State Allocation Board Increases Level 1 School Fees

02.25.2016

School districts are now able to assess statutory school facilities fees (Level I School Fees) at the newly established $3.48 residential rate and $0.56 commercial/industrial rate, provided such rates are properly justified pursuant to law.  On January 27, 2016, the State Allocation Board (“SAB”) initially authorized an increase in the allowable amount of “Level I School Fees from $3.36 to $3.39 per square foot of assessable space for residential development, and from $0.54 to $0.55 per square foot of chargeable covered and enclosed space for commercial/industrial development.  However, upon discovery of a discrepancy in the RS Means Index used as the basis for the increase, on February 24, 2016, the SAB approved a correction to the previously approved percentage increase from 1.05 percent to 3.59 percent.  As a result, the Level I School Fees will be increased from $3.39 to $3.48 per square foot of assessable space for residential development and $0.55 to $0.56 per square foot of chargeable covered and enclosed space for commercial/industrial development. 

Pursuant to Government Code Section 65995(b)(3), the SAB is required to increase Level I School Fees every even year “according to the adjustment for inflation set forth in the statewide cost index for class B construction…”  In determining the 2016 Level I School Fee increase, the SAB considered indices from RS Means, Sierra West and Engineering News Record.  Ultimately, the SAB chose the RS Means index as the most appropriate index for construction projects in California since it analyzes data from twelve (12) cites in California, whereas the Sierra West and Engineering News Record indices only analyze data from two (2) California cities.  Use of the RS Means index marks a departure in the SAB’s reliance on the Marshall & Swift index, which was used to authorize Level 1 School Fee increases in 2012 and 2014.

Since Senate Bill 50 went into effect in 1998, school districts have had three levels of statutory school facilities fees available to mitigate the effects of development on school district facilities. This most recent action of the SAB affects only Level I School Fees. In order to take full advantage of the increase, school districts desiring to adopt the new Level I School Fee rate should take action as soon as possible. School districts desiring to adopt the Level I School Fee rate should follow necessary steps including: 

• Development of a fee justification study which properly justifies assessment of school facilities fees at the newly increased rate, or higher;
• Publication and posting of a notice for a public hearing on the proposed Level I School Fee increase to be held at a regularly scheduled meeting of the school district’s governing board;
• Mailing of the public notice to any party that has requested, in writing, to receive notice of school fee increase proceedings;
• Making the school district’s fee justification study available to the public;
• Adopting a resolution approving the Level I School Fee increase after the required public hearing; and
• Providing notice of the adopted Level I School Fee increase and school district boundaries to the city and county agencies responsible for the issuance of building permits and/or collection of school facilities fees, as well as the Office of Statewide Health Planning and Development (“OSHPD”). 

Level I School Fee increases are effective sixty (60) days after the adoption of a fee increase resolution. However, in certain circumstances, school districts may adopt an urgency resolution which requires a four-fifths vote of the governing board and findings which demonstrate that it is necessary to immediately increase Level I School Fees in order to respond to a current and immediate threat to the public health, welfare or safety. 

Also, please note that school districts must comply with the five year school fee findings requirement set forth at Government Code Section 66001(d) and the annual school fee reporting requirements of Government Code Section 66006.

Should your school district desire assistance with regard to adopting, increasing or collecting Level I or Level II School Fees, defending school facilities fee protests, negotiating school facilities fees mitigation agreements or other facilities-related issues, please contact one of the attorneys listed above.