To spur housing construction and address California’s chronic housing shortage, the California Legislature enacted two new housing laws in 2021, Senate Bills (SB) 9 and 10. Since additional housing generates additional students, there will inevitably be increased demands on school facilities. Districts will need to mitigate the impact through developer fees. Fortunately, there are concrete steps districts can take to maximize their fee intake consistent with the new laws.
The first housing law, SB 9, effectively abolishes single-family zoning in California, allowing homeowners to build four housing units on any lot zoned for single-family housing. Homeowners will be able to both split their lots, and build duplexes by right on each lot. The second housing law, SB 10, exempts up-zonings that allow up to 10 units per parcel in urban infill sites or transit-rich areas from the California Environmental Quality Act (CEQA). SBs 9 and 10 will go into effect January 1, 2022.
It is expected that a significant number of the new housing units made possible by SBs 9 &10 will be redevelopment projects that repurpose or replace existing residential space. This could pose a problem for school districts that need to mitigate the impact these new units will have on enrollment. While it is well established that districts can charge fees for new residential space under Education Code section 17620, school district efforts to assess fees on the full square footage of projects that repurpose or replace existing residential space have run into difficulties in the courts.
Government Code section 66001 requires that, in order to assess fees, school districts establish a reasonable relationship between the fee’s use and the need for the fee and the type of development project on which the fee is imposed. In the context of redevelopment, districts must establish that a project will likely generate students—above and beyond those generated by the previous residential use of the property—in order to assess fees on the entirety of a project.
These requirements have been a stumbling block for school districts, because they often find it difficult to establish that replacement of preexisting housing with new housing will generate more students. In Warmington Old Town Associates v. Tustin Unified School Dist.  the developer was replacing 56 apartment units with 38 single-family homes. The district sought to assess fees on the entire square footage of the project. When the developer sued, the court ordered a partial refund, concluding that the district could only charge fees to the extent of the increase in residential square footage. (Id. at p. 867.) More recently, the court in Cresta Bella, LP v. Poway Unified School Dist., reached a similar result, finding that the district’s fee study had not established that the replacement of preexisting square footage increased the student population. The court consequently ruled that the district could only charge for the new square footage.
The takeaway from Warmington and Cresta Bella is that to charge fees for the entire square footage of redevelopment projects, school districts must clearly demonstrate that the projects will result in an increase in the number of students a district must serve.
Unlike the redevelopment projects in Warmington and Cresta Bella, redevelopments authorized by SB 9 and SB 10 will in most cases result in an increase in housing density within preexisting square footage. Therefore, these redevelopments will net additional students, even if the total increase in residential square footage is not substantial. If school districts can convincingly substantiate the increase in students, they should be able to avoid the pitfalls of Warmington and Cresta Bella, and charge fees for the entire square footage of the new development projects.
Tao Rossini’s attorneys have extensive experience providing guidance to school districts regarding developer fees. Our attorneys have been involved in litigating some of the most consequential developer impact fee cases in recent years. We would be happy to address any questions you may have about the impact of SB 9 and SB 10. We can help you craft a plan that maximizes your district’s fees, providing crucial resources to house the additional students SBs 9 and 10 will generate.
 (2002) 101 Cal. App. 4th 840,
 (2013) 218 Cal. App. 4th 438