An F in Business

Once thought a model of financial wizardry, Brea Olinda High looks like a flop

School-district records obtained by JLAC investigators show that by 1994, the Brea district already expected to "receive between $56 million and $61 million less than initially projected" from the ill-fated deal with Lowe. Part of the problem was the fact that in 1991, Orange County real-estate values crashed, forcing Lowe to renegotiate many of its contracts with tenants. Lowe also failed to develop one portion of the old school site.

Moreover, the physical scope of the proposed high school was slashed even before the project broke ground in 1987. The size of both the auditorium and the swimming pool were reduced, the gymnasium received air blowers instead of an air-conditioning system, and student lockers were eliminated altogether.

Seal told JLAC investigators that "value engineering," along with construction modifications designed to meet a 30-year performance standard rather than 40 years, also played a role in keeping costs down.

The final price tag for the high school, $36 million, has yet to be paid by the Brea Olinda school district. Assistant superintendent Gary Goff acknowledged in a recent interview with the Weekly that the school district will continue to pay off its huge debts on the two bond issues for another 20 years—until 2018.

Fortunately for the district, Brea voters in June approved $27 million in bonds to help pay for badly needed improvements to the city's school system. Goff insisted the money will go where it's intended and not be tapped to keep up with debt payments on Brea Olinda High School.

"We're right at the point where our income is just slightly higher than our debt," Goff said. "We expected our income [from Lowe] to be higher today, and it isn't for a variety of reasons.

"Our project across the street has had some closures," he added, referring to the Lowe commercial site. "That lowered our income quite a bit."

The most recent of those closures occurred last month, when the United Artists movie theater finally shut its doors after struggling unsuccessfully to compete with the nearby Brea Marketplace "Big 22" Edwards Cineplex. Goff acknowledged that, in order to keep up with debt payments on the high school project, the school district will now have to dip into the high school project's reserve fund.

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