State law silent on how to reel back big hike in builder fees

State law silent on how to reel back big hike in builder fees

(Calif.) Now that California voters have restored the state’s fiscal ability to help pay for school construction, a controversial hike in fees on builders is no longer needed, and seemingly set for repeal.

It turns out, however, that while the State Allocation Board has the legal authority to trigger the Level 3 fees, the statute is silent on how to rescind them.

As a result, officials at the Office of Public School Construction are huddled with their legal advisers considering what options they might have for addressing the legislative omission.

Perhaps because of the uncertainty surrounding the issue and a pending lawsuit, few around the Capitol were willing to talk about what might happen next–but almost everyone contacted said they did not believe districts should be allowed to impose the higher building fees while at the same time accepting support from the state made possible by the sale of the bonds.

The OPSC offered little insight when asked about the problem, choosing instead to issue only a non-responsive statement.

“In the aftermath of the election, OPSC is currently working with members of the State Allocation Board, Legislature and education stakeholders to determine next steps in implementing this bond program to improve accountability and compliance with program requirements,” the press office of the Department of General Services said.  “Nothing more to add at this time.”

The California Builders Association also didn’t respond to a request for comment, although they still have a lawsuit pending against the Allocation Board aimed at rolling back the higher fees. That challenge lost at the appellate court level earlier this month, but it could be appealed to the State Supreme Court.

At issue are fees that districts can impose on both residential and commercial developers that, theoretically, could cover the entire cost of a school construction project.

The authority for the fees is rooted in an arcane set of rules set down by the Legislature in 1998, governing how the state, local school boards and developers share the burden of the cost of new schools and classrooms.

Under the Leroy F Greene School Facility Act, districts were provided the ability to collect Level 1 fees from builders that cost about $3.50 per square foot on residential projects and 56 cents per square foot on commercial construction.

Districts are also allowed to hike the builders’ contribution to the Level 2 under certain circumstances, and escalation to the Level 3 fees–which prior to this summer had never been triggered–can only be authorized by the State Allocation Board when they determine that the state’s funding for school construction has run dry.

Because Gov. Jerry Brown had resisted legislation that would have put a statewide bond measure before voters on a number of occasions, the state’s pool of money for school construction was officially recognized by the SAB as “unavailable” in May.

Meanwhile, in an effort to head off the higher fees, the BIA, along with school groups, qualified Proposition 51 for the November ballot–which passed and thus, authorizes the sale of some $9 billion in bonds to provide the state’s share of school building needs.

The suit from the building industry challenged the State Allocation Board’s determination that all the money had been exhausted–it lost at the appellate level and may be appealed to the State Supreme Court.

Independent of that argument, however, is the clear fact that with the $9 billion in voter approved borrowing, the state can refill its school construction accounts–an action that would seem to then require the rollback of the higher fees.

It is possible that legal counsel to the State Allocation Board may decide they also have the authority to simply rescind the action they took in May. If not, the answer might require legislation.

Harold Freiman, a partner at Lozano Smith, and educational law firm based in California, has said that districts that qualify now to impose the Level 3 fees continue to have that option given the November appellate court ruling–at least until the bond money starts flowing.

“There’s going to be an interim period where it appears districts will be able to continue collecting at Level 3 until the state actually starts allocating funds out of that new bond measure, which could be months down the road,” he said in an interview earlier this month.