BURLINGTON — The Burlington-Edison School District has hired an attorney to review a 2007 land purchase that has helped set the stage for a possible state takeover of the district’s finances as early as August 2010.

Superintendent Laurel Browning said the attorney, Grace Yuan of the Seattle firm of K&L Gates, will advise the School Board on any potential liability board members or the district could face as a result of the transaction.

The board authorized hiring the attorney after speakers at a recent public meeting raised the possibility of litigation.

The district faces the possibility of having the state assume strict oversight of its financial affairs, a move called “binding conditions” that would restrict local control of the district’s spending.

In such cases, the task of monitoring the district’s finances falls to the local Educational Service District, a division of the Office of the Superintendent of Public Instruction.

Jerry Jenkins, superintendent of the Anacortes-based Northwest Educational Service District, said Thursday he is aware of Burlington-Edison’s financial issues.

“When situations surface in districts that would question their financial status to the level that Burlington is, we are certainly monitoring them more closely,” Jenkins said. “(B-E) is probably one of three to five districts that we are watching pretty closely.”

The district could end up in binding-conditions status as early as August 2010, Jenkins said, if voters don’t pass a bond or if the district doesn’t come up with the money some other way. Once the district creates a budget that relies on future years’ revenues, the state steps in, Jenkins said.

He recently met with district officials and gave them advice.

“Instead of dealing with hypotheticals and what ifs, the district needs to quantify the impacts on programs and the services it offers so the public can make informed decisions,” Jenkins said.

Meanwhile, board President Liza Bott on Friday shed additional light on a key element in the $1.8 million transaction, in which the district purchased nearly 29 acres of farmland without assurance it could be rezoned for a school site.

Bott said former Superintendent Rick Jones was the board’s sole source of information about the transaction and board members acted on his recommendations.
A clause in earlier drafts of an agreement with the property owners that would have conditioned the deal on bringing the land into Burlington’s urban growth area was removed from the final version of the document.

For the past several months, board members, administrators and Jones all said they did not know how or why the contingency clause was removed.

Bott, in an e-mailed response to questions Friday, said Jones recommended removing the contingency, telling the board the clause would have been a deal breaker with the sellers.

“Ultimately, the board agreed to have the contingency clause removed based on the recommendation and information provided by administration that the sellers would not accept any agreement that contained such a contingency clause,” Bott wrote.

The district paid $63,000 dollars per acre for farmland at the intersection of Peterson and Pulver roads west of Burlington.

Prime agricultural land in the Skagit River delta generally sells for between $6,000 and $10,000 per acre.

In her e-mailed response, Bott said she thought the land would be accepted into the urban growth area because the city supported the plan, and because the board felt the city and county had a mandate to work together to identify school sites.

“We also relied on administration to provide us with thorough, accurate, reliable information, recommendations and follow through,” Bott wrote.

In a follow-up interview, Bott said all references to “administration” meant Jones, the former superintendent.

Jones, who is now the superintendent at North Kitsap School District, could not be reached for comment.

Superintendent Browning said the district’s risk-management insurance pool will cover the cost of the attorney for 30 days.

The attorney will be reviewing all documents related to the Peterson-Pulver transaction, at least those that are available.

There are no documents explaining what instructions were given to the appraiser, David Parsons and Associates, which reported the land was already within Burlington’s urban growth area.

Officials said all instructions to the appraiser were verbal, a practice that is not uncommon.

Also, neither the district nor the appraiser has a copy of a contract between the two, according to district Finance Director Joe Stewart.

Since the board voted to close on the property in July 2007, Jones and former Finance Director Greg Thramer have found jobs elsewhere. Browning and Stewart said they cannot find the contract anywhere.

The district did have a copy of the appraiser’s invoice, which charged the district $2,400 for the land valuation.

Former School Board member Al Brown, a real estate broker in Burlington, volunteered as a consultant to the district on the land deal, according to both Jones and Facilities Director John Leander.

Leander said Brown, who has previous real estate experience, called him and asked to talk to the appraiser for the district.

Brown, a board member in the 1980s, said the parcels used as comparable sales to establish a value on the Peterson-Pulver land were appropriate. The comparisons were with parcels already within urban growth boundaries or city limits, which increases the value by six or seven times over the value of farmland.

Brown said he doesn’t remember specific conversations he had with the appraiser.

“I suggested we use Dave (Parsons, the appraiser),” Brown said. “He’s done a lot of the major appraisals in the county. He has done some other appraisals for the district.”

Brown said the appraiser “did his own homework” in determining the land’s value.

“I’m of the opinion that the land will be a school site someday,” Brown said.

The land purchase, along with another in 2004, and two smaller bond issues — all purchased by the board using its authority to leverage non-voted debt — could lead to the district’s financial unraveling. The district owes nearly $9 million, including interest, in non-voted debt on which it has been making interest-only payments for the past several years.

The board had been counting on passage of a voter-approved bond issue to pay off the non-voted debt and finance new facilities for the district. The board authorized the purchase of the Peterson-Pulver land after the failure of two bond measures.

The voters rejected a third bond issue in March of this year, which set the stage for the financial crisis the district now faces.

n Kate Martin can be reached at 360-416-2145 or .