WATSONVILLE — The Pajaro Valley Unified School District Board of Trustees on Wednesday unanimously approved a plan to purchase its Towers headquarters, a move that is expected to save the district more than $28 million over the next three decades.
The recommendation by PVUSD Chief Business Officer Joe Dominguez to move forward with the plan comes thanks in part to a favorable rating by Moody’s Investors Service, which provides financial research on bonds issued by commercial and government organizations.
At the Nov. 14 meeting, the trustees approved a recommendation to look into financing options and perform a “due diligence” inspection of the property for safety concerns and other issues, including the building’s structural support system, the mechanical, electrical and plumbing systems and an asbestos survey.
In total, the district estimates the sale price at $16.46 million. This number includes $5.6 million in deferred maintenance costs stemming from the due diligence inspection, which includes earthquake retrofitting, roof repairs and elevator modernization.
Because of safety concerns, about $3.9 million of this work must be completed within the next year, Dominguez said.
Still, the district stands to save $28.6 million through 2048 because the money that was going to rent will be used to pay off the loan, Dominguez said.
“The direction was quite clear from the board of trustees that the acquisition was cost neutral and a cost savings,” he said.
According to Dominguez, continuing to lease the building, with an expected 2 percent annual increase, would have cost the district about $52.5 million over 30 years.
Building in a new location, he said, would run about $30 million in the unlikely event the district found a viable space.
In addition, there were no other buildings to lease that suited the district’s needs, Dominguez said.
Purchasing the building will give the district an appreciating asset and a savings of approximately $1.3 million per year, Dominguez said.
“We can show the stakeholders in our community that we’re investing our dollars and supporting our programs for student achievement,” he said.
PVUSD Superintendent Michelle Rodriguez said the short-term benefit of the purchase will be immediate.
“We will be in a safer building than we are currently in because we are going to be doing all the modifications to the building, all the way from the elevators to the structural support,” she said.
At the same time, the district will be building equity with the payments, Rodriguez said.
Trustee Willie Yahiro attributed the district’s ability to make the purchase to good management by the district’s business office and by the superintendent.
“Because of good financial oversight, we’ve been able to be financially secure, so it makes a lot of sense to do it now,” he said.
The four-story, 134,422-square-foot building was assessed in 2017 at $10.9 million. In addition to administrative offices, it houses Pacific Coast Charter School, Watsonville/Aptos/Santa Cruz Adult Education, as well as the migrant and special education departments.
The district has until Dec. 4 to cancel the deal. The deal closes on Jan. 9.