Under the agreement approved March 29, Estrella will become the city's 13th Smart Start center; it will serve 112 children in the Gardner neighborhood.

"The most important thing is that Estrella will have better facilities and will service not only children, but also their families," says Jane Light, director of the city's Library Department Early Education and Literacy Services, which oversees the childcare centers in San Jose's Smart Start program.

Fred Ferrer, executive director of Estrella, says talks between the family services agency and the school district began in November 2002, when the district was planning to renovate Gardner's campus. It was a unique situation because the Estrella building was privately owned, and the nonprofit was paying rent to the owner. The school district, however, owned the land where the building sat, according to Ferrer. The building had to be demolished when the Gardner campus was renovated in 2003.

School district property manager Sonja Shurr says the owner could have moved the building to a different location but permitted the school to demolish it because the building was old and a buyer was not found.

Estrella, however, wanted to continue serving the Gardner community. To accommodate the nonprofit's future needs, the school district agreed to lend the agency $1.5 million toward the rebuilding.

Estrella then went to the city looking for ways to repay its school district debt. The city's redevelopment agency agreed to pay $617,000 to Estrella to reduce the loan, which left $883,000 unpaid. To pay off the additional $883,000 Estrella has begun a fundraising campaign. During this time, it has arranged for a 15-year lease with the city and school district. At the end of the 15-year period, Estrella will own the building.

The nonprofit agency hopes to raise $2.45 million to repay the loan and its relocation costs during the renovation; the agency also plans to use some of the money to begin an endowment fund.

To date the agency has raised $1.3 million, which includes a $200,000 grant from the Packard Foundation, $617,000 from the redevelopment agency, and $530,500 from individual donors, foundations and corporations.

Looking forward, Light says, the 15-year lease will only strengthen Gardner's ability to educate its students because children enrolled in quality childcare programs are more successful later in life.