Newhart Gym: Another Boondogggle
by Dale Tyler

On Oct. 17, 2005, the Mission Viejo City Council decided on a 3-2 vote not to spend city reserves to build a gymnasium at Newhart Middle School. This action came after the State of California refused to grant the city $1 million to pay for part of the facility. In my view, this was the best possible outcome. A number of people spoke on both sides of the issue, with parents of Newhart children and Capistrano Unified staff and administrators predictably on the side of spending the city's money.

Earlier in the year, the City Council, at the urging of Lance MacLean and Trish Kelley, decided to throw out the list of capital projects planned for years and move a new project to the very top of that list. This project, which was not talked about seriously in any prior budget planning sessions, suddenly became the most critical need of the city. Why MacLean and Kelley suddenly decided this was so important may never be known, but the other council members agreed to go along only if the state would provide almost all of the money to build the gym. Operating costs were mostly ignored at these sessions. However, the reasons used to justify this project were incorrect, as I will show here.

First, why should the city build gymnasiums or any other structures on school property? The school district should plan for and build its own buildings. Some would argue that the gym would serve the entire city and, thus, we should pay a part of the cost. I say this is poor reasoning. The old adage that possession is nine-tenths of the law applies here. I can imagine in the future that the city would have little leverage if Capo decided that they needed the gym for a school function at the same time some citizens were scheduled to use it. What could we do – call the Sheriff to eject the Capo people using a building on their property? If you think this is far-fetched, consider the statements of the Newhart parents who complain that the local high schools will arbitrarily cancel gym time if the school teams “need” the gym. One could ask the question, would Capo pay for part of a gymnasium located on city land? My guess is they would not.

Second, there is the issue of need. Of course, it would be great if every school had a gym. However, the schools are very overcrowded, and academic areas suffer because of this. Does this mean the city should build classrooms for Mission Viejo students? Of course not; we all recognize this as a school district responsibility. So, why should a gym on school property be any different? Although much was made of the lack of basketball facilities in the city, there are actually a number of outside courts, and more could be constructed for a tiny fraction of the proposed gym cost. Of course, there will be times when the weather doesn’t permit outdoor games, but we have some of the best weather in the country, with less than 35 days per year with even a trace of rain at all and less than that where the rain would bother any serious player. Of course, parents want to protect their children, but a little adversity builds character. Many of us from colder climates recall playing in 30-degree temperatures with patches of snow on the court. We should also remember that there are other needs in the city besides the gym, including the long-promised Community Center expansion.

Third, there is the issue of affordability. This is a complicated subject because of how cities account for the money they have. MacLean will tell you that Mission Viejo has $30 million or more in “reserves.” What this actually means is subject to interpretation, but one thing is clear, we could write a check for $1 million if we absolutely had to. However, just because we can do it doesn’t mean that it is prudent. I have written before on the state of Mission Viejo's finances. Briefly, if one takes the total reserves of $30-plus million, subtract the costs of replacing worn-out city facilities, already promised capital projects and set aside a reasonable sum for emergencies like the slope failure on Ferrocarril, one is left with an amount that would not cover more than three months of operating the city. Financial planners tell us that we should have at least six months’ expenses in cash available to us as individuals. While the minimum set aside for this purpose is 15 percent for cities, I think our city needs to be more careful and keep a high level of reserves to help us through the next recession or major disaster without going into debt or having to cut police and fire services because we cannot afford them.

Another part of the affordability is the actual cost. While MacLean, Kelley and Capo claim that a gym can be built for $3 million or less, there is little reason to believe them. Every substantial city project built in the last 5 years has cost more than 175 percent of the initially projected cost, with many costing two times or more than the projections. This is also true of Capo, with their new Taj Mahal administration building already way over the original estimates. Imagine what would happen if both the city and the school district planned a project together. If the actual cost were only $5 million, I would be very surprised. Recall that this cost does not even include bleachers. So, instead of Mission Viejo paying $1.5 million, our tab would be more like $3.5 million, because everyone knows that Capo has no money; otherwise, why would our students be housed in rotting portable classrooms? Add to the capital costs, the nearly   $400,000 per year of projected operating costs, which is far below the costs of similar facilities in suurounding cities, and thus likely to be $500,00 or more. Although these costs are supposed to be split evenly between the city and Capo, the school district's deteriorating financial situation makes it likely that we would pick up most or all of these expenses. After all, what could we do if they didn’t pay their half? We could hardly lock them out of a gym on their land. It is more likely they would lock us out unless we paid the whole cost.

Finally, there is the question of lost opportunity. While it looks like a great loss to give up $1.5 milliion that could be used for a gymnasium, consider two things: a) Would Capo pay the $1.5 million from their reserves (what reserves?) if we got the grant and they did not? b) Will Capo pay all of the excess costs over $3 million and sign an agreement allowing the city to preempt the payment of Mission Viejo Redevelopment Agency funds to the school district if Capo does not meet its obligations for construction costs and ongoing operating costs.? My guess is that the answer will be “no” to both questions. The people who want the gym will make up official/legal-sounding reasons as to why this cannot be done, but the bottom line is that this “lost opportunity” is really just a shell game where the taxpayers of Mission Viejo are on the hook for both halves of the cost. Capistrano Unified received more than $800,000 from the Redevelopment Agency in 2004-2005. (see this document for details)

Why could the district not take that money for two years and build the gym on its own? In 1999, voters approved spending $65 million on school upgrades and repairs. As of Dec. 31, 2004, less than $1,000 out of $65 million was spent at Newhart. Talk about lost opportunity. I guess the district is too busy putting in new football fields and building fancy administration complexes to spend money at Newhart. That’s lost opportunity!

To sum up, we, the citizens of Mission Viejo should not pay for facilities on property not owned by the city. We should keep the promises already made for capital projects like the Community Center expansion before committing to new projects. We should find other ways to play basketball and other sports outside in the almost-perfect climate we live in. We should live within our means and not be fooled that state grants will cover the actual costs of the gym. Most importantly, we should not be fooled by the promise of $1.5 million, as Capo would not dig into their reserves if the situation were reversed.

This is a bad idea now and it was a bad idea when it was first seriously considered last year. We need to put this behind us and move on to more productive projects that are already promised.

For the Supporting Document, History of MVCDA PassThrough Payments to CUSD,Click here;