ENCINITAS -- The Encinitas school district's proposal to rezone the Pacific View Elementary School property and give it to a developer in exchange for office space has raised new questions about a state law that requires school districts to first offer their surplus property to other government agencies before they are allowed to sell or lease it.

At a Planning Commission meeting last week, residents and city officials said that under the spirit of that law -- called the Naylor Act -- the city should be given the option to purchase the 2.8-acre property Pacific View property on Third Street near the city's downtown.

The Naylor Act, enacted in 1980 to discourage school districts from selling surplus property to developers, requires districts to offer school playgrounds and athletic fields first to other government entities -- such as cities -- at a reduced rate before putting the land up for sale or lease.

The intent of the law is to safeguard school property for recreational use because surrounding communities have come to permanently rely on their use for recreation.

For now, the Encinitas Union School District is proposing the land be rezoned for mixed office and residential use. Once that happens, the district plans to exchange the property -- with restrictions -- with developer John DeWald and Associates for office property that could be used to generate extra revenue for the district.

Superintendent Lean King said Tuesday that the district has not designated the property as surplus and therefore, the exchange does not violate the Naylor Act.

King said the district was counseled by its attorneys not to sell or lease the property outright because such a transaction would trigger the state law.

"Because the Naylor Act would cause us to take a loss on the property, it is in our best interest to exchange the property, but with a zoning change," King said. "If you were responsible and you knew that selling the property outright would not be in the best interests of the school district, would you do that?' "

King said he was surprised when the Planning Commission chose to continue the matter of the zoning change and even more perplexed when the state law was brought up.

"I can tell you that when I left for vacation, there had been no complaints (with the plan)," King said. "While I was gone, a couple of the neighbors started on this hit campaign and the next thing we know, the Naylor Act is an issue."

"What was really surprising was that over the three-year period we have been working on this plan with the community, never has the city said it wanted to buy it for a park," said King. "We have been communicating this all along. There's nothing secretive about it."

The project, known as Pacific View Commons, has been the subject of numerous community meetings. It requires a change to the property's zoning, which is currently for public or semipublic use.

Calling for 12,000 square feet of office space, 14 townhomes and seven condominiums, as well as five single-family homes, planners say that the units would blend with the surrounding community and not hinder neighbors' ocean views.

At a Planning Commission meeting last week, the panel refused to approve a request to rezone the property, choosing instead to direct the district to meet with city staff to rework the plan. Commissioners asked that attention especially be given to parking, building height, and lot setback issues.

Critics, such as neighboring property owner Don McPherson, said the proposal has flaws. Among the problems they cited are insufficient parking; grading at the northern boundary is dangerous; and the height allowances of some of the buildings are unacceptable.

Meanwhile, some city officials have questioned why the Naylor Act was not publicly raised and whether it was relevant to the Pacific View site at all.

Mayor Jerome Stocks said that he is waiting to be briefed on the matter by the city attorney. Councilwoman Maggie Houlihan said she would also like to learn more about the Naylor Act and whether it might apply in the Pacific View case.

"If they (the district) were acting in good faith, it should have been disclosed," Stocks said. "It is disappointing. It should have been explained up front in order to let the residents weigh in."

Planning Commissioner Gene Chapo asked the same question of the superintendent at the Planning Commission meeting last week, though he said he doubts the Naylor Act discussion will be part of the panel's recommendation to the City Council.

"It (the property) would probably be better in the public domain," said Chapo. "You already have the Moonlight Lofts and Pacific Station. Downtown is getting more and more dense. I am thinking that one day, Encinitas will not be a sleepy little beach town but an urban city by the sea. And while that piece of property would be an asset for the city, that is for the policymakers to decide."

The Planning Commission's decision on whether to rezone the property as proposed was continued until Sept. 18.

Contact staff writer Ruth Marvin Webster at (760) 901-4074 or rwebster@nctimes.com.