC requirements; CEQA requirements; and, notice and coordination with other local agencies as necessary (such as, local city/county Planning Commission).
In the case of a district acquiring a commercial or residential property, the district must pay for the fair market value of the real estate acquired. In addition, in the case of a commercial property owner or tenant, the district must pay certain relocation costs.
It is acceptable and politically prudent for a public school district to acquire property on a voluntary basis rather than by eminent domain. An offer to purchase voluntarily can be made by a school district whether the property is on the market or not. It is best for a district to keep its power of eminent domain in reserve and not waive its possible use. This is likely to ensure that a property owner will agree to sell to the district on a voluntary basis.
1. Searching for a new site.
Searching for a new site is both an art and a science. Be creative in what you are willing to look at and in developing a process to find what you want. First, note that, with certain narrow exceptions, the search for a new or expanded public school site is not constrained by the existing local governmental zoning of the targeted property. The public school district can exempt itself from local general plan designations and zoning ordinances for sites proposed to contain classroom facilities when it follows specific government code provisions.
Lay out the new school attendance area on a map. Within this area use your common sense to scout for undeveloped or underutilized properties. Drive your targeted area and note promising addresses and then request the assessorís information about these properties through your title company (such as, size of property, ownerís name and telephone number). Look over aerial photographs of your targeted area (sometimes available in the local planning department). Make yourself aware of all major potential hazards in this area, such as, railroad tracks, power lines, airports, significant earthquake faults, and incompatible uses (noise generators and hazardous air emitters). Move your gossip talent to new levels by: talking to the local planning department; speaking to brokers about available real estate; talking to other agencies that may also be looking for property (e.g., the local redevelopment agency, public housing authority, park and recreation department); asking community groups or community members to keep their ears to the ground for you. It is also important to know if the school district has its own adopted policies and criteria for school site selection (such as, minimum size by school type and distance from other schools).
Check with local agencies to see if a joint use facility might be feasible. (Part of a park could become the new schoolís play yard during school hours.) Work to an understanding of the absolute minimum size your districtís corporate culture will accept for a new school. (For example, some California public school districts are experimenting with building elementary schools on two acres with recreational areas on the roof.) Make sure that you have a school facilities architect lay out a conceptual school on possible sites to see if access points and building configurations are feasible.
Understand that in an urban district it is likely that a school site will require an assemblage of a number of individual parcels in order to achieve the site size you need. In the case of an assemblage, remember that it is always better to deal with
- fewer parcels of a larger size;
- several parcels owned by one owner;
- unimproved parcels, or improved parcels which are vacant (no relocation costs);
- parcels which contain lower-density apartments (fewer families to pay to relocate).
At some point you will need to put a report together describing the preliminary universe of sites that you have found. This report can be called a "Preliminary Site Evaluation Study". It would contain basic site information about each parcel (location, size), an informed "guesstimate" on land cost, and perhaps a matrix which ranks each site according to several important factors (e.g., location on arterial or neighborhood streets, proximity to students it will serve, ready-to-go quality of the site, high or low land costs, high or low relocation costs, likelihood of not having to use eminent domain).
Many district staff persons like to have their Board review this kind of document. This way Board members become invested in the site search and more easily accept the controversial issues that may later arise. (Of course, putting together a preliminary study does not prevent your coming up with another site later on.)
2. The process of site approval.
Once a site (or sites) is identified, how do you go about getting approvals for acquisition?
Acquiring land for a new or expanded public school site is heavily regulated by the State. It is a complex process that requires the district to assign a project manager (staff member or independent consultant) to oversee the numerous required tasks. These approvals operate on several different tracks, some of which are interdependent and require a critical path. The process on each track must be completed before close of escrow (when title to the property transfers to the school district). The different processing tracks for school site acquisition may be grouped as follows:
- ordinary due diligence investigation requirements;
- California Department of Education requirements:
- Department of Toxic Substances Control requirements;
- California Environmental Quality Act requirements;
- local agency notice and coordination.
- ordinary due diligence investigation requirements. These "requirements" are simply the investigatory steps that any prudent buyer would undertake when acquiring real property.
Under this track make sure that you:
- check out the feasibility of the site for the use intended (including asking the districtís architect to conceptually lay out the school on the site);
- create a boundary survey of the property and a topographic map (the latter shows the surface configuration of the site);
- order the preliminary title report on the property;
- working with the civil engineer, plot the easements of the property shown in the title report on the survey map;
- working with the districtís attorney, confirm that existing easements on the property do not adversely affect the districtís proposed school use;
- working with the civil engineer, investigate any extraordinary on-site requirements (e.g., costly grading of hilly areas, water wells to be removed), and, if there are some, create a preliminary budget for their cost.
- working with the civil engineer, work with the local city or county to investigate any extraordinary off-site requirements for the development of this property (e.g., traffic signals, sidewalks, road widening), and, if there are some, create a preliminary budget for their cost.
- working with the districtís bio-scientist or CEQA (California Environmental Quality Act) consultant (see below), identify any issues that may fall within the jurisdiction of the California Department of Fish and Game or the U.S. Army Corps of Engineers (e.g., riparian ways or rare or threatened animal or plant species);
- near close of escrow finalize the districtís appraisal of the property if you have not already done so.
- California Department of Education requirements. These requirements are overseen by the Department of Educationís School Facilities Planning Division ("SFPD"). Pursuant to Section 17211 et seq. of the California Education Code (as well as Sections 14001 through 14012 of the California Code of Regulations), each new or expanded public school site must be evaluated according to certain specific "Site Evaluation Standards" set by the Legislature and the Department of Education.
Some of these Site Evaluation Standards are simply ones that suggest ordinary due diligence in evaluating the site (e.g., the site is not located in a flood plain or has any easements which hinder access or building placement). A geotechnical engineer is required to complete a report on the quality of the soils (with a special emphasis on whether the seismicity of the site is acceptable and whether the site has soils that may be subject to liquefaction). Geological hazards reports are also required by CDE.
Most of the Site Evaluation Standards, however, are designed to analyze the site with an eye towards the unique nature of the public school that will be built there. For example, if the site is within two miles of an airport or 1,500 feet of a railroad track or 1,500 feet of a pipeline carrying hazardous materials (including natural gas), certain additional studies must be carried out. For sites located near high voltage lines, certain set-backs are required. For sites located within two miles of an existing airport runway or potential runway contained in an airport master plan, the district must request California Department of Transportation review through CDE. With certain exceptions, if Cal Trans does not favor the site, the district may not acquire the site.
At some time prior to transfer of the selected site to the district, Section 17211 of the Education Code requires that a public hearing before the Board of Education be held. At this Site Evaluation Hearing the District staff shall indicate that the site has been evaluated pursuant to the specific CDE standards and that the site is found to be acceptable. The public is invited to comment at the public hearing.
Districts seeking State School Facilities Program ("SFP") Funding must first obtain CDE Site Approval via a number of submissions listed on SFPD Form 4.01. The first step in the process is field review of preferred and alternative sites. SFPD will evaluate the sites, identify conditions of approvability, and rank the sites via Form 4.0. A Contingent Site Approval is possible for financial hardship districts and for sites requiring toxic clean-up.
Note that, while a locally funded project is not required to obtain CDE approval per se, it still must meet many of the criteria and processes described in Title 5 (Section 14012).
- Department of Toxic Substances Control Requirements. Pursuant to Section 17213.1, et seq. of the Education Code, a Phase 1 Environmental Site Assessment shall be undertaken by a school district on the selected property prior to acquisition. (This process only applies to a district seeking CDE approval or SFP Funding.) A Phase 1 Environmental Assessment analyzes the historical use of the property as well as its current use in terms of whether it is likely that its soils or water are in any way contaminated. This Phase 1 Environmental Assessment includes an identification and evaluation of any hazardous air emissions or hazardous materials users located on or close to the property.
If the Phase 1 Environmental Assessment concludes that further investigation of the site is not warranted, the Department of Toxic Substances Control ("DTSC") (a division of the California Environmental Protection Agency) will confirm that that is the case and give its approval in the form of a "no action" letter. Should further investigation be warranted (that is, a Phase 2 Environmental Assessment, also known as a Preliminary Endangerment Assessment ("PEA")), the DTSC will ask the district to sign an agreement whereby DTSC oversees this additional investigatory process. The end of this oversight process will be a letter from the DTSC to the school district indicating that "no action" is required or that a Response Action (that is, a clean-up) is required. The PEA and the Response Action processes also involve public review periods and coordination with the CEQA process.
- California Environmental Quality Act requirements. Pursuant to the terms of the California Environmental Quality Act ("CEQA") (Section 21000, et seq. of the Public Resources Code), a public school district (regardless of funding source) is required to analyze the environmental impacts of a new or expanded school development project (including the acquisition of a site therefor). (For an expanded school site there are some narrow exemptions available under CEQA.) If no significant environmental impacts are found to occur, the Board of Education of the school district (as lead agency with the right to approve the CEQA document) can adopt a Negative Declaration. If significant environmental impacts are found to occur, the Board of Education of the school district can adopt either a mitigated Negative Declaration or an Environmental Impact Report with mitigations or with a Statement of Overriding Considerations. Public Resources Code Section 21151.8 also requires that school districts make specific determinations and findings regarding waste disposal sites, hazardous substance release sites, pipelines, and facilities within one quarter mile which might be hazardous air emitters or handle hazardous materials.
Most importantly, acquisition of the site by the school district can only occur after the Board of Education has approved the CEQA document on the new or expanded school project.
- local agency notice and coordination. Pursuant to Public Resources Code 21151.2 and Government Code Section 65402, a public school district, prior to acquisition of a new or expanded school site, shall give notice to the local city or county Planning Commission with a request to determine if the proposed site is approved for a school and if such use of the site conforms to the General Plan designation for the site. Should the Planning Commission not approve the school, the school district has the ability to override the local jurisdictionís determination (Government Code Sections 53094 and 65352.2). However, note that a school district in developing a new school must comply with local ordinances regarding road improvements as well as on-site drainage and grading plans. (If the site is designated or zoned for agricultural production, Education Code 17215.5 also requires specific city/county notification and findings to be made. If the site is within an agricultural preserve, provisions in the Williamson Act must be followed. Note that review of a new school site may also be required by the California Coastal Commission where appropriate.)
Pursuant to the requirements of the California Relocation Assistance Act (Government Code Section 7260, et seq.) a school district as a public agency is required to pay specified relocation expenses where the district is acquiring a property that is occupied. This is true regardless of whether the user of an improved property is an owner or a tenant or whether the property is residential or commercial in character.
In the case of a residential tenant the district may be required to pay a substantial relocation payment which represents the difference between the current monthly rent and the monthly rent expected to be paid at another comparable rental property in the neighborhood times forty two months ("Rental Assistance Payment"). In the case of a single family residential owner the district may be required to pay a substantial relocation payment which represents the difference between the existing fair market value of the property and a comparable one in the same community ("Purchase Differential Payment"). In addition, both owners and tenants of residential property are entitled to receive an amount for reasonable moving expenses.
In the case of a commercial tenant or owner, reasonable moving expenses are paid as well as the fair market value of physical assets which are found to be non-moveable. In addition, the school district may be responsible for any loss of the businessí goodwill caused directly by the required relocation (i.e., compensation must be paid if the net profit of the business is adversely affected).
4. Voluntary acquisition: offers and appraisals.
It is acceptable and politically prudent for a public school district to acquire property on a voluntary basis rather than by eminent domain. An offer to purchase voluntarily can be made by a school district whether the property is on the market or not. Of course, while your district can make an offer on a parcel of property at any time during the site approval process, the escrow on the property can not close until after the DTSC and the CEQA processes have been completed. As a practical matter this approvals process could take one year, particularly in cases involving parcel assemblages.
If the targeted property is on the market, the district does not need to have commissioned an appraisal before it makes an offer. Of course, if it reaches a deal, it must commission an appraisal before it closes escrow in order to assure itself that it is buying the property at or below fair market value.
Any appraisal commissioned by a school district for the purchase of property must be prepared by a Member of the Appraisal Institute ("MAI"). It is always best to first get an appraisal in draft form in order to assure yourself that the appraisal was properly scoped and that the appraiser did not reach any mistaken conclusions that would embarrass your efforts. With the exception of an appraisal undertaken for eminent domain purposes, it is the districtís call as to whether it wants to share an appraisal with the property owner. Often, however, if the appraisal sharing is done as part of an orchestrated program of working with the affected owner, it is more likely than not that the acquisition will be a voluntary rather than an involuntary one.
A strategy for a timely appraisal may need to be put together. Generally an appraisal is considered stale if it is more than three months old. Therefore, if you want to commission an appraisal at the beginning of the approvals process in order to understand the likely land cost of the project, understand that you will likely be paying for two appraisals on the affected property. Of course, with a major landowner involved in a new school project, one way to bring him successfully on board the program is to pay for an early appraisal in order to assure him of the likely range of value at which he will be ultimately looking.
It is always best to avoid eminent domain action for the purchase of a new school site. the use of eminent domain may be controversial. Someone may have a hard luck story to tell the Board, or the district may be characterized as trying to drive long-time residents and businesses out of town. It is best to cut this possibility off at the pass by dealing openly and fairly with prospective sellers and early on in the process laying all cards on the table. For example, hold a community meeting to explain why the district needs to have a new school and that this is only one of the sites at which the district is looking. In this way the process of site approval and acquisition can be explained, and potentially affected property owners can be encouraged to be in touch with the district if they have any questions.
When the time comes to make an offer, the district or its designated consultant should make it in a personal meeting with the property owner. This will avoid any misunderstandings. In the presentation of the offer an owner should never be threatened with eminent domain. Such a tactic may make a voluntarily acquisition difficult to achieve. Simply explain that you want to make it work voluntarily, and "no", you do not know what the Board of Education ultimately intends to do. Tell the property owner you simply know that the Board wants you to make every effort to acquire his property voluntarily. The property owner will soon figure out what your backup option is likely to be if voluntary acquisition efforts fail. In conducting your negotiations, keep in mind that in any relocation, generally speaking, a residential property owner or a tenant receives full compensation while a commercial property owner or a tenant is not always made whole. However, a business owner tends to be a businessman first. If he recognizes that the new school is likely to be located eventually on his property, he will act in a businesslike way by negotiating with you and moving out when the time comes.
5. Eminent Domain.
If it is ultimately decided by a school district to acquire a property by eminent domain, the district must have in hand a recent appraisal of the property. It must then make an offer to the affected property owner based on that appraisal. By this time, the district must have also adopted the CEQA document for the new school. Assuming the offer based on the appraisal was not accepted, the Board of Education can move to acquire the property by eminent domain by making certain findings in a public hearing and then adopting a Resolution of Necessity. This resolution can, however, only be adopted by a two thirds vote of the Board members.
After adoption of the Resolution of Necessity the district can file a lawsuit in eminent domain against the property owner in Superior Court. At this time the appraised value of the property is deposited into court by the district. Upon deposit of the money, the district can move for an Order of Immediate Possession in order to gain an exclusive right to occupy the property. Possession of the property is usually obtained by the district no earlier than ninety days after notice of the order is given.
Note that in eminent domain a public school district obtains occupancy of a site even before title transfers to the district. This is because transfer of title occurs only upon the resolution of a trial on the question of the value of the property. It is not unusual for this trial -- and, hence, the transfer of title -- to occur one to two years after occupancy of the property is acquired by the district. Note also that, at the beginning of the eminent domain action, the affected property owner can draw down the amount of money deposited into court by the district while still disputing the amount of the purchase compensation owed.
If SFP funding will be sought for site acquisitions that involve eminent domain or relocation, districts should also consult with the Office of Public School Constructionís Property Acquisition Section regarding required procedures and eligible expenses.
Jerry Suich is President of Oxbridge Development, Inc., in San Francisco and Michael J. OíNeill is a Consultant for the School Facilities Planning Division, California Department of Education