Mountain View school district and city clash again over how to split millions in tax revenue

Tensions are once again publicly flaring between the city of Mountain View and the Mountain View Whisman School District, with a dispute over how to split tax revenue leaving millions of dollars hanging in the balance.

At the last meeting scheduled before summer break, the school board voted on Thursday, June 13, to approve a revenue-sharing contract that doesn’t align with the one the city put forward, and that the Mountain View Los Altos Union High School District already approved.

A city spokesperson called it an “incomprehensible decision” that casts uncertainty on millions of dollars of public funding. The district defended the decision as a stopgap measure while a longer-term deal gets hashed out.

The city and schools districts have been in multi-year negotiations over how to divvy up revenue from the Shoreline Regional Park Community, a special tax district that covers much of the city north of Highway 101 and includes lucrative property tax revenue from Google’s headquarters and other tech offices. 

Although a portion of property taxes normally flows directly into local school districts, the vast majority of Shoreline’s property taxes instead go into a special fund set aside to maintain and improve that area. The city acts as the steward of the funds, and for nearly 20 years has agreed to share some of the money with Mountain View Whisman and MVLA, though less than what they would receive if the tax district didn’t exist.

Attempts to reach a long-term agreement on how to split the money have so far been unsuccessful, and the current one-year deal expires on June 30. The expiring deal granted the Mountain View Whisman School District an estimated $6.5 million in additional revenue for 2023-24, according to an October report.

On Thursday, the school board approved another one-year extension, which differs from the three-year agreement that the city and MVLA are supporting. With mismatched agreements across the three agencies, it’s unclear what will happen when the current agreement expires at the end of the month.

Vice Mayor Lisa Matichak told the school board that the city was blindsided, and that it wasn’t until earlier this week that they learned the school district wasn’t planning to adopt the agreement that the city sent the district back in November. 

City Manager Kimbra McCarthy similarly raised concerns.

“This is quite disturbing to know that an item was put on the agenda this evening that was not agreed upon by the City Council. It was not agreed upon by staff, and came as a surprise to the city,” McCarthy said.

Superintendent Ayindé Rudolph told the board that district staff brought back the same one-year extension that the parties approved in May last year. Rudolph said that district staff didn’t have the authority to negotiate the city’s proposal, and that there hadn’t been a joint meeting with the city and school districts to approve the new three-year agreement.

With little discussion, the board voted 4-1 to approve the district’s one-year proposal. Chris Chiang dissented, but didn’t explain his reasoning.

In an email to the Voice, Rudolph said that the district and city agreed last fall that a new deal would be negotiated by an ad-hoc committee of elected officials that did not meet.

“This short-term agreement is meant as a stop-gap measure at the end of the school year because that meeting has not happened,” Rudolph said. “It’s reasonable that the city and schools would continue the same agreement, with the same terms, until a new one can be negotiated.”

Rudolph added that he hopes the city won’t withhold funding “because the ad-hoc committee of elected officials hasn’t met to finalize a new agreement,” and that the district remains open to working on a solution and believes negotiations should continue.

City spokesperson Lenka Wright told the Voice that when the current agreement ends on June 30, “as a matter of law, expired contracts are null and void, and any associated rights and contractual obligations end.”

The city will consider reaching a separate funding agreement with MVLA, Wright said. She left open the question of whether the city is willing to continue negotiations with Mountain View Whisman.

“Given the incomprehensible decision by MVWSD Board to deny their own request, at this stage the City will need to assess the best path forward,” Wright said.

Three-year agreement prompted by school district request

During the late-night school board meeting, McCarthy stressed in her comments that it was the school district, not the city, that had pushed for the three year extension, and that city staff had “moved mountains” to promptly bring that agreement forward.

In September, the district sent the city a formal letter explaining that when it had submitted its 2023-24 budget to the Santa Clara County Office of Education for approval, the county raised concerns about its inclusion of Shoreline tax revenue in future years. The district asked the city for a letter of assurance that payments would continue through June 2027. 

The City Council responded on Oct. 10 by voting unanimously – in their capacity as Shoreline tax district board members – to authorize amending the agreement to extend payments through June 2027. Laura Ramirez Berman, who was school board president at the time, spoke at that meeting to thank the council for considering extending the agreement.

Staff then prepared the amended agreement and presented it to the school districts in November, Matichak said.

Rudolph characterized the series of events at Thursday’s meeting as city staff sending back a “different contract with new terms,” after the board had requested a letter of assurance.

Earlier this year, the district raised issues with one part of the three-year agreement. According to Matichak, in January, the district requested a change to the contract to state that the Shoreline Community wouldn’t issue any bonds through 2027 or until a future agreement was reached.

That request was denied, Matichak said, because development in the area is uncertain and a legal obligation exists to provide public infrastructure in the area, if it’s needed.

The prior one-year deal included a stipulation that bonds wouldn’t be issued in the 2023-24 fiscal year, but the city never agreed to not issue bonds going into the future, McCarthy said.

Chiang asked the city on Thursday if it had any plans to issue bonds. Assistant City Manager Arn Andrews said there weren’t current plans, but that the city couldn’t rule out issuing bonds in the future.