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Nation’s biggest builder wants zoning change, refuses to join Mello-Roos
DR Horton.jpg
A model home D.R. Horton is selling with a starting price of $457,000 in South Manteca.

D.R. Horton — the nation’s largest home builder with $14.5 billion in sales during 2017 — is refusing  to join longtime local builders Atherton Homes and Raymus Homes among others to make sure that Manteca Unified has adequate funding to house students that will live in 158 homes they want to build on North Main Street.

Manteca Unified Outreach Coordinator Veronica Brunn made it clear at Tuesday’s Manteca City Council meeting the district would stridently oppose any plans by the nation’s most profitable home builder to develop the  proposed North Commons neighborhood if it is not included in a Mello-Roos district to help build school facilities. 

Brunn noted D.R. Horton has steadfastly refused to acknowledge any communications from the district regarding their efforts to make sure children that will live in homes the publically traded company wants to build in Manteca will have adequate classroom space or that owners of the homes will pay what most other buyers of new homes have since the early 1990s in Manteca to help pay for schools.

After the meeting, a D.R. Horton representative made it clear they had no intention paying beyond the minimum required — development fees — as required by state law.

D.R. Horton’s positon

concerns at least

two council members

Two council members whose support will be needed to allow the zoning change via a general plan amendment on the 23.7 acres along North Main Street east of Northgate Drive after the meeting were less than enthusiastic about D.R. Horton’s position.

Mayor Steve DeBrum said it is would prompt him to “give pause” regarding the general plan amendment request if D.R. Horton was not participating in a Mello-Roos district for school facilities.

Councilman Gary Singh was blunt.

“They (D.R. Horton) have got to do what it takes to be a part of this community,” Singh said.

Usually the City Council has little or no leverage to get builders to put projects they build into Mello-Roos districts to help pay for new schools. It is an issue the district is essentially at the mercy of home builders to help put in place.

Historically when all builders in Manteca were 100 percent local — with firms with deep roots in the community or based in nearby Stockton and Modesto — they viewed it as a necessity to make sure their future residents as well as the rest of the community would have needed school facilities.

When sewer connections were at a premium starting in 1999, all builders eagerly entered development agreements to secure a multi-year commitment from the city for sewer connections. That gave the city a way to leverage builders to agree to enter into Mello-Roos districts with Manteca Unified.

Due to the city’s 3.9 percent growth cap that increases the number of housing units that can be built annually as it is based on the number of existing homes in Manteca on Dec. 31 of each year, there is little danger projects will be without sewer connections. That’s because currently in excess of 900 homes could be built in Manteca annually before the growth cap is reached.

Developers like D.R. Horton essentially buy subdivisions that are entitled to be developed instead of working on them from inception. That means whatever the local land developer — in this case the Rossi family — is able to get city approval for is what the national builder is buying. D.R. Horton’s representative said since their deal only covers development fees for schools that is all they plan on paying.

Not having Mello-Roos would 

give D.R. Horton advantage 

over local builders

That said the builder doesn’t really pay for the Mello-Roos taxes. The buyers of new homes and subsequent buyers do for 30 years.

Builders like D.R. Horton like not having Mello-Roos attached to their neighborhoods as it gives them a leg up on competition such as Raymus Homes and Atherton Homes.

It’s because a $450,000 home sold with a Mello-Roos tax requirement is not equal to a $450,000 home sold without such a requirement. Fewer buyers can qualify for a home with Mello-Roos obligations as mortgage writers undertake all of the monthly housing costs into account included pro-rated Mello-Roos taxes.

Just like the housing boom from 1999 to 2006, Mello-Roos taxes aren’t slowing down the sales of new homes in Manteca. That’s because almost 8 out of 10 buyers are from the Bay Area with significantly higher paychecks than can be typically earned in the Northern San Joaquin Valley.

Mello Roos is considered vital for school facilities given development fees aren’t enough to cover the impact of additional space needs even when coupled with state money if it is available.

The fact a general plan amendment is needed to allow more homes in addition to roughly 10,000 proposed homes in Manteca that have secured entitlements or are in the process of doing so, means questions could be raised about how the zoning change would benefit the community especially since it would create homes that could be built without paying Mello-Roos taxes.

That could create significant political issues in the middle of the council campaign.

Court rulings allow school 

districts to bus no Mello-Roos 

children out of neighborhoods

Mayoral challenger Ben Cantu has long argued that the city is allowing growth that isn’t paying its fair share. While that is hard to quantify, it wouldn’t be if the council allows the creation of 150 more single family homes that won’t be required to pay what other new homes are paying for schools.

The D.R. Horton representative noted apartments would be allowed with the current zoning that would have a higher density and a bigger impact on schools.

While that is true, D.R. Horton doesn’t build apartments.  Also as developers have found, securing financing for apartments is extremely tough compared to residential subdivisions and have inherent risks that relatively easy to sell single family tract homes with a built in Bay Area market don’t have.

Brunn said the district will make it clear to buyers of new homes that aren’t in Mello-Roos districts that they will be the first forced to go to non-neighborhood schools that in the district could be outside of the Manteca city limits.

It reflects legal cases such as in nearby Tracy where homeowners in Mello-Roos districts successfully sued because they were paying taxes for a neighborhood school that students from homes without Mello-Roos taxes assessed against them were attending while their children were bused significant distances.

To contact Dennis Wyatt, email