The Developer Bonus Tucked Inside This Ballot's Prop. 13 (School Bonds, Not Property Taxes)
California voters are being asked to approve a controversial measure making it easier for developers to build apartment buildings within a half-mile of public transit.
Most will think they're only voting on whether the state should borrow more money to fix broken air conditioners in schools.
On its face this new Proposition 13 — the only statewide ballot measure to appear on the ballot for California's March 3 presidential primary — asks voters for $15 billion in state bonds to finance the construction and renovation of California K-12 schools and public universities.
But tucked into the ballot measure's language is a provision that frees new multi-family developments around subway stops and bus stations from school impact fees.
Developers say such levies unnecessarily drive up the cost of desperately needed new housing. Education finance experts say they are a pillar of some school district's budgets and defray the cost of added enrollment from new students.
WIDESPREAD SUPPORT (+ SOME HEARTBURN)
Nearly every major education group in the state — teachers unions, school boards, charter schools — supports the bond, arguing that billions in new statewide funding far outweighs the potential loss of developer fee revenue. But even the lawmaker who authored the ballot measure has some heartburn over how that provision will impact certain school districts — so much so that he thinks schools could need more money down the line.
"What we need to do at a state level is we need to watch what fiscal impact this has on school districts across the state," said Assemblyman Patrick O'Donnell, Democrat from Long Beach and author of the bond. "If it's significantly impactful we may have to backfill the fees that the districts will lose because of this policy."
Gov. Gavin Newsom, who has endorsed the ballot measure, has long sought to incentivize more homebuilding around public transportation. The goals are twofold: fill the state's crushing housing shortage, and reduce carbon emissions from long commutes.
But major legislative efforts to accomplish those feats have so far fizzled. Senate Bill 50, a proposal from San Francisco Democratic Sen. Scott Wiener to force cities to allow apartment buildings around transit and eliminate single-family-only neighborhoods, failed to clear the state Senate earlier this year.
"Keep in mind that transit-oriented housing is what we need for climate reasons, what we need for congestion relief reasons, it's what we need overall," said Dan Dunmoyer, president of the California Building Industry Association. The association, a developers' trade group, has spent more than $1.5 million backing the ballot measure.
HOW THE BONUS GOT THERE
O'Donnell said the developer fee provisions were inserted into the bond measure during prolonged negotiations with the Newsom administration. The governor's office did not respond to request for comment.
The fee waivers in this Prop. 13 (not to be confused with the property tax-cutting Prop. 13 voters passed in 1978) don't come close to the type of radical transformation proposed by Wiener. But they satisfy another complaint from developers over why new construction is so difficult in California: the "impact fees" local governments charge new homebuilding.
According to the nonpartisan Legislative Analyst's Office, roughly 90% of school districts have raised around $10 billion from new housing developments since 2002. While the fees make up a relatively small portion of school budgets, they are a key pillar in financing the construction of new schools or facilities.
Fees can total from the thousands to tens of thousands of dollars per unit, which developers argue manifest in higher rents and home prices. Prop. 13 would not only eliminate those fees for apartments near transit, but would reduce by 20% whatever a school district is charging new apartment buildings anywhere.
Single-family-only developments — like many master-planned suburban communities marketed towards young families with children — would receive no benefit from the ballot measure.
The rationale for imposing school fees on new developments is intuitive:
Developers argue that in an era of declining school enrollment, the idea that new apartment buildings in urban corridors should be charged for impacts on local schools is misguided. Younger, single adults are more likely to live in those apartments than nuclear families with school-age children.
But ironically, the scale of California's housing affordability crisis — where a single family home costs nearly $600,000 — has meant families are increasingly opting for an apartment over the McMansion in the 'burbs.
In "The Crossings at Montague", a 468-unit apartment complex north of San Jose, leasing consultant Rosio Tafoya has seen a steady increase in the number of families interested in renting. A two-bedroom, one-bath now goes for $2,880 a month.
"When I first started it was mainly roommates, and now most of the time we're getting families," said Tafoya.
The big attraction for the tech transplants with a growing family? The schools.
"We've had residents that come and say they want to live here because we want to start kindergarten here," said Tafoya.
This story was originally published by CalMatters on Feb. 24.
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