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March 1, 2021

District Opens Books

The school district will have its financial records reviewed by
an independent party in hopes of wooing developers to make
voluntary contributions to its construction budget.
Gilroy – The school district will have its financial records reviewed by an independent party in hopes of wooing developers to make voluntary contributions to its construction budget.

Representatives from the Gilroy Unified School District met with area developers and Gilroy councilmen and staff Tuesday to determine how area developers could help the district to shore up a $14 million facilities deficit. The so-called impact fees that developers are paying are insufficient to add the classrooms necessary to offset the influx of students generated by new development, district officials said. The Tuesday meeting was the fourth discussion aimed at determining how developers can offset both the district’s current facilities deficit and future annual shortfall.

In the three previous meetings of the three parties, developers have expressed both a desire and hesitancy to help the district. Developers, who requested independent scrutiny of the district’s financial history and plan, did not specify what or when they would contribute in Tuesday’s meeting, but said their continued conversations reflected that they wanted to reach an agreement.

“We’re here because we want to be here, because we want to find a solution,” said Brad Durea, an Arcadia Homes developer.

The solution, according to district representatives, is for developers to pay $6.61 per square foot for newly developed houses, or about $16,500 per 2,500 square-foot home. The district currently charges developers $2.63 per square foot, the maximum allowed by the state. The increased fee would generate a projected $20 million for the district by 2015 and eliminate the district’s construction budget debt.

The state maximum and a burgeoning facilities debt put the district at the mercy of developers, who initially were supportive of a voluntary fee increase at a meeting in March. However, the tides changed by a second meeting in May, when developers claimed the city had to reduce city building fees to ease the impact an increased district fee would have on their profit margins. The city, which has discussed a building moratorium in hopes of motivating developers to bargain, refused to reduce fees at a closed session meeting in June.

The next step to reaching an agreement is having a third-party analyst examine the school district’s finances and past audits, developers said Tuesday. The aim is to identify how the district went $14 million into debt, whether it truly needs the full amount of the increased fee, and how it would use the money, developers said.

“It would give great comfort level on the part of the people who are paying the fees and probably an assurance level on part of the people who are requesting the fees,” said developer Beverley Hansen.

The district will cooperate and contribute to the possible $30,000-price tag of the review not because it needs the audit – the district’s finances are audited each December – but because it wants to work with developers, trustees said.

“We’re asking for a voluntary contribution,” trustee and real-estate agent Denise Apuzzo said during a debate at a July 5 board of trustees meeting. “If we have to invest $10,000 or $12,000, I’d be very willing to do that if at the end of the day we’re going to get $12 or $15 million.”

The District superintendent, Deborah Flores, will also meet with three developers to help them formulate questions that they want answered by the third-party analyst. Flores navigated a request for increased developer fees when she was superintendent of the Santa Barbara elementary and high school districts.

If developers come to the next meeting July 17, after the meeting with Flores, still wanting an independent review, district trustees and staff worry the process could drag out until the end of the year. They proposed an Aug. 6 deadline for an agreement, which would give the parties three more two-hour meetings, but developers gave mixed responses.

The district, though it appreciates alacrity, cannot be too pushy, Apuzzo said.

“I think the tenor has to be, ‘We’re realizing that we’re in a bad way financially and we’re coming and asking the developer community and the city to work with us so they can contribute more for the good of our schools, for the good of our community,’ ” she said.

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