Manteca Unified is planning on setting the record straight when it comes to community facilities districts and the complicated Mello-Roos taxes that fund them.
On Tuesday the school board agreed to move forward with a community study session on June 21 that will specifically address the issue of Mello-Roos taxes in Weston Ranch and the district’s best options are as it pertains to the legality of using that money for projects other than what was specified in the bond language and whether residents have been routinely overcharged when assessments are distributed.
And it’s going to take lawyers and experts to wade through the tricky language and give recommendations on the best way to move forward.
On the table will be discussing whether to implement a sunset clause that would effectively end the tax once the bond is paid off, whether to adopt a model that ensures that homeowners aren’t overtaxed on their properties, and whether the money in the fund can be used for projects like the overhaul of the existing Weston Ranch High School stadium – the project that, during discussions about using funds from the neighborhood’s community facilities district fund it, got the ball rolling towards possible litigation depending on the decisions that are made by the board as a whole.
The homeowners themselves might even get the opportunity to exercise their right to vote to determine whether they agree or disagree with the board’s findings and what the money should be used for.
“Weston Ranch is the highest taxed community in all of Stockton, and this board has taken the position that we want to make things right – it makes no sense that this community does not have an end date,” Trustee Sam Fant, whose district includes Weston Ranch, said before getting cut off by Board President Deborah Romero who reminded him that the board hasn’t made any decisions or taken a stand on the matter. “Speaking for myself then, based on conversations, I know this board is interested so far because of conversations we’ve been having and based on the direction we’ve been given so far in wanting to figure out how we can make things right and do everything above board without breaking any laws or any rules and overcharging.
“I personally am concerned about the potential overcharging of CFD 1 and I am concerned about not having a sunset date in Weston Ranch as I know a lot of my colleagues are. And I am personally in favor of the direction we’re going to potentially look at taking a vote of the people and allow them to decide whether or not they want to lower their taxes – which I’m sure they do.”
Determining who is right in the situation might be a lot harder than most people think.
According to Superintendent Jason Messer, different attorneys have different opinions on what they think is the best way to proceed. The district will be soliciting not only their opinion, but the opinion of a special tax advisor and a bond consultant to draft a strategy that will legally suffice.
What was relatively straight forward situation for the district – using the money available in Weston Ranch’s existing Mello-Roos fund to resurface the high school track and football field with artificial surfaces that will cut down on maintenance and eliminate a pesky gopher problem – became a very complicated one when former Weston Ranch trustee Dale Fritchen informed the board, based on his findings, that not only can they not use that money for the field project, but the district has been using the South Stockton neighborhood’s tax money to finance other projects within the district which he says is a violation of the bond agreement that put into effect 25 years ago.
While Fritchen in the past has informed the board that he would possibly seeking legal counsel (and the district has reacted to that statement by discussing the matter in closed session as if a lawsuit or legal challenge were on the horizon) on Tuesday he was relatively soft-spoken about the matter and chose to tell a story about his time on the board and how Weston Ranch ended up with their stadium.
Fritchen, who served two terms on the board representing Weston Ranch, was on the board at the time that some of the expenditures from Weston Ranch’s Mello-Roos fund were used for projects outside of the area.
“I want to tell a story – I’m getting old so I have the right to tell stories. I spent eight years on the board and three as president and when I was talking to the school district staff, I told them that we needed to get a stadium out in Weston Ranch,” Fritchen said. “They came back and said yes they had the funds and they would build a really nice stadium. Well later that day I went and did some chores and ended up heading out to 120 and I drove by Sierra and thought to myself, ‘Are we not a unified school district? What would the kids and the parents who live in that area think if Weston Ranch, which was built much later, got a stadium before they did.’
“I would love to be the hero and bring this into Weston Ranch and have all of the people cheer me and say good job but you know what? I represent the whole district – I represent all of Manteca Unified School District.”
District focusing on 12
Mello-Roos tax issues
So where does the board go from here?
According to Messer, there are 12 things that he has laid out that need to be focused on in June when the board meets to discuss all of the issues surrounding Weston Ranch and the CFD.
He said that a rate and apportionment study will need to be done to determine whether the homeowners have been overcharged like they claim, and noted that while the district is using the term “refunded” when dealing with the finances – disbursing what is left over in the fund after the debt is serviced annually back to the homeowners is something that is being pushed for – it actually has a lot more to do with refinancing than actually giving money back to those who paid into it.
Currently the district has a lawyer that is looking into the legality of actually refunding cash to taxpayers, and an explanation of the district’s position will be coming soon.
Regardless of the decision made by the board, Messer said that a public outreach campaign explaining the issue and what will be done is currently being looked into as well – mentioning that South County school districts like Banta, Mountain House, Tracy and Jefferson are also currently looking into funding mechanisms to cover the cost of new schools in the growing community.
But while Weston Ranch is the focus of the internal probe, it’s not the only part of the district that is facing Mello-Roos concerns.
District stopped asking
for Mello-Roos funds
in South Manteca
According to the City of Manteca, the school district stopped requesting Mello-Roos funds from new development occurring in the community – noting at a council meeting that they notified the district about when those new projects and neighborhoods were came up for approval.
Currently Manteca’s fourth high school is planned to be built on Tinnin Road south of the Highway 120 Bypass near where a large portion of Manteca’s growth is taking place – carrying a $120 million price tag. When coupled with the pair of elementary schools that are also needed, the lack of Mello-Roos funding has the potential to be a major hindrance for the district.
Some in the audience cautioned the board to look at the matter from all angles before making any decisions because of the implications that could affect all of the other high schools and the funding mechanisms that they have in place that differ from Weston Ranch.
“I urge you to not make this decision in a vacuum,” Karen Pearsall told the board before they discussed the matter. “Look at how and what you do here – even though this concerning Weston Ranch – will impact the other areas of the district. I think at the very least you need to put a halt on this project (stadium) until you decide where the funding is going to come from for the upgrades at Weston Ranch.
“If you decide that you then want to proceed with them regardless of whether you’re going to use Mello-Roos funds or (other funding). I urge you to not make it in a vacuum. Look at how what you do here – even though this is concerning Weston Ranch – will impact the other areas of the district. I think at the very least you need to put a halt on this project until you decide where the funding is going to come from for the stadium upgrades at Weston Ranch High. If you decide that you want to proceed with them regardless of whether you’re going to be able to use Mello-Roos or other facilities money at least you know you looked at every option.”
In the past Fritchen has said that he’s been contacted by groups that deal specifically with these types of matters. He has been in contact with a lawyer to see what options are on the table for homeowners who want to make sure their taxes aren’t just being put into a slush fund that allows the district to spend it wherever it’s needed.
Messer reminded the board and the public that the matter is very intricate and complicated and noted that information that isn’t 100 percent accurate – or claims from people that aren’t 100 percent accurate – doesn’t help the district in moving forward towards finding a solution.
The possibility exists that the board will put the decision on installing a sunset clause and whether residents want to use that money for a stadium overhaul on the ballot. It is an election that the district would have to pay for.
Fritchen said that if the matter goes before the voters, he’d like to see it opened up to all registered voters within Manteca Unified School District boundaries rather than just specifically Weston Ranch. A legal recommendation will likely come from the district’s counsel.
The study session will not only include the 12 points that Messer mentioned, but also the historical information about CFDs including how much and when the bond was issued and what has been paid back. He encouraged the board and the public to submit questions in advance to his office in order to include them in the materials that the board will cover during the meeting.