A decade long struggle for high school

Actions taken by past City Councils often come back to haunt later councils, and one good example is the near 10-year-old agreement with Yorba Linda Friends Church to lease a 32-acre city-owned property as a site for a private, Christian high school.

Mistakes were made by both parties that signed the 99-year ground lease for the parcel at the northeast corner of Bastanchury Road and Casa Loma Avenue, dated March 4, 2003, which includes ever-escalating rent on land leased for the intended 1,200-student campus.

First, the city should have taken bids on a lease to better determine the property’s market value and include in the bid process a review of the ability of each bidder to fulfill all the financial terms of the lease back in 2002-03.

And no, that’s not a case of 20-20 hindsight, because a large number of residents pressed for an open-bid process before council members awarded the lease to the Friends Church.

Second, former school officials didn’t do enough research on the actual costs of building a new campus on a problem-plagued parcel, and they didn’t have a realistic notion of the large amount of donations and bank loans required for success, based on the lease terms.

True, much has changed from the headier economic times of the early 2000s, but when I asked the now-departed school planners in 2003 about finances, I was told they wouldn’t release figures, but they had a solid fund-raising program with “big donor” commitments.

Through June 30, 2012, school officials report spending $12.8 million on the project: $4 million in lease payments to the city; $6.1 million for project management (architect, engineering, consulting, legal and plan check fees); and $2.7 million on actual site work.

The original lease was amended four times and a number of extensions have been granted for the conditional use permit, design review and tentative parcel map. The latest lease payment was made September 2011, leaving an unpaid balance of more than $1 million.

A city-issued notice of default was delivered to the church in April 2012, but since then, three delays--two for 120 days and one for 60 days--were approved by the council, with the latest expiring at an upcoming Feb. 19 council meeting.

Expected to be presented at the meeting is a new lease with lower payments based on independent property appraisals. School personnel noted last year that banks working with the church wouldn’t make construction loans due to onerous lease terms.

In addition to lower payments, the lease package is expected to include a revised joint-use agreement--first signed in 2005--that opened school buildings and athletic facilities for use by city residents.

Of course, a new agreement should provide a cure for the past-due payments. The revenue loss has negatively impacted both the past and current years’ city budgets.

Council’s decision on a new lease could be the panel’s most important in 2013. Certainly, the vote will be of intense interest to residents who’ve donated to the school’s fundraising campaigns.

Next week: more on a new lease, joint-use facilities and other options open to council.