Sale of Martin Luther King Elementary School

School Board Meeting October 6, 2010

History
School vacated in 2006 Site declared surplus School Board in 2007 City of Seattle School Department of Neighborhoods approved allowing non-school use in summer 2009 RFP issued in August 2009, asking for offers either to purchase or long term lease property Final Proposals received June 30, 2010

School Board Procedure

Highest offer wins, unless one or more firms meets requirements for Youth Education Center or providing social services School Board may select one or more proposals for special treatment, if: At least 50% of building is used to support youth education, or At least 50% of building is used for governmental or social services Sole discretion of School Board
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School Board Procedure

Community use was deleted in 2008 by School Board as one of the methods to establish qualifications for special treatment, in order to focus on support to youth education

June 30, 2010 Proposals

First AME Church ($2.4 M) Citizens for a Community Center@MLK ($2.5M) Bush School Purchase for $3.0 M 99 year lease at $150,000 annually = $5.7 million Lease of 75% of site for $3.3 million Central Area Dev. Association ($0.750 M for 1/3 of site)
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FAME Proposal
About 60% of the building is used for youth education activities Rental rate for those areas is reduced to $6/SF/yr, about 50%-80% of market value of $712/SF/yr Value of support is roughly $50,000 to $80,000 per year; most of the support ($32,000) is in the form of free use of the gym area

CCC@MLK
Roughly 50% of the building will be used for youth or social services Rental rate is $10.40/SF, which is 85% to 150% of $7-12/SF market rent At a maximum support level of $1.60/SF/yr, this is at most $23,200 annually

The Bush School

Purchase at $3,000,000 Lease at $150,000 annually; NPV = $5,638,401 Lease of 75% of site for $88,000 annually, NPV = $3,308,000 Promises about 1,000 hours of guaranteed public access annually to the soccer field, with a value of about $20,000 to $30,000 annually

CADA
Purchases only part of site (1/3) Does not meet minimum price requirement: offer is for less than 1/3 the minimum cost Proposes to use state funding for improvements instead of acquisition; this violates legislatures budget restrictions Does not match with Bush lease - CADA proposes to keep both the gym and auditorium, which leaves inadequate room for a soccer field
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Purchase Price/Rent Payments

CCC@MLK: FAME: Bush Purchase Bush Lease $2.5 M $2.4 M $3.0 M $5 .7 M (NPV)

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Financial Analysis
Value of Support to Education and Social Services Annual value NPV FAME $50-80,000 $1.25-2 M CCC@MLK $23,000 $0.575 M $20,000 $0.500 M Bush (field use)

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Staff Recommendation
Sell the property to First AME Church The value of keeping the building available for support of youth education and social services creates an intangible benefit to the community which outweighs the financial gain offered by the higher priced proposal First AME proposal offers more support than the CCC@MLK proposal

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Questions Raised
How will the District assure that the uses and reduced rental rates proposed by First AME are maintained? Does sale to a religious organization violate statutory or constitutional requirements?

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Questions Raised
Will the property be needed for population growth? What role did possible use of the property as a community center, beyond support of youth education and social services, play in the recommendation?

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Audit & Finance Committee

Recommended sale to First AME Church Introduction to Board October 6 Board Action October 20 Closing about December 31

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Discussion

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