A behind-the-scene tug-of-war involving the Building Industry Association of the Delta, the Manteca Unified School District, and City of Manteca has acronyms such as SCIP and CFD and may be an eye roller to follow.
But the outcome could negatively impact the school district’s ability to teach the ABCs to students for decades if developers prevail in their quest for city approval to use SCIP financing.
Non-local developers building homes in Manteca want to shed the need to finance tens of thousands of growth-related fees per housing unit by accessing the Statewide Community Infrastructure Program better known as SCIP.
To do so requires the City Council to allow SCIP financing to be used before developers can use the financing mechanism that allows them as landowners to “vote” to impose an assessment on the home lots they are creating to pay for sewer, water and storm system infrastructure as well as a wide array of growth fees for parks, fire stations, roads and such.
By using SCIP developers don’t have to secure loans to pay the growth fees in advance and pay interest until they are reimbursed at the close of escrow on new home sales. Instead it is essentially a lien placed against the property — or the lot — that the home is being built on and is collected from the homeowners on an annual basis.
The school district is facing a situation where growth alone in Manteca will add more than 9,000 housing units in the next 20 years without adequate money to build facilities to house future students. It needs money from three sources to come up with the $30 million to build a typical elementary school and $130 million plus for a high school.
The three sources are: growth fees charged for new homes on a per square foot basis when building permits are issued, state and/or local bond money, and community facility districts (CFD) or mitigated agreements.
A deal made years ago by the California Legislature with the state’s development community put in place the square footage fee in exchange for dropping a school district’s ability to say they can’t serve a new development. It essentially took away the leverage of school districts to require home builders to form CFDs or Mello-Roos districts to raise money from assessments on new homes to build classroom space to accommodate student growth the sale of those homes create.
City councils also have no standing to force developers to form or annex to a Mell-Roos District or a CFD.
In addition state bond money that is available is committed primarily to the rehab and modernization of existing schools. At the same time Manteca Unified property owners are now paying off two school bonds. Meanwhile, the district has in excess of $600 million in modernization that still will need to be addressed after all of the bond money is spent. It is highly unlikely a local bond election for new schools would have much success.
Manteca Unified is exploring various options to accommodate growth that would reduce the need to build a large number of expensive campuses. That strategy would add on to some existing elementary schools and reconfigure Manteca High. Such a strategy would reduce expensive support infrastructure needed for a new campus.
But even with new homes included in a Mello-Roos district or covered by a mitigated agreement where the developer could front additional money, financing even a lower cost alternative that could be as effective if not more so would be extremely daunting.
What the district is trying to do is work with builders to get them to form Mello-Roos districts or enter into mitigated agreements as a number of homes are now going forward without being part of either financing tool.
Longtime developers are correct — and school districts leaders agree — that Manteca Unified dropped the ball during the Great Recession in talking with builders to make them aware of school housing needs in a bid to get a solution in place.
In trying to go forward, however, the school district is being tripped up by developers that want the City Council to allow them to use SCIP financing for growth infrastructure required by the city.
That’s because having a SCIP in place for a housing development has a negative impact on the ability to put in place a CFD or Mello-Roos district for schools.
Last week Manteca Unified sent the city council a letter formally expressing opposition to SCIP financing.
MUSD Chief Business Officer Jacqui Breitenbucher noted former City Manager Karen McLaughlin hammered out an agreement with the school district not to allow future developers to use SCIP financing unless the developers had entered into a Mello-Roos district or mitigated agreement to support the schools.
On April 3, Acting City Manager Greg Showerman told the district that the agreement had never been taken to the City Council for adoption. Now there is a council directive to allow SCIP programs without a developer annexing into a CFD or having a mitigated agreement.
Showerman — who told the council Tuesday he plans to meet with district officials over the issue — said he was under the impression based on what the BIA told the city that the builders group was actively negotiating fees with the school district.
The District met with the BIA and their consultants on Jan. 20, 2017, and received an extensive information request in which MUSD provided response to on Jan.31, 2017, including MUSD’s most current eligibility documentation for school construction that have been submitted the State for approval. The BIA and MUSD are not actively negotiating adequate financing to support school facilities, since the BIA does not feel they have the most current eligibility documentation information.
On March 29, 2017, MUSD hosted a courtesy meeting to review the Fee Justification Study for the proposed increase in Level 1 Developer fees from $3.36 to $3.48 per square foot of single-family construction. The local development community — including the BIA — was invited to attend this meeting. The BIA did not attend this meeting.
Absent any active negotiations with the BIA, MUSD is actively reaching out and meeting with individual developers for annexation in to a CFD or entering into a Mitigated Agreement.
“If the City Council approves the SCIP financing program, there will be direct negative impacts to the District, therefore MUSD opposes the Council taking action to allow SCIP financing,” Breintenbucher noted in a letter to the council.