CUSDWatch: No State Matching funds are available- The Ranch loans CUSD money to complete the Construction of Esencia K-8

November 8, 2017 CUSD BOT Meeting Agenda Item #38 PA2 SCHOOL IMPLEMENTING AGREEMENT – RMV COMMUNITY DEVELOPMENT, LLC AND RMV PA2 DEVELOPMENT, LLC

Board Meeting Agenda at page 1192

Board Audio 193:40 (3 hours 13 minutes 40 seconds)

Presentation by Clark Hampton

"SHARED CASH FLOW ARRANGEMENT"

The Ranch will make an "Owner State Funding Advance" up to $6,906,000 million.

Total Cash Flow Advances shall not exceed $8,300.00

The Ranch will Authorize the us of "Deferred High School Payments" to fund the balance

When the State matching funds are received (they have 30 years to receive payment), they will be used to reimburse the Ranch (Owner State Funding Advance) and the used High School Payments.

If state funds are not received, the Ranch shall receive a credit for the High School Payments (to be used for Construction of future schools)

Moved by Trustee Holloway

2nd by Trustee Bullockus

Passes 5 - 0 - 2 (Trustee Reardon absent. Trustee Jones left the meeting for the last three agenda Items without explaining).

Link to the November 6, 2013 School Facilities Agreement page 1

Why this is a bad deal for taxpayers and students living outside the Ranch Plan Area:

On the November 2016 Ballot there was Prop 51 - a $9 billion Public School Facilities Bond. In addition many school districts across the State initiated their own school facilities bonds. CUSD had Measure M an $889 million dollar school facilities bond. Although the State of California is enjoying record high revenues; and has accumulated over $77 billion in EXCESS TAX REVENUES since 2007-08, the state is not allocating a singe penny for K-12 facilities. The majority of facilities funding is going to Transportation aka High Speed Rail. The only facilities funding for education is for Community Colleges.

The California 5-year Master Plan does not contain a single penny for K-12 schools...

NOT ONE PENNY FOR K-12 SCHOOLS!

In addition- During the great recession, the State eliminated most categorical programs and allowed Deferred Maintenance Funds to be swept into the General Fund. Most of these funds were used to maintain maximum employee Compensation during the economic downturn. Even though we are now in one of the longest economic recovery periods of all time...

CUSD facilities have not been fixed or maintained for 15 years.

On November 1, 2017 CUSD released its Facilities Condition Assessment Districtwide Executive Summary - Final Report which indicates that CUSD has $200 million in "Emergency" Facilities Repair and maintenance needs. Reports for individual Schools.

While the existing facilities need $200 million to be SAFE! CUSD is in the process of adding the new Ranch Development to the district, an estimated 77,000 new residents which will require the construction of not only the Esencia K-8 school which is currently under construction, but two additional K-5 schools, one additional K-8 school and a possibly, high school.

CUSD has no available funds to fix existing facilities, and is now going into great debt to fund NEW facilities that ONLY RANCHO MISSION VIEJO RESIDENTS WILL ENJOY.

CUSD has already spent $13 million of district money to OVERPAY for the Esencia K-8 School site by agreeing to value the land as if it had 100 homes on it... there are no entitlements attached to this land, and this appears to be a gift of public assets to the Ranch.

The project included receiving $16,930 in state matching funds for site acquisition, and $17,969,156 in matching funds for construction. The State is not releasing matching funds which has placed CUSD in a cash flow crunch. CUSD is being forced to go into debt to pay for the Ranches new schools. And, will be doing so at the expense of every other existing school in CUSD.

Note: This Agreement only covers the State Matching Funds for Construction... how did CUSD and the Ranch cover the $16,930 in state matching funds for the site acquisition?

In anticipation that CUSD would not receive State matching Funds, the Ranch is providing CUSD with a loan which Clark Hampton refers to as a "SHARED CASH FLOW ARRANGEMENT".

This Item seeks Trustee approval of a Loan from the Ranch to CUSD for the construction of Esencia K-8.

This agreement is unfair to existing taxpayers living outside the Ranch Plan area. Trustees should let the Ranch pay for, and build the schools it needs to develop it's property. That is not the responsibility of taxpayers living outside the Ranch Planned Area especially when it means there is no available funding to fix and maintain existing facilities.

Source: March 22, 2017 Presentation: Esencia K-8 School Facilities and Funding Agreement between CUSD and the Ranch

2017 California Five-Year Infrastructure Plan page 3

2017 California Five-Year Infrastructure Plan page 10

Capistrano Unified Direct and Overlapping Bond Debt November 1, 2017

Documentation: Complaint filed with the District Attorney: https://cusdwatch.com/index.php/2-uncategorised/201-march-22-2017-board-meeting-agenda-item-22

DAMAGES – The Public has been substantially harmed as a result of the Conduct of CUSD.

1) $24 million in taxpayer money is being taken- money that could be used to restore class sizes, restore programs like art, music and science and to fix and maintain facilities.

2) CUSD is 8,555 students over legal capacity (excluding any students from the Ranch).

3) CUSD is giving priority to RMV students over Mello Roos Taxpayers in Ladera Ranch and Talega, who have legal priority at Tesoro and San Juan Hills High School

4) Student generation rates are not accurate. The Ranch has sped up its timeline and has built what the Public believes to be 1,406 more units than initially planned. There could be over 1,000 students that will NOT have seats in CUSD schools for this fall September 2017-18. The Public is trying to verify this number, but the County is not cooperating.

5) The negotiated School Payments are unconscionable. They reduce the fees paid to CUSD simply because a home is on a smaller lot. The Density of the building done in Sendero and Esencia is outrageous. They have 3 story homes (10 to a lot) that will generate as many students as the same home on a larger lot, but CUSD receives ½ the fee to build the school The 2013 Agreement was based on the following:

Source: pages 58 - 65.