BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session
BILL NO: AB 1903
AUTHOR: Buchanan
AMENDED: May 2, 2012
FISCAL COMM: Yes HEARING DATE: June 20, 2012
URGENCY: Yes CONSULTANT:Kathleen Chavira
SUBJECT : Level 3 Developer Fees.
SUMMARY
This bill, an urgency measure, temporarily suspends
provisions of current law that authorize school districts to
levy Level 3 developer fees if the State Allocation Board
(SAB) is no longer approving apportionments for new
construction due to a lack of funds available for that
purpose.
BACKGROUND
Under current law funding for new construction and
modernization of school facilities comes from both state and
local sources. Current law establishes the School Facility
Program (SFP) under which the state provides general
obligation bond funding for various school construction
projects. Local funding comes from a variety of sources
including local General Obligation bonds, Mello-Roos bonds
and developer fees.
SB 50 (Green, Chapter, Statutes of 1998) in addition to
authorizing a $9.2 billion education bond, revised developer
fee procedures for school facility purposes. SB 50
authorized three different levels of developer fees to be
assessed under specified conditions:
1) Level 1 - A district is authorized to levy per square
footage fees of $1.93 per square foot for residential
construction and $0.31 for commercial or industrial
construction to be adjusted for inflation every two
years according to the class B construction index as
determined by the SAB at its annual January meeting.
This fee level is currently at $2.97 per square foot for
AB 1903
Page 2
residential 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.
2) Level 2 - A district may levy Level 2 fees if it has
conducted a needs analysis, as specified, has SAB
approval of eligibility for state funding and meets two
of the following four conditions:
a) The district has attempted to pass a local
bond at least once during
the last four years and received approval by the
voters of 50 percent plus one.
b) For a K-6 district, it has at least 30
percent of its enrollment on a
multi-track year round schedule (MTYRE). For a
high school district, it has at least 30 percent of
its enrollment, or 40 percent of the K-12 students
within the high school attendance area, in MTYRE
schools.
c) The district has issued debt or incurred
obligations for capital outlay
equal to 15% of the district's local bonding
capacity for indebtedness approved by voters before
November 4, or 30% of capacity for indebtedness
approved by voters after November 4, 1998.
d) Twenty percent of the teaching stations in
the district are in
re-locatable classrooms.
3) The fee may not exceed 50% of construction and site
acquisition and development costs.
4) Level 3 - A district is authorized to seek 100 percent
of school facilities costs if the state has exhausted
state school bond funds and the State Allocation Board
(SAB) is no longer approving apportionments for new
construction projects. (Government Code � 65995.5)
Current law provides that state funds are not available if
AB 1903
Page 3
the State Allocation Board is no longer approving
apportionments for new construction due to a lack of funds
available for this purpose. (Government Code �65995.7)
ANALYSIS
This bill temporarily suspends provisions of current law that
authorize school districts to levy Level 3 developer fees.
More specifically it:
1) Suspends the authority of school districts to impose
level 3 developer fees upon the bill's enactment and
until December 31, 2014, after which time Level 3
developer fees resume unless:
a) A statewide school facilities bond
passes prior to December 31, 2014, in which case
Level 3 developer fees become operative upon
certification of the election in which the bond was
approved.
b) By August 31, 2014, no statewide
school facilities bond has been placed on the
ballot for the November 14, 2014, general election,
in which case Level 3 developer fees become
operative on September 1, 2014.
2) Declares the bill to be an urgency statute.
STAFF COMMENTS
1) Need for the bill . According to the author, home
builders have been hit hard by the current recession and
home values have dropped dramatically. The author
contends that industry experts predict that the
imposition of level 3 developer fees could bring the
already shaky new housing development industry to a
halt. According to the sponsors of the bill, the
California Building Industry Association, if this bill
is not enacted, the level of school fees associated with
the construction of a new home could double. This bill
ensures that homebuilders, and ultimately new
homebuyers, are protected until December 31, 2014, from
having to cover the state's portion of costs associated
with the construction of new school facilities.
AB 1903
Page 4
2) History . 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.
In 1986, the Legislature enacted statutes that
authorized school districts to directly levy a fee on
new residential development at specified rates, adjusted
for inflation increases. Beginning in 1988, a series of
appellate court decisions found that cities and counties
were not bound by these limitations and could 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 Corp. 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).
In response, with the enactment of SB 50 (Greene, 1998),
a negotiated agreement between the development and
education communities and the State of California
resulted in the authorization of three different levels
of developer fees to be levied under specified
conditions and subject to specified calculations. This
bill temporarily suspends the authority of school
districts to levy the highest fee level which school
districts are authorized to impose when the state is
unable to provide for a share of the costs of school
construction, thereby modifying an element of the
agreement reached in SB 50.
3) Need for clarification . As currently drafted, the bill
appears to create a condition which must be met in order
for level 3 developer fees to become operative again.
Consistent with the author's intent, the bill should be
amended to more clearly articulate the bill's intent,
that failure to place a bond before voters in November
2014, or the passage of a bond initiative in November
2014, would result in the statutes authorizing level 3
AB 1903
Page 5
developer fees becoming operative sooner than January 1,
2015. Staff recommends the bill be amended on Page 3,
lines 8 and 9, to delete "except upon either of the
following circumstances:" and insert "except that it may
become operative sooner in either of the following
circumstances:"
4) Current status of bond funds . According to the April
2012 agenda of the State Allocation Board meeting, there
is $228.5 million in bond authority remaining in new
construction. It is unclear when bond authority for new
construction funds will be exhausted and level 3
developer fees triggered.
5) Consistent with SAB activity . In February 2012, the
State Allocation Board considered the recommendations
from the State Allocation Board Subcommittee on New
Construction concerning the future of the School
Facility Program (SFP). The Sub-committee discussed and
made recommendations on several topics, including level
3 developer fees. The SAB subsequently adopted the
recommendation of the Sub-committee and voted to request
that the Legislature suspend the Level 3 developer fees
through December 31, 2014.
6) Related budget activity . In his 2012-13 proposed
budget, the Governor proposed a shift of existing School
Facilities Program bond authority from the Overcrowding
Relief Grant Program to the New Construction program and
to regulate the allocation of new construction and
modernization funds to ensure continued construction of
new classrooms and modernization of
existing classrooms. The Governor indicated his intent
to delay local authority to impose a level 3
construction fee while continuing construction of new
classrooms using bond proceeds, fee revenues and local
funds.
7) Prior legislation . Previous attempts to modify elements
of the agreement reached in SB 50 have included the
following:
AB 2173 (Caballero, 2008) would have revised
requirements for assessing developer fees for the
construction of school facilities. AB 2173 was
ultimately vetoed by the Governor, whose message read:
AB 1903
Page 6
The historic delay in passing the 2008-2009 State
Budget has forced me to prioritize the bills sent
to my desk at the end of the year's legislative
session. Given the delay, I am only signing bills
that are the highest priority for California. This
bill does not meet that standard and I cannot sign
it at this time.
AB 1716 (Torlakson, 2010) expanded the authority of a
governing board to reimburse the portion of the fees
triggered by Level 3 developer fees if the district
receives future state funds for the construction
projects for which the supplemental fees were provided
to additionally 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. The hearing on this bill was postponed by,
and ultimately withdrawn from the committee.
SUPPORT
California Building Industry Association
Los Angeles Unified School District
California Housing Consortium
Contra Costa County Superintendents' Coalition
OPPOSITION
California Association of School Business Officials (CASBO)
California School Boards Association
California's Coalition for Adequate School Housing
County School Facilities Consortium
Irvine Unified School District
Riverside County School Superintendents' Association (RCSSA)
Salinas Union High School District
San Francisco Unified School District
Small School District Association
Western Placer Unified School District