SFUSD's Non-School Property Portfolio

"One of the stupidest contracts The City has ever entered into", and other stories behind over 30 non-school properties

In a previous post, we looked at what happens to schools after they close and found that the most common outcome is that they reopen. This post is going to focus on all the real property SFUSD owns today that is not being used for schools or child development centers. From shopping centers to offices, and parking lots to open spaces, we’ll look at why SFUSD owns them and what is currently being done with them.

Who Owns The Schools?

For a long time, it wasn’t clear whether SFUSD even owned its own school buildings. The school district was not legally separate from the City and County of San Francisco before 1927. The title to many public properties acquired before 1927 was left in legal limbo after the separation¹. It has been the off and on work of many decades to clear up the titles. In 1983, the Chronicle reported that the City agreed to pay the school district $2.25 million in exchange for clear title to “the Richmond, Taraval, and Potrero police stations, fire engine company number 6 on 12th Avenue, the old juvenile court building on Otis Street, and 13 city parks and playgrounds.” This deal, called a quitclaim agreement, was eventually signed the following year. At the same time, “the city and school district still have not reached a legal agreement on who owns the property on which 84 (sic) of the district’s schools are built².”

Acting with all deliberate speed, the school district and city waited 27 years to make further progress. Apparently, under the terms of the 1984 quitclaim, the school district still retained some reversionary interest in the three police stations, the juvenile court building, and fire station no. 31³. In 2010, the school district agreed again to give up that interest and received in return a quitclaim to 110 (not 84) school properties.

The job still wasn’t complete. The resolution authorizing the exchange of quitclaims mentions five school properties that were not included because they still had “title issues”. Each of those five has seen some changes to lot boundaries since 2010 so these issues may now all have been resolved but I could find no record of this resolution in the Board of Education minutes.

To determine what SFUSD currently owns, I consulted a number of sources:

• SFUSD’s Facilities Master Plan

• This presentation to the District Advisory Committee on Resource Alignment.

• This map of all publicly-owned property in the city

• This list of all City Facilities that shows which are under SFUSD’s jurisdiction

• This 10-year old version of the same thing that contains useful historical data about some sites.

• Property ownership records at the SF Assessor’s office, as shown in this SF Chronicle visualization

• This joint City/School district 2014 presentation on “Leveraging Surplus and Other Properties for Productive Use or Revenue”.

There are some discrepancies between the sources that I was unable to explain. For example, the map of all publicly-owned property shows that SFUSD owns a large parcel on Kiska Rd in Hunters Point. The site is home to an apartment complex called Reardon Heights and to the Willie Mays Boys and Girls Club building. The list of City Facilities also shows that SFUSD owns the Wille Mays Boys and Girls Club. But it does not appear in the Facilities Master Plan and I could find no reference to it in the SF Chronicle or Board of Supervisors documents post-2000 or Board of Education minutes post-2010. I guess there has been a long-term ground lease in place for many decades that produces no revenue for the district.

I’ve organized all the non-school properties by current use.

Administration Sites

There are 12 buildings that house staff but not students:

• 555 Franklin. This is the District Headquarters building bought from the State Bar of California for $8.3m in 1998.

• 135 Van Ness / 170 Fell St: This is the former Headquarters. It was previously the High School of Commerce. The idea was that this building would be refurbished and be the permanent home for the School of the Arts. That idea has been dropped because it would cost over $100m. Some admin staff still work at 135 Van Ness. 170 Fell is not used, so far as I know, because it is seismically unsafe.

• 735 24th Ave: Former Cabrillo Elementary. Now, used by SFUSD Academic and Professional Development

• 20 Cook St: formerly Geary Elementary, which closed in 1977. It now houses the Student and Family Services Division and the Transcripts, Records and Work Permits Office

• 3045 Santiago: former Phoebe Apperson Hearst Elementary. Special Education Services uses it.

• 1515 Quintara: former Crespi School. School Health Programs are here.

• 1551 Newcomb: formerly Burnett Elementary and Leola Havard EES. The building is currently unsafe for students but, according to the Facilites Master Plan, Facilities is going to assess whether to open a new elementary school on this site. In the meantime, Special Education Services is here.

• 1015 Laguna: Former Child Care Center. Used by SPED Medical Therapy Unit.

• 95 Gough St: former Child Care Center. Used by the Physical Education Department but I believe this site has been declared surplus.

• 841 Ellis St: former Child Care Center. Was a school from 1910 to 1927, when it became the Northern Police Station. As such, it's where Dan White surrendered after killing George Moscone and Harvey Milk). When the Police Station moved to its current location at Turk and Fillmore in 1988, possession reverted to SFUSD which opened the Harvey Milk Children's Center in 1989. It now houses Student Nutrition Services.

• 801 Toland: Warehouse, never a school.

• 834 Toland: Also seems to be a warehouse used by Buildings and Grounds

There are also non-teaching staff housed at 727 Golden Gate Ave (the former John Swett Elementary, shared now with Civic Center Secondary), and 2340 Jackson (home to San Francisco Public Montessori) and McLaren Elementary (2055 Sunnydale). There may be others.

Long-Term Leases

There are a number of properties owned by the district that are under long-term leases. None of these is producing annual revenue for the district.

• Shirley Chisholm Village (1351 42nd Ave). An affordable housing project that gives preference to educators is being constructed on the site of the former Francis Scott Key Elementary Annex. The 2022 lease runs for 75 years with an option to extend for 24 years. SFUSD contributed land worth $22.1 million to this project ($16.1 million per acre). The project will provide 135 units so that works out to $164,000 per unit. I’ve not seen any pro forma analyses that would indicate whether the district will receive any rental income once the project is fully leased.

• Brooks Park (373 Ramsell St). Rec and Parks has a lease until 2094 on 88,550 square feet of land on the Jose Ortega Elementary site.

• Richmond Recreation Center (251 18th Ave). The site of the former Sutro Annex was leased to Rec and Parks for 99 years in 1988.

• City College’s Mission Campus (1125 Valencia). This used to be Downtown High. In 2003, when City College was looking for a Mission campus, SFUSD leased this site to City College for 75 years for an upfront payment of $7,500,000. Under the terms of the lease, Downtown High was supposed to be housed there rent-free for 30 years and then at 50% of market for a further 30 years. Phoenix High was supposed to be housed for 15 years at no cost. Just three years later, SFUSD decided to move Downtown to its current location on Potrero Hill. Phoenix High also closed. It’s unclear whether SFUSD received any compensation from City College for giving up a hugely valuable lease.

• Park View Commons (701 Frederick St). In 1988, the City signed a 75 year lease for the site of the former Polytechnic High and constructed an affordable housing site. In return, SFUSD got $2.5 million and the open space at 7th and Lawton.

• Glad Tidings Temple (1475 Ellis): SFUSD owns this site, which is adjacent to the Rosa Parks Elementary campus, but Glad Tidings Temple has been at this address since at least 1966 so it must be under a very long-term lease.

Revenue Producing Leases

There are three leases that produce respectable amounts of money every year.

• Westfield Mall (865 Market St): No school has been on this site since Lincoln Grammar burned after the 1906 earthquake. It is leased to Westfield Mall under a 60 year lease that ends in 2043, with an option for a further 15 years. The lease calls for both a fixed payment and 0.1% of the mall’s gross revenue. It produced $3.26 million for the district in 2022 but is unlikely to produce as much in future, given the Mall’s well-publicized troubles⁴.

• Harrison School (1440 Harrison St). This site of the former Harrison School was being used as a warehouse by the Board of Education as early as 1964. It was advertised as “surplus school property for commercial development” in 1981. It has been leased to the City's Human Services agency since around 1987. The current lease was signed in 2017 and runs through September 2025. Rent is currently about $4.4m per year and rises 3% per year.

• 1235 Mission St. This was never a school. It is a three-story building constructed by Mangrum & Otter, a tile company, in 1927. Because they used colorful tiles on the building's facade, it's now listed as a historical building. It had various occupants down the years, including an industrial supply company, Social Security Administration, and California Dental Service. In 1992, the City wanted to move the Social Services Department into this building. Instead of a simple buy or lease arrangement, a convoluted three-way deal was put together. The City signed a 20-year lease and SFUSD agreed to "sponsor the loan" to acquire and improve the building. This was called "one of the stupidest deals The City has ever entered into", by Supervisor Angela Alioto but the terms are not public so it’s unclear whether any of the stupidity was SFUSD’s. In any case, at the end of the lease in August 2013, ownership transferred to SFUSD. The City has since renewed its lease, which runs through April 2026 at a current rate of around $3.35 million per year.

  

  1235 Mission St (credit: Beyond My Ken, CC BY-SA 4.0)

Rounding-error Leases

A number of buildings are leased for very little revenue.

• International School of San Francisco (1155 Page St). The Catholic Church has leased or sold many of its closed schools to non-religious private schools but this is the only SFUSD building leased to a private school. It was the site of a Child Development Center which SFUSD closed in 2006. The site was declared surplus in 2007, a requirement before it can be sold. In 2012, it was leased to French American (now called International) school which agreed to do massive reconstruction on the site. The rent for the first 20 years is very low, to account for the cost of the construction, but the lease can be extended for 10 years at a market rate.

• Richmond Neighborhood Center (741 30th Ave). From 1938 to 1967, this used to be the Lucinda Weeks School for Handicapped Children, a private school. After Weeks closed, it was acquired by SFUSD which quickly declared it surplus. Since 1980, it has been leased to the Richmond District Neighborhood Center. In May 2012, the district approved a 10-year lease (with an option for a further five years) at a rent of only $2,000 per month.

• Cross-Cultural Family Center (325 Leland Ave). This is a 5,500 sq. ft facility adjacent to Visitacion Valley Elementary. I don't know what it was originally but, back in the 1990s, it was a nonprofit child care center called Visitacion Valley Family School, funded by the Miriam and Peter Haas Fund. Now, it's leased to Cross-Cultural Family Center, a different non-profit that provides child care services. The lease was signed in November 2013, and lasted 10 years, with an option to renew for a further 5. The rent was just $500 per month.

• Irving Scott Elementary (1060 Tennessee St). Irving M. Scott Elementary was in dilapitated condition for most of its existence before closing in 1974. It's now a historic building which limits its usefulness. It's used by Friends of Potrero Hill Child Care and Omega Boys Club & Partners in School Innovation. I can find no record of the lease agreements in board minutes but, in 2014, the site was bringing in $28,000 per year. The rent is probably nominal because SFUSD hires these organizations.

• McLaren Elementary (2055 Sunnydale Ave). The site of the former McLaren Elementary school houses a SFUSD Science Resource Center and the Samoan Community Development Center. The latter is a non-profit funded by the City's DCYF to provide mentoring to certain students in certain schools. It’s not clear if they are charged any rent at all. In 2024, the district received a $3 million grant from the City to update the Samoan Community Development Center.

• Excelsior Youth Center (163 London St). This site is adjacent to San Francisco Community School. The City signed a 30-year ground lease which expires in 2027 and built and operates the Excelsior Youth Center on the site. Boys and Girls Club operates various programs at the facility in agreement with SFUSD.

Parking

The district owns two parking garages and two parking lots.

• Bush Parking Garage (1340 Bush). The lot had served as a playground for Redding Elementary since being acquired in 1939 but, in 1968, the Parking Authority got approval to put in parking for 40 cars and build a new playground on the roof. It’s unclear why the school district couldn’t stop them. The garage is now leased to Central Parking. The lease that began March 1, 2014 had rent rising to $3,515 per month in year 6 plus 7.5% of gross revenue over $120k. That lease ran for three years with option to extend for an additional 3 but I could not find any record of any follow-on lease in the board archives.

• Lombard Parking Garage (2055 Lombard). This was the school yard for the long-closed Yerba Buena Elementary. The original plan was to build a four-story hotel on this site but the supervisors demanded a four-story parking garage “to help handle the crush of shoppers and singles bars habitues in the area”. In 1983, there was a report that the city was going to pay $750,000 for a 60-year lease. If true, that can't have been the only provision because, in 2014, the District reported that the lease was bringing in $350,000 / year from the Parking Authority. MTA assumed the lease in 2016.

• 7th and Irving Parking (1350 7th Ave). This is the parking lot adjacent to Independence High School. It is leased to SF Parking Authority. I don’t know the terms or duration of the lease but, in 2014, it was bringing in about $28,000 per year.

• Parcel E (631 McAllister St). This is a parking lot adjacent to the District’s HQ at 555 Franklin. The district received title, and $2.675 million, in exchange for 1950 Mission St, the former home of Marshall Annex. I’ll have more to say about this transaction below.

Unused

A few sites have no current use.

• 7th and Lawton (1620 7th Ave). SFUSD received this empty land from the City in 1985 in partial exchange for Polytechnic High. It's unclear whether SFUSD has clear title or just a 75-year lease. At the time of the exchange, there was an idea that Wallenberg HS would move to this location but the District didn't want to commit to the new construction (presumably because it was unsure of the path of future enrollment). I believe that one consequence of that debate is that there is a covenant requiring that the property be used for educational purposes. I wonder how broad the definition of "educational purpose" could stretch. It seems to encompass seasonal leases for things like pumpkins and Christmas trees.

• 200 Middle Point Road. It was the site of the annex to Sir Francis Drake Elementary (now Malcolm X Academy) which closed in the 1970s. The annex was used as Hunters Point Youth Park for over 30 years but has been unoccupied since 2010. The buildings were demolished in 2016 and nothing has been built in its place.

• Edwin and Anita Lee Newcomer School (657 Merchant St). This site was gifted to the district in 1972 by the U.S. Navy to be used for the Chinese Education Center. Renamed after the former mayor Ed Lee in 2018, it’s now co-located with Lau, leaving the Merchant St building empty.

A Very Expensive Parking Lot

Back in 2014, the City and the District agreed a property exchange. The City got two sites on which it could build affordable housing. The District got a parking lot and cash. A few things stand out about the transaction.

• The City and the District approved different things. In December 2013, the Board of Education approved a single exchange. The City would get 1950 Mission Street (for $9.775 million) and 1101 Connecticut (for $1.825 million) and give the district in return “Central Freeway Parcel E” (for $7.1 million) and $4.5 million in cash. The transaction was eventually done in three parts. In September 2014, the Supervisors agreed to the exchange of Parcel E and $2,675,000 for 1950 Mission. In November 2014, the City paid $450,000 in November 2014 for an option to buy 1101 Connecticut and a further $1,800,000 in February 2016 to exercise the option for a total of $2,250,000. I can find no record that the Board of Education ever reviewed the evolving structure of the deal after its December 2013 vote.

• Parcel E was, and still is, a surface parking lot next to the District’s headquarters at 555 Franklin. The District had bought its HQ from the State Bar of California and it had assumed the State Bar’s lease on the parking lot at the same time. That was a 99-year lease signed back in 1975 so it still had 60 years to run. By 2013, the lease payment was a mere $66,000 per year, making the lease enormously valuable. The City valued the parcel at $4,584,000 with the lease and at $7,500,000 without the lease. The nearly $3 million difference between those two amounts represents how much it would be worth to the City, or any other purchaser of the parcel, to terminate the lease. By buying the property for $7,100,000, the District simply squandered the lease’s value. A good analogy is to imagine the District as a longstanding tenant in a rent-controlled building that the owner wants to sell. The building is worth $3 million more if there’s no rent-controlled tenant in place but the tenant can’t be forced out so either the seller or buyer will pay the tenant to leave.

• Valuing undeveloped property is tricky because the valuation depends on what you’re allowed to build on it. As a general rule, the more you’re allowed to build on a property the more valuable it is. Selling property to the City is tricky because the City is the one that determines what you can build. For 1950 Mission, both sides did a valuation for a “mixed use five-story to seven-story retail and residential building”. The District’s appraised value of 1950 Mission was $13,400,000. The City’s appraised value was between $6,300,000 and $9,450,000. The agreed value of $9,775,000 was thus far closer to the City’s estimate than the District’s. Once it had obtained the property, the City then decided to construct a nine-story building. Had the valuation been based on what was actually going to be built, the District might have received more money.

• For 1101 Connecticut, we know that a 2013 appraisal put the value at $2,100,000 but we don’t know which side paid for that appraisal. That figure is higher than the $1,825,000 price at which the Board of Education agreed to sell but less than the $2,250,000 they eventually received. Given the extra time it took to consummate the deal(The list of City Facilities still shows that SFUSD has a ground lease on 1101 Connecticut but the map of City-owned properties shows that it belongs to the Mayor’s Office of Housing and Community Development. It’s also in conflict with this resolution authorizing the purchase of the site. ), that seems reasonable. My issue here is that I don’t understand the relative valuations of the two sites. 1950 Mission was 0.84 acres and 1101 Connecticut was 0.57 acres. The agreed valuations were therefore $11.64 million per acre for 1950 Mission and $3.16 million per acre for 1101 Connecticut. That’s a 3.6x difference. I understand that being adjacent to the Potrero housing projects is less desirable than being adjacent to the 16th and Mission Bart station. But 16th and Mission is not exactly Pacific Heights. 3.6x seems like a big difference.

How and why did this deal happen the way it did. My guess is that the deal evolved this way:

• SFUSD had declared 10 sites as surplus in 2007 and was under pressure to do something with them. By the time of this transaction, it had only disposed of 1 (700 Font Blvd, the former Frederic Burk / Louise Lombard site, sold to SF State in 2011 for $11.1 million. ). It still owns the other seven and has used Bond money to refurbish some of them. Why would you spend bond money to refurbish a site you’ve declared surplus unless you really really don’t want to get rid of it).

• Building more affordable housing was a City priority. I suspect every mayor and supervisor this century has spoken in favor of more affordable housing.

• The board of education was highly attuned to City politics: one commissioner worked directly for the mayor and three others would go on to run for supervisor. Meanwhile, four of the supervisors had previously been on the board of education or been executives of the district.

• SFUSD didn’t need cash for its properties. Voters had passed a facilities bond proposition in 2011 and would pass another one in 2016.

• SFUSD therefore preferred a property exchange to an outright sale.

• SFUSD had no particular desire to own Parcel E because it had no plans to develop it and already had a long-term lease on it.

• Nevertheless, the only available property that the City could include in an exchange was Parcel E.

Thus, everyone wanted to get a deal done and the exchange was the best way to do it. If a few million dollars of value got lost along the way, who’s counting?

Takeaways

SFUSD’s real estate policy can be summarized as:

• Find a use for every building

  Whenever the district has unoccupied buildings, it comes under pressure to declare them surplus and dispose of them. But if a building is occupied, it can’t be surplus. The 2014 report on surplus properties is very keen to make the point that a bunch of properties which had been declared surplus in 2007 were no longer surplus because uses had been found for them. This policy explains the proliferation of administration sites, the number of properties leased at way-below-market rates, and apparently bizarre decisions like moving Downtown High from a location where it enjoyed a rent-free lease. It also contributes to the reluctance to close under-enrolled schools.

• Lease rather than sell

  This makes sense. It is a basic budgeting principle for households and businesses that you shouldn’t pay recurring expenses with one-time actions such as selling assets. For this reason, school districts are forbidden from paying salaries by selling school properties. If they sell properties, they have to use the money for other capital projects. There’s no need to do that in San Francisco because the voters can always be relied upon to vote for school bonds. The most recent school bond raised $790m. No individual property sale is going to move the needle that much.

Unfortunately, there’s no market for school buildings. The Catholic Church has leased or sold many of its closed school buildings to private schools but it’s hard to imagine SFUSD being politically willing to do the same. Alternative uses for school buildings are hard to find. Schools don’t make good office buildings and there’s no shortage of good office space in the city anyway. It’s not an accident that only one former school building (1440 Harrison) is producing real revenue for the district.

Whenever SFUSD does dispose of a property, the building gets demolished and it disposes of the site. SFUSD might want to generate recurring lease revenue from its sites but it has not been able to do so. It has had to settle for an upfront fee for a long-term ground lease or an outright sale.

It is open for debate what SFUSD’s goals should be for its surplus property portfolio. One meeting of the District Advisory Committee briefly considered this topic but it didn’t get the time it needs. One school of thought is that the district should use its surplus properties to fulfill societal goals, with those goals being determined by the district itself or the board of education or the board of supervisors. This might involve leasing some property at below market rates to a favored organization or selling it cheaply to make a project feasible. Another school of thought is that the district should do whatever is best for the district’s finances. This might involve selling to, or partnering with, some developer who wants to construct market-rate housing. Proponents of this approach argue that the board of supervisors, not the board of education, is the natural place for discussions about how to balance societal goals and available funds. If the supervisors have a particular project in mind for a site, they are welcome to buy it at the full market price. The board of education’s duty is to look out for the interests of the district.

SFUSD has in the past sometimes sold land for market-rate development⁵ but more often it has sold for affordable housing. Today, it is subject to state guidelines designed to promote affordable housing. Whenever the district does decide to sell, the most likely buyer is the City or somebody sponsored by the City. Although the City and the District are legally separate, they are still not politically separate. The school board has long been a path to the board of supervisors⁶; the City has bailed the District out of financial messes; the City rents buildings from the District; the City’s Department of Children, Youth, and their Families (DCYF) works closely with the district on many issues; and, of course, the new Superintendent is on leave from her real job as head of DCYF. This web of relationships means that any deals between the City and the District merit extra scrutiny.

1. It wasn’t just the legal title. For many years, the Arts Commission had final say on the design of school buildings.

2. San Francisco Chronicle, November 23, 1983.

3. I don’t know if this is a different station or if company number 6 changed its name in the intervening years to station number 31. Perhaps the number six was found to have a racist or colonial history that necessitated a change.

4. San Francisco Chronicle, September 12, 2023

5. The highest sales price it has ever achieved for any sale is the $13.6 million it received back in 1998 for the site of the former Grant Elementary but that was in Pacific Heights.

6. This link is weaker than it was. None of the outgoing board of education commissioners ran for higher office in 2022 or 2024 and only one current supervisor used to be on the board of education.