FAQ on Measure H - Be an informed voter!

Information to consider before you vote on Measure H (School Bond for $283,000,000)

We are proud of our school district and its consistent progress over the past few years. 

Thanks to Students, Teachers, Parents, Administrators/leadership, PFCs and all involved. 

The fact is that most bay area/tri-valley school districts with our demographics have gone through similar progress. However, we face unique situation of over growth that other school districts are not facing.

1.     What does bond (Measure H) for $283 million guarantee?

There is no guarantee in this bond (for specific repairs/upgrade needed, 2^nd High School, or any project). Bond provides long list of projects with no guarantee to fund any specific project. The project list includes a school for Dublin Crossing (near BART station, next to SAP) where builders will be building about 2000 homes over next many years and the project is yet to start.

Would you give a blank check for $283M when School Board cannot guarantee any project?

2.     What is a GO (General Obligation) bond?

School districts can issue GO bond to raise money to fund capital expenses (such as building new schools). The outstanding bond debt cannot exceed statutory borrowing capacity limit of 2.5% of assessed valued (AV) - property values assessed in the school district taxable area).  There is a possibility of getting a hardship waiver from CA state, but these are rare and district stated that they do not intend to get a waiver. As of June 30, 2015 our statutory borrowing capacity was $315 million and our outstanding debt was $272 million, meaning there was $43 million of additional borrowing capacity.  In March 2016, the district borrowed additional money and did some other financing activities, and exact borrowing capacity is not known.

Assuming our AV increases from $12.5 billion at June 30, 2015 to $14 billion at June 30, 2016, we can raise only between $75M to $100M without seeking a waiver from CA state.

This highlights that we have limited potential for GO bond money and we need careful planning / expense management to prioritize right projects as we cannot raise more money easily. Developers and state money contribution have to be managed/increased as well.

3.     What is the resolution passed by school board and is it legally binding?

After approving the bond language to be voted, the School board passed a resolution with priority of projects and has already amended it once within a month. This resolution is NOT legally binding and the School Board can change the priority / fund allocation at their will.  The School Board reviewed the latest demographic data and its very much possible that they would amend it again in the coming weeks.

4.    Why this bond is set at $283M?

We believe that there is some psychology in this number ($283M) suggesting that it is tied to an exact budget versus a rounded amount (e.g.: $300 million).

School district could have chosen to raise lower bond amount to meet immediate needs (e.g.: $100M to fix/upgrade schools, fund initial cost for CHS2, etc) while figuring out all needs and have a priority.

The school board is proposing to charge the maximum amount of tax that’s allowed in one bond ($60 per $100,000 of assessed value of properties across the school district area). This bond will put DUSD in the Top 5 Unified school districts in California in terms of debt (out of 330 unified school districts in California).

5.     If this bond fails, is it end of vision for 2^nd high school in dublin?

Need for 2^nd Comprehensive High School (CHS-2) is real based on the student enrollment projections. School Board is yet to secure land for CHS-2 and any large expenditure on CHS2 is several years away. Also, School Board has not committed any money to start or complete CHS-2 in legally binding way (which means, all their words/resolutions can be changed by them after the bond is passed).

6.     What's the impact of developer fee reduction if bond fails in June 2016?

Developer fee will be reduced to about $3.43 per sqft (from Level-2 to Level-1) as this (bond) is one of the criteria to meet for our situation to levy Level-2 fee. This translates to about $1.5-2M per year. This is very small amount to justify passing $283M in bond plus $269 million in interest for that purpose. However, if the school board proposes new bond in November 2016, the loss in developer fee will be far less than $1.5-2M.

7.     What if bond fails in June 2016?

If bond fails in June 2016, there is another opportunity to vote on a right bond in November 2016. Its more important to understand the funding source in the interim until next bond -- please see the next question.

8.     How will Dublin school district manage if the bond fails in June 2016?

Bond money does not pay for school operations, so if the bond fails there should be no impact on school operations. Additionally DUSD has already secured $50 million for construction of the first phase (middle school focused) for the Jordan Ranch school and that’s sufficient to finish Jordan Ranch school as a middle school. As per DUSD school board, there is option to raise short-term money for immediate needs such as fixing any immediate repair or acquiring portable classrooms to handle growth. Also, as per DUSD, there are ways to get loans from the state in the interim (CA state owes us about $29M and more with Jordan Ranch school). 

9.     How much developer is paying?

Developers are paying about 15% of money needed to support each additional home built in Dublin (its about $7 per sqft of home built while school district have said that their need is about $42 per sqft to support children from each new home, which translates to about $85,000 per child for elementary school and $115,000 for High School). School Board may raise the fee slightly to about $10.66 per sqft, but that will still pay about 20% of school needs. The remaining 80% for new homes are dumped on voters (through local bond measure, such as measure H and state bonds, again the voters to take the burden).

More importantly, this increase is very small and many big projects have mitigation agreement that locked them (for no good reason for residents) at older rate. Those mitigation agreements need to be re-opened and re-negotiated.

10. What is current debt?

The unpaid principal balance of previously issued DUSD debt is $272M as of June 30, 2015 plus $37 million of deferred interest and refinancing fees for a total of $309 million. This debt is payable over 36 more years.

11. How much developers contributed to DHS?

No Level 2 developer fees have ever been collected for high school.  The school board has stated that developers contributed $10M towards Dublin High School in its reconstruction, but we are unsure how this was determined. The total reconstruction of DHS costed about $150M (most of the fund came from residents through previous bonds) and almost none of this has been repaid (part of $272 million of unpaid principal).

12. What did previous bond help (Measure E passed in 2012)?

Dublin voters passed Measure E in 2012 for $99M. The primary purpose of the bond was to fix aging school infrastructure across the school district, but school board redirected about 75% of that bond money to build new schools in East to support new home developments. More info: http://www.smartvoter.org/2012/06/05/ca/alm/meas/E/

13. How many more houses to be built in dublin?

As per School Board - about 4664 homes are expected to be constructed over the next seven years and about 8000 homes in total at build out. There could be additional homes to be built if City council continues to convert commercial zoned lands to residential lands.

14. Why are we in this situation?

Multiple reasons:

School Board is not collecting enough money from the developers. SB50 law provides formula to calculate the money that developer needs to pay. If the input to the formula is under reported, the money that developer needs to pay will be lower as well.

For example, School Board have long said (until about 6 months ago) that Dublin student population for High School will not exceed 2,500 students, so they were not collecting money from developers for High School needs. Now, the School Board is saying that the student population in High School will reach about 4,500-5,200 (and in matured phase, in about 20-30 years, the High School population will be about 4,000 students). This situation warrants need for 2^nd High School (for which School Board is yet to acquire land or have strong plan on funding).

If the DHS reconstruction costed about $150M and 2nd HS will cost about $350M, we lost about $100M-200M from the developers for High school needs depending on how we calculate the fee.

City Council continues to rezone commercial lands into residential (and change single family homes to higher density homes). Once approved by City Council, a developer has 10 years to build the homes.

15. How city can help?

City can help by stopping the rezoning of commercial/other land to residential land and also slow down many home developments based on city infrastructure aspects.

16. How state can help?

CA state owes part of school construction cost, but the School Allocation Board’s money for new school construction has run out of money.

17. How other neighbor cities managed?

San Ramon mandates builders to build schools before homes are sold in a neighborhood. Pleasanton has been allowing limited number of new homes. Fremont assigned schools in different part of town for new home owners (not guaranteeing space in overcrowded local schools).

Dublin School Board has not taken appropriate measures to manage the growth and related funding needs.

18. What is the lawsuit over a few Dubliners who raised concerns on bond?

Developers and vendors (that do business with school district) have funded campaign team that supports this bond. The support team is raising about $150,000. The campaign fund from developers/vendors supported lawsuit against a few Dubliners who raised concern about the school bond. The interesting aspect is that the bond support team (funded by the developers/vendors) have included false information in the Bond support language that 2^nd High School building is legally binding. This is false information.

Its interesting that there are many concerns raised in the ballot left intact (and that makes us believe that Yes campaign/School Board could not challenge those concerns in the court and agree to those concerns to be valid). For more info - please read the ballot https://ballotpedia.org/Dublin_Unified_School_District,_California,_Bond_Issue,_Measure_H_(June_2016) and search for "opposition to the measure" in the page.

19. How did previous bonds help?

Previous bonds emphasized on preventing overcrowding and upgrading aging school infrastructure. We are still dealing with those issues in more larger scale.

20. What is SB-50?

SB 50 (Senate Bill 50) is a law enacted in 1998 by CA state. This prohibits a city government to use school infrastructure capacity issue as a reason to deny requests for home development (however, the city government can have other reasons to deny requests – such as city infrastructure issues). School districts across the state have used positive negotiation strategies with the developers to workaround this situation. Mello Roos is an example (used by San Ramon).

21. How does our property tax help?

Property tax assessment by county/state is major source of funding to operate schools (paying for Teachers/staff salaries, operational/maintenance of schools, etc). That money does not fund new school construction.

On the other hand, this bond does not support or impact operational budget aspects of school district.

22. What is parcel tax?

School districts levy short-term parcel taxes to support any operational shortfall. We Dubliners already pay a parcel tax. Parcel tax can give exemption to senior citizens (but not the GO bond by law).

23. How much money will be available from this bond if it's passed?

If the bond in June passes, about $75M-$100M is expected to be available immediately. School board will decide on where this money will be spent. Public who vote for the bond does not have any control on what projects will be prioritized by School Board.

An additional $75M to $100M is expected in each of 2019 and 2022, and the remaining portion in 2025 (unless School Board request waiver to increase debt ratio to accelerate the use of funds from the measure; that comes with a few huge challenges -- 1. will reduce the bond rating of Dublin school bonds, pushing up interest rate, 2. the interest will be too high to pay and will let principle to grow quickly and 3. DUSD will be in top 5 in terms of debt ratio in CA among the 330 unified school districts).

24. What's the role of CBOC?

CBOC (Citizen’s Bond Oversight Committee) plays an important role, but they are limited in their power/responsibility to confirm that the bond money is spent on projects listed in the bond. Since the bond includes a long list of projects and does not guarantee completion of any specific projects in that list, its up to school board to decide on projects where the money is spent.

25. Why Jordan Ranch School (JRS) is good for the community but financially a bad deal?

We need JRS for middle school for current residents (and some capacity will support future residents as well). School Board gave up right to buy the original school site of 10 acres (since the developer asked for $30M for 10 acres), the developer/builders got right to build about 150 homes in total and stand to gain about $60M in additional profits. School Board just got about $2M in the process.

However, these additional 150 homes will be adding burden of $15M in new school facility needs.

The same land (the original school site of 10 acres) was available at $3.5M back in 2008 when school district executed mitigation agreement for Jordan Ranch schools!

In summary, School district has taken huge additional burden. We (voters/public) donated a park in the process to school district (lease option where most of the park site will house the school buildings). The credit goes to voters and not to the developer.

School district could have negotiated better and got $20M in the process from the developer/builders instead of just $2M in road improvements and $2M in standard developer fee.

If you think, this is bad negotiation, wait… Dublin Crossings has much worse negotiation and dwarfs JRS negotiation.

26. What is the growth expectation for school district and how much money is needed?

We need about $600M-800M as per School Board to meet growth needs. As per School Board, we expect to add 5,000 students to school district in next 7 years (taking total number of students in schools district to about 15,000 students by Fall 2023). 

The peak enrollment is expected to go to about 18,000 students (this is our community group's assessment). This is is justified since the growth in elementary grade levels will still be growing as of Fall 2023 (not plateauing / decreasing).

To put this in context, Pleasanton school district has about 15,000 students today with their stable population of about 75,000 residents. Dublin is expected to grow to about 80,000 residents at build out / maturity (from the current 55,000 to 60,000 residents) and our town has lot of young families and attracts more of them due to good schools.

27. Should I vote YES or NO to measure H?

We need clarity on funding for next 5-10 years and more importantly, how the first $75-100M from measure H (if passed) will be spent. There are many unanswered questions.

Looking at past bond (measure E), 75% of them were diverted to build new schools to fund / support growth and developers instead of repairing old schools (which was the priority).

Each of us should decide on the vote. We are running a marathon here and not a 100 meter sprint. Other school districts (such as Pleasanton and San Ramon) got their school tax measures voted down in recent years, but they tightened the belt and thrive. We need reality check, accountability and transparency and not continue to sweep the issues under the rug.

28. Why do we have such high fund need?

There are a few reasons for our current situation and future need. Following four reasons may be in top:

a. Unmanaged growth (combined with mitigation agreements with developers that locked us in bad contract and accepted developers to pay low even when our develop fee calculation goes up on yearly basis)

b. Collecting low developer fee
c. Making big errors in demographics (see question #11 above for one of the major impacts we had)

d. Expensive schools (apparently, School Board is not using competitive bid to select most cost effective contractor), 

About point 28.d (expensive schools) -- Comprehensive HS for 2500 students in Fremont is estimated to cost about $265M while its $438M for Dublin (that’s about $173M more just for HS!!!). Please see attached.

We have requested School Board to look at this and fix these cost aspects, but there has been no response over the past 3-4 months since this topic was brought up. We build most expensive schools in tri valley / bay area and probably across our state or nation.

Interestingly, Fremont's estimate for land is about $2M per acre while Dublin's estimate is about $3.5M per acre. That's about 75% more. Fremont is supposed to be more expensive than Dublin. Same on construction cost.


Measure H is to subsidize these expensive/bad policies and the developers?

Data source:
Dublin/DUSD - http://www.dublin.k12.ca.us/cms/lib5/CA01001424/Centricity/Domain/16/DUSD%202016%20SFNA%20FINAL%205-13-2016.pdf


Fremont/FUSD - http://www.fremont.k12.ca.us/cms/lib04/CA01000848/Centricity/Domain/79/SFNA_Report_15259_3901_Fn.pdf

Please vote YES if you believe that this bond is good for the school district / community

OR

vote NO in June 2016 and ask for a better & well-planned bond in November 2016.