BILL ANALYSIS �
AB 1903
Page 1
ASSEMBLY THIRD READING
AB 1903 (Buchanan and Hagman)
As Amended May 2, 2012
2/3 vote. Urgency
EDUCATION 9-0 APPROPRIATIONS 17-0
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|Ayes:|Brownley, Norby, |Ayes:|Fuentes, Harkey, |
| |Buchanan, Carter, Eng, | |Blumenfield, Bradford, |
| |Grove, Halderman, Wagner, | |Charles Calderon, Campos, |
| |Williams | |Davis, Donnelly, Gatto, |
| | | |Ammiano, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Suspends, commencing upon the enactment of this bill
through December 31, 2014, the authority of a local governing
board of a school district to increase the fee against any
residential or commercial or industrial construction within the
boundary of the school district, for the purpose of funding the
construction of school facilities, except upon either of the
following conditions:
1)A statewide school facilities bond passes prior to December
31, 2014, in which case the fee shall become operative upon
certification of the election in which the voters approved the
bond; or,
2)A statewide school facilities bond has not been placed on the
ballot for the November 4, 2014, general election by August
31, 2014, in which case the fee shall become operative on
September 1, 2014.
3)Contains an urgency clause, allowing this bill to take effect
immediately.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, state and local school facility bond cost pressure to
suspend Level III developer fees under the state school
facilities program for two years. Without the ability to assess
these higher fees, school districts will likely require
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additional bond funds to cover the cost of constructing new
facilities.
COMMENTS : This bill, an urgency bill, suspends the authority of
school districts, beginning upon the enactment of the bill until
December 31, 2014, to assess Level III fees for the construction
of new school facilities unless a bond is passed in 2014 or if a
bond is not placed on the November 2014 ballot by August 31,
2014.
Prior to the enactment of SB 50 (L. Greene), Chapter 407,
Statutes of 1998, which established the School Facility Program
(SFP), builders were assessed a mitigation fee of $1.50 per
square foot of livable space for each newly constructed house.
This fee provided a share of the funds needed for the
construction of new schools to serve the pupil population of the
school district within which the development occurred. In
addition to this fee, local governments also had the authority,
confirmed by the courts through litigation popularly known as
the Mira, Hart and Murrieta line of cases, to require developers
to pay for additional school-related expenses as identified in
local environmental impact reports.
SB 50 changed the method for determining the share of school
construction costs that developers would pay and provided a
consistency in the amount of fees developers pay to build
schools to accommodate new developments. SB 50 suspended the
threat of lawsuits and the ability of local governments to deny
new developments on the basis of inadequate schools.
SB 50 established per pupil grant amounts that local school
districts are entitled to receive from the state to build new
schools, equal to 50% of the estimated average cost per pupil
for school construction. The school district provides the
remaining 50% from local revenue sources that could include
local general obligation bonds, redevelopment funds and
developer's fees. SB 50 increased the developer's fee from
$1.50 to $1.93 per square foot and required an inflation
adjustment every two years according to the class B construction
index as determined by the State Allocation Board (SAB), the
body that allocates state bond funds and oversees the
administration of the SFP, at its January meeting. The fee,
also known as the Level I fee, is currently at $3.20 per square
foot for residential construction and $0.51 for
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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 facilities
needed to house future students. SB 50 also established
additional levels of assessments. Level II is assessed based on
a five-year Needs Assessment as prescribed in the Government
Code and 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 Level II fees is based on the SFP new
construction per pupil grant level multiplied by the number of
unhoused pupils identified in the needs assessment. Current per
pupil grant levels are $9,455 for elementary schools, $9,999 for
middle schools, and $12,721 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 double the
Level II fee. 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, with no new bonds since
2006, only $393.3 million in new construction bond authority
remains.
Existing law specifies that Level III is triggered when the SAB
is no longer approving "apportionments" for new construction due
to a lack of funds available for new construction.
"Apportionment" is the term used when the SAB, during a public
hearing, approves a project for funding and makes cash available
to the district for that project.
Level III may not be triggered for a while. Due to the state's
budget crisis and poor credit ratings, the Pool Money Investment
Board halted the regular sale of all state-approved general
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obligation bonds in December 2008 and slowed the disbursement of
funds. Due to the lack of "cash", the SAB has been making
"unfunded approvals" since 2009 to enable districts to continue
their facilities planning. The unfunded approvals are tentative
approvals of the projects and are converted to "apportionments"
when bonds are sold and cash becomes available. The State
Treasurer's office has made more than $6 billion in bond sales
for school construction since 2009, but there remain almost $1
billion of projects waiting for funds. Unfunded approvals are
not apportionments. Until cash is available, the SAB has
ability to make apportionments.
Another factor to consider is that of the $393.3 million
available in new construction funds, $194.8 million is set aside
by the SAB for seismic projects. The allocation of seismic
funds has been slow; $5 million have been allocated in five and
a half years. There is one project totaling $12.9 million
waiting for SAB approval. According to the Division of State
Architect (DSA), there are currently three seismic projects
totaling $5.7 million being reviewed. The SFP requires approval
from the DSA to ensure that the architectural design plans meet
fire, life and safety requirements; Field Act requirements; and
access requirements under the Americans with Disability Act.
The approval processes can take months. Once the three projects
receive DSA approval, it will take several more months before it
receives approval from the SAB.
This bill helps builders by suspending for more than two years
the authority for school districts to collect Level III fees.
The California Building Industry Association (CBIA) states,
"Assembly Bill 1903 is a critically important measure that
upholds the statutory framework of shared burden inherent in the
public school facilities financing program established by the
Legislature in 1998. Under that historic program, the cost of
constructing new school facilities is distributed among public
sources - state bonds and local revenues - and private sources
through school impact fees paid by homebuilders. School fees are
imposed by local school districts on both residential and
commercial construction and, depending on the area of the state,
typically run from $10,000 to $14,000 per unit.
"If Assembly Bill 1903 is not enacted, the level of school fees
associated with the construction
of a new home could double. In today's economic climate with
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continued high rates of unemployment and individuals and
households still struggling from the ravaging of their own
personal finances, a dramatic jump in costs associated with the
construction of a new home would severely hobble California's
housing markets and hold back the state's ultimate economic
recovery."
Stakeholders involved in the crafting of SB 50, which included
CBIA, say that the program was designed as a three-way
partnership to build schools. The state would provide state
bond funds, school districts would pass local bonds or secure
other type of local financing, and developers would provide its
share. The agreement was crafted with the three levels of fees.
Level III was designed specifically for the times when the
state is out of bond funds to enable school districts to
continue building schools to accommodate new developments. This
bill will relieve housing developers of their obligations to pay
Level III fees, while the state has not put a bond on the ballot
since Proposition 1D in 2006. In the meantime, local
communities continue to pass local bonds, with the expectation
of getting a state match. Passage of another statewide bond is
the solution to avoid the trigger of Level III and will uphold
the agreement established by SB 50 for the state to partner with
school districts and developers to build adequate school
facilities. Level III was suspended once already in 2002, when
AB 16 (Hertzberg), Chapter 33, Statutes of 2002, which put the
November 2002 and June 2004 education bonds on the ballot was
enacted on April 29, 2002. Continuous suspensions could raise a
question of the purpose of a Level III fee.
The Coalition for Adequate School Housing opposes the bill and
states, "Suspension of the statute creating Level III developer
fees would violate the very purpose for which the statute was
created. In order to house future students that will result from
new development, school districts may levy fees against
development; this authority began with ideas deeply rooted in
the California Environmental Quality Act (CEQA). Commencing in
the 1970s, residential project development must mitigate the
need for schools. Statute and case law strongly support this
concept. Longstanding and even recent court decisions such as
Chawanakee support districts that may need to sue to ensure
mitigation of school facilities if they exhaust the
administrative remedies afforded to them under CEQA.
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"The need for construction of school facilities is ongoing; the
lack of state bond funds and no guarantee that a school bond
will be placed before voters on the November 2012 ballot creates
the need for a positive response to schools, not denial of
authority for levying Level III fees. Levying these mitigation
fees would provide districts with the resources needed to
accommodate developer-driven growth, as the statute originally
intended, if the state fails to provide a bond."
Analysis Prepared by : Sophia Kwong Kim / ED. / (916) 319-2087
FN: 0003888