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LAUSD looks at underused real estate to help offset future budget deficit

Mike Szymanski | March 13, 2017

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The Sage Park area before the district used the vacant space for housing.

The second-largest school district in the country is looking at its unused real estate, closed schools and empty spaces as a potential way to offset an upcoming budget deficit. It seems like an easy solution, but LA Unified officials caution it’s not that simple.

“If you are going to look at these assets to sell or develop any of the assets, it will come with community outrage and protests and people with signs,” said Albert Grazioli, the director of Facilities Asset Development in a report at a committee meeting last Tuesday. “The school board must have a clear direction, and if you are going to waver and not be committed then it will be a tough road.”


The Sage Park Apartments now generate revenue for the district.

LA Unified has 21,000 buildings with more than 78 million square feet, which is more than the Downtown Los Angeles office market or all of downtown San Francisco. The land that the district owns exceeds 6,400 acres, or 10 square miles, which is larger than the cities of Santa Monica or Newhall Ranch.

Next, the facilities team will determine which buildings are vacant and underused and ask the school board what to do about them. The committee asked for a follow-up report with a map identifying the underused properties, the vacant spaces and any commitments attached to the land.

Grazioli, who describes his job as “the real estate guy for the district,” said, “We understand the impact from the budget standpoint that some of these spaces are highly valuable and in commercial areas.”

Some schools are closed due to disrepair, some are in poorly located areas and some are single-story buildings when they should be two stories, said Grazioli at the Budget, Facilities and Audit Committee. The district owns parking lots, vacant spaces, agricultural land, and old warehouses that present prime opportunities for better use and to generate revenue.

“We cannot just sell these properties and put it into the general fund,” warned Megan Reilly, LA Unified’s chief financial officer who is leaving the district this month.

The money for any district property that is sold can only be used for capital outlay and not operating expenses, leases or ongoing maintenance. And the district must first offer the property to other governmental agencies. There are options, such as long-term leases, exchanges for other property or joint use or joint occupancy, Grazioli said.

Al Grazioli facilities

Albert Grazioli is the district’s “real estate guy.”

An example of a joint occupancy project is a nearly six-acre vacant lot that was turned into the Sage Park Apartments where 90 units were built for LA Unified employees to rent. That project and the Selma Community Housing with 66 units have provided the district $315,000 in revenue and $65,000 in ground lease payments per year.

The newly built Norwood Learning Village that has 29 units for LA Unified workers has more than 900 district employees applying for the living spaces, Grazioli said.

Committee chair Mónica Ratliff said she knew of a property in her district in Sun Valley that was going to be developed into workforce housing, but then it was discovered that it was promised to a charter school.

“The community was ticked off,” Ratliff said.SageParkApartments

Board member Ref Rodriguez said, “I don’t like the idea of taking schools and doing something with them and reconfiguring it because it generates more revenue. Our main purpose is to educate kids.”

Grazioli said that a 10-minute walk in any direction from the school’s Beaudry Headquarters could take someone to one of the underused spaces. He said the revenue would not be immediate, but that the district has to be willing to deal with potential backlash.

He pointed to how Hollywood High School wanted to put up a moving billboard to generate revenue for the school, and how the community stopped the idea before it even got to the school board.

“This is not for the faint of heart,” Grazioli said. “The phone board in your office will light up and there will always be someone against the project.”

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