The City of Morro Bay and San Luis Coastal School District have reached an agreement on the sale of Morro Elementary School, shown here. Photo by Neil Farrell
One down and one to go.
The Morro Bay City Council and San Luis Coastal Unified School District have reached a sale agreement for the long-closed Morro Elementary School, one of two old school sites that the District has declared as surplus properties to be sold.
That leaves Los Osos voters to decide at the June Primary Election whether to tax themselves to raise the money to purchase Sunnyside School, the other surplus property being liquidated.
The Morro Bay City Council approved the sale agreement at its March 10 meeting, with the school district approving it at a March 12 special study session meeting.
The purchase price is $5.3 million for the 10-acre site with the City putting down $500,000 with the remaining $4.8 million due at closing. The school district had appraised the property at $10 million, so the $5.3 million is considerably less than the District was trying to get.
According to a report from City Manager, John Craig, the City will now conduct “due diligence” on the property and pay for it too.
“The City will incur due diligence, escrow, and related consultant costs during the due diligence period,” Craig said. Due diligence includes a review of the condition of the Property and title, Craig said. They will also conduct an environmental assessment to look for potential hazardous materials, like asbestos and potential soil and groundwater contamination, as well as plan to hire a project manager to steer the due diligence process through. Total costs were listed at $45,000 plus the project manager’s contract.
The City plans to cover these costs within the current budget. This due diligence period is slated to end Aug. 31 with the target closing date of Oct. 31.
Escrow and title costs will be shared equally with the District.
As part of this due diligence work program the City will also inspect the condition of the school’s buildings, some of which date back to the original school dedicated in the 1930s. Other buildings were constructed in the ensuing decades with the newest structure — a library that’s now a Montessori School — was built in the 1990s.
When the school district looked at the site it concluded the school’s infrastructure needed over $1 million in upgrades and repairs, one of the reasons they decided to sell it. The City will do an “Infrastructure review, including water, sewer, storm water, power, and broadband connections and potential upgrade needs.”
Also, the City will be looking at future uses, the zoning, consistency with the City’s General Plan, Coastal Zone constraints, and “permit pathways, regarding potential future uses like city offices, housing or other community needs.”
Those community needs, especially the large grassy playground behind the school that local youth and adult sports leagues use, were driving forces for citizens who lobbied the City to buy the old school and preserve it.
When old school sites are deemed surplus and offered for sale, State Law requires the school district to first offer it to local governmental agencies to keep publicly owned property for public uses.
If no agency (City of Morro Bay or Los Osos Community Services District) wants it, they can offer it to local organizations that are certified by the State to build “affordable” housing.
In SLO County there are two — People’s Self-Help Housing and the Housing Authority of San Luis Obispo both of which have existing housing developments in Morro Bay.
The due diligence period is intended to uncover most of the aspects of just what the City is getting itself into and though they have a purchase agreement, which the school district approved 6-0-1 (Trustee Ellen Sheffer was absent) and the Council 5-0, it could still all fall apart, depending on what they discover.
Craig’s report hedges its bets to a certain degree. “Staff will provide periodic updates to the City Council during the due diligence period and return with recommendations prior to any decision to proceed to closing.”
The due diligence period will have at least two chances for citizens to participate, Craig said. “City staff proposes holding two community meetings during the due diligence period, the first for a purchase overview and initial feedback on potential future use concepts, and the second to provide an update on due diligence findings and further feedback on potential future use concepts.”
The first meeting is tentatively planned sometime in April and a second meeting in July. They expect to get the due diligence report back Aug. 10 with the City Council reviewing it and making the final decision to proceed or not on Aug. 25.
Then sometime in early 2027 they’ll start looking at potential future uses.
A citizen’s group — The Friends of Morro Elementary — formed to push for the purchase has suggested the City could move City Hall to the old school and also make part of the property available for an affordable housing project, while still keeping the playing field available. Classrooms could also be rented out to educational organizations, as the school district has done over the past 20-plus years.
