Five developers have informally agreed to more than double the
amount they pay to the school district for new development, but the
two biggest players in the deal remain uncommitted.
Gilroy – Five developers have informally agreed to more than double the amount they pay to the school district for new development, but the two biggest players in the deal remain uncommitted.
Gilroy Unified School District staff and trustees convinced the five developers to voluntarily increase the fees they pay from $2.63 to $6.61 per square foot in an effort to help the district close a $15 million facilities deficit. However, the Glen Loma Group and Hecker Pass landowners, who hold more than 2,100 residential development ordinances worth possibly more than $20 million to the school district’s construction budget in increased fees, have not joined on.
Representatives from the companies were absent from conversations Monday between district officials, City of Gilroy council members and staff, and developers – the fifth and final such meeting.
“Because the largest developers are not on board, the impact on our gap deficit is not as large as we’d like,” said Superintendent Deborah Flores.
District officials hope developers will contribute the increased fee – or an equal contribution, such as a parcel of land or new school – at the time developers pull the permits to build. Neither Glen Loma, which has nearly 1,700 units allocated for 359 acres in southwest Gilroy, nor the Hecker Pass landowners, who have more than 400 units allocated for west Gilroy, have pulled the vast majority of their permits. If the two developers agreed to the increased fee, they could contribute upwards of $20 million to the school district.
District officials said this increased contribution is justified based on inflation costs. While construction costs have risen about 65 percent since 1998, the amount developers pay the district have declined about 35 percent.
The possible contributions of Glen Loma and Hecker Pass landowners overshadow the $3 million the district would receive from developers who are awarded the 191 residential development ordinances that the city council plans to give out later this year. After this round, the city does not plan to award more until 2013.
Given these circumstances, it is integral the school district gets Glen Loma and Hecker Pass landowners to agree to a voluntary contribution, assistant superintendent of business services Steve Brinkman said.
Otherwise, “we would generate very little revenue,” he said.
Chris Vanni, one of the Hecker Pass landowners, said that negotiations were ongoing with the school district and that he would have attended the meeting if he had known about it. However, he would not say whether they were supportive of the district’s request.
“It’s real premature to sit down and say what can and can’t be done,” he said. “Maybe there will be stuff that we can talk about down the road.”
Eric Keller, representative for Glen Loma, refused comment until he had discussed the situation with his boss, Tim Filice, who also refused comment.
Despite the absence of the big players at the Monday meeting, district officials presented a seven-page list of answers to questions gathered during the past three weeks from developers. The list included questions on the tripled cost of Christopher High School, how past district funding created the current facilities budget crisis and state funding procedures. In addition, Brinkman answered more than a dozen questions that were not included in the packet.
The next step in the process will take place following the Christopher High School study session that district officials scheduled for Aug. 23, developers said. District officials are considering cuts, such as athletic fields and classroom furniture, to reduce the $14 million shortfall in financing for the school. They will also explore alternative financing options, such as loans and bonds, trustees said.
Developers said they will compile a wish list of policy changes the city can make – such as reducing or delaying its own development fees – during the next month. City representatives have indicated that they would be unwilling to change their current fee amounts or structure.
The district is continuing to work with the big players, in part by e-mailing all the information presented at the meeting to their representatives. District staff also will continue to meet individually with representatives.
While board president Tom Bundros said he was “disappointed” with Glen Loma and Hecker Pass landowners’ absence, Flores said the move was not unexpected and did not signal the end of the process.
“We knew if we took it to the end, it would have to be case by case,” she said.
Developers at Monday’s Meeting
Tony Sudol, ACS Ventures*
Cheng C. Kao, Rancho Meadows*
Justin Berglund, Rancho Meadows*
Mike McDermott, Oak Grove project*
Dennis Lalor, South County Housing*
Richard Barberi
Lee Weider
Developers Not at Meeting,
but at Past Meetings
Eric Keller, Glen Loma Group
Chris Vanni, Vanni Properties
James Suner, The James Group*
Bob Emberley, The James Group*
Brad Durga, Arcadia Homes
Donna Vingo, Warmington Homes
Gerry de Young, Ruth and Going Inc.
Mike Morelli, HMA Engineers
David Stanton, HMA Engineers
Ernie Filice, HPOA
Sal Akhter
*Expressed willingness to pay increased fee
Sample Question and Answer from Monday’s Meeting
How did the district’s facilities funding crisis develop so quickly? Why didn’t the district plan for the growth that everyone knew was coming?
A: The funding crisis did not develop quickly. This has existed for several years. Has anyone had a project in the past few years that did not experience inflation? The district has planned since 2001. Unfortunately, during one of the fastest growing periods in the history of Gilroy, there has been a significant decline in developer fees. The gap in December of 2005 on page 19 of the annual Facilities Master Plan Update was listed as $10.43 million. By the third quarter 2006 update the gap was $11.98 million. As of 12-14-06 the annual update showed a $12.86 million gap. The most recent quarterly update as of 6-13-07 showed a gap of $14.93 million. As is customary, these gaps are explained at the time and are generally chronicled in the local paper. All of these reports have been presented publicly to the Citizens Oversight Committee, the Board of Education, and are on our Web site.
For a complete list of developer questions and district answers, visit www.gilroydispatch.com.
