SAN JOSE -- Retired county schools Superintendent Charles Weis wants to unload his luxury condo in downtown San Jose -- which has lost about a fifth of its value since its purchase in 2008 -- onto his former employers, potentially costing Santa Clara County taxpayers hundreds of thousands of dollars.
The Santa Clara County Board of Education, in order to lure Weis here four years ago, offered him a loan of up to $1 million to settle in expensive Silicon Valley -- half the amount at zero interest, the remainder at 3 percent interest.
Weis never moved here permanently, instead keeping his home in Ventura County. But he borrowed $915,000 to purchase a brand-new, 18th-floor condo, which he remodeled, in the Axis building downtown. Now Weis, who has returned to Ventura, needs to repay the loan within 18 months of his June 30 retirement. But he said he couldn't sell or refinance the two-bedroom, two-bath condo at 38 North Almaden for anything near what he paid for it -- $890,000, according to property records.
He says the unit is worth in the $600,000s. A similar-sized unit in the building, where 90 of the nearly 350 units remain unsold, is on the market for $725,000.
So now he wants the board to agree to take ownership of the property.
"I just think this is an unfortunate circumstance of the value of a home not inflating," Weis said Tuesday from his Ventura County home. "If the County Office handles it right, they won't lose anything
Board members meet Wednesday night to discuss whether to accept Weis' move to surrender his interest in the property to them. Three board members would not comment or did not return calls Tuesday afternoon.
But Craig Mann, who recently resigned from the board and frequently was at odds with Weis, wrote in an email, "I am very troubled by Dr. Weis trying to avoid his contractual obligation to repay the district the money loaned him. What this says about his character and integrity is unbecoming -- very sad. How could you steal money from students?"
Weis, who was earning $332,600 annually as the county's top educator, said he was caught up in what happened to many Americans, when their homes sunk below the amount they paid or borrowed for it.
"My hope was that it would hold its value or come back up before I left the County Office."
In order for Weis to transfer ownership of the property, the county Board of Education would have to accept the transfer. The board will discuss terms of that acceptance Wednesday, its attorney, Harold Freiman, said. It's not clear if the board will consider foreclosing or negotiating, two other options. The loan contract covers default and forfeiture, but does not mention "quit claiming," which Weis seeks to do. Quit claiming refers to the transfer of the ownership interest in a property to another party.
It's not clear whether California's open-meetings law permits those discussions to take place in a closed session, as the board has scheduled. Freiman argued that discussing the terms and price of transferring property can be discussed behind closed doors.
Weis said he has paid from $15,000 to $20,000 back on the loan from the board of education. Taxpayers will be on the hook for the current value of the loan, and will lose money -- potentially hundreds of thousands of dollars -- if the county chooses to accept the transfer of the condo and then sell it at current market prices.
Board President Joseph Di Salvo said he has not discussed the disposition of Weis's San Jose home with him. "There was absolutely no conversation," he said, "other than that he has 18 months to pay us back." He would not speculate on what course the board would take.
Extending favorable home loans has been common practice among school boards and city councils trying to attract top administrators. The County Board also offered a low-interest, $1 million loan to help its new superintendent, Xavier De La Torre, relocate from Texas.
In the meantime, the quickening real-estate market may be working in favor of Weis and the County Office. After dropping about 20 percent, prices are recovering to 5 percent to 10 percent below the original selling prices in 2008, said Paul Zeger of Pacific Marketing Associates, which is selling the Axis condos. "Sales have really picked up in San Jose."
Contact Sharon Noguchi at 408-271-3775. Follow her at Twitter.com/NoguchiOnK12.