By Alessio Cei

 

After three years of discussion on how to best absorb a rising tide of students from new residential developments, the school board of Santa Clara Unified School District met June 26^th to discuss implementing a Mello-Roos tax increase. The vote was postponed to July 24^th for further negotiation with developers and municipal governments. “I’m angry about this situation,” said school board vice president Andy Ratermann. “We tried for three years to get cooperation, and now at the last minute they are talking to us.  It’s a shame all that time was squandered.”

The negotiations are complicated by the number of developments and municipalities that SCUSD encompasses. The former Kaiser hospital site will bring in 812 units of housing, the Santa Clara Square project will bring 490, and there are other projects in the works such as the redevelopment of the former Marina Playa office complex (at Flora Vista and El Camino) and the former Wheels and Deals site at 2585 El Camino Real. The largest impact by far will come from Vision North San Jose, which the San Jose Redevelopment Agency website estimates could bring “up to 32,000 units”. North San Jose falls within SCUSD’s territory.

 

A principal source of disagreement has been over student generation numbers, which are used to predict future enrollment. SCUSD’s three separate studies show sharp increases that would increase district enrollment by 50 percent, while the city of San Jose’s study projects much smaller growth. Both sides agree that development projects in SCUSD’s territory are projected to bring in thousands of new students, but San Jose’s numbers would require much less taxation, while SCUSD’s numbers show that "Mello-Roos is the only way [to raise the money]," says Roger Barnes, SCUSD’s Community Relations Officer.

 

To developers, the Mello-Roos tax "would be financially disastrous," says Mark Faulkner, senior Vice President of Fairfield Residential, which is developing new residences in Santa Clara and San Jose. "[Our projects] probably wouldn’t make sense. We [the developers] have all sent in letters of protest."

 

The new tax would fall entirely on new residents, with an up-front charge of $4,500 and an additional tax of $2,000 yearly. Existing residents would be charged $12 yearly in Mello-Roos tax, but because the existing tax burden would be spread out among many more residents, property taxes would be lowered by about $20, for a net savings of $8 to existing residents.

 

Both the developers and the school board are hoping to avoid an election this November. "We don’t want to fight an election," says Faulkner. "We don’t want to go at odds with the school district because that always gets nasty. We’re all members of this community."

 

Alternative means of financing the school district’s expansion have been examined. The school board has considered the possibility of passing a bond measure, as in previous years (with Measures J and B).

The problem with a bond measure, according to Ratermann, is that "it’s not fair to tax the guys who have already paid," since all new expenditures will be used to cover new students generated by developments.

 

The developers have offered a plan to pay in phases, a proposition the school board rejects as risky because changes in development plans may leave the district hanging. “We’re looking at [our financial risk] in totality,” said Mr. Ratermann.  “So far, Mello-Roos is the only way we can get full funding.”

 

One possibility of salvation comes from the San Jose Redevelopment Agency, whose territory overlaps SCUSD. "[San Jose] Mayor Reed has made an offer to the district as part of our package," says Faulkner.

 

“I’m hopeful [of an alternative]" said Mr. Ratermann.  “We would love to find a non-tax solution that ensures the students are covered.  We are agreeable to any solution that reaches that goal.”

Mayor Reed outlined the possibilities in a letter to SCUSD’s board. "On August 12^th I will ask the City Council/Redevelopment Agency Board to appropriate $15 million for schools out of Redevelopment Agency funds set aside for North San Jose

infrastructure."

 

Another $30 million is contingent on the ability of the San Jose Redevelopment Agency to increase its bond authority, for a total of $45 million. These measures, according to Reed, would provide for 2,700 new students without having to raise taxes.

 

The board will meet with developers and San Jose representatives in a special meeting on July 21^st, to discuss these and other proposals before the Mello-Roos vote on July 24^th.
Mello-Roos Taxes Fund Community Improvements

By Alessio Cei

 

In the wake of Proposition 13 and its curtailing of property tax rates, lawmakers were forced to find alternatives to raise public funding. The Community Facilities District (CFD) Act of 1982, also called the Mello-Roos Act after its legislative sponsors (Senator Henry Mello, D-Santa Cruz, and Assemblyman Mike Roos, D-LA), is one such alternative.

 

CFDs are formed to raise money for major public improvements, such as schools, streets, utilities, and parks. The creation of a CFD must be approved by a two-thirds vote of residents (or landowners if there are fewer than 12 residents). Then the district sells municipal bonds to acquire the funds, and assesses a special parcel tax to pay them off, which is usually added as a line item in residents’ property tax bills.

 

Because the municipal bonds go to improve facilities that add to property value, the Mello-Roos tax is not deductible as most county property taxes are. A resident’s Mello-Roos tax cannot be determined by the value of the property, but instead relies on a formula incorporating the purpose and square footage of the building, the size of the lot, and other factors.