Court decision could hold overflowing schools afloat

Court decision could hold overflowing schools afloat

(Calif.) A state appellate court denied a petition late last week aimed at preventing school districts from imposing higher fees on home buildings to fund new school construction.

The action came just ahead of voter approval of Proposition 51 in Tuesday’s election, which authorized the sale of some $9 billion in school facility bonds.

Both developments signaled good news for districts in need of help paying for new or updating older classrooms.

“For those districts currently eligible for Level III fees, the court decision was a big win and, in our opinion, not mooted by the passage of Prop. 51,” Harold Freiman, a partner at Lozano Smith, and educational law firm based in California, said in an interview. “There’s going to be an interim period where it appears districts will be able to continue collecting at Level III until the state actually starts allocating funds out of that new bond measure, which could be months down the road.”

State law allows Level III developer fees to be levied when matching state funds have been officially exhausted and districts meet required benchmarks for enrollment growth and borrowing limits. In May, the State Allocation Board made such a declaration, triggering a challenge from the building industry which may still not be resolved.

The California Building Industry Association, which filed the suit, could appeal the recent decision to the state Supreme Court.

Some districts including Dublin and Fremont, where student populations have grown significantly, were the first to lobby to use the new power to level maximum fees on housing developers in building new or renovating older facilities.

Although voters have approved the new bond, it is unclear if Gov. Jerry Brown will follow through with a promise to restructure the school facility funding system. Brown’s resistance to new borrowing led groups and the building industry last year to qualify a $9 billion statewide bond measure for the November ballot.

Districts that do continue to seek Level III fees in the meantime should begin working with developers early to determine reimbursements once the $9 billion in bonds is made available, according to Freiman.

“Districts are really going to have to be cautious when going forward with these Level III fees,” Freiman said. “I’m encouraging our clients who are eligible for Level III fees to sit down with developers and negotiate reimbursement agreements, so that when state funding starts coming through, school districts will still be able to hold onto some of the higher fees that were collected.”