Schools: Developer Fees Are Unfair : They Hurt Homeowners, Should Be Replaced by Local Options

<i> Bill Leonard (R-Redlands) is a member of the Assembly Education Committee</i>

California must expand classroom space in its population growth areas, and that is going to cost us a lot of money. No one disputes this fact, or the urgency of the problem, but everyone seems to have a different notion as to how to address it.

Gov. George Deukmejian has estimated that we must spend $4 billion in the next five years to provide adequate classroom space. But, based on present allocations, the state will have only about $2.2 billion for school construction during this period. And it is unrealistic for us to assume that local revenues now available to school districts can make up the difference.

California allows local entities to levy a special tax known as “developer fees” on the construction of new homes. This cumbersome, unfair, inefficient tax can raise the price per unit by as much as $5,000. A $5,000 fee adds $43.88 to the monthly payment of a 30-year loan at 10% interest--that’s a total of $15,796 over the life of the loan. But only $5,000 of that money goes to school construction; the remaining $10,796 goes to the bank. This is a tragic waste of taxpayer resources that our schools desperately need.

The homeowner would be better off making a direct $5,000 payment to the schools for construction, but not all of us have $5,000 to spare--particularly when we are purchasing a home in a state in which the median price exceeds $120,000.


Developer-fee financing of local school construction places the total tax burden on a few people--homeowners--whether or not they have school-age children. This fee system is too narrow, and ignores the entire concept of local government fees, which, unlike taxes, are supposed to be charges for services rendered. There is no corollary between a home purchase and the need for a local school.

The state has allowed this financing scheme, an outgrowth of efforts to circumvent the property-tax limitations of Proposition 13, to make home ownership less available to poor and middle-income families. Equally wrong, however, is a policy of neglect that jams youngsters into classrooms where crowd control by the teacher replaces learning. When there are 35 to 40 students per class, it is not surprising that there are higher dropout rates and lower SAT scores.

We would all benefit if developer fees were abolished and replaced with a variety of local options for school districts to finance their share of the costs for new schools. Local school districts and the state should decide together on a fair method of raising the billions necessary for construction. Among the recommended alternatives are voter-approved local general-obligation bonds or benefit-assessment districts. In fact, the local general-obligation bond is the most cost-effective means of financing projects, as well as the fairest, because all property owners pay their fair share for classroom space.

It would be a tragedy for the state to invest huge sums of money to improve the quality of education while doing nothing about overcrowding. To some participants in this state policy debate, the choice has been to tax new homes or accept substandard conditions in our schools. I reject that either/or argument.


In 1985 the Legislature passed a series of bills calling for more state support of school construction. These bills sought to provide classrooms through state and local financing, but they limited the amount of homeowner fees that could be levied for school construction. Deukmejian vetoed the legislation on the ground that the state could not afford to pay 90% of the costs. Thus the stage was set for yet another flurry of bills on school construction and homeowner fees in 1986.

Before the Legislature can address these two issues effectively, Californians must agree on some fundamental principles to guide us. For example, I believe that we must accept that we all have a responsibility to properly house our students and teachers in safe and uncrowded classrooms. And Californians, particularly local government officials, must recognize that home ownership is a stabilizing influence for communities and should be encouraged.

When Deukmejian spoke about the classroom shortage in a recent radio address, I was delighted at his willingness to have the state finance 75% of the cost of building new schools. The governor stressed local and state cooperation. The state cannot, and should not, pay the full cost. There must be local financial support.

But there is more to this debate than who will pick up the tab. More and more local school boards have become involved in municipal land-use debates. Some school trustees believe that a city should not grant permits to developers if it would lead to overcrowded classrooms. But schools should not be permitted to act as planning agencies with the power to block residential development and thereby exacerbate the already high cost of home ownership.


The governor has suggested that $1.6 billion of the state’s $2.2-billion share be raised through statewide bond issues authorized by voters. California’s Assembly members need to hear from educators, developers, parents and property owners. If these groups could forge a coalition, our common interest in the education of our youth would be served.

The unacceptable alternative is to resign ourselves to makeshift classrooms, overcrowding and the astronomical cost of social programs to deal with the problems of dropouts, the unemployed, the drug- and alcohol-addicted and delinquents, for we already know that the less education that youngsters receive, the more likely they are to fall victim to one or more of these tragedies.