Phoenix Elementary board approves sale of First & Grant parcel and authorizes ADM contracts tied to $20M estimate

The Phoenix Elementary School District governing board approved the sale of district-owned parcels at First Street and Grant and authorized purchase orders to ADM Group, with staff saying sale proceeds will be used to build a phased replacement of the plant services facility at the Ann Ott site.

Sarah Sims, the district's executive director of strategic initiatives, told the board the decision responds to safety and operational issues at the current downtown plant services site, including frequent railroad crossings that delay buses. "If we move down to the Ann Ott line of the chart, you can see the distance from the proposed facility to each school and that 0 routes would require crossing a railroad track," Sims said during her presentation. She described a phased approach that would prioritize transportation parking, a fuel center and charging infrastructure, kitchen and warehouse space and staff offices.

Sims and staff emphasized that state rules restrict how real estate sale proceeds can be used. "According to school finance rules in Arizona, proceeds from the sale of real estate can only be used for capital expenses, not for maintenance and operations," Sims said, adding the goal is to replace like-for-like and use any remaining proceeds for further capital projects without asking taxpayers for a bond.

The board also reviewed how the district procures architects and bids architectural fees. Miss Morales, the district's procurement and materials manager, described the cooperative-contracted procurement used in this case and said the district solicited five proposals; ADM was selected by a scoring committee. Jennifer, principal and director of architecture at ADM Group, said the firm structured its fee proposal as a percentage of construction cost, and that the originally assumed construction budget was $27.5 million. "When we put our fee proposal together, it was based on that number that was given to us," she said, and added fees would be adjusted if the construction budget is lower.

Board member Justin Graham moved to approve the ADM purchase orders at a stipulated estimated budget of $20,000,000 with the understanding that the final purchase order would be realigned to the actual GMP (guaranteed maximum price) and contingent on approval of the sale; his motion was seconded and passed by voice vote. Later the board moved to approve the sale of the First & Grant parcels; board members discussed contingency options, oversight and community engagement before voting. In a roll-call exchange recorded during the meeting, Board member Graham, Board member Edmonson and President Trujillo announced their support and the motion passed.

Members of the public had urged caution. Joseph Leon asked whether the architects' portion of the proposal (he referenced nearly $1.9 million) had been competitively procured and requested a full cost comparison between relocating services and renovating the current plant services facility. Miss Morales responded that the district used cooperative-contracted architects and a scoring committee, and staff said a more detailed fee realignment would be provided as the sale price and scope are finalized.

District staff told the board they have contingency plans in case construction or the proposed purchase move forward more slowly than expected, including short-term use of other district-owned facilities or expedited surface preparation at Ann Ott to park buses temporarily. Laura Severblanco, the district's real estate legal counsel, outlined lease terms in the proposed sale/leaseback arrangement: a two-year leaseback at nominal rent with standard triple-net terms disclosed in outline form.

The board approved the ADM-related purchase orders (subject to future PO realignment) and the sale of the parcels. Staff said proceeds, which were described in board materials with an appraised or offered value around $22.7 million, will be deposited to the district's plant sale fund and used for capital projects, with public oversight of subsequent construction contracts.

What's next: staff said a final purchase order and any construction contract will return to the governing board for approval, and the district will continue community outreach and programmatic design before moving into detailed contracting and construction phases.