Tustin District, Irvine Co. Reach Accord : Legal Fight Abandoned in Exchange for Schools in Development

The Tustin Unified School District has reached an agreement with the Irvine Co. that would provide $103 million for school facilities to serve the residents of a $1-billion development in East Tustin.

The agreement calls for the financing of three elementary schools, a middle school and part of a new high school in the Irvine Co.’s Tustin Ranch development. As part of the plan, the school district will also receive up to $5 million to refurbish existing schools outside of the development.

The accord announced Friday was reached in negotiations and resolves a lawsuit filed by the district that was aimed at halting the development, according to District Supt. Maurice Ross.

Keith Greer, senior vice president of the Irvine Community Development Co. and chief negotiator for the Irvine Co., said: “It marks the culmination of three years of discussions between the district and the company regarding the funding of school facilities. It provides one of the most comprehensive school financing plans in the state of California.”

Ross said the $103 million will come from three sources: an undetermined amount from the state, developer fees and bonds that will be issued by a special Mello-Roos taxing district.

In 1982, the state Legislature passed a law sponsored by Sen. Henry Mello (D-Watsonville) and Assemblyman Mike Roos (D-Los Angeles). The bill provided a novel way for special taxing districts to be formed and still not violate the restrictions of Proposition 13, which says that a two-thirds vote of a community is required before any new tax may be imposed.

The Mello-Roos law, which allows a tax to be imposed on planned communities before the residents move in, is based on the premise that when there are fewer than 12 residents of a community, the landowner can cast the votes on the basis of one vote per acre. In such a case, a large landowner such as the Irvine Co. can “vote” its acreage majority and set up a new taxing district.

The Mello-Roos district that would be set up in East Tustin will allow the school district to sell bonds to build new schools and use funds raised by the special taxes to pay off the bonds.

“The (developer) fees and the special tax (district) are the safety net of the agreement, in the event that adequate state funding is not available,” Ross said.

The Irvine Co. has guaranteed that if the plan does not provide enough funds to accommodate the increased student enrollment, there are provisions which would “pick up the difference,” Ross said. This would include plans for refurbishing other school sites, he added.

Ross said the plan will not increase taxes for residents outside the Tustin Ranch development. “The plan makes the whole area self-supportive,” he said.

Last June, the school district filed a court action seeking a temporary restraining order to bar the Tustin City Council from approving a final tract map for the development’s second phase. The lawsuit alleged that the development, designed for nearly 8,000 housing units, violated the city’s general plan because it did not provide adequate schools for the projected housing.

The Irvine Co.’s development covers 1,740 acres and is expected to boost Tustin’s population by more than 60,000 over the next 13 years.

The lawsuit, the second court action filed by the school district, was thrown out because the district’s lawyer did not file it within the required 90 days. Superior Court Judge Tully A. Seymour said the lawsuit was, therefore, barred by the statue of limitations.

The district planned to appeal the decision, Ross said, but will now drop the action.

The agreement calls for the three elementary schools to be built at sites either within or near the Tustin Ranch development. A middle school is to be built in the northern area of the community and other funding will provide for the renovation and reopening of Utt School as a middle school.

Also settled is a dispute over the number of acres provided for a new high school to be built just south of Irvine Boulevard. The school district had argued that the 34 acres offered by the city for the high school was not adequate. The agreement gives the district an additional six acres that the city had initially planned as a joint-use community park.

“We are very pleased with the agreement,” said Judith Frutig of the Irvine Co. “Establishing appropriate school facilities for every Irvine Co. development is always part of our goal.”