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Attachment 3September 1, 2015 The Hon. Mayor Marcia Jenson and Members of the Town Council Town of Los Gatos Via email to: clerk @losgatosca.gov Re: Agenda Item 5— Interim School Facilities Ordinance BIA Obiections and Opposition. Dear Mayor Jenson and Town Council Members: CIH, The California Building Industry Association and the Building Industry Association of the Bay Area (collectively Building Associations) respectfully submit these comments regarding the Los Gatos Union School District (District)'s request that the Town of Los Gatos (Town) adopt a school facilities mitigation ordinance and related school impact fee in the amount of 59.57/sq. ft. for the benefit of the District pursuant to the School Facilities Act of 1977 (1977 Act or SB 201). We urge the Town Council in the strongest possible terms to reject the District's request and instead adopt a resolution of non- concurrence in the District's Notice of Findings as soon as practicable before September 14, 2015, and terminate all further proceedings under the 1977 Act. The actions requested by the District violate controlling state law that has preempted the field relating to considering the adequacy of school facilities in the land use approval process and mitigating the impacts of new residential development on the need for school facilities —both permanent and interim/temporary. Under the School Facilities Act of 1998 (SB 50), the Legislature created a comprehensive school facilities financing and mitigation regime. A cornerstone of that regime is the complete preemption of local authority to consider and mitigate school facilities impacts from new development, as summarized in a recent article by a leading California municipal law expert: ATTACHMENT 3 [T]he ability of local jurisdictions to consider school overcrowding in their planning and zoning decisions has been virtually eliminated by the passage of the Leroy F. Greene School Facilities Act of 1998 ( "S.B. 50 ").That legislation limits local authority to require developers to mitigate school impacts; now, developers can only be required to pay school impact fees equal, at most, to fifty percent of the cost of providing new facilities. S.B. 50 prohibits cities and counties from requiring additional contributions. (http://goldfarblipman.com/wp- content/uploads /2015/07 /real- property joumal_vol- 33_no2 2015_no- more - kids.pdf) Presently, the maximum amount of school facilities mitigation that may lawfully be imposed on new residential development for the benefit of the District —under any Legal authority —is the $2.29/sq. ft. fee the District currently imposes directly on new residential development. The Town should therefore reject the District's request, which would almost certainly drag the Town into a morass of costly litigation challenging the suggested common enterprise to flout the laws of the State of California. Further weighing against the Town's assuming this significant risk is the fact that, by the District's own admission, new housing is not even a primary source of its asserted school facilities capacity problems: The District has grown annually from 2,587 students in the 2006 -2007 school year to 3,345 students in the 2014 -2015 school year. During that this timeframe, there was only a minimal amount of new housing units built within the District boundaries, suggesting growth was caused by other factors than new development." (Los Gatos Union School District, Notice of Written Findings, April 17, 2015, p.5); Interests of the Building Associations: Preservation of SB 50's Integrity The California Building Industry Association is a statewide, non -profit trade association representing approximately 3,200 businesses involved in all aspects of residential and commercial construction. As such, its members are involved with local governments on a day to day basis on projects that range from the remodeling of a single family home to the design and construction of new towns. The Building Industry Association of the Bay Area is a non -profit association representing over 300 member companies in the building and construction industry in the San Francisco Bay Area. BIA Bay Area is very familiar with local government planning and zoning practices in the Bay Area and closely follows implementation of state housing, environmental review and impact fee statutes, including those pertaining to school fees such as SB 50. The Building Associations have a compelling interest in maintaining the integrity of SB 50 against efforts by school districts or other local governmental agencies to undermine its painstakingly negotiated comprimises. Among the most fundamental: in return for unequivocally ending the ability of cities, counties, and school districts to use local planning and zoning authority, CEQA, or any other state or local law to exert pressure on developers to provide mitigation for any school - related impact exceeding the statute's newly established three- tiered maximum fee level, CBIA, the broader business community, Republicans in the Legislature, and Governor Wilson agreed to support the largest school bond in United States history, program reforms significantly benefiting school districts, and a substantial increase in the maximum allowable school fees that school districts could lawfully impose on new residential construction. The State Office of School Construction summarizes the new statewide funding program, including some of the additional significant changes made for the benefit or school districts, as follows: The School Facility Program (SFP) was implemented in late 1998 and is a significant change from previous State facilities programs. The State funding is provided in the form of per pupil grants, with supplemental grants for site development, site acquisition, and other project specific costs when warranted. This process makes the calculation of the State participation quicker and less complicated. In most cases, the application can be reviewed, the appropriate grants calculated, and State Allocation Board (SAB) approval received in 60 -90 days regardless of project size. In addition to a less complicated application process, the SFP provides greater independence and flexibility to school districts to determine the scope of new construction or modernization projects. There is considerably less project oversight by State agencies than in previous State programs. In return, the program requires the school district to accept more responsibility for the outcome of the project, while allowing the district to receive the rewards of a well managed project. All State grants are considered to be the full and final apportionment by the SAB. Cost overruns, legal disputes, and other unanticipated costs are the responsibility of the district. On the other hand, all savings resulting from the district's efficient management of the project accrue to the district alone. Interest earned on the funds, both State and local, also belongs to the district. Savings and interest may be used by the district for any other capital outlay project in the district. http: / /www. documents. dgs. ca. gov /opsc/Publications /Handbooks /SFP_Hdbk.pdf Since its inception in 1998, SB 50's state facilities funding program has overseen the construction of safe and secure classrooms for over 1.3 million children and modernized facilities for over 3.4 million more. Voters have approved about $45 billion in school and higher education borrowing since that time. These statewide funds are used as matching funds for local school districts to cover at least 50% of the cost of constructing safe quality schools, with SB 50 authorizing eligible districts to impose school impact fees in an amount sufficient to cover the remaining 50% (so- called "Level II" fees). When the state program is no longer apportioning new construction funding and certain formal statutory requirements are met, districts are then authorized to adopt so- called Level III fees that provide for the full cost of providing school facilities built to the state's robust standards. Currently, the Building Associations and allies in the education community are poised to qualify a $9 billion school facilities bond to be placed on the statewide ballot in 2016 to replenish the state program coffers. If passed, the measure would provide $9 billion in bonding authority to fund new construction, decaying classroom renovation, upgrades to classroom technology, computer systems, science labs, libraries and career education programs for elementary, secondary, and community college districts. In sum, SB 50 represents a true partnership —one that has consistently delivered tremendous benefits to responsible school districts. The Building Associations are determined to preserve its integrity. Summary of Comments The District has not provided the Town with a comprehensive and accurate analysis of state law limiting the authority of local agencies (including cities and school districts) to consider and mitigate the impacts of new residential development on the adequacy of school facilities. Contrary to the District's representations to the Town, the 1977 Act does not authorize the Town to impose any fee or other exaction on new residential development for the purpose of providing school facilities in an amount that exceeds the statutory cap established by the Legislature in SB 50. Nor does SB 50 permit the Town to deny or refuse to approve development approvals, or even consider the adequacy of school facilities, in exercising its local police powers related to planning, zoning, and development in the manner the District proposes. As discussed below, these conclusions stem from SB 50's sweeping preemption of school facilities financing, mitigation, and adequacy determination, and the statute's complete prohibition on any state or local agency denying or refusing to approval any land use approval on the basis of the adequacy of school facilities (broadly defined as "any school - related consideration related to a school district's ability to accommodate enrollment"). Indeed, so encompassing is SB 50's preemption in these fields that it expressly prohibits a city from considering the adequacy of school facilities under CEQA, and from refusing to approve a land use approval on the basis of inadequate school facilities even if circumstances otherwise warranting a moratorium exist. A thorough examination of SB 50's language and legislative history establishes that, while the Legislature did not formally repeal Chapter 4.7 (the 1977 Act) or excise all references to it, the 35 -year statutory scheme is patently inconsistent with SB 50's key operative provisions. In all relevant respects, the District's proposed implementation of the 1977 Act is irreconcilable, clearly repugnant, and so inconsistent with SB 50 that the two cannot have concurrent operation. See Pacific Palisades Mobile Estates, LLC v. City ofLos Angeles (2012) 55 Cal.4" 783. For this reason, cities, counties, school districts, members of the building industry, and their respective legal representatives throughout California have correctly treated implementation of SB 201 as requested by the District as legally unviable. Fundamentally, the District's proposal represents an attempt to have the Town shoulder the considerable legal risk of attempting to resuscitate this anachronistic statutory regime as part of a blatant scheme to evade the clear school mitigation limitations imposed by SB 50. Furthermore, even assuming SB 201 was not effectively repealed in toto by implication and/or practical consideration, and maintains some sort of inchoate legal existence, the District's proposal remains unlawful for the Town to implement because: (1) Gov't Code 05995 (a) and (b) expressly include SB 201 fees within the applicable SB 50 school mitigation cap (which the District concedes is the $2.29 /sq. ft. it currently imposes); (2) the original SB 201 legislation limits SB 201 fees to funding interim/temporary classroom and related facilities; (3) the original SB 201 legislation requires a school district to identify the specific interim/temporary facilities to be provided and prohibits a city or county from imposing SB 201 fees unless and until it finds that provision of the identified facilities are consistent with the local general plan; (4) the original SB 201 legislation limits SB 201 fees to an amount not to exceed that "necessary to pay five annual lease payments" for the eligible interim/temporary facilities; (5) the original SB 201 legislation grants builders /developers the unqualified right to choose to comply with SB 201 by "provid[ing] interim facilities, owned or controlled by the builder" and that at the end of five years "the builder shall... remove the interim facilities.... "; and (6) the District has failed to provide sufficient documentation to comply with AB 1600's requirement to establish a reasonable nexus between the amount of a proposed fee and the impacts of the development on which it will be imposed, and therefore the Town may not lawfully impose the proposed fee even if it were not otherwise preempted by SB 50. I. The Text and Legislative History of SB 50 To understand properly the sweep of SB 50's preemptive effect—including specifically with respect to SB 201 —it is necessary to review the statute's expansive text and the historical context that led to its enactment. In 1998, the Legislature enacted historic bipartisan legislation that established —more accurately, re- established —a school facilities finance regime that balanced the competing statewide interests of the need to ensure adequate school facilities funding, and the significant contribution to California's chronic housing affordability problems by excessive fees and other mitigation requirements related to school facilities imposed on residential development. In enacting SB 50, the Legislature struck a bipartisan compromise that balanced two important public policies: the structure of California's system of financing public school facilities, and the impact of school facilities mitigation requirements on housing affordability and the California economy. In the ensuing years since passage of SB 5Q the law's opponents have repeatedly failed to persuade the Legislature to "repair" the legislation to their liking.I In late 1996 —less than two years before SB 50 took effect and as the state began to recover from the deep recession of the early 1990's —the California Department of Housing and Community Development published a report titled Housing: California's Foundation for Economic Growth ( "HCD Report") .2 According to the Executive Summary, the purposes of the report were "to educate about the far - reaching benefits of housing on the economy; to discuss the conditions which have slowed housing's recovery; and to consider methods to improve the state of housing in California." HCD Report, p. I. Among the HCD Report's key findings were the following: • Housing is a major component of the California economy, both as an income producing sector and a principal factor in economic development. • Company executives strongly factor the cost of housing when looking to site operations. • California's housing supply is inadequate relative to demand and too expensive for too many residents. • For every dollar spent directly spent on housing construction, on average $1.59 additional indirect dollars are generated in other economic sectors. • Housing is increasingly becoming an economic development factor, as important in the retention and attraction of employment as the traditional materials, labor, transportation, and market orientations. • Even in areas where the volume of new housing units has approached the forecast quantity of demand, the product mix has failed to accommodate the needs of all income levels. High fee and development cost burdens have often resulted in oversupplied higher price housing categories. • As little as a $1,000 increase in the purchase price of a median - priced home can force more than r See California School Boards Association, "Analysis of SB 50 /Proposition IA" (September 1998) ( "The sacrifices by all districts under this legislation compared to existing law are significant. However, realizing that some reform was going to happen under any circumstance, the challenge is to determine the degree of hardship on districts produced by the specific onerous provisions of this package compared to what so many of us considered reasonable reform. Setting the issue of Mira repeal aside, our School Facility Task Force and many school leaders suggest that a decision on support for Proposition 1 A must consider the huge financial stake versus reforms that may be able to be repaired through 41 -vote bills in the future "); see also Community Systems Associates /Marshall Krupp: "Q — What is the future of SB 50 and the limitations set forth in Government Code Section 65995 et. seq.? A— `SB 50'... was adopted as a vehicle to limit the financial and environmental authority of school districts to effectively address school facilities needs resulting from development and growth. The original legislation was a compromise between the State legislature, politically influential school districts and the California Building Industry [Association] as a way of protecting the interests of these particular parties. Since 1998, the provisions of SB 50 have been shown to not provide full and complete mitigation in many school districts of all school facilities considerations, suggesting that legislative revisions to the original legislation is [sic] warranted. Many attempts have been made over the years to seek such revisions, only to be confronted with the lobbying of the special interest groups who do not seek to have the original legislation modified. Therefore, it is unlikely that significant adjustments in the statutes will be forthcoming in the immediate near future...." (http: /rcommuni systemsassociat�,.com FAOs.hnnl ) 2 vsw.bcd.ca.Loy hiid'hrc rep !state /foundation..df 21,000 potential buyers out of the market nationwide. • Extensive environmental reviews... add time and expense. [T]he impact on housing of the approval process is more pernicious because of the high degree of uncertainty it creates for residential development. • [California must] promote balanced environmental policies and regulations that acknowledge the need for housing and jobs as well as the need to protect and enhance California's natural resources. • [California must] explore alternative funding options to reduce the extent of impact fees. • Although most agree that new development should pay a share of necessary infrastructure to meet new demands, the amount and reach of such fees are having an increasingly detrimental impact on housing costs. The disproportionate contribution toward infrastructure from new housing is inequitable. Id., passim. Notjust the content but the timing of the HCD Report is important because it was released just as the debate on school fee legislation reached the boiling point. Both the Legislature and the Governor's Office recognized the multifaceted importance of the housing sector to the state's economy, as well as the negative impact that excessive local infrastructure mitigation requirements imposed on the industry and housing affordability. As will be discussed more fully below, they also recognized what their respective predecessors had in 1986: allowing local discretion to consider impacts in the land use approval process (whether via CEQA or the local police power) necessarily results in fees and other mitigation requirements that exceed the amounts established by the Legislature as a matter of statewide public policy. In Grupe Development Co. v. Superior Court (1993) 4 Cal.4`h 911, 915, the California Supreme Court determined that a thorough review of the history of school financing legislation is not only appropriate when construing the statutes at issue here, it is "necessary." Grupe's observation is consistent with the longstanding principle of statutory construction that words in a statute are to be construed so as to effectuate legislative intent, and to ascertain that intent, a court properly considers not only the plain meaning of the word in question, but also the legislative history of the statute and the wider historical circumstances of its enactment. See, e.g., California Mfrs. Assn. v. Public Utilities Com. (1979) 24 Cal.3d 836, 844. The relevant history began with the School Facilities Act of 1977. See Grupe, supra, at 915 -919. As summarized by the Court of Appeal in Western/California, Ltd. v. Dry Creek Joint Elementary School District (1996) 50 Cal.App.41h 1461, 1479 (quotations and citations omitted): The financing of school facilities has traditionally been the responsibility of local government. School districts supported their activities mainly by levying ad valorem taxes on real property within their districts — issuing local bonds repaid from real property taxes. The early 1970's saw an increase in residential development leading to school overcrowding, coupled with increased resistance to rising property taxes. Looking for other ways to finance school needs, local governments began to impose fees on developers to cover the costs of new school facilities made necessary by the new housing. The courts upheld these `school - impact fees' as a valid exercise of the police power.... In 1977 the Legislature took its first major step towards a statewide solution to the problem, by granting local governments specific legislative authorization —i.e., in addition to their constitutional police power —to impose school - impact fees: In 1977, with the passage of the Senate Bill No. 201 (the School Facilities Act, effective Jan. 1, 1978), the Legislature specifically authorized cities and counties to enact ordinances requiring residential developers to pay fees to finance temporary facilities necessitated by new development. Soon after SB 201's enactment, the question arose whether the legislation preempted the field of school fees and facilities financing. As noted, the 1977 Act authorized cities and counties to impose a capped temporary facilities fees upon receiving a notice of overcrowding from a local school district. The issue found its way into the courts via a dispute between a developer (Candid Enterprises) and a school district (Grossmont Union High School District). The dispute arose because the 1977 legislation was in tension with a land -use policy of the County of San Diego County, which provided that "before giving approval to development proposals involving a special use permit or a rezoning,... the proponent of the development proposal [must] make certain provisions... that public school services will be provided." As evidence that school facilities would be provided, the county required a "school - availability" letter from the affected local school districts, including the Grossmont Union High School District. The Grossmont District, in turn, required as a condition to issuing a "school - availability" letter, that developers agree to pay not only the temporary facilities fee authorized by the 1977 Act, an additional fee for permanent school facilities as well. Candid Enterprises argued that the 1977 Act preempted the field of school fees and mitigation requirements and therefore the additional fee imposed by the Grossmont District for permanent facilities was unlawful. The school district argued that SB 201 only preempted the field of mitigation requirements imposed to fund temporary facilities. At the time, it was the view of many that the Legislature's intent in enacting SB 201 had indeed been to preempt all school fee and related measures for school facilities — whether permanent or temporary. The California Attorney General had issued an opinion (No. 79 -625, 62 Opinions of the Attorney General 601, 607 -608) concluding that the detailed statutory scheme, including strict requirements related to the eligibility of local agencies to adopt SB 201 fees, the prescriptive language detailing the method of adopting the fees, and the statutory cap on the amount and duration of the fees, combined with the fact that the Legislature was aware that prior to its entering the field local agencies were imposing fees for both temporary and permanent facilities, indicated the Legislature intended the 1977 Act to occupy the entire field. In the litigation between Candid Enterprises and the District, both the Superior Court and Court of Appeal agreed with the Attorney General. After reviewing the language and legislative history of the legislation, the Court of Appeal determined that imposition of permanent school fees on new housing by the District — enforced by the County's land use policy refusing to approve development approvals including rezonings —was preempted: The express authority to impose school impact fees and dedication upon developers under Government Code sections 65970 to 65981 is broad in its scope, applies to all schools but narrowly restricts the amount and use of such fees. To permit local entities to impose further broader fees or further burdens on developers for new school construction would be to write into this very comprehensive plan for school finance of new school construction a complicating feature, having statewide ramifications never generally. There is preemption in the legislative scheme we consider here, precluding the county, district, and board from collecting the fees for permanent school facilities. Candid Enterprises, Inc. v. Grossmont Union High School District (1983) 150 Cal.App.3d 38, 435 -436, superseded by grant of review and rev'd by Candid Enterprises, Inc. v. Grossmont Union High School District (1985) 39 Cal.3d 878 (emphasis added) The California Supreme Court granted review of the Court of Appeal's opinion on March 15, 1984. On December 7, 1984, while the case was pending, the Senate Committee on Housing and Urban Affairs held a hearing in Sacramento on the potential impact of the Court's decision on housing affordability —the very concern noted by the Court of Appeal in the italicized portion of its opinion quoted above. The subject matter of the hearing was titled The Impact of Development Fees on Housing Affordability With Special Focus on School Impact Fees and School Construction. Chairman Leroy Greene's opening statement included the following remarks: There is a court decision on appeal in the California Supreme Court which directly relates to the topic of this hearing. In Candid Enterprises..., the court of appeal ruled that the statutorily created school impact fee process preempts local efforts to provide for construction of fully- equipped permanent school facilities. The appellants... are arguing that Grossmont Union High School District and San Diego County in fact were properly utilizing local legislative powers to require school impact mitigation by residential developers based on authority... under... the California Environmental Quality Act and general zoning laws. The decision is not expected to be handed down until the spring of next year. Depending on the outcome of this case, some of our discussions may well become moot. The California Supreme Court's reversal of the Court of Appeal ensured that the Legislature's discussions about "the impact of development fees on housing affordability with special focus on school impact fees" did not "become moot." The situation facing housing developers as a result of Candid Enterprises was this: under CEQA or its local police power, a local government could refuse land use approvals based on a local detennination of inadequate school facilities, unless the developer agreed to pay a school fee or other school facilities mitigation beyond that authorized by the 1977 School Facilities Act—in whatever amount the city or county and school district deemed appropriate. Whether or not the Legislature agreed with this reasoning of Candid Enterprises, it most certainly did not countenance the result it engendered with respect to the local agencies' ability to exact school facilities mitigation and housing affordability. Indeed, with impressive alacrity, on January 8, 1986 — almost immediately after the California Supreme Court issued Candid Enterprises —the language that would ultimately be enacted as Government Code3 §§ 53080, 65595, and 65996 in the 1986 Act was introduced as part of AB 2630 (AB 2926 ultimately became the enacted legislative vehicle). In Grupe, the California Supreme Court recounted the history, content, and intent of the 1986 Act in great detail. Id. at 917 -919. Grupe recognized the Legislature's clear intent broadly to preempt the school facilities mitigation regime: The legislation was designed, first, to bring order out of confusion. Prior to its enactment, different school districts had used different methods for meeting their financing needs: as noted above, even measures taken under the 1977 School Facilities Act were required to coexist with ordinances of local governments imposing school impact -fees under their police power [citing the Court's Candid Enterprises decision]. The 1986 legislation gathered all such financing under one umbrella and imposed statewide uniformity on the process, expressly occupying the field and preempting `all local measures on the subject.' Id. at 919. However, by the time Grupe was decided in 1993, the Mira cases had in important respects undermined the 1986 Act and its fundamental purpose, and the California Supreme Court had denied petitions for review in each case. See 1989 Cal. LEXIS 953 (March 1, 1989) (Mira); 1991 Cal. LEXIS 1932 (May 2, 1991) (Hart, Panelli and Arabian, J.J., of the opn. review should be granted); 1991 Cal. LEXIS 2615 (May 30, 1991) (Murrieta). To appreciate fully the sweep of SB 50, it is crucial to recognize the full extent of the violence done by the Mira cases to the Legislature's intent in enacting the 1986 legislation. Understood in the context of Candid Enterprises, it is clear that the Legislature in 1986 sought to create an effective —not an illusory— school mitigation cap covering school fees from whatever source derived, and that to do so it intended to prohibit local governments from denying residential projects, including legislative approvals such as rezonings, on the basis of school inadequacy whether under CEQA or under the exercise of local 3 Subsequent statutory references are to the Government Code unless otherwise indicated. planning and zoning discretion .4 However, not one of the Mira cases discussed the history or purpose of the 1986 School Facilities Act, let alone its relationship to Candid Enterprises. That intent was there to be found. In addition to the copious analyses of the history and purpose of the 1986 Act in Grupe, California/Western, and other decisions, the Conference Report Analysis of the legislation (to the Building Industry's knowledge not referenced in any reported decision) provides additional compelling evidence the Legislature understood that allowing local agencies (cities, counties, or school districts) to consider the adequacy of school facilities in the land use approval process (including under CEQA) and deny land use approvals were flatly inconsistent with establishing an absolute cap on school facilities mitigation requirements enacted in the interest of housing affordability. In other words, the Legislature understood that, just as the power to tax is the power to destroy,5 the power to consider and deny under local government land use planning is the power to additional mitigation: This bill [AB 2926 (Stirling)] SB 1133 (Bergeson) and SB 327 (L. Greene) are the three school facilities bills which are being reported out of one conference committee.... SB 327 represents the `program' changes to the existing school facilities construction statutes; AB 2926 represents the `fiscal' sections; and SB 1 133 is the 1986 proposed G.O. bond measure. In reality, many sections of all three bills are interdependent, particularly SB 327 and AB 2926 which are double joined.... JAB 29261 Places a cap on developer fees for school facilities.. Authority to levv the fee is shifted to school districts where this autbority currently resides 11 Stipulates that the new square foot fees are the exclusive method of financing permanent school facilities and no other fees or charges may be levied including those which may be levied pursuant to CEQA mitigation or pursuant to local police power SB 201 fees are included within the cap (that is they may not be added on above the cap.... By eliminating CEQA fees for school facilities the bill would result in lower development fees in some districts than would be if current law were to continue.... The California Building Industry Association (CBIA) supports the developer fee proposal contained in the school facilities package. They support AB 2926 because the capped fee provides them with some certainty regarding their fee obligations and better allows them to carry out their business." Conference Report Analysis of AB 2926 (Aug. 28, 1986) (emphasis added).6 4 Indeed, in Grupe the California Supreme Court described the situation created after its Candid Enterprises decision as one of "confusion" that prompted an immediate response from the Legislature intended to "bring order" and create "statewide uniformity." Grupe, supra, at 919. 5 McCulloch v. Maryland, 17 U.S. 316 (1819) 6 As a law firm representing school districts candidly wrote in analyzing SB 50 following its enactment: "The 1986 law appeared, on its face, to prohibit municipalities to levy fees in excess of the statutory maximum amounts to fund schools or to deny requests for development approvals on the basis of inadequacy of school facilities.[] In a series of appellate decisions known as the `Mira- Hart- Murrieta cases, however the courts found a way around Hart and Murrieta similarly ignored this legislative history and provided little in the way of analyzing the purpose of the 1986 Act. Each case relied heavily on Mira and failed to ask whether excluding general plan amendments and rezonings from §65996 would undermine the Act's very purpose by holding every housing project requiring a legislative approval (which many, if not most, do) hostage to local demands for school facilities mitigation exceeding that authorized by state law.7 Almost from the day Mira was published, continuing through the mid- 1990's, the Legislature was forced to revisit the contentious issue it thought it had resolved with the 1986 legislation. Opponents of the Mira cases introduced bills to repeal them8; supporters introduced bills to codify them.9 Finally, in the late 1990's it became clear to enough interests that the status quo was untenable. Over 300 districts had begun extracting Mira fees, sometimes exceeding $25,000.00 per house, 10 and as noted the Legislature became concerned that the excessive school fees and mitigation requirements were negatively impacting housing affordability. Furthermore, school districts that relied on state bond funds for school construction and modernization were suffering because the Legislature had not put a school bond on the statewide ballot in over 4 years (it requires a 2/3 -vote of the Legislature to place a school bond on the statewide ballot and there was insufficient support to do so absent a clear and unequivocal restoration of the intent of the 1986 legislation. the limitations of the 1986 law.... In addition..., [tlhe Murrieta case interpreted the term `project' to again limit the application of this rule to adjudicative decisions, thereby allowing mitigation measures under CEQA pursuant to legislative acts. (Kronick Moskovitz Tiedemann & Girard, "SB 50, Chapter 407, Statutes of 1998: School Facilities Finance Reform Legislation" (Jan. 14, 1999) (emphases added) The emphasized language confirms that the Mira cases clearly conflicted with the legislative intent of the 1986 legislation. 7 Besides improperly failing to consider the history and purpose of the 1986 Act, the Mira cases clearly erred even in the narrow analyses they did undertake. The cases failed to recognize that the language defining "project" in §65931, enacted in 1977, was taken verbatim from the definition of "project" found in CEQA — language that had already been interpreted by the courts as including legislative acts such as rezonings and general plan amendments. See Friends ofMammoth v. Mono County (1972) 8 Cal.3d 247; Rosenthal v. Los Angeles County Board of Supervisors (1975) 44 Cal.App.3d 815; City ofSanta Ana v. City of Garden Grove (1979) 100 Ca1.App.3d 521. Why the Mira cases would look to the interpretation of "project" given by a Court of Appeal in a case involving the Permit Streamlining Act, rather than how courts had consistently construed the term in the CEQA context—the precise context in which the Legislature used the term in the 1986 Act —is unclear. 8 E.g., SB 1533 (1989), AB 80 (1991), SB 1287 (1992), SB 1066 (1995), AB 3147 (1996). 9 E.g., SB 1771 (1990), AB 1846 (1991), AB 1833 (1993), SB 443 (1993). See Assem. Com. on Local Gov., Analysis of AB 1833, as amended April 12, 1993 (April 14, 1993); Sen. Com. on Local Gov., Analysis, Analysis of AB 1846, 3d reading analysis of AB 1846, as amended July 15, 1991 (Aug. 21, 1991) 10 See, e.g., infra, n. 19, n.25. Most importantly, the California Teachers Association ( "CTA "), unquestionably the leader of the education community in Sacramento and among the more powerful lobbying forces in California, made the decision to partner with CBIA to negotiate a bipartisan school facilities finance "grand compromise " —a compromise that included repeal of the Mira cases.I I Once CTA signaled its support for a legislative package that included Mira repeal and restoration of an absolute cap on school facilities fees, passage was inevitable. 12 In return for unequivocally ending the ability of cities, counties, and school districts to use local planning and zoning authority, CEQA, or any other state or local law to exert pressure on developers to provide mitigation in any form for any school - related impact exceeding the newly established three- tiered maximum fee level, CBIA, the broader business community, Republicans in the Legislature, and Governor Wilson agreed to support the largest school bond in United States history, as well as a substantial increase in the maximum allowable school fees that school districts could lawfully impose on new residential construction. Many school districts, cities and counties, and others strongly opposed SB 50 because, as they acknowledged at the time, it took them and the adequacy of school facilities "out of the local planning process," 13 and eliminated their ability to force the consideration of school - related issues in the land use approval process in any way other than that expressly spelled out in SB 50, and clearly and unequivocally affirmed that the three- tiered maximum fee level includes school impact fees and exactions from whatever source derived, including any adopted pursuant to the 1977 Act. 14 11 Los Angeles Times, "State Studies New School Funding" (Sept. 4, 1997) 12 To the great dismay of the school district lobby: Press Enterprise, "Murrieta District Will Fight Cap on School Fees" (May 3, 1997) ( "Murrieta school officials are fighting efforts by legislators to prohibit local school districts from charging developer fees above a state- mandated cap. If the Legislature decides to close loopholes in the 1986 legislation that set the cap, Murrieta and other rapidly growing districts will have a tougher time finding money to build new schools and renovate existing ones, said Chuck DePreker, assistant superintendent for facilities. "); California School Boards Association, "SB 50 Legislative Update," (July 14, 1998) ( "The Assembly Democratic leadership told us that they would put up a clean bond for a vote several times.... Instead, Assembly leaders met over the weekend to draft a horrible and more onerous version of SB 50. It is this version that passed off the Assembly Floor last night ... a bill that gives the developers 150 percent of what they have been seeking.... and repeals the Mira line of court cases. ") 13 Cal. School Boards Ass'n, "Analysis of SB 50 /Proposition IA," supra, n. 1. 14 See, e.g., Sen. Rules Com., Off. Of Sen. Floor Analyses, analysis of Sen. Bill No. 50, as passed by the Assembly July 13, 1998 (July 15, 1998) (The bill revises developer fee and mitigation procedures for school facilities as follows: A fee, charge, dedication or other requirement for school facilities is prohibited from being levied in connection with an adjudicative act or a legislative act (thereby overriding Mira and related cases) by any state or local agency relating to the planning, use, or development of real property that exceeds the amount specified in this bill.); Association of Cal. School Admrs., "1998 Statewide Bond & Facilities Reform Update," (Aug. 26, The Legislature had seen that the power to force consideration of an issue in the land use approval process is the power to extract additional fees and other mitigation. 15 That is why SB 50's preemption language and express decoupling of school facilities from the land use approval process and CEQA is drafted so sweepingly: 16 65995(e). The Legislature finds and declares that the financing of school facilities and the mitigation of the impacts of land use approvals, whether legislative or adjudicative, or both, on the need for school facilities are matters of statewide concern. For this reason, the Legislature hereby occupies the subject matter of requirements related to school facilities levied or imposed in connection with, or made a condition of, any land use approval..., and the mitigation of the impacts of land use approvals, whether legislative or adjudicative, or both, on the need for school facilities, to the exclusion of all other measures, financial or nonfinancial, on the subjects. For purposes of this subdivision, `school facilities' means any school related consideration relating to a school district's ability to accommodate enrollment. 1998) ( "SB 50 (Greene), ... SB 50 contains the following provisions: MiralHartlMurrieta court cases would be repealed.... Ability of cities and counties to mitigate for reasons not related to schools would be protected.... "). Even a leading school law firm conceded what its clients had lost: "The MiralHartlMurrieta cases established that a Local Agency has the discretion to deny or refuse to approve a development application based upon the development's adverse impact on local school facilities, either by its own legislative act or by a finding that the California Environmental Quality Act had not been adequately complied with. As a result, Developers seeking legislative land use approvals often have, and are continuing to negotiate with school districts to establish mitigation agreements ( "Mitigation Agreements ") providing for mitigation payments ( "Mitigation Payments ") and other provisions that would adequately mitigate the development's impact upon local schools. The result proved favorable to school districts as Mitigation Payments in an amount greater than Statutory School Fees were often agreed upon together with other provisions to more realistically mitigate on a timely basis the impact of a Developer's projects on the local schools. With the advent of SB -50, and the passage of Proposition IA, the MiralHartlMurrieta decisions appear to be repealed, and are replaced with a strict statutory structure for funding of School Facilities within the State.... With the apparent repeal of the MiralHartlMurrieta decisions (which previously allowed an estimated 300 school districts to obtain realistic mitigation funding from Developers for affected school districts as part of the Local Agency approval and environmental review process), a greater number of school districts will be pursuing any available State funding.... With the passage of Proposition 1 A, repeal of the MiralHartlMurrieta decisions has become a reality, unless subsequently held invalid if State fmtding is not fairly available to all school districts in need." Bowie, Arneson, Wiles, & Giannone, "Developer Fee Aspects of SB -50," (March 23, 1999); see also C.A.S.H. Legal Advisory Committee, "Senate Bill 50 and School Facility Fees (Feb. 23, 1999) ('9n essence, SB 50 completely relieves cities and counties of the power to require development fees or other exactions in excess of the statutory maximum amounts to help fund school facilities.... ") 15 press Enterprise, supra ( "the School Facilities Act of 1986 established a maximum developer fee.... A subsequent series of court rulings collectively called MiralHartlMurrieta determined that local agencies could consider school overcrowding issues in making land -use decisions. This allows local agencies to negotiate higher fees with developers. "); San Jose Mercury News, "School Bond Deal Isn't Very Good, But It's All We've Got," (Aug. 26, 1998) ( "It's troubling that the compromise takes away the school districts' negotiating clout with home builders... ") 16 Fresno Bee, "Madera County Oks 8,200 homes" (Dec. 8, 2008) 65995(h). The payment or satisfaction of a fee, charge or other requirement levied or imposed pursuant to Section 17620 of the Education Code in the amounts specified in Section 65995 and if applicable any amounts specified in Section 65995.5 or 65995.7 are hereby deemed to be full and complete mitigation of the impacts of any legislative or adjudicative act, or both involving but not limited to the planning use or development of real property, or any change in governmental organization or reorganization on the provision of adequate school facilities (emphasis added) 65995(1) A state or local agency may not deny or refuse to approve a legislative or adjudicative act, or both, involving but not limited to the planning use or development of real property or any change in governmental organization or reorganization ... on the basis of a person's refusal to provide school facilities mitigation that exceeds the amounts authorized pursuant to this section 1659951 or pursuant to Section 65995.5 or 65995.7, as applicable. (emphasis added) 65996(b) The provisions of this chapter [Chapter 4.9] are hereby deemed to provide full and complete school facilities mitigation and, notwithstanding Section 65858 [moratorium statute] or Division 13 (commencing with Section 21000) of the Public Resources Code [CEQA], or any other provision of state or local law, a state or local agency may not deny or refuse to approve a legislative or adjudicative act, or both, involving, but not limited to, the planning, use, or development of real property or any change in governmental organization or reorganization ... on the basis that school facilities are inadequate. (c) For purposes of this section, `school facilities' means any school- related consideration relating to a school district's ability to accommodate enrollment. SB 50 comprised thirty -seven interrelated statutory sections within its fifty -seven pages, dealing comprehensively not only with the school facilities mitigation and land use issues, but also wholesale revision of the state school construction program, and placement of the largest school facilities bond in United States history on the November 1998 ballot. SB 50's program reforms replaced the antiquated, complicated, and ineffective Lease - Purchase Program (SB 201 refers to, and is dependent on, compliance and consistency with this no- longer - existing state funding program, another example of its anachronistic status) with a streamlined approach that, addressed many of the complaints that school districts had voiced about prior program. Among other reforms, SB 50 effected the following changes: Created a specified per pupil state construction grant to school districts equal to 50 percent of the cost of construction, including site acquisition and development. Education Code §17072.10. • Authorized school districts to impose a school fee on new residential construction17 in an amount sufficient to fund the remaining fifty percent, provided the district can demonstrate the need for facilities using state criteria and efficient use of existing facilities. § §65995.5, 65995.6 • Authorized school districts to impose a school fee sufficient to fund one - hundred percent of the cost of providing school facilities if the State is no longer apportioning state bond funds to districts. §65995.7 • Authorized hardship assistance for districts unable to provide sufficient local matching funds. Education Code § 17075.10. • Eliminated existing state liens on local school facilities. Education Code § 17070.85. • Removed existing restrictions on when local school bond elections may be held. Elections Code §1003. • Authorized school districts to use wrap -up insurance policies on any construction project. • Authorized placing the largest school construction bond in United States history on the November, 1998 ballot. • The authorized amount of the bond was $9.2 billion. Education Code § 100400 et seq. • Provided that if the school bond measure failed at the November 1998 election, or upon the failure of any subsequent statewide school bond after 2006, SB 50's Mira repeal provisions would be suspended and the pre -SB 50 version of §65996 would become operative. See generally Sen. Rules Com., Off. Of Sen. Floor Analyses, analysis of Sen. Bill No. 50, as passed by the Assembly July 13, 1998 (July 15, 1998). 11. The District's Proposed Implementation of SB 201 is In Irreconcilable Conflict with SB 50's Operative Provisions and Legislative Intent. The District's proposed implementation of SB 201 is in irreconcilable conflict with SB 50's operative provisions and legislative intent. Thus, even though the Legislature did not expressly repeal Chapter 4.7 of Title 7 of the Government Code (the SB 201 statutory scheme) or excise the preexisting reference to Chapter 4.7 as a theoretically available school mitigation "provision," a comparison of the new statute's key operative provisions with the 1977 statutory scheme shows conclusively that they are in fatal conflict. • Through amendments to §65995, SB 50 expressly provided that the school fees authorized by Education Code § 17620 (formerly §53080), in the maximum amounts specified in Chapter 4.9, are deemed to represent full and complete mitigation of all school facilities impacts. The 1977 Act that authorized interim/temporary facilities fees is found in Chapter 4.7. Thus, the Legislature in the more recent and more specific statutory regime made a preemptive determination that the school fees authorized to be imposed by districts pursuant to SB 50 17 Relevant to the Mira repeal issue, SB 50 eliminated the terms "project" and "development project" not only from §§ 65995 and 65996, but in Education Code § 17620 as well. Whereas §53080 had authorized a fee on "development projects," SB 50 amended the statute to authorize a fee on "new residential construction." represent full and complete mitigation, and that determination cannot be second - guessed or evaded via invoking the 1977 Act. • Through amendments to §65996, SB 50 not only expressly reiterated that the provisions of Chapter 4.9 are deemed to provide "full and complete school facilities mitigation," it also provided that "notwithstanding... any other provision of state or local law," no state or local agency may deny or refuse to approve any land use approval on the basis of school facilities inadequacy. Again, the 1977 Act is in Chapter 4.7 and clearly falls within the meaning of an "other provision of state law" that is rendered inoperative (though not formally repealed) by virtue of use of the drafting term of art "notwithstanding." It well - settled that "[w]hen the Legislature intends for a statute to prevail over all contrary law, it typically signals this intent by using phrases like `notwithstanding any other law' or `notwithstanding other provisions of law.'.... Thus, the phrase `[n]otwithstanding any other provision of law' in section 781, subdivision (a) prevails over contrary law." In re G. Y, 234 Cal. App. 4th 1196, 1201, (2015). The 1977 Act's restriction on approving residential development based on the adequacy of school facilities ( §65972) and its requirement to consider and mitigate school facilities impacts through non -SB 50 methods, are patently antithetical to the operation of SB 50's provisions and would frustrate its clear intent. • SB 50 repealed the then - existing Leroy Greene Lease - Purchase Program in toto and replaced it with an entirely new state school funding regime. The new regime includes preemptive language dictating how school districts are to calculate school building capacity, establishes school site size limitations for purposes of calculating school impact fees imposed on new development, establishes site development cost limitations for purposes of calculating school impact fees imposed on new development, and establishes new eligibility requirements for districts to meet in order to be eligible to go beyond the Level I SB 50 fee amount. The 1977 Act read in isolation and implemented as urged by the District would allow imposition of fees in excess of Level I without meeting any of SB 50's eligibility criteria. • Through adding §65595.5(e), SB 50 created important fiscal and expenditure limitations with respect to school facilities funded by fees or other exactions imposed on new development. That subdivision provides that school districts may construct school facilities that exceed the amount authorized by the combined SB 50 fee formulae and matching state grants from the School Facilities Program only "if the additional costs are funded solely by local revenue sources other than fees, charges, dedications, or other requirements imposed on new construction." The 1977 Act read in isolation and implemented as urged by the District would allow school districts to circumvent these limitations entirely. • Through retaining critical language from the 1986 amendments to §65995(a) and (b), SB 50 clearly retained the absolute cap on all school fees, from whatever source derived, expressly including any fee imposed under the 1977 Act. Thus, §65995(b) provides: "Except as provided in Section 65995.5 [authorizing Level 11 fees] and 65995.7 [authorizing Level III fees], the amount of any fees, charges, dedications, or other requirements authorized under Section 17620 of the Education Code [former §53080], or pursuant to Chapter 4.7 (commencing with Section 65970) [the 1977 Actl, or both, may not exceed the following Isettin2 forth the SB 50 Level I,11, and III maximum fee amounts]" emphasis added). As previously discussed, the legislative history of the 1986 legislation confirmed that "SB 201 fees are included within the cap (that is, they may not be added on above the cap. "). By the District's own admission, it is already imposing the maximum fee authorized by SB 50 and therefore even if the 1977 Act continues to provide authority to impose a school mitigation fee in certain heretofore unascertained circumstances, neither the Town nor the District may lawfully impose a fee pursuant to the 1977 Act in any amount. III. The District's Proposal is Inconsistent With SB 201. Even going so far as to assume that neither SB 50 nor the 1986 legislation were never enacted, the District's proposal still invites the Town to adopt a patently illegal school mitigation program because the proposal violates the express limitations of the 1977 Act itself: • The 1977 Act is limited to funding temporary/interim school facilities as defined in § 65980(c). The District's proposal involves imposing school fees based on land acquisition costs for "a small school with capacity of 305 students' and expending the fees on the vaguely described category of "expand[ing] school facilities to educate the additional 305 students." Nothing in the District's proposal purports to limit the fee expenditures to the authorized interim school facilities. • The 1977 Act requires a district to identify with specificity the temporary/interim facilities to be funded and, if land acquisition is necessary, identification of the land to be acquired. The District's proposal fails to identify any land or temporary classrooms with the required specificity. Instead, the proposal merely provides that "the additional mitigation fees are expected to only cover the cost to expand school facilities to educate the additional 305 students." • The 1977 Act requires a city to find that the specified land and interim facilities are consistent with the jurisdiction's General Plan. Because the District has failed to comply with the statutory requirement to identify the interim facilities with sufficient specificity, the Town is unable to make a legally defensible finding of consistency as mandated by the 1977 Act. • The 1977 Act establishes that "the value of the land to be dedicated or the amount of fees to be paid, or both, shall not exceed the amount necessary to pay five annual lease payments for the interim facilities." ( §65974a)(4)). There is no evidence in the information provided by the District suggesting that the proposed fee of $9.57 sq. ft. is limited to the amount necessary to pay five annual lease payments for interim facilities. To the contrary, the District's proposed fee appears to be based on the permanent cost of acquiring land and expanding school facilities to accommodate 305 students. For all of the foregoing reasons, we urge the Town Council in the strongest possible terms to reject the District's request and instead adopt a resolution of non - concurrence in the District's Notice of Findings as soon as practicable before September 14, 2015, and terminate all further proceedings under the 1977 Act. Best regards, Nick Cammarota Paul Campos General Counsel General Counsel CBIA BIA Bay Area