BILL ANALYSIS
SENATE RULES COMMITTEE SB 50
Office of Senate Floor Analyses
1020 N Street, Suite 524
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UNFINISHED BUSINESS
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Bill No: SB 50
Author: Karnette (D), et al
Amended: 7/13/97
Vote: 27 - Urgency
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All Senate Votes Not Relevant
ASSEMBLY FLOOR : 66-11, 7/13/98 - See last page for vote
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SUBJECT : School Facilities Bond Act: facilities
construction;
developer fees
SOURCE : Author
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DIGEST : This bill authorizes a $9.0 billion K-12 school
and higher education bond to be presented to the voters
November 3, 1998.
This bill also revises developer fee and mitigation
procedures for school facility purposes and reforms the
state program that distributes state bond funds to K-12
school districts.
Assembly Amendments delete the prior version. As it left
the Senate, this bill was authored by Senator O'Connell and
made changes in the Class Size Reduction Program.
ANALYSIS : BACKGROUND
STATE BONDS
Between 1986 and 1995 the voters of the state approved $6.8
billion in state general obligation bonds for K-12 school
facilities programs. These funds have been used to fund
the State School Building Lease-Purchase Program, which
provides much of the money for school districts to buy land
and construct or modernize school buildings in the state.
Additional funds for K-12 school facilities comes from
three other main sources: local general obligation bonds,
Mello-Roos bonds and developer fees.
Between 1986 and 1995 the voters approved nearly $2.4
billion in general obligation bonds for capital
improvements at public higher education campuses. In
addition, the Governor and the Legislature have provided
about $2.4 billion for public higher education facilities
from lease-payment bonds.
At the March 26, 1996 election the voters approved, with a
62 percent approval rate, a $3 billion general obligation
bond measure for public education facilities. Of the
amount approved, $2.025 billion was for K-12 schools and
$975 million was for higher education facilities.
The Legislative Analyst reports that in 1997-98 the ratio
of debt service costs to GF revenue is estimated to be
4.4%. This is not considered to be an excessive level of
debt by the New York bond rating agencies. At the most
recent general obligation (GO) bond sale in April of 1998,
the state received an overall interest rate of 5.05% on
$600 million in GO bonds.
STATE PROGRAM
Current law authorizes the Leroy F. Greene State School
Building program which provides state bond funds for school
construction, and moderniza-tion, to local school
districts. The program is administered by the State
Allocation Board (SAB) with staffing assistance from the
Office of Public School Construction (OPEC).
The Lease Purchase program contains elements to determine
need for funds, timing of funding, and priorities for
eligibility for scarce resources.
DEVELOPER FEES
Cities and counties are generally charged with
responsibility for local land use decisions within their
respective jurisdictions. Landowners apply to cities and
counties for authorizations to develop their property.
Local officials must comply with the California
Environmental Quality Act to mitigate project impacts, and
subsequently set conditions, which may include fees, to
mitigate the effects of development as a condition of
approval. State law requires local agencies to justify the
purpose and use of fees, as well as make a finding that
there is a reasonable relationship between the fee and the
cost of any public facility to be built with fee revenues.
In 1986, the Legislature enacted statutes that authorized
school districts to directly levy a fee on new residential
development at the rate of $1.50 per square foot and on new
commercial development at the rate of $.25 per square foot.
With currently permitted inflation increases, the
developer fees levied by school districts now have
increased to $1.93 on residential and $.31 on commercial
development.
Beginning in 1988, a series of appellate court decisions
found that cities and counties are not bound by these
limitations and may consider the adequacy of school
facilities "legislative" land use decisions such as general
and specific plan adoptions and amendments, and zoning
changes. Sometimes referred to as the " Mira " cases, the
actual case titles are Mira Development Corporation v City
of San Diego ,(1988); William S. Hart Union High School
District v Regional Planning Commission , (1991); and
Murrieta Valley Unified School District v County of
Riverside , (1991).
THIS BILL
Specifically this bill provides:
EDUCATION FACILITY BONDS
The bonds to be known as the Class Size Reduction
Kindergarten-University Public Education Facilities Bond
Act of 1998 would be able to be spent as follows:
1.$6.5 billion for K-12 education facilities:
A. $2.9 billion for new construction related to growth.
B. 1.9 billion for rehabilitation of older schools.
C. $700 million for Class Size Reduction (CSR) related
facilities including (1) facilities funding for all
districts to implement K-3 CSR; (2) "land locked"
Multi-Track Year Round Education (MTYRE) elementary
schools that need to buy land to implement the CSR
program, and (3) CSR displaced facilities such as
child care.
2.$2.5 billion for higher education facilities (including
$165 million for new campuses.
3.Bonds would be sold under a policy that the state debt
ratio of debt service to General Fund revenues be
maintained below 6% unless the sale is in the best
fiscal interest of the state.
STATE K-12 CONSTRUCTION PROGRAM REFORM
The bill proposes reforms in K-12 school facility
construction as follows:
1.Construction Costs: Replaces the current project
approval process with a specified per-pupil funding
grant for new construction. Specifies that additional
funds equal to 50% of the cost for site acquisition and
development may be added to the grant amount.
2.New Construction Match Requirement: Requires that the
state grant for new facilities be matched by the school
districts on a one-to-one basis.
3.Modernization: Decreases modernization funding from 29%
to 27% of the replacement cost of the facility.
Requires that the state modernization grants be matched
by the school districts on a 80% (state)-to-20% (local)
basis.
4.Hardship: Authorizes hardship assistance in cases of
extraordinary circumstances as specified and as
determined by the SAB. Hardship funding could be used
for the local share of the match requirements or for
higher per pupil allowances if justified.
5.Provides that Priority I projects approved for
construction by July 15, 1998 will be funded under
current law. All Priority II projects approved prior to
that date must convert to Priority I or the new program.
6.Provides that West Contra Costa Unified School District
may participate in the program.
7.Liens: Provides that there would be no state lien on
local school facilities.
8.Wrap-up Insurance: Allows districts to utilize
contractor wrap-up insurance on any construction
project, and not be subject to the current requirement
allowing this procedure only for projects exceeding $125
million.
9.Ongoing Maintenance: Increases over a two-year period
the percentage of district general fund budgets
dedicated to ongoing maintenance of facilities
(exclusive of deferred maintenance match funds), from 2%
to 3%.
10.Elections: Removes existing limitations on when local
school bond elections may be held.
11.Architectural Approval: Provides that in addition to
the Division of the State Architect, districts could
seek architectural approval from a state-approved list
of private engineering firms or local building
departments.
12.SAB Regulations: Requires the SAB to adopt by September
1, 1998 regulations to revise the school design and
construction standards in order to achieve measurable
reductions in school facilities costs.
13.Architectural and Engineering Costs: Requires the SAB
standard sets of school plans make them available to
districts at cost.
DEVELOPER FEE AND MIRA PROVISIONS
The bill revises developer fee and mitigation procedures
for school facilities as follows:
1. A fee, charge, dedication or other requirement for
school facilities is prohibited from being levied in
connection with an adjudicative act or a legislative
act (thereby overriding Mira and related cases) by any
state or local agency relating to the planning, use, or
development of real property that exceeds the amount
specified in this bill. (NOTE: There are three
sections in this bill affecting Mira and related cases.
One section is inoperative after 2006 only if a school
facilities bond measure fails after that date, and the
Mira override provision is reinstated if a bond measure
is subsequently approved. The other two sections
amended by this bill to override Mira contain no sunset
or suspension, and thereby permanently override Mira
and related cases.).
2. Districts may continue to levy a school fee under
existing rules up to $1.93 per square foot.
3. Districts may levy a fee that exceeds $1.93 if the
districts meet specified requirements (see below). If
state bond funds are available, the fee may not exceed
50% of construction costs and 50% of site acquisition
and development costs.
4. In order to levy a fee above $1.93, school districts
must:
A. Conduct a needs analysis as specified.
B. Have SAB approval of eligibility for state funding.
C. Meet two of the following conditions:
(1) Attempt to pass a local bond within the last
four years and get approval by the voters of 50%
plus one.
(2) Have at least 30% of K-6 enrollment on MTYRE.
(3) Have passed local bonds equal to 15% of the
district's local bonding capacity or 30% if it
includes other debt such as Mello Roos debt.
(4) 20% of the teaching stations in the district are
relocatable classrooms.
5.If the state has run out of state school bond funds,
school districts may levy a developer fee equal to 100%
of school facilities costs. Any fee amount over 50% of
the construction cost will be reimbursed to the person
that paid the fee from the state bond funds as
specified.
DEVELOPER FEE ASSISTANCE PROGRAM
This bill establishes a developer fee assistance pilot
program with the following two pilot programs:
1.The first pilot program reimburses developers for school
facility fees if the developer commences construction of
the residential units on or after January 1, 1999, and
uses the reimbursement proceeds to "maintain the
affordability of the units." Income qualification limits
are set for renters and owners, the rental units must be
affordable for 30 years, and the owner-occupied housing
must remain affordable for five years.
2. The second pilot program makes payments to developers of
owner occupied housing for school facility fees paid in
excess of the $1.93 fee cap if the developer commences
construction of the housing on or after January 1, 1999,
and either sells the unit for $110,000 or less or
constructs the housing in a county with an unemployment
rate that equals or exceed 125% of the state
unemployment rate and where 500 or more housing units
are constructed each year.
The Developer Fee Assistance Fund is established and $160
million is appropriated from the General Fund to that fund,
with $80 million to be made available for each of the above
pilot programs.
Comments
According to the State Department of Education, over the
next ten years, there is a need for $15 billion in new
school facilities to meet increasing enrollment demand and
a need for another $19 billion to modernize existing
facilities. This does not include facilities related to
the new CSR program which could cost $1 billion to $2
billion. Some of this demand can be met from non-state
sources (e.g., bonds, Mello-Roos, fees). About half of the
demand, however, is expected to be met from state bonds.
According to higher education officials, $13 billion is
needed over the next ten years for the facility needs of
the University of California, California State University
and the California Community Colleges.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee, total
General Fund costs for debt payments would be approximately
$15.0 billion over 20 years, or $750 million per year.
SUPPORT : (Verified 7/15/98)
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OPPOSITION : (Verified 7/15/98)
League of California Cities
California State Association of Counties
Association of California School Administrators
American Planning Association, California Chapter
Young Americans for Freedom
ARGUMENTS IN SUPPORT : Proponents argue the bill contains
needed reforms to the school facilities process.
ARGUMENTS IN OPPOSITION : Opponents argue this bill is a
blatant shift in land use discretion and authority from
local governments to the state.
ASSEMBLY FLOOR :
AYES: Ackerman, Aguiar, Alby, Aroner, Ashburn, Baca,
Baldwin, Battin, Bordonaro, Bowler, Brewer, Bustamante,
Campbell, Cardenas, Cardoza, Cedillo, Cunneen, Davis,
Ducheny, Escutia, Figueroa, Firestone, Floyd, Frusetta,
Gallegos, Goldsmith, Granlund, Havice, Hertzberg, Honda,
House, Kaloogian, Keeley, Knox, Kuehl, Kuykendall, Leach,
Leonard, Machado, Margett, Mazzoni, Migden, Morrissey,
Murray, Napolitano, Olberg, Oller, Ortiz, Pacheco, Papan,
Perata, Poochigian, Prenter, Richter, Runner, Scott,
Shelley, Strom-Martin, Thompson, Torlakson, Vincent,
Wayne, Wildman, Woods, Wright, Villaraigosa
NOES: Alquist, Baugh, Bowen, Brown, Lempert, Martinez,
McClintock, Morrow, Pringle, Sweeney, Thomson
NOT VOTING: Miller, Takasugi, Washington
NC:ctl 7/15/98 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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