BILL ANALYSIS
AB 1716
Page 1
Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON EDUCATION
Julia Brownley, Chair
AB 1716 (Torlakson) - As Amended: February 24, 2010
SUBJECT : Land use: development fees
SUMMARY : Provides that if a governing board chooses to
reimburse developer fees, the reimbursement includes any
interest for the supplemental amount accrued during the period
prior to a district receiving state funds for the construction
project for which those fees were provided, as determined by the
school district.
EXISTING LAW :
1)Authorizes, under Education Code (EC) section 17620, the
governing board of any school district to levy a fee, charge,
dedication, or other requirement against any construction
within the boundaries of the district, for the purpose of
funding the construction or reconstruction of school
facilities.
2)Specifies, under Government Code section 65995, various levels
of fees that may be assessed to fund school facilities and the
types of construction projects subject to the fees.
3)Requires, under the Leroy F. Greene School Facilities Act of
1998, the State Allocation Board (SAB) to allocate to
applicant school districts, prescribed per-unhoused-pupil
state funding for construction and modernization of school
facilities, including hardship funding, and supplemental
funding for site development and acquisition. (EC 17070.35)
4)Requires a 50% local match for education bond funds for the
construction of new schools and a 40% local match for funds
for the modernization of school facilities. (EC 17072.30 and
17074.16)
5)Specifies that a governing board may offer a reimbursement
election to the person subject to the increased fee, charge,
dedication, or other requirement that provides the person with
the right to monetary reimbursement of the supplemental
amount, to the extent that the district receives funds from
AB 1716
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state sources for construction of the facilities for which
that supplemental amount was required, less any amount
expended by the district for interim housing. At the option
of the person subject to the fee, charge, dedication, or other
requirement the reimbursement election may be made on a tract
or lot basis. Reimbursement of available funds shall be made
within 30 days as they are received by the district.
FISCAL EFFECT : According to the Legislative Counsel, this bill
is non-fiscal.
COMMENTS : SB 50 (L. Greene), Chapter 407, Statutes of 1998,
established the School Facility Program (SFP) which governs the
allocation of state education bond funds and the construction
and modernization of kindergarten through grade 12 school
facilities. SB 50 was based on the premise that the state would
provide 50% of funding for the construction of new school
facilities in the form of per unhoused pupil grants, with the
remaining amount provided by local funds, which could include
local bonds, other public funds such as redevelopment funds,
private funds, and developer fees. SB 50 revamped the developer
fees laws and established the current three levels of
assessments.
SB 50 increased the residential per square footage fees from
$1.50 to $1.93 and required an inflation adjustment every two
years according to the class B construction index as determined
by the SAB, the 10 member body which oversees the allocation and
administration of state education bond funds, at its January
meeting every year. The fee, also known as the Level I fee, is
currently at $2.97 per square foot for residential construction
and $.47 for commercial/industrial construction, and is assessed
if the district conducts a Justification Study that establishes
the connection between the development coming into the district
and the assessment of fees to pay for the cost of the school
facilities needed to house future students. Level II is
assessed based on a five-year Needs Assessment adopted by a
governing board, which takes into account district capacity,
projection of unhoused pupils resulting from new residential
development, and available funding to the district. Level II is
authorized when a district has submitted an application for
state bond funding and when a district meets two of four
specified conditions. The amount of the fees is based on the
SFP new construction per pupil grant level multiplied by the
number of unhoused pupils identified in the needs assessment.
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Current per pupil grant levels are $8,738 for elementary, $9,241
for middle, and 11,757 for high schools. In the event that
state bond funds for school facilities are depleted, developers
would be required to pay the Level III fee, which is 100% of the
required amount for school facilities construction or,
essentially, doubling the per pupil grant amount. Level III is
authorized when the SAB is no longer approving apportionments
for new construction projects.
Level III has never been triggered as voters have approved four
education bond measures for K-12 school facilities since the
enactment of SB 50 in 1998: Proposition 1A in 1998, which
authorized $6.7 billion; Proposition 47 in 2002, which
authorized $11.4 billion; Proposition 55 in 2004, which
authorized $10 billion; and Proposition 1D in 2006, which
authorized $7.329 billion. However, new construction funds
under Proposition 1D are projected to be depleted within a few
months, which could lead to the trigger of Level III fees.
Under current law, a governing board is authorized to reimburse
the portion of the fees triggered by Level III (equivalent to
the per pupil grant amount) if the district receives future
state funds for the construction projects for which the
supplemental fees were provided, minus any amount expended for
interim housing. This bill expands the reimbursement to include
any interest on the supplemental amount accrued between the
payment of the fees and receipt of state funds, as determined by
the school district. It is staff's understanding that "as
determined by the school district" means the method by which
interest is calculated.
According to the author, this bill codifies the ruling in Webb's
Fabulous Pharmacies v. Beckwith, Clerk of the Circuit Court of
Seminole County. The 1980 case centers on the sale of Webb's
Fabulous Pharmacies located in Florida. While the debts of
Webb's were being settled, the funds from the sale of the
company were held in an interest bearing account by the Circuit
Court of Seminole County. When the funds were released, the
Clerk of the Court deducted a sum for court fees and retained
the interest generated by the funds. The U.S. Supreme Court
ruled that Florida statute already provided for collection of
fees and retaining the interest, which was unrelated to the
costs of using the courts, constituted a violation of the Fifth
and Fourteenth Amendments of the United States Constitution.
AB 1716
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It can be argued that this case is not applicable to the
developer fees statute. Unlike the Circuit Court of Seminole
County, developer fees are not deposited in a district's account
as a temporary hold for developers; developers are also not
paying a district for a service. Districts are authorized, but
are not required, to provide reimbursement of the supplemental
Level III fees. There is nothing to prohibit a school district
from agreeing to refund the interest generated by the Level III
fees currently, if the governing board chooses to refund the
supplemental amount required by the Level III fees. One can
argue that if a district is willing to provide a reimbursement,
it would not be inconsistent for the district to include an
amount for interest accrued. This bill may, however, result in
an inadvertent disincentive for districts to offer to reimburse
developers.
The author and the sponsor, the California Building Industry
Association, have indicated that this bill may also serve as a
vehicle for addressing the potential trigger of Level III fees.
Triggering or not triggering Level III has significant
ramifications for districts and developers. Should the
Committee pass this bill and the bill is later amended to
include such related issues, staff recommends requesting the
bill be returned to the Committee for further deliberation.
REGISTERED SUPPORT / OPPOSITION :
Support
California Building Industry Association (sponsor)
Opposition
None on file
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087