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Developers agree on $2.3M for schools
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Developers building 299 homes in Evans Estates south of the 120 Bypass have struck the first deal of its kind in Manteca to assure funding to build schools for future students generated by housing growth.
DUC Development and Isles Ranch Partners have reached a “mitigated agreement” with the Manteca Unified School District to pay $2.3 million above statuary developer fees assessed on homes on a  per square foot basis to help pay for new schools.
The board Tuesday blessed the deal that will allow a final financing plan and mitigation terms to be drafted. District Superintendent Jason Messer expects to have that in place within 30 days.
The terms call for:
uA mitigation payment of $18,000 per unit for the 2016/2017 fiscal year. The per unit fee will be increased on an annual basis using the construction cost index starting July 1, 2017.
uThe fee will be determined when a building permit is used for a home. It will be paid from an escrow at the closing of the new home. The payment is essentially a lien on the property.
uThe developers will provide the school district with an upfront payment of $50,000 to cover costs associated with the creation and administration of the mitigation terms.
uFuture homeowners in Evans Estates will be assured priority attendance at new schools built within the planning area.
The $2.3 million represents roughly a 10th of the current cost of building a typical Manteca Unified elementary school.
Messer called it a win-win-win for all parties involved — the developer, the home buyer and the school district.
It makes funding for school construction available as homes are built as opposed to a Mello Roos district that would require a certain assessment level in terms of property value to be reached and then bonds sold and repaid.
The builder can market homes that have an assurance students won’t be bused out of the area even when a school may be built in the planning area.
Home buyers can pay the $18,000 up front in cash or collapse it into their mortgage. The advantage over a Mello Roos for homebuyers is two-fold. There would be no potential annual escalation of tax payments for bonds. The interest paid, if it is collapsed into the mortgage, is tax deductible.
Some 5,300 of the new homes being developed south of the 120 Bypass are in the Manteca Unified district. A smaller number are within Ripon Unified boundaries.
To serve those 5,300 homes based on a yield of 0.8 school-aged children per home, it would require two additional elementary schools. At the same time a high school is needed to serve the planning area. The school district has already secured a high school site on Tinnin Road.
Two elementary schools and a high school campus would cost between $150 million and $170 million at today’s construction prices.
Developer fees — the per square foot assessment all new residential units are charged — is one of three ways the district has to come up with funds to build schools. It is part of what school officials like to describe as the three-legged stool of school financing. Another leg is state bond money and local general obligation bonds. The third leg is generally Mello Roos taxes also known as community facilities districts.
Cities — and school districts — have no legal authority to require developers to join or form Mello-Roos districts. The mitigation agreement for Evans Estates replaces the funding Mello Roos would provide for the third leg.
Without Mello-Roos funding or mitigated agreements for homes being built south of the 120 Bypass, Manteca Unified will have a critical shortfall of funding to build new schools. If that happens they will need to resort to other alternatives such as busing to schools out of the area that have room at select grade levels, year round school, and double sessions.

 To contact Dennis Wyatt, email