Educational Facilities Developer Fee Information October 2010

1. Educational Facilities Developer Fee Information October 2010

2. FEE BASICS AND TYPES • Allowed by statute (EC 17620; GC 65995) • For new development, renovations, and reconstruction to mitigate impact • Level I & Commercial/Industrial • Level II -- ”Alternative” • Level III

3. FEE BASICS AND TYPES (continued) • Level I and Commercial/Industrial • Minimum amount allowed by Statute (EC 17620) • Adjusted biannually by SAB (January 2010 for next increase) • Fee Justification Study (FJS) required

4. FEE BASICS AND TYPES (continued) • Level II – “Alternative” • Increased fees allowable with certain criteria met • Residential only • School Facilities Needs Analysis (SFNA) required • Valid for one year

5. FEE BASICS AND TYPES (continued) • Level III • Allowable only if/when SAB finds that funds are no longer available; has yet to occur.

6. ACCOUNTING FOR FEES • Separate account maintained for developer fees • Amounts attributable to each fee are segregated • Level I: • Residential (currently $2.97) • Commercial/Industrial (currently $0.47) • Level II • Mitigation payments • CFDs

7. REPORTING FREQUENCY Five (5) Year -- Govt. Code 66001(d) Annual -- Govt. Code 66006

8. FIVE-YEAR REPORT • Per Gov’t Code Section 66001(d) Fees levied and unexpended in 5th fiscal year following the first deposit into the developer fee fund and every 5 years thereafter. 1988/89 (first deposit) 1993/94 (5th fiscal year) 1998/99 (5 years thereafter) And every 5 years thereafter

9. FIVE-YEAR REPORT (continued) • Report must include findings in regard to the funds that remain unexpended and whether or not such funds are committed or uncommitted to specific school facilities projects. Fees levied and unexpended in 5th fiscal year following the first deposit into the developer fee fund and every 5 years thereafter (which means each year a ‘new dollar’ turns 5, thereby the need for a 5-Year Report annually as well).

10. FIVE-YEAR REPORT (continued) • Identify purpose of fee • Demonstrate relationship: • fee  purpose • Identify anticipated funding sources and amounts to complete financing • Designate approximate dates on which funding is expected to be deposited into account/fund • Update annually (because each year a dollar turns 5)

11. ANNUAL REPORT • Per Govt. Code Section 66006 • Applies to each account established to finance public improvements. • Must be made available within 180 days after last day of fiscal year (December 27, 2010). • Must be made available 15 days prior to public meeting of governing board to act on Annual Report.

12. REPORTING PROCESS • Plan on beginning preparation process no later than October to ensure compliance. • Board must review annual and five– year reports at a regularly scheduled meeting not less than 15 days after the report is made available to the public. • Notice requirements: • Mail notice 15 days before meeting to anyone who filed written request.

13. REPORTS INFORMATION • Fees collection: • Description of type of fees collected; • Amounts that may be collected; • Beginning and ending balances of accounts and sub-accounts; • Total amounts collected and interest earned.

14. REPORTS INFORMATION (continued) • Project expenditures: • Detailed information on each project for which Fees were expended; • Percentage actually funded by Responsible Fees for project; • Descriptions of any inter-fund transfers or loans; • Amount of any refunds made.

15. REPORTS INFORMATION (continued) • Maintenance of records: • Information should be obtained from internal business records; • Separate files of this information should be kept; • File should include all relevant information to assist in making required findings.

16. Understanding How to Increase Fees • Increase in fees due January 2010 (remained the same as 2008 per State Allocation Board) • Update Fee Justification Study • Conduct Public Review Period • Make available to public 10 days before Public Hearing. • Meet 10-day mailing, posting, and publishing notice requirements. • Schedule Public Hearing in mid-February (recommendation).

17. Understanding How to Increase Fees (continued) • After the Public Hearing and Governing Board adopts a Resolution Fee Justification Study, statutory feed do not take effect for 60 days unless urgency resolutions are adopted. • Up to two urgency resolutions may be adopted which provide interim authorization for the adopted fees for 30 days per urgency resolution.

18. PROPER EXPENDITURE OF FEES • Section 17620(a)(3) states fees cannot be used for: • Regular maintenance • Routine repair of facilities • Inspection, sampling, analysis, encapsulation, or removal of asbestos– containing materials • Except where incidental to construction or reconstruction in which the expenditure of fees is not prohibited • Deferred maintenance • Described in Section 17582

19. PROPER EXPENDITURE OF FEES (continued) • Flexibility: • Education Code Section 17620(a)(5) allows paying cost to perform needs analysis • Described in Govt. Code 65995.6. • Allows 3% fees for reimbursement of administrative costs. • 3% can only be calculated against Level I Fees collected. • Not allowed for Level II or III Fees collected.

20. NOTES • If you are considering spending developer fees on something other than the actual allowances noted in Code, it is recommended you discuss the idea with legal counsel. • The Building Industry Association (BIA) is going to begin asking for these reports in the near future.

21. POTENTIAL BIA AND DEVELOPER CHALLENGES • Missed reporting and/or action deadlines • Declining enrollment • Fee Justification Study (FJS) or School Facilities Needs Assessment (SFNA) not updated regularly. • Other (any district experiences?)

22. AVAILABLE RESOURCES • Sample reports and templates are available at the Educational Facility Solutions Group web site: • www.sdcoe.net: Business Services Division – Educational Facility Solutions Group– Developer Fees