Tough Decisions! Put All Housing in the Los Gatos School District? Or Spread the Housing to the North Section of the Development too? There are consequences.

posted in: North 40, Our Town, School | 0

Summary:  If all housing under the current North 40 Phase One application were to be built in the Los Gatos School District, the Schools stand to gain more than $ 6,368,500 over and above state mandated payments by the developer.  If all housing under the current application are built in the south section, there are a number of people that feel that much housing on those 22 acres is too dense and the housing should be spread over the entire development.  The decision is not a simple one, and we’re not pointing you in one direction or the other.

The reason for explaining this is to give you information as to why some decisions are made the way they are.  The entire project is much more complex than even this issue. Soon, we’ll have an article on why the housing numbers were determined to be what they are.   In our mind, it is  important that the whole community knows the facts as best we can present them – not just the hype that there are poor, uninformed decisions being made without your input.  Very smart, concerned citizens made the decisions and you should understand the thinking behind them so that you can make an informed decision

By law, the Los Gatos Union School District (LGUSD) will receive $3600 dollars per average sized living unit of 1572 sq. ft. (1572 x $2.29) which is a state mandated, fixed- fee to the school district with jurisdiction.  In addition to this fee, the developer, Grosvenor has made an agreement with the LGUSD to give them either 2 contiguous acres, or $23,500 per living unit that is neither classified as “affordable” nor “low income”.  If the current plan was approved for 271 of these units, the LGUSD would receive either the acreage or $6,368,500 over and above the state mandated $975,600 specified by SB 50.  I should note that there are additional fees for the commercial portion that I have not addressed as there is no “bonus” being paid on that square footage.

However, the North 40 consists of 5 school districts (Campbell, Cambrian, LGUSD and Los Gatos-Saratoga High School District, and San Jose) with the LGUSD comprising the southern 2/3 of the 44 acres.  Any housing going into the north section of the North 40 would fall into the other school districts’ jurisdictions.

In general, the money for schools goes to the jurisdiction.  A complication may arise if the housing were reduced in the southern half, that would reduce the amount received by the schools proportionately.  Having the houses split may be more pleasing to many people, but it is important to understand the implication for the dollars donated to the schools.

The agreement with Grosvenor calls for an additional mitigation fee of $23,500 for every market rate unit in the Los Gatos Union School District.” Students who live in the northern end of town on the North 40 would be students of the other school districts and therefore, not part of the agreement between the developer and LGUSD. Students who petition to transfer from the other school districts into LGUSD have the right to appeal to the Santa Clara County Office of Education (SCCOE).


If the SCCOE approves the transfer from the other districts into LGUSD, LGUSD would not receive any new revenues to educate children living in the other school districts. However, the catch 22 is that the financial burden to educate students from other districts falls on LGUSD for 9 years (K-8). For example, the cost to educate a student in LGUSD is approximately $9,630 per year, or $86,670 if the student is there from K-8 years.  If only there for part of the time, the cost to LGUSD is proportionately dropped.


Given that the North 40 has its own community identity, it would be very common for the families living in the northern half to petition the Santa Clara County Board of Education to have their children go to the Los Gatos schools since they actually live in Los Gatos, and they are living in a defined neighborhood.  The North 40 is all within the Los Gatos boundaries, and is physically bound with Hwy 85, Hwy 17, Lark Ave. and Los Gatos Blvd.  To a degree, it is a community within itself, and parents in the northern half have the right to petition to join the LGUSD.

Petitioning does not guarantee that they will be accepted to the LGUSD, however, parents have a right to petition to the Santa Clara County Board of Education, and it is likely they will succeed in sending their kids to LG schools for as long as they attend LG schools.  We hope to have an article from a former school principal regarding the petition process.

It may be far worse than just losing the $23,500 donation plus losing the $3600 mandated dollars.  The schools would also lose the property tax benefits.  If the average unit sold for $1,200,000 (which is our  guesstimate), that would be an annual loss of $12,000 in property taxes to the town, of which approximately 40.62% goes to the schools.  This does not count any 2% annual increase.  The annual cost of each child attending Los Gatos would be incurred by the LGUSD.  Very roughly, this is how this might look on paper for LGUSD to educate a child in the north end of the North 40 that successfully petitions to attend a school in Los Gatos.  No inflation nor property tax increases have been estimated:

One time loss per living unit of an average 1572 sq ft:  – $27,100  ($23,500 + $ 3600)

Annual loss of property tax to the school:   – $4874  (guesstimating a sale value of $1,200,000 per unit x 1% X 40.62% that would go to the other school districts)

Annual cost of educating one child:  $ 9,630

The LGUSD school-life loss of one child loss of property tax  ((9 years X $12,000) x (40.62%)) = $43,870)

The LGUSD school-life cost of educating one child going 9 years to school  (9 X $9,630 = $86, 670)

A living unit in the northern district that successfully petitions their child into the LGUSD COULD have the associated costs to the LGUSD.

One time  revenue loss:  $27,100

Annual Costs to LGUSD: 

  • Property tax: $43,869  ($ 1,200,000 x 1% x 40.62% x 9 years)
  • Cost Incurred by the school for 9 years$ 86,670 ($9630 x 9 Years)

Total loss of one living unit of 1572 sq. ft with one child over 9 years in this unit is located out of the LGUSD school district inside the North 40 = $153,983. 

Each additional child will cost the district $ 86,670  ($9630 x 9 Years)

IF housing is built in the northern section of the No. 40 and there are no kids, the district will still lose $27,100 of gift dollars per living unit not built within the southern 22 acres.

Once again, the reason for explaining all of this is to give you information as to why some decisions are made the way they are.  We are trying to look out for the Unintended Consequences and to give you information to make the best decision for the community.