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School districts becoming commercial landlords is a new normal in the Tri-Valley.
Following a similar strategy to Pleasanton Unified School District three years earlier, the San Ramon Valley Unified School District has fully moved into the Canyon Commons Corporate Plaza building it purchased to house its headquarters and open up a new revenue stream of rental income.
“We’re not a private company that has a real estate investment portfolio. We are a school district that has limited means to generate revenue. And this is a creative solution to address that problem,” SRVUSD Superintendent CJ Cammack told me when I toured the new HQ on Oct. 19.
“But it doesn’t necessarily mean that it can be done on scale,” he added. “We don’t have six commercial properties that we’re using as an investment portfolio. We have one main building that is our heart of our operations now, which includes space for private tenants. And that, I think, is really where the strategy comes in.”
SRVUSD acquired the four-story building at 3130 Crow Canyon Place in San Ramon for $18,009,987 late last year, a property with a number of vacant units that seemed like just the right size and orientation for district operations, Cammack told me.
Seeking to minimize relocation costs, the district relied largely on furniture left behind from prior tenants or donated from groups like Smarsh, Alchemy and the Duffield family and went with just a fresh coat of paint, shampooing existing carpets and a solid cleaning where they could, according to the superintendent.
The district relocated 101 employees from the old district offices at 699 Old Orchard Drive in Danville (as well as information technology staff from the SRVUSD transportation service center) to Canyon Commons between Oct. 7 and Oct. 12.
“The move itself has gone very well. I think all of the large-scale issues have been successful. Now we’re just navigating some of the fine-tune adjustments,” Cammack said from his fourth-floor office, a smaller space than he had at the old site. “One of the things that we obviously want to do is make sure that our employees have a safe and secure environment that’s well taken care of for their working conditions, while also being a good landlord so that our tenants feel supported.”
SRVUSD occupies parts of three floors, with its main public lobby in Suite 300. The staff offices feel more modern and connected than the layout at Old Orchard, a mix of brick-and-mortar buildings and portable units that felt outdated and spread-out.
The rest of the space on all four floors are commercial tenant units occupied by businesses like First American Title, Be CLINICAL, Hunter Tax Associates, Edward Jones Investment, Risewell Homes, and dentist and legal offices. The district also recently inked Westamerica Bank to lease a first-floor space, which will bring the building occupancy up to 98% when the bank opens later this fall.
“As a community bank, Westamerica is focused on locating our offices where they are convenient for our clients, offer growth to our business and where community is important. We recognize the value San Ramon has to offer,” said Marylou Ostrum Vanderkous, vice president and senior regional service manager for Westamerica. “We are pleased to announce a full-service branch location in San Ramon adding a 4th location within Contra Costa County in November.”
All told, the district is under contract to generate $1.8 million annually in lease revenue. Right now, Cammack is relying on the same property manager that worked with the building’s prior owner while officials assess what to do about tenant services down the line.
The final domino is offloading 699 Old Orchard Drive – and could be many more months before it falls.
SRVUSD has a waiver pending with the California Department of Education to open the pool of potential buyers, a process that could take another four to six months before the district can even list its old property for sale. But if all goes to plan, Old Orchard seems destined for residential development.
Proceeds from the sale must be earmarked for district facilities.
“In that way, we could leverage that against the purchase of this building. We have a number of other facility needs across the district that would also benefit from those funds,” Cammack said, later lamenting, “I wish the state would allow us to put those on the operational side of the budget, but they don’t allow us to do that.”
“When we purchased the building, what we did is we took out a loan for the purchase price, we have money that comes to us in what we call redevelopment agency fees,” he added. “Through about 2035, we’ll continue to receive enough money in those funds to completely pay off the loan for the building.”
And there’s still the question of where the SRVUSD Board of Education will live.
Canyon Commons has no space to host public board meetings, so the school board will stay at the old headquarters in Danville through the 2026-27 fiscal year while Cammack and his team look for future alternatives such as renting Danville town or San Ramon city council chambers.
“We have plenty of options available. It’ll just be identifying which one works best for us operationally,” he told me confidently. “All of them will be very cost efficient, don’t see any significant impact to the budget in terms of relocating our boardroom.”
As for how things are going for Pleasanton Unified, the first Tri-Valley district to take on the role of commercial landlord, “Our experience has been very positive,” spokesperson Susanne Frey told me Monday.
PUSD acquired the property at 5758 and 5794 W. Las Positas Blvd. for just under $23.5 million in 2022 and began moving its district office operations there the next year from its property on Bernal Avenue on the edge of downtown.
Gatan remains PUSD’s lone tenant, leasing about 39,500 square feet to the tune of more than $1 million annually.
“Approximately $700,000 supports unrestricted general fund expenses, including salaries and operations,” Frey said. “The remainder covers payments on the approximately $5 million outstanding balance of the original $30 million certificate of participation financing, as well as facility maintenance costs.”
Another 6,300 square feet of commercial space remains open for lease and is being actively shown to prospective tenants, according to Frey. If successful in filling it, PUSD could generate another $190,000 in unrestricted revenue annually.
The strategy has been paying off from a diversified revenue stream standpoint, as well as toward the goal of creating “a modern, centralized district office that better supports our operations and services,” Frey said.
“The move also supports our longer-term plans to monetize our Bernal Avenue property, which previously housed the district office and several other district programs and services,” she said. “We continue to consolidate operations at our new district office, having recently relocated adult education and graphics, with plans to relocate TV30 as well.”
“We are also actively exploring relocation options for our Maintenance, Operations and Transportation (MOT) facility. These efforts are helping free up the Bernal property and create another opportunity to generate revenue for the district,” Frey added.
Given how the experience has gone so far for Pleasanton and San Ramon Valley, I can’t help but wonder if cash-strapped Dublin Unified and Livermore Valley Joint Unified school districts might consider the same with their expansive headquarters lots.
Editor’s note: Jeremy Walsh is the associate publisher and editorial director for the Embarcadero Media Foundation’s East Bay Division. His “What A Week” column is a recurring feature in the Pleasanton Weekly, Livermore Vine and DanvilleSanRamon.com.
