School District and Developers at Odds in Irvine

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Monday, March, 28, 2011 | The Irvine Unified School District Board of Trustees this month signed off on a school facilities needs analysis that allows a higher level of fees to be levied on developers.

The analysis, which predicts up to 13,262 new housing units in the city, paves the way for the district to impose a developer fee of $5.48 per square foot for new residential construction and the ability to levy fees at double that rate where there is no state funding available. Without the analysis, the fee would be $2.97 per sq. ft.

The analysis was immediately assailed by the Orange County chapter of the Building Industry Association, which has accused school officials of ginning up the numbers.

The higher fees would be levied in neighborhoods where there aren’t other ways to mitigate school impacts — such as special property tax areas known as Mello-Roos districts. The fees would mainly affect the Irvine Business Complex, a mixed use area of the city that could see 6,000 new housing units.

The district is looking to levy the higher fees in the business complex because the area lacks a Mello-Roos district. Mello-Roos allows cities, school districts and other legislative bodies to levy a special property tax to pay for services, including roads, police protection and new schools in new neighborhoods.

The traditional housing developer in the city is the Irvine Company, which typically works with the district to setup a Mello-Roos district before building the neighborhoods.

The district has been the beneficiary of eight Mello-Roos and has used the money to build top-notch schools. Recent state testing on academic performance showed the district having 11 of the top 25 scoring schools in the county.

But housing at the business complex is going to be built by several other developers.

A letter from the builder’s association contends the school district is exaggerating the school building needs and is trying to gouge the developers with unreasonable fees.

“The Irvine Unified School District has artificially created any impacts it is experiencing and cannot justify the fees in a legally defensible manner,” the letter stated.

One School Board member said that if anyone is taking advantage, its the developers.

“I wouldn’t say we’re gaming the system, we’re just trying to survive like anyone else,” said Trustee Mike Parham. “I’m questioning whether the developers themselves are trying to game the system — I mean everybody’s trying to survive right now.”

Developers at the business complex aren’t the only ones at odds with the school district over paying for new facilities.

School district officials have also complained that Great Park neighborhoods development manager FivePoint Communities and the city of Irvine left the district out of a Mello-Roos district that was formed to pay for, among other things, joint backbone infrastructure at the park.

However, the developer fees won’t apply in those neighborhoods because the district and the development manager will be negotiating an alternative mitigation agreement.

In one example, the letter says the district is artificially keeping 20 percent of its classrooms in portable facilities, which is a state law requirement to levy the higher fees.

It goes on to say that the district is allowing, among other things, all of the Creekwood High School site to remain in portable classrooms, “despite seeking and receiving state funds to acquire and build out the facility.”

The letter also disputes the school district’s future student enrollment estimates, saying that the school district gave the city of Irvine only two days to come up with figures for projected housing construction over the next five years.

The letter says past estimates have been off, in at least one case, because of an assumption that students from all possible new housing at the business complex would be attending Irvine Unified schools — despite the fact that the site shares boundaries with two other school districts.

Two surplus school sites, known as Alderwood and Vista Verde, are being sold off to pay for improving existing school facilities, the letter points out. The letter calls this an example of a “self-created issue” and questions why the revenue isn’t being used to pay for new schools.

The school district responded with its own letter from a consultant hired to put together the analysis. The response letter dismisses most of the association’s arguments as unfounded and ignoring facts about facilities needs throughout the district.

School board trustees have always been unapologetic about their aggressiveness with developers, saying they’re doing it for the children.

“People always accuse us of — well if the schools ran more like a business they would be much better off,” said school board trustee Gavin Huntley-Fenner. “Here you’ve got a school district that is very aggressive with developers — not because it profits from it — but because every dollar we get goes toward kids’ education.”

Huntley-Fenner questioned the timing of the letter from the association, which was dated the day of the public hearing on the analysis and was received late in the afternoon. Huntley-Fenner said that, because postponing approving the analysis would have opened up a time window for developers to pull permits at lower fees, the letter constituted an underhanded move.

“The timing is the worst part for me. The timing seems calculated in a very crude way,” Huntley-Fenner said. “The timing was very tactical, and that felt icky to me.”

School district officials say that they simply did not have enough money to build permanent classrooms at the Creekwood High School site. The response letter also says that their student enrollment estimates are accurate because they were based on discussions with the city going back to Dec. 8 of last year.

And, in defending the use of money from the sale of the two surplus school sites, the response letter simply says it is within the school district’s discretion to use that money toward improving current facilities.

“We have lots of schools, lots of pupils and the infrastructure has to grow as the district does,” said School Board Trustee Sue Kuwabara.

This new development comes on the heels of a successful lawsuit  against the school district for not going with the lowest bidder on a modernization project at two elementary schools. In the appellate court’s opinion, a judge writes, “It doesn’t take Hamlet to figure out something rotten happened in this case.”

School Board trustees said the ruling does not undermine the school district’s credibility by showing the district to be prone to underhanded tactics.

“I think on the whole we’ve got a very good record,” Parham said.

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