How advantageous is it for the Building Industry Association of the Delta headed by Jon Beckman who once served as a councilman in the fairly slow growth community of Lodi to get the developers he advocates for to play ball with the Manteca Unified School District?
It could stave off making new homes his members build within district boundaries avoid having an average added cost of $21,509 before even a shovel of dirt is overturned.
That’s because the district — which is obligated to look out after the best interests of current and future students — is leaving no stone unturned to provide the school board with and arsenal of options when it comes to housing students.
The district’s preferred option is for developers to step up and put new neighborhoods they are building into Mello-Roos districts to provide partial funding for new schools.
The BIA may assume that given no law provides cities the power to make such a requirement or allows a school district to demand such a move that there is no reason why they should encourage builders to annex to — or form a new — Mello Roos District.
Bad assumption if that is the case.
There is a nuclear option the state created that district staff is dusting off if they need to employ it. Simply put, when certain conditions are met and findings made the existing residential fees charged for new home construction for school facilities that are now at $3.36 per square foot can ultimately be ratcheted up to $10.08 per square foot.
For the typical 3,200-square-foot new home now being built in Manteca Unified that builders are paying $10,752 upfront in school facilities fees it means that cost could shoot up to $32,256.
At 4.75 percent interest that additional $21,509 when collapsed into a mortgage means a new homebuyer would have to pay $83.16 more a month on a 30-year loan to buy that 3,200-quare-foot home.
It also means two other key things for builders. First, the pool of eligible buyers shrinks a bit as buyers have to qualify for another $83.16 a month to finance school fees that will end up costing the buyer $8,400 more or $29,937 after the end of 30 years. Given how close Manteca Unified is to ground zero for housing unaffordability — the Bay Area — builders may not have to worry much about not having enough buyers even in a downturn.
The most important impact on builders is the loss of the ability to steer buyers into $20,000 worth of highly profitable upgrades if $20,000 has to be used to finance increased school mitigation fees.
And while the BIA advocates for and doesn’t direct builders on what they should do by not dealing with the issue head on it means a builder that does step up and puts a new project being built within a Mello-Roos district would be at a distinct disadvantage with builders that eschew Mello Roos districts.
Of course by the time Manteca Unified would be forced to go for the nuclear option a number of schools would have to be on year round schedules or — in a worst case scenario — double sessions. That would make buying a new home in Manteca or the non-River Islands part of Lathrop all that more less appealing.
The BIA is revving up its calculators to make the case the school district is partially wet — if not completely wet — behind the ears when it comes to their current ability to cram more students into classrooms. That’s fine. They have the right to do that.
But this is a different game than the game plan they’ve used over the years dealing with the City of Manteca to keep asking to re-examine recommended fees or proposed increases over and over again before they are implemented. That strategy helps hundreds if not thousands of homes to skirt by without paying their fair share of the cost for city amenities. In a strong market where other cities come into play, keeping Manteca fees lower for a year or two than elsewhere puts more profits into the pockets of a builder than their counterparts in other communities where elected officials have made requiring growth to pay its way a top priority with real teeth.
And the BIA needs to spare everyone proclamations that they are only doing what they are doing because someone has to fight for affordable housing. While there is a lot of truth to that given state mandates, questionable environmental costs related to six figure studies that either state the obvious or no one bothers to follow, as well as escalating labor and material costs the bottom line is the people they are selling houses to need amenities such as schools.
Developers are risk takers who — for the most part — build communities and not simply build homes.
More than anyone else they know the score when it comes to how dysfunctional California is when it comes to development hoops and environmental overreach.
That said they can ill afford to kill the goose that lays the golden egg.
Without an effective and appealing school system, parks, adequate fire and police protection and more developers will still be able to build homes here given this state’s incredible housing shortage and the proximity of Manteca Unified to the Big Squeeze when it comes to housing affordability and availability — the Bay Area.
But they will miss out on landing the whales — those new home buyers who can afford to go elsewhere and spend bigger dollars on bigger homes and more highly profitable upgrades.
How builders fare tomorrow in Manteca depends heavily on what they do today.