The Buyout Opens the Possibility of Relocating the School Bus Yard to a Colorado Avenue Property
By Gail Pinsker
In an SMMUSD news brief, authored by Gail Pinsker, Community & Public Relations Officer for SMMUSD, the school district has announced new plans for rental properties.
The Santa Monica-Malibu Unified School District (SMMUSD) Board of Education announced plans in open session to buy out the ground leasehold interests in two rental properties, thereby increasing the general fund revenue to pay for teachers, staff, and supplies. To move this forward, the Board of Education adopted a resolution at its Nov. 21, 2024, regular meeting authorizing staff to proceed with a financing plan to acquire all right, title, and interest of STG Three Properties, LLC (STG) in and to these rental properties. The resolution authorizes a Certificate of Participation (COP) for an amount not to exceed $13.4 million to purchase the STG leasehold interest.
The subject Santa Monica properties are located at 902-926 Colorado Ave., and 1631-1645 16th St. and 1630-1646 17th St. (adjacent to the old District Office.) The current ground lease was contracted to expire on June 30, 2051.
This plan will allow the District to: Manage the property more efficiently increasing revenue to the general fund that can be spent to support students, teachers and operational costs; Remove the contracted 27½ years remaining on the lease and thereby provide the District flexibility and options for future uses of the two properties; and potentially relocate the current school bus yard, which is currently leased from a private owner at $550,000 per year, to the Colorado property. STG has leased the properties on District land since 2006, and the properties were ground leased by STG’s predecessors since 1984.
A COP is a lease agreement between an investor and a government or issuing entity. The investor receives cash flow in exchange for their investment, and the governmental agency uses the money to finance a project. The investor’s share of the lease payments is paid out through a trustee, who creates shares from the total investment and distributes them to the investors.
COPs are a common alternative to municipal bonds and offer investors tax benefits similar to municipal debt bonds. They can also help governments reduce or replace debt.
The COP will be paid off with capital funds that can only be used for facility needs while increasing revenue to the general fund. This is funded through redevelopment funds and not facility improvement bonds approved by voters in 2018 or 2024.
“This project furthers the educational goals of the District by using its assets more efficiently to increase funding for student learning. This buyout provides the District more flexibility for future uses that will benefit and provide opportunities for our students and staff,” said Carey Upton, Chief Operations Officer. “We are pleased with the school board’s approval of this resolution as this benefits the District’s general fund and its future. This action does not have any impact on our exciting and necessary facility improvement projects that will continue, thanks to the voters’ support for SMMUSD bond measures — Measure QS for Santa Monica schools and Measure MM for Malibu schools.”
