Students, Students Everywhere and Nary a Place to Sit : The Real Trick Is Finding Money for Construction

The challenge for school administrators in coping with growing enrollment is not to accurately project class sizes so they can plan, on paper, enough schools to accommodate the incoming students.

The tricky part is finding the money to pay for new schools--which cost from $10 million to upward of $30 million each, depending on the grade levels they will serve.

The traditional source for the bulk of school construction money has been property taxes and contributions from the state. But Proposition 13’s passage 11 years ago effectively shut down that as a major source of funds, and the state’s kitty for school construction money is flat busted.

A number of school districts in San Diego County are successfully pursuing a type of school financing called Mello-Roos, which essentially is a bond authorized by landowners rather than voters.

Under Mello-Roos, if a particular land area has fewer than 10 registered voters--such as a large, undeveloped tract of property--the property owners themselves can approve the bond measure and promise to repay the

indebtedness through tax assessments on their property. Developers, however, pass that tax debt on to the homeowners who will buy the property and homes they are developing, thereby effectively passing on to future residents the cost of providing schools for their children. A homeowner knows, going into his purchase, that he faces the additional tax.

Typically, the school district will not authorize sale of the bonds until a certain percentage of the homes are purchased, and then use that revenue to build the schools needed to serve those new neighborhoods. Some districts--as was the case last year in Carlsbad--negotiate with the developer to pay the bond debt up front so school construction can begin that much sooner. The developer then gets reimbursed when he sells the homes in subsequent years.

Some districts don’t have the opportunity to pursue Mello-Roos financing, however, because there are no large tracts of undeveloped land within their district to tap as a bond-repayment source, and Mello-Roos isn’t feasible on smaller developments.

Other districts, if they have the support of the city councils that approve new, large developments, sometimes win negotiated settlements directly with a developer to donate a land site or, better yet, fund the construction of entire schools as a condition of the approval of their development by the council.

That has occurred in the San Dieguito High School District, which, with the cooperation of the San Diego City Council and the two major builders of North City West, got more than $30 million from the developers to pay for a new high school, said Eric Hall, director of administrative services for the district.

The San Marcos Unified School District won a similar agreement with a builder developing a large, master-planned development near Palomar College who promised to pay for a new elementary school out of his pocket to serve his new neighborhood.

“It helps to have a City Council on your side,” said San Marcos Supt. Mac Bernd. “Our city fathers are buffeted by a lot of competing interests, but schools are very important to them and they’re doing all they can (with developer agreements imposed by City Hall) to assist us. Ours is a City Council that realizes that the infrastructure of a community goes beyond roads and sewers and water mains and fire stations, and includes schools as an essential part of a community.”

By contrast in neighboring Escondido, the City Council has pursued no such agreements with builders, and, in fact, ordered the school district to pay for much of the public works improvements before it approved the construction of a new campus at Kit Carson Park.

The San Marcos Unified School District found yet another way to finance an elementary school that opened last year: It sold certificates of participation through a brokerage house--private bonds to investors that will be repaid as other developer-impact fees trickle into the district.

“It’s an expensive way to go because of the interest rates and brokerage fees we have to pay, but it got us the money we needed at the time we needed it to build a school,” said Jeff Oken, facilities administrator for the district. “The school district is the guarantor of the bonds, and we’re counting on developer fees to keep coming in to repay them.”

In Carlsbad, a new elementary school completed two years ago was financed through developer-impact fees collected over many years, and the kitty was virtually drained, said Georgiana Kirby, manager of information systems for the Carlsbad Unified School District.

Another new elementary school, scheduled to open in 12 months, was financed through Mello-Roos bonds.

Carlsbad needs to build six more schools--and is hoping to work a deal with the city, now under study, in which a citywide assessment district will be established to generate construction funds.

The Solana Beach Union (elementary) School District is counting on developer contributions to finance the two schools it hopes to build--one to serve Fairbanks Ranch, the other for North City West.

“A developer donated a 10-acre site in Fairbanks Ranch, and we’re hoping we can apply that as our contribution so we can get the equivalent in matching funds from the state to help pay for the school,” said Supt. Raymond Edman.

The problem, though, is that the state is broke and faces a backlog of more than $7 billion in requests for help to build new schools throughout the state.

Already, districts are queuing up to tap $1 billion in state funds that they hope will be made available if Sacramento authorizes--and voters approve--a bond measure next year.

While the state may have been considered for years as the bail-out funding source for local school districts, voter sentiment and legislation in Sacramento has undermined school districts in more recent years, school officials complain.

The single worst blow was the passage in 1978 of Proposition 13, which limited the increase of property taxes that had been a major source of school construction money and that required a two-thirds voter approval for bond measures--a threshold that few districts can meet.

State law was changed several years ago and aggravated the problem. Prior to the law, a city council or county board of supervisors, on behalf of school districts, could assess whatever level of builder fees it wanted on new construction to help finance new schools, and some districts were able to collect upward of $4 on every square foot of new residential construction--enough money to pay for new schools.

The state put a $1.57-per-square-foot limit on that developer-impact fee, however--and now, every time a new home is approved for construction, districts receive less than half the amount of money needed from that home to provide school housing for those residents. With every new home built, then, districts are falling further behind in paying for new schools.

The law change also affected a school district’s right to tell a city or county that there is no school space available to serve a new development. Without the assurance from a school that it could properly house new students, the municipality or county in the past could reject new development. But the new law forbids that protocol, saying that the schools effectively were making land-use decisions on the basis of whether school classrooms were available.

Now a developer can build his homes without regard to the availability of classroom seating to serve the new residents, and homes are being built with no guarantee that the residents’ children will have a place to go to school.

There is proposed additional legislation in Sacramento that will strike another blow against schools. The proposed law by Sen. Bill Greene (D-Los Angeles) would prohibit cities and counties from practicing their current option of requiring developers to build schools as a condition of receiving zoning or general plan amendments that would allow those new developments.

If that law were already in effect, the developers of North City West and in San Marcos, for instance, could not have been required to fund new schools there--even though they were willing to as the cost of doing business and providing classrooms for newcomers to the community.

Tom Robinson of the county’s Office of Education suggests that dramatic changes in law will be needed to give school districts a better future.

“We will live or die on the acceptance of continuing the philosophy of Prop. 13,” he said. A bill that would amend that state constitutional amendment has been proposed, he noted, “but it will be a very difficult task for it to be approved.”

“So right now, we’re all hanging our hats on a billion-dollar bond measure next June,” he said. And even that would only be a Band-Aid fix.

The other options still remain: Mello-Roos financing, developer contributions and year-round schools and double sessions, where half of a school’s student population attends classes starting in the early morning and the other half stays in school until late afternoon.

GROWING AND GROWING

The following is a list of some of the fastest-growing school districts in San Diego County, showing the number of students who were enrolled 10 years ago, 5 years ago, last year and this year, and a projection to the year 2000.

1979 1984 1988 1989 Carlsbad Unified 4,324 4,719 6,110 6,200 Chula Vista 14,658 13,483 15,461 16,665 Elementary Escondido Elementary 9,340 9,810 12,892 13,700 Oceanside Unified 10,944 11,983 15,320 16,400 Poway Unified 15,166 15,890 21,953 23,500 San Dieguito 5,692 6,228 6,683 6,700 Union High San Marcos Unified 4,850 5,425 7,425 8,074 San Ysidro 2,606 2,715 3,682 3,650 Elementary Solana Beach 896 837 1,497 1,675 Elementary Vista Unified 10,200 11,368 15,996 17,689 Countywide 310,000 317,000 368,000 382,000 Countywide 1,831,300 2,053,303 2,328,331 2,418,181 Total Population

2000 Carlsbad Unified 11,000 Chula Vista 27,100 Elementary Escondido Elementary 21,000 Oceanside Unified 19,330 Poway Unified 38,000 San Dieguito 11,500 Union High San Marcos Unified 15,000 San Ysidro 9,000 Elementary Solana Beach 2,319 Elementary Vista Unified 31,700 Countywide 515,000 Countywide 2,765,421 Total Population

Source: San Diego Assn. of Governments, County Office of Education and school districts.