In 1999, three years before the Oakland school district realized it was millions of dollars in debt and might not be able to make payroll, the school board decided to loan $10 million to the Chabot Space and Science Center.
The center’s 86,000-foot facility, with its interactive exhibits and 100-year-old telescopes, opened in 2000 in the Oakland hills. The partnership worked, at first. But after a few years, partly because of ballooning interest rates (according to OUSD’s CFO, Vernon Hal), Chabot stopped making its debt payments. It still owes the district $8 million, Hal said.
After years of tense negotiations, the stars have begun to align: Chabot will lease its facility to OUSD for $1 a year. OUSD, in turn, will lease it back to Chabot for about $450,000 until that debt is repaid. It’s called a “Lease Lease Back Agreement.” If Chabot defaults on its payments, OUSD will (as before) be able to take over the building — though the land on which it sits is owned by the city.
As part of the agreement, Chabot will allow Oakland students to access its programs at no charge (though schools still need to get their kids up the hill, an expense some haven’t been able to afford). Before this, Chabot charged Oakland students half-price for admission, Hal said. The difference will come out of Chabot’s loan balance.
Smith called the deal “the height of good business.” The school board approved it 6-1, with Alice Spearman casting the dissenting vote. “They had the money to pay and they didn’t want to pay,” she said. “I think we should have taken it over. Either pay or go about your business. I don’t like this, I really don’t.”
Other board members said they felt the agreement was a good one, though they questioned why OUSD loaned the money in the first place. Noel Gallo, a board member since 1992, said he couldn’t remember the vote. “I’ll take responsibility,” he said.
“This is a cautionary tale for this school district as we’re entering into formal, inter-governmental partnerships, that we should be absolutely clear about what our institutional interests are,” David Kakishiba said.
Did OUSD do the right thing by working out this deal with Chabot? Does your school take advantage of this resource? How often?