Timeline of Key Events

District Lease of Property

 TERRA MARIN SCHOOL

2018 - Terra Marin began leasing the premises.

Background:

The District  originally leased the premises to Ring Mountain Day School in 2004, which assigned the lease to Pacific Discovery School. Pacific Discovery assigned the lease to Terra Marin on June 15, 2018 ("Lease").

(To assign a lease means for the existing tenant to transfer its lease rights and obligations to a new tenant.)

• The original Lease term in 2004 was for ten years, with four renewal options of five years each.
• In 2014 (end of the ten year term) Ring Mountain Day exercised the first option to renew - extended the Lease to 2019.
• Terra Marin took over the Lease on June 15, 2018.
• In 2020 Terra Marin exercised the second option to renew the Lease to 2024.
• In 2023 Terra Marin expressed a desire to exercise the third option to renew the lease to 2029.

2020 – Terra Marin exercised the second option to renew the Lease to June 2024 and was granted several requests for rent abatement.

• February 8    Terra Marin exercised the second option to renew the Lease to June 2024.

• March 28       District sent a letter to Terra Marin that certain staff members were currently living on the premises in violation of Sections 6(a), 6(b) of the Lease and the Basic Lease Information which limited use of the premises to "school use, including classrooms, general office and administrative purposes." District notified Terra Marin to cure this breach within thirty days.

• May 7             District granted several Terra Marin requests for rent abatement (Covid) 

2021 – District and Terra Marin entered into discussions on which party should pay, and how much, for sewer repairs resulting from Terra Marin's 2018 renovation in which sewer lines were mistakenly connected to an abandoned sewer waste line.

            Background:

• In 2018 Terra Marin renovated a portion of the premises without notice to the District, including installation of two toilet facilities. The sewer waste line began clogging an excessive amount of time and required approximately $60,000 worth of repairs.
• District's contractor repaired the sewer waste lines and billed the District approximately $60,000 for the repair work.
• District and W. Xa corresponded and met several times to discuss payment for the sewer repair.
• District offered to split the costs. Each would pay approximately $30,000.
• Numerous exchanges of emails, letters and meetings between District and Terra Marin with no resolution.
• District offered to reduce the amount it would accept to $10,000.
• Terra Marin has still not paid the $10,000.   

2023 – Terra Marin expressed a desire to exercise the third option to renew the Lease (until 2029) and reduce the amount of square footage it was leasing for its program. Terra Marin expressed doubts about the rent and square footage.

Background:

• Regarding rent, on July 17, the District sent letter to Wendy Xa (from Sue Murphy, Accountant) providing the following information:

"Per your lease agreement Section 3(b), effective July 1, 2023 your monthly lease payment for 11,013 square feet will be $33,369.39 for the period July 1, 2023 through June 30, 2024. Your lease increase is based on the June 2023 Consumer Price Index of 2.9%. The square footage rate increases from $2.94 to $3.03."

• Regarding square footage, District hired Thornton Tomasetti to measure the premises based on BOMA standards and found that the square footage (thought to have been 11,013 sq ft) was actually 15,901.5 sq ft and that Terra Marin had been paying less rent than it should have been paying. District did not charge for that rent. 

2024 – Terra Marin again expressed a desire to exercise the third option to renew the Lease for another five years (until 2029) and reduce its  space and program. At the same time the District recognized its need for additional space and proposed both parties could share the space.

Background:

• On January 29, Terra Marin sent the District a letter indicating its desire to exercise the third option to renew the Lease for another five years, reduce the space Terra Marin would use and sublet the rest of the space to French Immersion School and a third entity. At the same time the District was looking for space to accommodate its needs during renovation of the middle school. The District proposed Terra Marin would reduce its space and the District would take over the remaining space.

• The District and Terra Marin engaged in a series of meetings and written correspondence in an effort to come to agreeable lease terms for both parties to share the space. Terra Marin rejected each draft with no proposed alternatives.

• Items under consideration included, among other issues, the amount of space Terra Marin would be using, which party would be responsible for the costs of remediation for previously completed unpermitted improvements made to the premises by Terra Marin, inspection costs to determine if additional repairs were necessary to the premises, the amount per square foot of rent and the need for Terra Marin to adhere to the terms of the Lease for any future alterations or improvements made to the premises.

• Between February and April, three versions of an Amendment to renew the Lease and share the premises were proposed to Terra Marin by the District. Each subsequent iteration was revised by the District to mitigate the concerns expressed by Terra Marin. Terra Marin did not agree to any of the iterations.

• Section 2(b) of the Lease gives the District the right and option to reclaim the premises if needed for school purposes so long as the District gives the tenant two years notice to allow for a smooth transition and for the tenant to find new space, On April 30, the District notified Terra Marin that the Lease would be terminated effective in two years, July 31, 2026 due to District need of the space for school purposes.

• After Terra Marin defaulted on its June rent payment to the District, on July 1, the District sent a  letter to Terra Marin terminating the Lease as of July 1. According to Section 14(a) of the Lease, Terra Marin could have been evicted immediately, but the District offered a ninety (90) day "grace" period for Terra Marin to organize its move out of the premises without paying rent. Terra Marin rejected this option.
• After rejection of the District’s offer of a ninety (90) day option, the District has moved forward with a formal unlawful detainer action, which requires compliance with service of a three day notice to pay or quit and filing of the unlawful detainer action.
• As of August 14, Terra Marin is in default of the Lease.
• Terra Marin owes the following rent:

                        June 2024 rent:        $35,037.86

                        July 2024 rent:          $36,159.07

                        August 2024 rent:     $26,879.07 (partial payment made)

                        Total:                          $98,076.00

General Background

In April 2024, the District informed Terra Marin, a preschool operator which has been leasing District property since 2018, that the preschool would need to relocate by 2026 because the property is needed by the District in order to serve its students.  To be clear, we place a high value on the important work that this organization plays in serving some of our community’s youngest learners which is why we have, over the past six months, tried to work with the operator to facilitate and support a smooth relocation to another space; however, our efforts have been rejected by Terra Marin.

In June 2024, Terra Marin defaulted on its June rent payment. The check for June rent was returned for insufficient funds and was not paid ten days following the due date. This failure results in a default and eviction. The District could have required an immediate relinquishment of the premises, but the District attempted to provide Terra Marin with a "softer landing" than immediate eviction, even offering three months of free use of the premises to give the school time to organize its departure. None of our offers, which we believe demonstrate our empathy for their situation and a strong commitment to be cooperative and supportive, have been accepted. Instead and quite unfortunately, Terra Marin is sharing misinformation about the District’s intentions and myriad efforts to offer grace as we execute the legal right to request a tenant to vacate a property that we need in order to serve our students. To date, Terra Marin has still not paid the owed rent or indicated that it plans to pay the owed rent.

On July 1, 2024, the District served notice of Terra Marin's default and eviction. The District understands that the Terra Marin management has been communicating its financial distress to families for some time now. The eviction notice was given now, during the summer, specifically to avoid disrupting the start of a school year. The District and Board have a fiduciary responsibility for the appropriate use of public funds and cannot legally subsidize a private school using public money. School districts are prohibited from making gifts of public funds.

FAQ

1. How long has Terra Marin been renting the space? 
   Terra Marin took over the premises in 2018 from the previous renter, Ring Mountain School, which had leased the premises since June of 2004.
2. Where is the space?  
   The premises are part of the building located at 70 Lomita Avenue, the former Alto School.
3. What will the district use the space for once vacated? 
   The District intends to use the property for additional space while it completes bond projects that will require relocation of personnel. The site will be used for District office space and related educational purposes.
4. Did the District attempt to work with Terra Marin? 
   The District has gone out of its way to work with Terra Marin.  When Terra Marin expressed a desire to reduce its square footage in January, 2024, the District agreed to that request and attempted to arrive at an agreement that would satisfy Terra Marin’s desire to reduce its square footage and the District’s need for additional space. But after discussions and draft amendments reflecting the discussions, Terra Marin would not sign any of the amendments, no matter how often they were revised, and would not offer any language as a revision which would be acceptable to it.
5. When and how did the District ask them to vacate? 
   When Terra Marin defaulted on its rent payment for June, the District sent a termination notice on July 1, 2024, but offered to forgive the past due rent (both June and July rent) and allow three months without rent for Terra Marin to organize its departure. Terra Marin also rejected that offer. On July 25, the District sent a follow-up letter notifying Terra Marin that since they had rejected the District's offer, the District was going forward with the formal eviction process. The letter notified Terra Marin that it needed to vacate the premises by August 9.
6. There are rumors that the District has “played foul” to try to force them out, including turning off the water at one time. What are the facts? 
   The District has not tried to force Terra Marin to leave. Terra Marin  experienced plumbing issues after unauthorized repairs made by Terra Marin without the District’s knowledge occurred. Water was turned off in the affected restroom in order to repair unauthorized and deficient plumbing Terra Marin had completed in the premises.  This occurred during the summer of 2022 whilst the school was not in regular session.
7. Did the District double Terra Marin’s rent?
   The District did not double the rent. The Lease terms define annual rent increases in a standard formula based on the annual increase in the Consumer Price Index. The District followed that formula. When Terra Marin questioned the square footage of the Premises (implying that the District was charging for more square footage than the school was using), the District hired an independent consultant to measure the space in accordance with accepted standards of commercial lease measurement (BOMA). Terra Marin was provided that measurement, which proved Terra Marin actually was paying less than the square footage it was using. Nevertheless, the District did not increase the rent to make up for Terra Marin's inadequate rent payments. In fact, during negotiations to try to reach a decision with Terra Marin, the District offered to suspend the regular, annual increase called for in the Lease. Terra Marin did not accept that offer.