The Wall Street Journal-20080116-In Lumber Town- School for Sale
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In Lumber Town, School for Sale
Pacific Lumber Co., which owns one of the last company towns in the U.S., wants to sell the elementary school and recreation center in Scotia, Calif., to the local school district for $3.13 million.
In papers filed with the U.S. Bankruptcy Court in Corpus Christi, Texas, last week, the logging company said the sale would bring "substantial value" to its Chapter 11 bankruptcy estate.
Since the late 19th century, Pacific Lumber has owned and operated the town of Scotia. The town's approximately 800 residents -- current and former employees of the company -- live on 420 acres in the Eel River Valley, about 250 miles north of San Francisco.
Pacific Lumber said it has leased the Stanwood A. Murphy Elementary School and recreation center to the Scotia Union School District for $1 per year since the school was built three decades ago.
According to court papers, Pacific Lumber for the past few years has been considering selling the buildings and the 5.86-acre lot on which they sit. There have been few interested buyers, however, because of the property's use as a school, which the company said leaves the school district as the only realistic buyer.
Pacific Lumber said the proposed $3.13 million purchase price is what the school district, with few financial resources of its own, hopes to get in state funding.
The proposed purchase price is about $1.5 million less than the property's $4.6 assessed fair market value. Pacific Lumber, however, said that the sale would still benefit its creditors. "The sale of the property will result in a much larger return to creditors than any current or expected future use of the property," the company said.
Pacific Lumber filed for Chapter 11 protection in January 2007. It has mentioned the possibility of selling off its other interests in the town, which include 274 homes, a movie theater and a shopping center.
Jaenelle Lampp, Scotia Union school district superintendent and the grade school's principal, said the district has been looking into purchasing the property for at least the past three years. She said the district's request for the $3.13 million in state funds is pending.
"We are hopefully scheduled on the state allocation board either in February or March to get the funding approved and yes, to purchase the school, the school land and the land of the gym," Ms. Lampp said.
