Measure RR, approved by voters in 2008, allowed Mt. SAC to approve $353 million in new construction projects. Due to issues with the method of funding stemming from the economic downturn and housing market slowdown, the majority of these projects cannot go forward.
To create funding, Measure RR requested the approval of local voters to raise their own taxes. They approved it by about 70 percent, extending the tax introduced by a previous construction bill, Measure R, in 2001.
This meant that the school could sell bonds up to the $353 million goal, and it would make money to finance those bonds through a special assessment on citizens’ property tax bills. This assessment charges $25 for every $100,000 of an owner’s property value.
However, due to the recession, the housing market has slowed. The assessed valuation of properties in L.A. County has decreased by about 2 percent annually since 2008, according to Gary Nellesen, director of facilities.
As a result, the amount the school would be able to collect from the property tax assessment would be much lower and would not match projections made at the time when the school planned Measure RR.
The school executed a backup plan in the form of a bond anticipation note. The note is a loan from a bank for about $65 million; the bank loans this money knowing that Mt. SAC will be able to repay it later with the planned bond money from Measure RR.
Using about $20 million of this money, the school is completing smaller maintenance and infrastructure projects at a lower price due to decreasing construction costs.
However, the majority of the measure’s projects are large-scale tasks that require destroying an old structure and creating a new one, and those projects remain stagnant.
This includes a new parking structure, a new campus center, and numerous new buildings for specific departments.
Delayed construction has resulted in additional costs for the school. Some of the aging buildings that the school planned to destroy and replace now must receive maintenance, which is financed by Mt. SAC’s general fund.
“We have to spend a lot of money just to keep some of these old buildings up to code and up to safety standards,” Nellesen said.
In addition, the school must extend their leases on trailers used to temporarily house classes during construction.
Construction projects planned and funded by Measure R are continuing as intended. The new building for agricultural sciences has been open for one semester and will soon be completed. The Design Technology Center has not yet been finished, but this is due to issues with contractors, not financial troubles.
“Some of our contractors are very good, but all it takes is one bad egg to spoil everything,” Nellesen said.
To collect their money and move forward, the school must wait.
“The solution is for the assessed valuation to go up,” said Mike Gregoryk, vice president of administrative services. “We won’t be able to use the funds until about 2017.”
“We’re doing a lot of planning,” Nellesen said. “When the money comes back, we want to be able to build as soon as possible.”
Nellesen added that attempting to continue construction with less money is a bad idea because the projects are meant to use quality materials and incorporate the best available technology in order to create lasting, reliable structures.
“Our Board of Trustees is dedicated to building these buildings correctly,” Nellesen said. “So far, Dr. Scroggins has been 100 percent behind this.”
Mt. SAC administrators are watching federal measures such as President Obama’s jobs plan announced earlier this month, which includes money to help educational institutions. The staff is not counting on the plan, because it is unlikely that Mt. SAC will be able to see this money. The federal money would go to the state and local schools must appeal their case and show how they are using some of their own money to combine with the state’s contribution, Nellesen said.
The staff also has considered the possibility of another ballot measure for voters to increase their taxes again, but has chosen not to create one at this time.
“After they were so generous with Measure RR, I don’t think it would be appropriate,” Nellesen said. “I think we should wait on new construction,” said Gina Crummitt, 34, social services major. “I don’t think it’s fair to raise taxes on people right now.”
“We don’t have a choice,” said Gregoryk. We will survive.”
- Matthew Medina
News Editor
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