Thoughts From a Facilities Master Plan Committee Member (FMPC)
Bond Campaign Financing
No one that is against Measure H, as far as I know, is against children and education.
Most of those that are against Measure H are actually longtime residents of Dublin and parents of children in schools here in Dublin and are very strong supporters of the schools and the teachers. The reason they are opposed to a bond as it is currently written is because they feel it favors the developers, and does little to help the children who are already here.
So why do I say that?
I am not sure if you are aware but the median price of a home in the eastern part of town (around Jordan Ranch, Positano and Iron Gate) is currently $1.12 million. According to our school district each standalone home will produce 0.80 school age children and will cost the district $80,000to house(based on various reported accounts including the Contra Costa Times, of which I can gladly share with you if you wish). Currently, the cost to house that student is supposed to be paid by the developer (50%) and the state (50%) under what is known as SB50, which the district often cites. Under SB50 then, both the developer and the state should be paying the DUSD $40,000 per new home that they build. Given that the homes in the area have a median price of over $1.1 million, that cost is not really that far out of line. Actually, the city will tell you that a developer pays significantly higher fees for their sewer hookup and other city related offsets.
However, the DUSD does NOT charge developers $40,000.
On average, the developer only pays about $12,000 per new home, again based on the data provided by the district. That leaves a gap of $28,000 for every new home built. The district seems to imply that that is fair, and expects the rest of the current residents to subsidize that remaining cost.
At the same time, I am not sure of this, but most likely is NOT passing that cost savings onto the new home buyers. Rather it is our assumption that they in fact are keeping that “saved” money as profit. After enough homes are built, as is the case now, the funding gap grows to a point that something needs to be done. We are now at such a point. The DUSD school board in it Facilities Master Plan has identified over $600,000,000 worth of projects, including new schools to house all of the new students and to repair older facilities. Unfortunately, some of us feel that the proper fees were not collected by the district which has led us to this situation. The same people that allowed the current situation to arise are the same ones that are now asking for a $283,000,000 bond, and the question is, who are we “bailing out?” Are we really helping the children who no one feels should be without a proper school, or are we helping the developers continue to make higher profits?
Until that question is answered, it is difficult for many parents who understand the actual financial impacts of the school boards decisions, or lack thereof, to support THIS bond as it is currently written.
FAQ on Measure H - Be an informed voter!Information to consider before you vote on Measure H (School Bond for $283,000,000)
1. What does bond (Measure H) for $283 million guarantee?
There is no guarantee in this bond (for specific repairs/upgrade needed, 2nd High School, or any project). Bond provides long list of projects with no guarantee to fund any specific project. The project list includes a school for Dublin Crossing (near BART station, next to SAP) where builders will be building about 2000 homes over next many years and the project is yet to start.
Would you give a blank check for $283M when School Board cannot guarantee any project?
2. What is a GO (General Obligation) bond?
School districts can issue GO bond to raise money to fund capital expenses (such as building new schools). The outstanding bond debt cannot exceed statutory borrowing capacity limit of 2.5% of assessed valued (AV) - property values assessed in the school district taxable area). There is a possibility of getting a hardship waiver from CA state, but these are rare and district stated that they do not intend to get a waiver. As of June 30, 2015 our statutory borrowing capacity was $315 million and our outstanding debt was $272 million, meaning there was $43 million of additional borrowing capacity. In March 2016, the district borrowed additional money and did some other financing activities, and exact borrowing capacity is not known.
Assuming our AV increases from $12.5 billion at June 30, 2015 to $14 billion at June 30, 2016, we can raise only between $75M to $100M without seeking a waiver from CA state.
This highlights that we have limited potential for GO bond money and we need careful planning / expense management to prioritize right projects as we cannot raise more money easily. Developers and state money contribution have to be managed/increased as well.
3. What is the resolution passed by school board and is it legally binding?
After approving the bond language to be voted, the School board passed a resolution with priority of projects and has already amended it once within a month. This resolution is NOT legally binding and the School Board can change the priority / fund allocation at their will. The School Board reviewed the latest demographic data and its very much possible that they would amend it again in the coming weeks.
4. Why this bond is set at $283M?
We believe that there is some psychology in this number ($283M) suggesting that it is tied to an exact budget versus a rounded amount (e.g.: $300 million).
School district could have chosen to raise lower bond amount to meet immediate needs (e.g.: $100M to fix/upgrade schools, fund initial cost for CHS2, etc) while figuring out all needs and have a priority.
The school board is proposing to charge the maximum amount of tax that’s allowed in one bond ($60 per $100,000 of assessed value of properties across the school district area). This bond will put DUSD in the Top 5 Unified school districts in California in terms of debt (out of 330 unified school districts in California).
5. If this bond fails, is it end of vision for 2nd high school in dublin?
Need for 2nd Comprehensive High School (CHS-2) is real based on the student enrollment projections. School Board is yet to secure land for CHS-2 and any large expenditure on CHS2 is several years away. Also, School Board has not committed any money to start or complete CHS-2 in legally binding way (which means, all their words/resolutions can be changed by them after the bond is passed).
6. What's the impact of developer fee reduction of bond fails in June 2016?
Developer fee will be reduced by half (from Level-2 to Level-1) as this is one of the criteria to meet for our situation to levy Level-2 fee. This translates to about $1.5-2M per year. This is very small amount to justify passing $283M in bond plus $269 million in interest for that purpose.
7. What if bond fails in June 2016?
If bond fails in June 2016, there is another opportunity to vote on a right bond in November 2016 or June 2017 or any other election period.
8. How will Dublin school district manage if the bond fails in June?
Bond money does not pay for operations, so if the bond fails there should be no impact on school operations. Additionally DUSD has already secured $50 million for construction of the first phase (middle school focused) for the Jordan Ranch school and that’s sufficient to finish Jordan Ranch school as a middle school. As per DUSD school board, there is option to raise short-term money for immediate needs such as fixing any immediate repair or acquiring portable classrooms to handle growth.
9. How much developer is paying?
Developers are paying about 15% of money needed to support each additional home built in Dublin (its about $7 per sqft of home built while school district have said that their need is about $42 per sqft to support children from each new home, which translates to about $85,000 per child for elementary school and $115,000 for High School). School Board may raise the fee slightly to about $10.66 per sqft, but that will still pay about 20% of school needs. The remaining 80% for new homes are dumped on voters (through local bond measure, such as measure H and state bonds, again the voters to take the burden).
More importantly, this increase is very small and many big projects have mitigation agreement that locked them (for no good reason for residents) at older rate. Those mitigation agreements need to be re-opened and re-negotiated.
10. What is current debt?
The unpaid principal balance of previously issued DUSD debt is $272M as of June 30, 2015 plus $37 million of deferred interest and refinancing fees for a total of $309 million. This debt is payable over 36 more years.
11. How much developers contributed to DHS?
No Level 2 developer fees have ever been collected for high school. The school board has stated that developers contributed $10M towards Dublin High School in its reconstruction, but we are unsure how this is determined The total reconstruction costed about $150M (most of the fund came from residents through previous bonds) and almost none of this has been repaid (part of $272 million of unpaid principal).
12. What did previous bond help (Measure E passed in 2012)?
Dublin voters passed Measure E in 2012 for $99M. The primary purpose of the bond was to fix aging school infrastructure across the school district, but school board redirected about 75% of that bond money to build new schools in East to support new home developments. More info:http://www.smartvoter.org/2012/06/05/ca/alm/meas/E/
13. How many more houses to be built in dublin?
About 4664 homes are expected to be constructed over the next seven years and about 8000 homes in total at build out. There could be additional homes to be built if City council continues to convert commercial zoned lands to residential lands.
14. Why are we in this situation?
School Board is not collecting enough money from the developers. SB50 law provides formula to calculate the money that developer needs to pay. If the input to the formula is under reported, the money that developer needs to pay will be lower as well.
For example, School Board have long said (until about 6 months ago) that Dublin student population for High School will not exceed 2,500 students, so they were not collecting money from developers for High School needs. Now, the School Board is saying that the student population in High School will reach about 4,500-5,200 (and in matured phase, in about 20-30 years, the High School population will be about 4,000 students). This situation warrants need for 2nd High School (for which School Board is yet to acquire land or have strong plan on funding).
City Council continues to rezone commercial lands into residential (and change single family homes to higher density homes). Once approved by City Council, a developer has 10 years to build the homes.
15. How city can help?
City can help by stopping conversion of rezoning commercial land to residential land (for other reasons such as city infrastructure issues).
16. How state can help?
CA state owes part of school construction cost, but the School Allocation Board’s money for new school construction has run out of money.
17. How other neighbor cities managed?
San Ramon mandates builders to build schools before homes are sold in a neighborhood. Pleasanton has been allowing limited number of new homes. Fremont assigned schools in different part of town for new home owners (not guaranteeing space in overcrowded local schools).
Dublin School Board has not taken appropriate measures to manage the growth and related funding needs.
18. What is the lawsuit over people who raised concerns on bond?
Developers and vendors (that do business with school district) have funded campaign team that supports this bond. The support team is raising about $150,000. The campaign fund from developers/vendors supported lawsuit against residents who raised concern about the school bond. The interesting aspect is that the bond support team (funded by the developers/vendors) have included false information in the Bond support language that 2nd High School building is legally binding. This is false information.
19. How did previous bonds help?
Previous bonds emphasized on preventing overcrowding and upgrading aging school infrastructure. We are still dealing with those issues in more larger scale.
20. What is SB-50?
SB 50 (Senate Bill 50) is a law enacted in 1998 by CA state. This prohibits a city to use lack of school infrastructure as a reason to deny requests (the city government can have other reasons to deny requests – such as cith infrastructure issues). School districts across the state have used positive negotiation strategies with the developers to workaround this situation. Mello Roos is an example (used by San Ramon).
21. How does our property tax help?
Property tax assessment by county/state is major source of funding to operate schools (paying for Teachers/staff salaries, operational/maintenance of schools, etc). That money does not fund new school construction.
On the other hand, this bond does not support or impact operational budget aspects of school district.
22. What is parcel tax?
School districts levy short-term parcel taxes to support any operational shortfall.
23. How much money will be available form this bond once it's passed?
If the bond in June passes, about $75M-$100M is expected to be available immediately. School board will decide on where this money is spent. Public who vote for bond does not have any control on what projects will be prioritized.
An additional $75M to $100M is expected in each of 2019 and 2022, and the remaining portion in 2025.
24. What's the role of CBOC?
CBOC (Citizen’s Bond Oversight Committee) plays an important role, but they are limited in their responsibility to confirm that the bond money is spent on projects listed in the bond. Since the bond includes a long list of projects and does not guarantee completion of any specific projects in that list, its up to school board to decide on projects where the money is spent.
25. Why Jordan Ranch School (JRS) is good community but financially bad deal?
We need JRS for middle school for current residents (and some capacity will support future residents as well). School Board gave up right to buy the original school site of 10 acres (since the developer asked for $30M for 10 acres), the developer/builders got right to build about 150 homes in total and stand to gain about $60M in additional profits. School Board just got about $2M in the process.
However, these additional 150 homes will be adding burden of $15M in new school facility needs.
The same land (the original school site of 10 acres) was available at $3.5M back in 2008 when school district executed mitigation agreement for Jordan Ranch schools!
In summary, School district has taken huge additional burden. We (voters/public) donated a park in the process to school district (lease option where most of the park site will house the school buildings). The credit goes to voters and not to the developer.
School district could have negotiated better and got $20M in the process from the developer/builders instead of just $2M in road improvements and $2M in standard developer fee.
If you think, this is bad negotiation, wait… Dublin Crossings has much worse negotiation and dwarfs JRS negotiation.
26. What is the growth expectation for school district and how much money is needed?
We need about $600M-800M as per School Board to meet growth needs. As per School Board, we expect to add 5,000 students to school district (taking total number of students in schools district to about 15,000 students by Fall 2023). The peak enrollment is expected to go to about 18,000 students.
To put this in context, Pleasanton school district has about 15,000 students today with their stable population of about 75,000 residents. Dublin is expected to grow to about 80,000 residents at build out / maturity (from the current 55,000 to 60,000 residents) and our town has lot of young families and attracts more of them due to good schools.
27. Should I vote YES or NO to measure H?
We need clarity on funding for next 5-10 years and more importantly, how the first $75-100M from measure H (if passed) will be spent. There are many unanswered questions.
Looking at past bond (measure E), 75% of them were diverted to build new schools to fund / support growth and developers instead of repairing old schools (which was the priority).
Each of us should decide on the vote. We are running a marathon here and not a 100 meter sprint. Other school districts (such as Pleasanton and San Ramon) have voted down school tax measures and still thrive. We need reality check, accountability and transparency and not continue to sweep the issues under the rug.
Please vote YES if you believe that this bond is good for the school district / community
vote NO in June 2016 and ask for a better & well-planned bond in November 2016 or June 2017.
your paragraph here.
The June 2016 will include Measure H related to the approval of a $283 million general obligation bond for schools. We may publish diverse information and views from the district, community and press related to the bond. Dubliners for Change believes it is important for each individual to fully evaluate the merits of the bond and vote as they see appropriate.
Measure H Information Links
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