The Denver Public Schools board will consider replacing an administrative building with Pascual LeDoux Academy in the district’s 2020 lease-purchase structure, a financing arrangement tied to the sale and leaseback of several school buildings now under legal challenge.

The deed swap is part of a financial maneuver to sell the administrative property on Yuma Street in northwest Denver to pay for the acquisition of a Food Bank of the Rockies industrial facility at 10700 E. 45th Ave. It was the organization’s home for almost 20 years before it moved into a new facility in Aurora recently.

In June, the DPS Board of Education unanimously approved the $12.5 million purchase price along with $6.5 million more for improvements funded from the district’s 2020 bond reserves.

The Yuma property listed at $8.5 million.

Officials justified the purchase to consolidate the district’s freezer storage and allow DPS to shed more than $10 million in deferred maintenance needs at the Yuma facility.

Planning documents for 2024 bond projects The Denver Gazette obtained in a Colorado Open Records Request show the Yuma facility was allocated more than $340,000 for critical maintenance.

With the sale of the property, it’s unclear whether this will still be done.

DPS must substitute Pascual LeDoux Academy for the Yuma property because the building was pledged as collateral in a financial tool called a “Certificate of Participation” or COP. In that structure, the district transferred the title of several DPS buildings, including the Yuma property, to a separate entity.

Pascual LeDoux Academy was chosen because its appraised value is similar to the Yuma property, Scott Pribble, a district spokesperson, told The Denver Gazette.

“The proceeds from the sale of that building will offset the purchase of the former Food Bank of the Rockies building that was completed late last year,” Pribble said in an email.

The lease-financing structure is used in public finance circles and widely seen as a workaround to the state ban on acquiring debt without voter approval.

Under the arrangement, the district transfers ownership of some of its school buildings — often for as little as $10 — to the Denver School Facilities Leasing Corp., a separate entity not restricted by the constitutional ban. The leasing organization then uses the buildings as collateral to raise money by selling what are known as COPs.

Investors who buy the COPs are repaid through lease payments the district makes to continue using the schools, typically at higher interest rates than voter-approved bonds.

As of the district’s most recent audit, DPS has $784.6 million in outstanding COP principal. This does not include future interest, fees or administrative costs.

Lisi Owen, an attorney representing the parent advocacy group Mamás de DPS, is challenging the financial structure of COPs in a lawsuit filed against DPS.

The board is also expected to consider, among other things, a new health care vendor for employees when it meets Thursday.

Prompted by declining enrollment and higher-than-projected claim costs, district officials have recommended moving to a new vendor, ending a 50-year relationship with Kaiser Permanente Colorado.

Anticipating a projected health plan funding gap of $6 million to $9 million, officials have reserved $6.9 million.

It’s a move that has angered the teachers’ union.

“When healthcare costs are underbudgeted and poorly predicted, employees pay the price,” the Denver Classroom Teachers Association said in a social media post. “After two years of inaccurate projections, DPS is shifting millions in costs onto workers who are already stretched thin.”

The union — which represents roughly 4,200 teachers across the district — has called on the board to extend the Kaiser Permanente contract for a year to “commit to a collaborative, transparent RFP process.”