School Bond Includes Repeal of Mira; Builder Are Happy, Citties Aren't as Decade-Long Dispute Ends
Ending a two-year political stalemate, the Legislature has placed a $9.2 billion education bond on the November ballot with conditions that would fundamentally change the way school construction is financed in California.
Under the proposed reforms, local school districts would have to cover half the cost of new schools, and the state would suspend the ability of cities and counties to levy school fees in excess of state-mandated limits - a power granted by a series of appellate court decisions collectively known as the Mira doctrine.
With the Mira powers gone, a statewide cap on school fees of $1.93 per square-foot for housing and 31 cents per square-foot for commercial and industrial construction would be back in force. Local school boards could impose higher fees in order to meet their 50% match requirement if certain conditions are met.
Finally, if the state bond money runs dry, districts that meet those conditions could assess developers 100% of the cost of new schools required by the families who will buy their homes.
The developer-fee reforms will essentially shift the authority to deal with developers over school-financing from cities to school boards. They will take effect only if voters approve the bond act, which will appear on the November ballot as Proposition 1A.
"It won't be as easy as it was before," said Richard Simpson, education consultant to Assembly Speaker Antonio Villaraigosa, D-Los Angeles, the lawmaker who brokered the bond deal. "If you were a superintendent, you didn't have to justify anything to anybody. If the city council was sufficiently cooperative, you just gave them a number and under their Mira power they imposed it as a condition."
An estimated 200 to 250 districts statewide use the Mira powers of their local agencies to levy fees averaging $4 per square-foot on new housing, according to a survey by the Association of California School Administrators.
The reforms contained in SB 50 are a victory for the California Building Industry Association, which successfully fought to block any new statewide education bond unless elimination of Mira was part of the deal.
"We made the case for complete repeal of Mira," said BIA lobbyist Richard Lyon. "We wanted to annihilate it, blow it up in a nuclear explosion....But the politics of the issue wouldn't let that happen, so we settled for an eight-year suspension."
The suspension allows for a return to conditions similar to current law in 2006 if a subsequent statewide bond issue fails. If that were to happen, local agencies could again deny zone changes or general plan amendments on the basis of inadequate school facilities, but could not require higher fees than those allowed under the bill.
Proposition 1A is the largest bond act in state history, and would provide $6.7 billion for K-12 school construction and modernization and $2.5 billion for higher education. The bonds would be issued over four years. The developer-fee provisions allow districts to levy fees to cover 50% of land and construction costs if they have conducted a needs analysis and are certified by the State Allocation Board as eligible for state funding. In addition, they must meet at least one of four conditions:
(1) Attempted a local school bond in the last four years that received at least 50% of the vote but short of the required two-thirds majority;
(2) Have passed bonds equal to 15% of bonding capacity;
(3) Have 30% of students on a multi-track year-round calendar, or
(4) Have 20% of students housed in portable classrooms.
After Jan. 1, 2000, districts must meet at least two of those conditions in order to levy fees above the statewide cap.
The adoption of the school bond assured voters the chance to deal with the $40 billion challenge of building sufficient classrooms to house the 5 million additional students who will enter California schools over the next 10 years. But the developer-fee provisions did not satisfy the long-held concerns of cities and the education establishment.
The state School Boards Association and the League of California Cities remain opposed to the fee provisions.
"The notion of losing your land-use authority shouldn't be too comforting," said League of Cities lobbyist Dan Carrigg. "The state is saying to city councils that they cannot deny a project even if in their opinion school facilities are inadequate."
The core problem, he said, is that the program fixes the cost of new schools at statewide averages. If that is not enough in a given area, cities could be forced into having to approve new development without sufficient schools. "Local discretion," he said, "is tossed out the window."
Carrigg also notes that the bill grandfathers only those existing school-fee arrangements contained in development agreements. Developers with projects in the planning pipeline that have been conditioned with higher school-impact fees can avoid the higher fees if they delay construction beyond Jan. 1, 2000.
Carrigg and other foes, conceding that political realities and the critical need for state bond money make opposition to Proposition 1A impossible, have turned their attention to how to react to the changes once they take effect.
Now that the developer-fee statutes are no longer part of a bond package that required a two-thirds vote of the Legislature, they can be amended by simple-majority vote. "If quickly after implementation a number of horror stories crop up," Carrigg said, "we could come back and try to clean up those problems.... That's something I find comfort in."
There is also the chance the issue could be thrown back to the courts.
As a condition of getting state assistance, a district has to certify that it has sufficient funds, combined with state money, to build a school. But if actual costs are higher, the district may not in fact be able to build. "Then what?" asks Carrigg. "The local government still can't deny a project. Let's see the court that says it's OK to build another 500 homes with no schools."
Another alternative, suggested Stephen Hartsell of the Kern County Superintendent of Schools Office, would be for a district to seek voter approval for a districtwide Mello-Roos bond that features a one-time special tax on new construction permits.
"I believe it's constitutional," said Hartsell, who is legal adviser to the Coalition for Adequate School Housing. "It passes the sniff test. It's not been done before because under Mira authority you could compel landowners to do that."
Lyon of the BIA dismisses the concerns of critics, both about the adequacy of school funding under the plan and the alleged loss of local control over land-use decisions.
"Cities can deny a project on any ground that's legitimately out there," he said. "We all know that if you're looking to deny a project there are plenty of opportunities out there... But for at least eight years, local government won't be able to second-guess pre-emptive state law on school fees."
The system is structured, he said, to guarantee 100% financing for new schools - facilities that may not have all the amenities some administrators desire, but which meet state standards.
The allowable amounts - $10,400 per-pupil for elementary schools, $11,000 for middle schools and $14,400 for high schools - are based on averages from projects built over the last several years.
The standardized construction figures do not include the price of land, because real estate costs vary radically among regions in the state. The program provides for land costs based on market value.
"We've guaranteed that in all cases the system will finance construction of a school," Lyon said. "With 100% financing, what's the concern? ... We're left with the conclusion that the opposition is for no-growth."
Dan Carrigg, League of California Cities (916) 658-8222.
Richard Lyon, California Building Industry Assn. (916) 443-7933.
Steve Hartsell, Coalition for Adequate School Housing (805) 636-4599.
Dennis Meyers, Assn. of California School Administrators (916) 444-3216.
Timm Herdt is the Sacramento correspondent for the Ventura County Star.