Largest School Construction Measure in California History Is Losing

A $15 Billion School Bond Would Allow Developers to Build Apartments Near Transit Lines

By Randyl Drummer CoStar News


California's Proposition 13, an initiative that would let the state issue up to $15 billion in bonds to help fund school and college building, repair and maintenance, was losing by a wide margin in vote counting late Wednesday.


The only statewide measure on this week's California ballot was far short of the simple majority needed to pass, with just more than 44% in support, 56% opposed and all voting precincts reporting at least partial results. However, an undetermined number of "unprocessed ballots," including mail-in, provisional and same-day voter registration ballots, remained to be counted by county election officials, who by law must report their final results to the state by April 3, according to a post on the California Secretary of State's Office website.


Opposition to the measure was strong as precincts trickled in, with incomplete results in densely populated counties like Alameda in the San Francisco Bay Area and San Diego in Southern California.


The school-bond measure received its name by coincidence under California election law, which resets ballot proposition numbers every decade. The new initiative confused some voters because it shares its number with a famous 1978 ballot measure that slashed property taxes for millions of Californians.


Adding to the confusion, teachers unions, community groups and Democratic lawmakers are pushing for a different measure in the November general election that amounts to a partial repeal of that historic property tax law. The measure, which has not yet been assigned a proposition number, would split the tax roll created by the Prop 13 of the 1970s and allow commercial properties to be taxed at market-rate values.


The original Proposition 13 has been referred to for decades as the "third rail" of California politics because of California homeowners' fondness for lower property taxes. The commercial real estate industry, arguing that the added tax burden will drive more businesses and jobs out of California, pledged to spend at least $100 million to defeat the split-roll measure.


The Prop 13 on this week's ballot was supported by the California Building Industry Association, which contributed $1.5 million to help pass the measure; labor unions representing construction workers and other professions connected with the building industry; and the California Teachers Association, which contributed $1 million to support the measure. Gov. Gavin Newsom campaigned heavily for the initiative in television ads and public appearances in recent weeks.


Prop 13, which was the only statewide ballot initiative on the March 3 ballot, requires a simple majority of voters statewide. It would authorize $9 billion in bonds for K-12 schools and $2 billion each for community college districts and the California State University and University of California systems. The measure does not involve a tax increase, but it would allow school districts to sell more bonds paid for with local tax increases that need to be approved by at least 55% of local voters.


It would also prohibit developer fees assessed on apartments built near transit hubs used to fund school construction, arguing that the fees increase construction costs at a time when California is trying to encourage affordable residential construction without increasing urban sprawl.


That provision could sharply reduce revenue to the Los Angeles Unified School District, the nation's largest school system, which did not endorse Prop 13 on this week's ballot, even though the measure has broad support from the state's other schools districts as well as labor unions, universities and construction groups. Los Angeles voters last summer defeated a parcel tax to help fund schools.


Only the Howard Jarvis Taxpayers Association, named after the businessman who 42 years ago spearheaded the original Prop 13, registered as an opponent of the school measure, arguing it would cause an increase in local property taxes and add to the state's debt and interest costs.


The measure would cost the state about $740 million a year, including interest over the next 35 years to repay the bonds, for a total estimated cost of $26 billion, according to California's nonpartisan Legislative Analyst’s Office. State Democrats, who have a supermajority in Sacramento, voted to place the measure on the ballot despite opposition from Republicans, who criticized the high interest and repayment costs.



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