Attachment 4San Francisco
September 9, 2015
VIA ELECTRONIC MAIL
CALIFORNIA'S THOUGHT LEADERS \�
IN EDUCATION LAW
Town of Los Gatos
Honorable Mayor Marcia Jensen
Members of the Town Council
Re: Los Gatos Union School District Findings of Overcrowding
Our file 4580.1103
Dear Honorable Mayor Jensen & Town Council Members:
SAN FRANUSCO
275 Battery Street
Suite 1150
San Francisco, CA 94111
TEL 1415543.4111
FAX 1415343.4384
115 Pine Avenue
Suite 500
Long Beach, CA 90802
TEL 562.366.8500
FAX 562.366.8505
SAN D3 FG0
750 8 Street
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San Diego, CA 92101
TEL 619.595.0202
FAX 619.702.6202
NOVATO
1682 Novato Boulevard
Suite 251
Novato, CA 94947
TEL 1 415.543.4111
FAX 1415 543.4384
Our firm is working with the Los Gatos Union School District ( "District ") in connection
with its recent Notice of Overcrowding Findings ( "Findings "). It is our understanding cl>
that several questions have been raised regarding the validity of the statutes relied 123 West 6th Street
upon by the District in making those findings, as well as applicable limitations on the Suite 120
amounts that can be imposed on developers and the use of those proceeds b the Chico, CA 959
p y TEL 530,343,33 Chico,
34
District. FAX 530.924,4784
Before setting forth the District's position on these issues, I want to raise a
preliminary but important point. As you hopefully can glean from the Findings, the www.DWKesq.com
District finds itself in the precarious situation of trying to meet the facility and
programmatic needs of a growing student population with very limited resources to
do so. The District is mindful of the imposing constraints of Senate Bill 50 and is
actively seeking to mitigate the impacts of growth of Los Gatos schools. As evidenced
in the District's Findings and by the sheer volume of pending development
applications, growth anticipated in the Town's Housing Element will result in
significant unmet capital outlay costs if the District has any chance at continuing to
provide the excellent education that members of the Los Gatos community have come
to expect.
To that end, the District offered the Findings and request of the overcrowding
ordinance as one such potential solution. The goal was to craft a comprehensive and
holistic approach to ensuring that the entire Los Gatos community remains committed
to maintaining top performing schools. With that said, it is our hope that the District,
Town and community can continue to work together to provide adequate school
facilities for continued implementation of the District's stellar educational program.
DEDICATION an
WISDOM
KNOW -HOW
nWK SF R"474v1 ATTACHMENT 4
Town of Los Gatos
Mayor Jensen
Members of the Town Council
September 9, 2015
Page 2
Validity of Overcrowding Findings and Ordinances under Government Code Section
65970, et seq.
The Building Industry Association ( "BIA ") submitted a 19 -page letter ( "BIA Letter ") in opposition
to the District's findings and any proposed action taken by the Town of Los Gatos in connection
with the findings. The bulk of the BIA Letter, nearly 16 pages, was spent trying to prove that
Government Code section 65970, et seq., (overcrowding fees) have been preempted by
Government Code section 65595, et seq. Ironically, the very statutes that the BIA claims preempt
the overcrowding fees specifically reference and identify those fees as one of the exclusive
methods of mitigating impacts on school facilities.
As the Findings explain, Government Code section 65970, et seq., permits a city or town to
impose mitigation obligations on residential developers to alleviate the impact of overcrowding in
schools caused by new development. However, as also noted in the District's Findings, before a
developer may be required to dedicate land or pay a fee in lieu thereof pursuant to sections
65970 through 65981, the governing board of a school district which operates an elementary or
high school shall make the written findings, supported by clear and convincing evidence, required
by Government Code section 65971, and notify the city or town council of its findings. The
mitigation contemplated by Sections 65970, et seq., is distinct from the typical school impact
fees that may be imposed under Education Code section 17620, etseq., as implemented pursuant
to Government Code section 65995, et seq.
Indeed, section 65995(a) specifically provides that except for a fee, charge, dedication, or other
requirement authorized under Section 17620 of the Education Code, or pursuant to Chapter 4.7
(commencing with Section 65970), no other fees, charges, dedications or requirements may be
imposed on developers in connection with their residential or commercial developments. Likewise,
section 65996(a) expressly provides that imposition of fees and /or other requirements under
Education Code section 17620, et seq., and Government Code section 65970, et seq., shall be
the "exclusive methods of considering and mitigating impacts on school facilities that occur or
might occur as a result of any legislative or adjudicative act, or both, by any state or local agency
involving, but not limited to, the planning, use, or development of real property or any change of
governmental organization or reorganization ...'. As such, it is clear that imposition of school
impact fees under Education Code section 17620, et seq., and payment of fees or dedication of
land in lieu thereof pursuant to Government Code section 65970, et seq., are both permissible
methods of mitigating growth impacts on school facilities due to development.
The BIA Letter asserts that Government Code sections 65995(h) and 65996(b) stand for the
proposition that payment of fees under those sections is the full and complete mitigation that can
be imposed on developers. (BIA Letter, p. 15.) However, the BIA fails to acknowledge that in
those same two statutes, the Legislature specifically reference and incorporate payment of
overcrowding fees under section 65970, et seq., as one of the two exclusive methods for
mitigating growth impacts on school facilities. For example, section 65995 specifically provides:
a) Except for a fee, charge, dedication, or other requirement authorized under
Section 17620 of the Education Code, or pursuant to Chapter 4.7 (commencing
with Section 65970), a fee, charge, dedication, or other requirement for the
DWK SP 812474v1
Town of Los Gatos
Mayor Jensen
Members of the Town Council
September 9, 2015
Page 3
construction or reconstruction of school facilities may not be levied or imposed in
connection with, or made a condition of, any legislative or adjudicative act, or both,
by any state or local agency involving, but not limited to, the planning, use, or
development of real property, or any change in governmental organization or
reorganization, as defined in Section 56021 or 56073. (Emphasis added.)
Similarly, section 65996(a) specifically states:
(a) Notwithstanding Section 65858, or Division 13 (commencing with Section
21000) of the Public Resources Code, or any other provision of state or local law,
the following provisions shall be the exclusive methods of considering and
mitigating impacts on school facilities that occur or might occur as a result of any
legislative or adjudicative act, or both, by any state or local agency involving, but
not limited to, the planning, use, or development of real property or any change of
governmental organization or reorganization, as defined in Section 56021 or
56073:
(1) Section 17620 of the Education Code.
(2) Chapter 4.7 (commencing with Section 65970) of Division 1 of Title 7.
(Emphasis added.)
As the BIA has recounted, there have been several revisions to the developer fee statutory
structure over the years, as well as many cases interpreting the statutes. As also pointed out by
the BIA, the California Legislature has indeed preempted the area of fee imposition for school
facilities. Within this authority, and despite some early confusion regarding the application of SB
50, the Legislature made the knowing decision not to repeal the overcrowding fee structure set
forth in Government Code sections 65970, et seq. Rather, these provisions were specifically
referenced and incorporated into the statutes implementing SB 50. In other words, if the
Legislature intended that overcrowding fees have no force and effect following the enactment of
SB 50, it would have repealed Government Code sections 65970, et seq. Based on the plain
language of Government Code section 65995, et seq., and contrary to the BIA's contention, both
types of fees are valid and permissible methods of mitigation that can exist at the same time.
Use of Funds and /or Land for "Interim" Housing
It is our understanding that there were questions raised regarding the meaning of "interim
housing" in the context of Government Code section 65970, et seq. Those sections authorize the
imposition of fees or dedication of land for "interim" housing when conditions of overcrowding
exist. While the statutes do not specifically define the term "interim housing," it does set forth a
few parameters that shed light on the meaning of this term. First, the statutes permit the
imposition of fees or the dedication of land upon which interim housing would be located.
Generally, the dedication of land is a permanent action. In other words, when property is
transferred, it is typically a complete and final transfer in title to property. The statutes attempt
to provide some qualification as to the value of the land that is subject to dedication for
overcrowding. Namely, section 65974(a)(4) provides that "the value of the land to be dedicated
nv SF 21)474v1
Town of Los Gatos
Mayor)ensen
Members of the Town Council
September 9, 2015
Page 4
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."
This limitation implies that the value of the dedicated land cannot exceed what it would cost the
District for a five -year lease of interim facilities. (See Gov. Code, §65974(a)(4).) However, to
the extent the value of the land is equal to the cost of leasing interim facilities for five years, the
dedication of the land would fulfill the requirements of section 65974 and the school district would
still own the land outright at the conclusion of a five year period. The statutes do not require a
lease of land for interim housing. Nor does the Code require the District to return property
dedicated to it in fee to the developer. Rather, in lieu of payment of fees or dedication of land,
the builder of a residential development may, at his or her option and at his or her expense,
provide interim facilities, owned or controlled by the builder, at the place designated by the school
district, and at the conclusion of the fifth school year the builder shall, at the builder's expense,
remove the interim facilities from that place. (See Gov. Code, §65974(a)(4).)
The Code also requires that there be some reasonable relationship between the location and
amount of land to be dedicated or the fees paid, and need for interim facilities. Specifically,
section 65974(a)(4) provides that: "The location and amount of land to be dedicated or the
amount of fees to be paid, or both, shall bear a reasonable relationship and be limited to the
needs of the community for interim elementary or high school facilities and shall be reasonably
related and limited to the need for schools caused by the development." Thus, land dedicated
under these provisions must be related in location and amount (square footage) to the provision
of interim facilities. As noted above, it would appear that a five year period is the time limitation
for provisions of interim housing, However, to the extent the land is thereafter owned by the
school district in fee, there appears to be no limitation on the future use of the land so long as it
was first acquired in compliance with Government Code section 65970, et seq.
In sum, we note that: (1) the Legislature clearly contemplates that dedication of land is
permissible under section 65970, et seq.; (2) there is an implied five -year period for the provision
of interim /temporary housing; (3) there is no reversion provision in the Code requiring the return
of land initially dedicated for interim housing; and (4) there is no requirement that the dedicated
land be "leased." In our view, these factors combined make clear that so long as property is
dedicated in compliance with the provisions of sections 65970, et seq., at the conclusion of the
five year period, the District would hold title to the property in fee and would thereafter be
authorized to use said property for any school purposes, including the construction of permanent
school facilities needed to house growing enrollment.
District Entitlement to Level II Fees
Finally, it has also been suggested that the District can, itself, seek to impose higher school
impact fees under Government Code section 65995.5. While it is simple to make this suggestion,
it is not as simple to qualify for the higher Level II fees. To qualify, a school district must have
applied for state funding pursuant to the School Facility Program pursuant to the Leroy F. Greene
School Facilities Act of 1998 ("SFP "), received an eligibility determination from the SAB, and met
two of the four following criteria:
Uwx sF 812474vi
Town of Los Gatos
Mayor Jensen
Members of the Town Council
September 9, 2015
Page 5
* Have a certain percentage of "substantial enrollment" in multi- track - year -round
education;
• Meet specified bonding /debt capacity requirements;
• Have held a local general obligation bond election in the past four years that
received at least 50% plus one of all votes cast; and
* Have a certain number of relocatable classrooms throughout the school district.
(Gov. Code, §65996.5.)
The District regularly monitors its entitlement to fees and has concluded that it is, unfortunately,
not eligible to impose Level II fees at this time.
Recommendations
As stated above, the District remains appreciative of the Town's willingness to consider this option
and continued support of Los Gatos schools. Our hope is to arrive at mitigation solutions that
are legally compliant and that meet the expanding facilities needs of the Town's growing
population. To that end, the District respectfully requests that the Town take the following
actions:
Adopt the overcrowding ordinance as proposed: As noted above, it is clear that both SB
50 and overcrowding fees are permissible methods for mitigating the impacts of
development. Even if there is a limit on the amount of fees that can be charged, the
ordinance itself is generic in nature and does not require the Town to impose a fee greater
than what is legally authorized. Our review of other Town Municipal and Zoning Codes
reveal that many jurisdictions have indeed enacted these ordinances in communities
where school districts are also accepting developer fees under SB 50. As such, we believe
that it is legally permissible for the Town to do so here.
Concur with the District's Overcrowding Findings: Again, even if the Town believes that it
is limited in the amount of fees its can impose on new development, there is no legal
impediment to the Town concurring with, at a minimum, the District's overcrowding
findings acknowledging that conditions of overcrowding exist in Los Gatos schools as a
result of recent and planned future development. This recognition is separate and distinct
from the imposition of additional fees to mitigate these impacts. Rather, the Town's
acknowledgement of the overcrowded state of community schools will signal that the
community, including developers, will need to do more to ensure that the schools they
have come to expect will maintain their reputation for excellence.
Encourage developers to work with the District to mitigate impacts of growth: The District
recognizes that, like the District, the Town is also limited in the type of conditions it can
impose on developers to mitigate impacts to school facilities. However, again, there is no
legal impediment to strongly encouraging developers to take action and participate
actively in ensuring as close to full mitigation for impacts from their developments. As the
Findings make clear, the District is doing all that it can and asks that the Town encourage
developers to do the same.
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Town of Los Gatos
Mayor Jensen
Members of the Town Council
September 9, 2015
Page 6
We look forward to working with you in the weeks ahead. In the meantime, please let us know
if you have any additional questions.
Very truly yours,
DANNIS WOLIVER KELLEY
Clarissa R. Canady, Esq.
CRC:JKJ
DWK SR 812474v7