Mountain View's first North Bayshore housing project generated $12 million in funding for local school districts to offset the cost of new students. But when it came time to approve the funding last week, Mountain View Whisman district officials said they found out they were getting the short end of the stick.
The Sobrato Organization is planning to build a 635-unit apartment complex at 1255 Pear Ave., and won City Council approval for the project in 2018. Council members required the real estate giant to pay $12 million in fees to offset the cost of facilities for the additional students generated by the new homes.
But how that money would be split between the two public school districts -- Mountain View Whisman and Mountain View-Los Altos High -- was apparently unclear. As it turns out, the city opted to give $6.5 million to the high school district and $5.5 million to the K-8 Mountain View Whisman district. Mountain View Whisman school board members voted unanimously to accept the money, but said it shouldn't set a precedent and shouldn't happen again.
The imbalanced agreement reportedly came as a surprise to Mountain View Whisman officials. Superintendent Ayinde Rudolph told trustees at the Jan. 23 meeting that the city, in deciding the fees, determined that the high school district ought to receive more funding because of the greater acreage required at high school campuses. At the time, Mountain View Whisman was exploring dense, urban school models in order to find a way to fit a campus in a neighborhood with limited, expensive real estate abutting 15-story buildings.
The expectation was that Mountain View Whisman would receive $6 million of the school fees, but district administrators and its legal firm did not realize it would be receiving less until after it was approached by the City Council. Board member Laura Blakely said she was willing to accept the terms of the funding agreement, but was not excited about the amount.
"I am disappointed that the city tried to dictate the parameters," Blakely said. "That doesn't feel appropriate to me."
City staff contend that the final negotiated amounts for each district were roughly based on a proportional share requested by the school districts themselves, rather than its own concocted formula. The city was involved, but the terms of the funding contract were brokered between and agreed on by all the parties involved.
"The school districts submitted a report to the city," said Aarti Shrivastava, Mountain View's community development director. "That breakout they put together themselves was used to facilitate the agreement between the developer and the districts and all parties agreed to it."
After the meeting, Mountain View Whisman spokeswoman Shelly Hausman clarified that the split was based on the total estimated cost of $193 million for both school districts ($109 million for the high school district and $84 million for the elementary district), which amounts to approximately 56% for Mountain View-Los Altos and 44% for Mountain View Whisman.
California school districts receive state-mandated developer fees for new residential and commercial construction, which can vary from one district to another but rarely, if ever, cover the full cost of housing additional students. This is particularly true in cases where an expected burst of enrollment growth would require school districts to purchase land and construct a new campus.
City Council members have endeavored to ask housing developers to pay beyond that state-mandated fee, but doing so has been a balancing act. Asking for too little would leave school districts without the resources to house more students, but asking for too much threatens the financial viability of residential projects and runs contrary with the city's housing goals.
Mountain View Whisman currently collects $2.53 per square foot of new residential development and $0.41 per square foot of commercial and industrial development. The Mountain View-Los Altos district collects $1.26 per square foot in residential fees and $0.20 for commercial, or about half of Mountain View Whisman's fees.
Going forward, Blakely said it would make sense for the city to follow that ratio, and give Mountain View Whisman two-thirds of negotiated school fees from developers -- something Rudolph said would be the standard for future projects.
"Moving forward our expectation is that we will get the two-thirds share of the developer mitigation," he said.
The subject of school fees has been a difficult and occasionally contentious three-way debate between school districts, the city and developers over the last year. The city is planning for 20,000 new homes primarily located in the North Bayshore and East Whisman areas of the city, transforming lower-density tech parks into urban mixed-use hubs. That magnitude of growth could mean anywhere from 2,500 to 3,600 additional students, and could end up costing school districts in excess of $1 billion, according to one city staff report.
Sobrato's project is the first one approved in North Bayshore, and the first to test-drive the city's policy on school fees. Originally, school districts requested that Sobrato contribute $24.4 million, but the City Council bent the rules in 2018 and accepted roughly half that amount after the developer complained that the high fees made the project financially infeasible. Council members insisted that Sobrato's deal was not intended to set a precedent for future housing proposals.
The largest landowner and prospective homebuilder in North Bayshore, Google, has been in talks with Mountain View Whisman for years on school fees and where a school could potentially be located. The last proposal considered by the school board was a small, 2.5-acre property on Plymouth Street between Huff Avenue and Joaquin Road.