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School plan cuts leases to trim budget

The Clark County School District has a plan to save $678,886 a year by ending five office building leases.

But to save thousands, the district first will have to spend more than $11 million on renovations, site preparation and prefabricated office buildings.

School Board members approved the lease transition plan Monday. The transition should be completed by early 2009.

District Board Member Carolyn Edwards said the transition costs “seem alarmingly high to me.”

The district is spending $2.3 million to transport and set up portable offices donated by the Stardust at the district’s food service warehouse in North Las Vegas.

It is spending another $8.9 million for new portable offices for a former day-care site at Flamingo Road and McLeod Drive. The building on the property also is being converted into office space, which will cost an additional $716,000. Those offices will be used by internal audit and facilities staff.

The transition costs are being paid through the district’s regular facilities budget. The district does not use capital bond revenues on administrative offices.

District Chief Financial Officer Jeff Weiler said the initial investment to get out of the leases, some of which are as old as 9 years, is worth it. Leases are only cost-effective if they’re short term, he said.

The leases contain “escalating clauses,” which means the cost of rent would skyrocket in the future, Weiler said.

The annual savings of $678,886 is actually a minimal estimate, Weiler said. And not having to pay rent will free up money in the general fund.

Plus, “we’re going to have assets to show for it,” Weiler said, referring to the benefits of ownership.

The district is spending about $3 million each on a pair of two-story portable office buildings, which are each 17,280 square feet. Those buildings are for the site at Flamingo and McLeod.

The portables are about 20 percent cheaper than building comparative office space and fit into the district’s time frame for getting out of leases, district officials said.

Site preparation, such as putting in a new parking lot and fire lane, will cost about $3 million.

School Board President Mary Beth Scow noted that the portables could be reused in the future for other purposes.

School Board Member Sheila Moulton said the portables look like other buildings.

“There’s no way you can tell they’re prefabricated,” she said.

Once the five leases are vacated, the district will have one lease left at 5450 W. Sahara Ave., used by staff supervising the Superintendent’s Schools program.

Renewed in February, the Sahara lease is good for three years with a two-year option to extend. Rent is $322,849 a year.

Contact reporter James Haug at jhaug@reviewjournal.com or 702-383-4686.

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