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Opinion: Funny business with school district properties by Gary Earle

February 5, 2006 7:04 AM
The math just isn't adding up at the Santa Barbara School Districts. Funny business has surfaced in the contract the school board has signed with its real estate consultant, UniDev LLC.

Through a feasibility study, this Maryland-based development company is advising the board regarding the use of its vacant land holdings, which include the Tatum property in the Eastern Goleta Valley and another parcel in the Hidden Valley area. The school board has paid UniDev a $150,000 fee for its land-use expertise.

Phase one of the study had UniDev conducting a survey among school district employees to determine the desirability of developing the properties for housing to be sold to them at below-market prices. UniDev presented the completed study to the board last week, with results showing high demand among district employees for such a perk.

However, under questioning by school board member Robert Noe-l, UniDev Vice President Peter Smirniotopoulos revealed that UniDev has a financial stake in the results of the survey. It turns out that if the school board decides to go ahead with the construction of housing on the properties, UniDev stands to be the most likely developer of the homes and will garner a fee of 6 percent of the development costs in the process.

Mr. Noe-l quickly pointed out such a conflict of interest is unacceptable if the survey results and the development process are to have validity.

What Mr. Noe-l didn't mention is that UniDev has an even more egregious conflict of interest under another provision of the contract. This section calls for UniDev to provide the district with options for maximizing the value of the properties. One alternative is to rezone the sites for high-density housing. This issue is a real hot button in the neighborhoods surrounding the properties, as residents fear the tremendous impacts from densities as high as 20 or more homes per acre.

This arrangement between UniDev and the Santa Barbara School Districts is highly prejudicial to the residents of the Goleta Valley and Hidden Valley, the two communities surrounding the properties in question. Since UniDev will receive a fee of 6 percent of the development costs, its executives would have motivation to skew their evaluations in order to favor the sites being built to the highest possible densities. The higher the density, the higher the development costs, the higher the fees to UniDev.

Taking the Tatum property alone, should it be built out at the upper end of its maximum density, development costs could exceed $60 million with a fat fee of more than $3.6 million going into UniDev's coffers.

Another multimillion-dollar paycheck could await UniDev in Hidden Valley. It's unknown whether the school board has calculated these numbers, but you can be sure UniDev has.

The school district is a public agency managing public properties. The school board has entered into an arrangement with inherent conflicts of interest that are in opposition to the best interests of the communities surrounding the district's public properties.

Superintendent of Schools J. Brian Sarvis should take immediate steps to cancel the board's contract with UniDev and rethink its approach to determining the future of these community assets.

The public's well being and best interests must supersede developer profits. Citizens demand that our public officials conduct their business in no less a manner.

The author is president of the Coalition for Sensible Planning.