On February 23, 2022, the State Allocation Board (SAB) increased the maximum Level I school fee assessment California school districts can charge to $4.79 per square foot for residential development, and $0.78 per square foot for commercial and industrial development.
Education Code section 17620, subdivision (a)(1) permits school districts to charge impact fees on residential, commercial, and industrial construction within their boundaries to fund school facilities. Government Code section 65995, subdivision (b) sets out the maximum Level I fees and provides that the SAB is to increase the fees every two years to account for inflation.
With inflation higher than it has been in 40 years, the SAB’s 2022 school fee increases are much larger than any in recent years. The SAB increased fees for residential construction by 17.4 percent, from $4.08 to $4.79, and for commercial and industrial construction by 18.2 percent, from $0.66 to $0.78. By way of comparison, the 2020 adjustment to Level I fees was from $3.79 to $4.08 for residential construction, and from $0.61 to $0.66 for commercial and industrial construction.
School impact fees cover only a portion of the facilities costs that new residential, commercial, and industrial development impose on school districts. (See Gov. Code, § 65995.5.) With inflation increasing district costs, and the newly adjusted school fee maximums offering substantial additional revenue, many districts will want to increase their fees quickly.
Increasing Level I fees is a multi-step process that includes the following:
- Drafting a school fee justification report pursuant to Government Code section 66001;
- Meeting the notice and publication requirements for the public meeting under Government Code sections 6062a, 66016, 66016.5, and 66018;
- Holding a public hearing on the proposed fee increase pursuant to Government Code section 66018, and adopting the increase;
- Informing the cities and/or counties within the district’s boundaries of the fee increase to facilitate collection at the new rates.
Districts should also be sure to comply with the requirements of newly-enacted Government Code section 66016.5 in their nexus studies.
There are two higher levels of school impact fees as well, which can only be charged on residential construction. Level II fees are meant to constitute up to 50 percent of district site acquisition and construction costs. (See Gov. Code, § 65995.5.) Districts can charge Level II fees on residential construction as an alternative to Level I fees if they meet the criteria and requirements set out in Government Code section 65995.5. Level III fees are meant to constitute 100 percent of district site acquisition and construction costs. (See Gov. Code, § 65995.7.) Only Districts eligible to charge Level II fees can charge Level III fees, and only when state funding for new school facility construction is unavailable. (Ibid.)
Tao Rossini attorneys have extensive experience providing guidance to school districts regarding developer fees. We have also been involved in litigating some of the most consequential developer impact fee cases in recent years. We would be happy to assist with any questions you may have about increasing school impact fees in your district.