Doubts About Deal In Prince George's
School Headquarters Plan Scrutinized

By Nelson Hernandez
Washington Post Staff Writer
Friday, February 20, 2009

As the Prince George's County school board considers closing a dozen schools and eliminating more than 1,000 jobs, its decision last summer to spend $36 million for a new headquarters faces mounting criticism while the costs of the project grow and the payoff remains uncertain.

The school system has spent nearly $2 million to rent and renovate a pair of office buildings outside the Capital Beltway along the Pennsylvania Avenue corridor. But officials have not announced a timetable for moving out of the aging, decrepit Sasscer Administration Building on School Lane in Upper Marlboro and into Washington Plaza on Presidential Parkway.

Meanwhile, the board is expected to vote Thursday on a $1.6 billion budget for the next fiscal year that would squeeze programs in the 128,000-student school system and possibly raise class size and force employee furloughs. Those cuts have made the headquarters move an easy target.

At a meeting in Glenarden this week, school officials faced parents upset about the school closure plan. Board Vice Chairman Ron Watson (At Large) fielded a question about the headquarters move.

"The plan for [office] consolidation has nothing to do with the budget," Watson said. "That was a long-range plan. There's been a lot of misinformation." As he outlined the case for a move -- that costs would be paid over a long term and that schools would save money and gain a better central office -- parents snorted and grumbled.

"We continue to revisit this decision," he said. "Even if the school system were somehow able to back out of this contract, it doesn't even come close to the $76 million we are short in this year's budget."

Headquarters moves are often sensitive. The Fairfax County Board of Supervisors rejected a $110 million proposal for a school office consolidation in September, but school officials returned this month with a $95 million plan they say will save money in the long run.

The Prince George's experience shows that political and financial complications can linger or multiply even after a contract is signed.

The school board's 6 to 4 vote June 26, approving a 10-year lease of Washington Plaza with an option to purchase, exposed divisions at the start. John E. Deasy, then superintendent, sought to delay action but was rebuffed. Opponents on the board said the project would force program cuts; supporters said it would save money and improve services for Maryland's second-largest school system.

The 200,000-square-foot Washington Plaza has as much space as the Sasscer building and several others combined, and the proposed consolidation is meant to help parents and teachers to take care of all their needs in a single visit. A design schematic calls for a "clean, fresh, no-frills look," with executive offices that would appear "contemporary . . . without looking either fancy or cheap."

Expenses were supposed to be minimal: $30 million for the two buildings and $6 million for renovations and closing costs. Deasy told the board that the consolidation of several offices around the county would save about $40,000 a year.

But the estimates started to crumble under questions from some board members, according to internal documents The Washington Post obtained through the Maryland Public Information Act and from sources.

Board member Donna Hathaway Beck (At Large), an opponent of the deal, asked how the $6 million would be spent. School officials replied in a memo: "As explained during the Board of Education closed session, the $6m is not totally available for construction and renovation. . . . An additional funding source will need to be identified."

Under the lease-purchase agreement, if the school system buys Washington Plaza, it must pay an additional amount equivalent to most of the renovation money. According to school officials, the size of the payment depends on short-term interest rates. In December, the projection rose as high as $5 million, and this month, it is about $3.7 million.

After making the additional payment, the board would be looking for money to renovate such facilities as its offices and public meeting room, estimated in October to cost $1.5 million. An additional $1 million might be needed to add parking. The site has 600 parking spots for 1,000 projected employees, documents show.

Documents show that the $36 million estimate also omitted "one-time costs" of $8.2 million for moving and for renovations to another building involved in the consolidation. Officials said federal funds related to telecommunications would reimburse about half that expense.

How much the consolidation would save -- if anything -- seems to change from scenario to scenario. After the initial estimate of a $40,000-a-year saving, a school system fact sheet in October showed the lease-purchase deal would cost $156,000 a year more than the current arrangement. In addition, the system is saddled with leases on some buildings it plans to vacate.

Yet another report, in December, indicated that consolidation would save the school system $2.5 million a year. But an asterisk was attached to that projection, with the fine print noting that it assumed that Sasscer, which was built in 1949, and another building would be renovated if the consolidation did not occur. The school board has not made such plans.

Now, the school board is seeking to renegotiate the agreement with the Washington Plaza owners: Dean F. Morehouse, president of MTM Builder/Developer Inc.; and Kenneth Michael, head of NAI The Michael Cos., which is brokering the deal. The new deal would be roughly equivalent to a purchase with a long-term mortgage, and officials said it could save $390,000 a year.

Deasy left for another job in December. It fell to Interim Superintendent William R. Hite Jr. to shepherd the project and draft a budget in a severe recession. His school closure plan, intended to save $10 million a year, could come to a vote as early as next month.

This week, the Prince George's County Educators' Association wrote that it could not support the headquarters project "given the level of agitation that exists in the community."

Maryland Senate President Thomas V. Mike Miller Jr. (D-Calvert) said the project should be delayed. "It is morally wrong to put offices for bureaucrats at the front of the line and the health and safety of children in public schools last," he wrote in December.

But school board member Pat Fletcher (District 3) said the state hasn't hesitated to renovate buildings, including one named for Miller.

Board Chairman Verjeana M. Jacobs (At Large) said this week that something has to be done about the situation at Sasscer and that the economic downturn provides a bargain opportunity.

"The dynamics around the reason to have a [new] building have not changed," she said. "We have to do something."

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