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