State legislators want to make more money available for needed school construction and they want to encourage transit-oriented development. Those are laudable goals.
But they shouldn’t perpetuate a system that subsidizes private developers by excusing them from fully funding classroom construction needed for their new homes; force current homeowners to pay more property taxes to make up the shortfall; and drive up construction costs by pushing local districts to use only union labor for school projects.
Four years ago, when California voters last approved state school construction bonds, we objected to the measure, Proposition 51, because it continued the developer subsidy. Proposition 13 on the March 3 ballot makes it worse. Voters should reject it.
Funding for local school construction in California comes from three sources: First, the state borrows money by issuing bonds and then repays it from general fund revenues. Second, local school districts borrow money by issuing bonds and then repay it by raising property taxes. Third, developers pay fees for a portion of the cost of new schools needed for the homes they build.
Prop. 13 would authorize the state to borrow another $15 billion, of which $6 billion would go for public universities and community colleges and $9 billion would go for local schools. Of the $9 billion for local schools, most would go for modernizing existing schools, but $2.8 billion would be used for new schools.
It’s that last portion of money that is being used as political leverage in Prop. 13. The measure, which was placed on the ballot by the Legislature, would ban school districts from charging developers fees for multi-family projects within a half mile of major bus, rail or ferry transit stops. And for all other multi-family projects, the fees would be reduced by 20%.
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It wouldn’t eliminate the need for the new schools created by those developments. It would merely shift more cost from private developers to local school districts. Those districts would then have to turn to voters to raise local property taxes to help fund needed new construction.
In other words, owners of existing homes would be called on to finance more of the school construction needed for new homes. While Prop. 13 might make some homes near transit slightly more affordable, assuming developers pass on the savings to buyers and renters, it would drive up the cost of housing for existing homeowners, especially in communities that are growing and adding more students to their schools.
Many of those homeowners already pay hundreds of dollars annually in property taxes to cover the cost of past school construction measures.
Prop. 13 would also relax one of the checks on excessive school borrowing. Local districts have long faced responsible restrictions on the amount of bond debt they can take on. For elementary and high schools, that limit has been set at 1.25% of the assessed value of property in the district; for unified school districts, it’s 2.5%. Prop. 13 would raise those limits to 2% and 4% respectively, sending a strong signal that school districts should borrow more, meaning higher taxes for property owners.
It’s an unnecessary move. School districts that need to exceed the current limits can apply to the state for waivers, which are almost always granted. Seven percent of all school districts have received such waivers since 2010. Thus, the limits have historically not served as a red stop light, but rather as a yellow caution. Passage of Prop. 13 would turn that light to green.
Meanwhile, Prop. 13 would drive up the cost of school construction by giving priority for state funding to projects that include union labor agreements. State law for public projects, including school construction, already requires paying prevailing wages for the area. This would further push up the cost by discouraging non-union contractors from bidding on the work.
To be sure, there are some good provisions in Prop. 13. It would end the state’s current system of awarding school construction funding on a first-come, first-serve basis rather than based on the needs of the district. It would also slightly increase the state share for poor districts. And, of course, incentives for transit-oriented development make sense, but existing homeowners should not be forced to bear the cost through higher school taxes.
Meanwhile, the subsidy for developers remains. Developers should pay for infrastructure their projects require, whether it’s roads, utility lines or more classrooms. If the state wants to subsidize some costs to incentivize smart growth, let’s have that discussion. Bur forcing local property owners to cover the cost isn’t the solution. Vote no on Prop. 13.
