U-T building sale to school still in limbo

The North County Times building in Escondido, pictured earlier this year, is owned by U-T San Diego. The office closed in mid-May, and the building is set to be sold to The Classical Academy charter high school. (North Coast Current file photo by Scott Allison)

The North County Times building in Escondido, pictured earlier this year, is owned by U-T San Diego. The office closed in mid-May, and the building is set to be sold to The Classical Academy charter high school. (North Coast Current file photo by Scott Allison)

Alex Groves

The acquisition of the old North County Times building by a North County charter high school is still ongoing, and both seller and potential buyer appear to be keeping mum regarding some details of the sale’s status.

The Classical Academy of Escondido entered into an escrow agreement with U-T San Diego to purchase the 4-acre property in October 2012, according to a U-T report. The charter school campus was set to open in early 2014, the report stated.

But the two entities have had difficulty facilitating a final sale due to various hurdles.

According to San Diego County property records, the building at 207 E. Pennsylvania Ave. is still owned by Project Safari Real Property Holdings LLC, which is a business entity in care of Manchester Financial Group.

Douglas Manchester is a real estate mogul and chairman of Manchester Financial Group. Manchester also owns newspaper U-T San Diego, which bought the North County Times last year and folded it into its publication.

U-T San Diego’s North County staff moved to offices in Oceanside in mid-May, leaving the Escondido building empty.

The slow pace of the transaction has left some observers in Escondido and elsewhere in North County wondering whether the school will actually purchase the building or if the escrow agreement has fallen through.

Classical Academy Communications Director Michelle Stanley said the plan to complete a purchase is still very much alive and pending the completion of a bond sale that would give the charter school the additional funds needed to purchase the property.

“Escrow has not closed and the bond-selling process is almost complete within the next 30 days,” Stanley said.

Stanley was specifically referring to a $37 million bond deal that would allow the school to also make various renovations and facilitate the furnishing of necessary school materials.

The bonds – which were underwritten by RBC Capital Markets LLC – have a BB+ rating. Bonds with this rating are sometimes called junk bonds, which means they are not investment-grade bonds. These bonds are still secure, according to experts, but they can be affected by adverse business conditions and can sometimes take longer to meet timely interest and principal payments.

The bonds are expected to mature in 2043, according to a state report that describes the process in detail.

While the final sale of bonds appears to be the major hurdle in the final sale of the North County Times building, it’s not the only difficulty that has kept the process from going through.

In February, The Classical Academy was still facing questions from the city of Escondido’s planning department before it could receive an approved change of land use permit.

The land use permit was approved in March by the Planning Commission, but not without some concern from those same individuals regarding the ability of businesses with alcohol licenses to move into the same area.

Bill Martin, an Escondido city planner, said that although putting a school in the proposed location would not necessarily prevent businesses with alcohol licenses from moving in nearby, it might very well change the expectations and requirements placed upon those businesses by the Department of Alcoholic Beverage Control.

“The fact that the school was going to be there was not going to result in any requirement to deny alcohol licenses by (the) ABC, but could be used as a consideration point to add conditions to proposed licenses,” Martin said.

More specifically, according to a report from Escondido’s Planning Division, businesses 600 feet away from the school would fall under this consideration point; while that wouldn’t in itself prevent a business from having an alcohol license, it could make it easier for them to be denied one.

The 600-foot limit could have the potential to affect a number of businesses along Grand Avenue, which is Escondido’s “retail core” area. Recently, the city has been making an attempt to increase shopping, dining and nighttime entertainment within the area, and the placement of a school could make it harder for businesses to come in and make that goal a reality, according to the report.

The report also raised concerns about whether the property had adequate parking and circulation for student pickup and drop-off.

Ultimately, the land use permit was issued.

As the deal continues to remain locked in place, officials at U-T San Diego are just as tight-lipped about the escrow process and how it’s going.

When contacted about the transaction for this story, U-T San Diego CEO John Lynch declined to comment.

“We do not comment on private business transactions,” he said via email.

Alex Groves is a freelance writer in the region