A Question of Tax Fairness in CUSD

The headquarters for the Capistrano Unified School District has long been chided as overwrought and overpriced – a “Taj Mahal” – but when it comes to paying for the digs, residents in the district do not feel the pain equally.

Costing $38 million to build, the Education Center has prompted several school board recall campaigns. 

To bankroll the project, the district used a financial tool that is similar to a mortgage and available to government agencies, which it pays off primarily with proceeds from landowners in special taxing districts known as Mello-Roos or Community Facilities districts.

Mello-Roos districts saddle the cost of roads, utilities and schools for new housing projects on their future homeowners. Each district is created and negotiated separately with the school district and other public agencies based on needs, the number of units and market forces.

Consultants recently looked at what residents across the sprawling Capo Unified district pay toward schools, and the portion of each bill that goes toward paying down the education center, opened in 2006 in San Juan Capistrano.

They discovered that one community facility district – the one that includes Mission Viejo and Aliso Viejo residents – has paid for the bulk of CUSD's headquarters: $14.3 million of the $19.8 million funded so far.

Cost per household varies greatly

Nevertheless, although Mission Viejo and Aliso Viejo property owners have footed the lion's share of the overall total, a group of taxpayers in San Juan Capistrano and Rancho Santa Margarita has paid more individually.

For example, from the total Mello-Roos fees paid to the school district by the 22,649 landowners in Mission Viejo and Aliso Viejo Community Facilities District No. 87-1, $635 per property has gone to support the ed center.

In contrast, Rancho Madrina has only 120 homes, but landowners there have paid an average $4,167 apiece for Capo’s HQ. Similarly, the 727 homeowners in one of Rancho Santa Margarita’s two Mello-Roos districts, No. 94-1, have paid $2,399 apiece.

How did such a hodgepodge of fees come into being? The district's consultant and a spokesman did not return a reporter's email seeking comment.

But the consultants recently recommended rebalancing the payments among each of 10 Mello-Roos districts, five of which have yet to contribute anything. The plan would have most property owners contributing $591 over the life of each community facilities district, which varies from district to district.

Under that proposal, people who have already paid more would see a credit returned to their area's Mello-Roos district to be spent on local school facilities.

Proposal to rebalance confuses

When the plan was presented to the school board last week, trustees seemed mystified.

“Why would we do this? What’s the benefit to CUSD to do this right now?” asked Trustee Jim Reardon.

Clark Hampton, deputy superintendent of business services, said recent refinancing of Measure A bonds gave the district pause to look at its community facility districts. He thought some tweaks could be made.

“In the totality of it, there would be some sort of equity,” Hampton said.

But Reardon challenged him on who gets to define what’s equal.

“There are many sins of the past and among them is the construction of this building and how we paid for it,” Reardon said. “The intent of this is to impose one view of fairness. … We’re imposing our view of what’s fair on top of a mistake made a decade ago.”

Trustee John Alpay also didn’t like the idea. Under the plan, Talega taxpayers would see their portion for the ed center jump from $442 to $591.

“Transferring money from San Clemente and giving it to Mission Viejo and Rancho Santa Margarita” isn’t fair to an area whose high school is in great disrepair, Alpay said. San Clemente High is "falling apart" and is in desperate need of new roofs.

Pitting region against region

“We’re taking more money out of San Clemente and basically subsidizing other schools,” Alpay said. “Given that there’s no money, you’re leaving less in the kitty to address issues at San Clemente High School or any other San Clemente school that the San Clemente CFD [Community Facilities District] serves.”

Trustee Ellen Addonizio, who represents a portion of Mission Viejo, saw it differently: “On behalf of residents in Mission Viejo and Aliso Viejo, we have been burdened and overburdened by the fees we’ve paid in previous times.”

The board decided the consultant should take another crack at what might be "fair." The item is not expected back before the board any time soon.

Areas without Mello-Roos districts include Capistrano Beach, Laguna Niguel and Dana Point.

CURRENT FIGURES IN CUSD MELLO-ROOS DISTRICTS