Builders File Challenge to Law Allowing School Fees

A legal challenge to an Orange County school district’s new developer-fee program has been filed by the powerful Building Industry Assn. of Southern California, and educators said Monday the lawsuit could have statewide impact.

If the suit against the Newport-Mesa Unified School District is successful, said officials with the California School Boards Assn., scores of other school districts in California might lose the right to impose the new fees on residential and business construction. In school districts in which enrollment is growing, the money is being used to build new schools. In districts of declining enrollment, the fees are being used for repair and reconstruction.

Suit Challenges Legality

The fees are being levied under a law that allows districts to recoup from developers some of the costs of providing education. The law took effect in January.

The Orange County lawsuit challenges the legality of the $840,000 in developer fees collected since the beginning of the year by Newport-Mesa Unified, which governs the schools in Newport Beach and Costa Mesa. The number of students is declining in the district.

An attorney for the Building Industry Assn. said Monday that the Legislature, in allowing the developer fees, did not intend for them to be used by districts of declining enrollment. But while the major push for passing the new state law allowing the developer fees came from growing districts needing new schools, the declining-enrollment districts wanted help in getting money for building renovations. Almost every school district in California has adopted the new fees, according to the California School Boards Assn.

“We’re absolutely interested in this (Orange County case),” said Dianne Jacob, president of the California School Boards Assn.

Jacob, who is a member of the Jamul-Dulzura Elementary School District in eastern San Diego County, said the fate of the Orange County lawsuit could have an impact on many other school districts. “We may take a role in this,” she said, adding that the state school boards association might file a friend of the court brief.

The suit against Newport-Mesa Unified is the third in Orange County aimed at the new developer fees, but it is the first by the Building Industry Assn. Earlier this month, districts in Anaheim and Placentia were named in similar lawsuits filed by individual development firms.

Jacob and other California School Boards Assn. officials said they know of no other such lawsuits in the state.

The Newport-Mesa Unified challenge was jointly filed in Orange County Superior Court by the 2,100-member Building Industry Assn. of Southern California Inc., the Commercial and Industrial Development Assn., two individuals and two firms.

The building association alleged that Newport-Mesa began imposing the maximum fees allowed by law in January. Effective Jan. 27, the school board imposed the fees of $1.50 per square foot on new residential construction and 25 cents per square foot on commercial development.

The BIA said that enrollment in Newport-Mesa Unified has declined almost continuously since 1970 and that most district elementary schools are being used at less than 90% of capacity.

“The intent of the law was to deal with those districts where development would create a need for new schools,” BIA board member and attorney David L. Colgan said. “Some school districts took this a method to exact new fees, whether there was a need for new schools or not.”

The BIA identified “three or four” districts with questionable fees and chose Newport-Mesa as the “worst abuser,” Colgan said.

“We met with (Newport-Mesa) officials to tell them of our complaint, and they said they had schools that were aging,” he said. “Ordinary repair and maintenance is not contemplated in the legislation.”

The district’s fee program conforms with state guidelines, according to Newport-Mesa lawyer Clayton H. Parker.

Maintenance Not Covered

Regular maintenance is not covered by the fees, Parker said, but reconstruction and modernization are.

Specific examples include new flooring, roofing, wiring, heating and air conditioning, Parker said.

But Colgan said even if the district could demonstrate some impact on enrollment, it is impossible to justify imposing the maximum fee allowable. The lawsuit alleged that the district has failed to show that the fees bear any reasonable relationship to need.

The fees are “simply an unauthorized and illegal additional source of revenue,” according to the lawsuit.

The fees have been a source of controversy. Ten years ago, the Legislature authorized assessment of fees on developers to cover the cost of interim facilities, such as portable classrooms, required in fast-growing districts.

A court decision two years ago gave districts additional leverage, allowing legal challenges based on inadequate school facilities to environmental impact reports for new building projects.

Some counties, including Orange and San Diego, allowed school districts to charge fees on a per-house basis. Jacob noted that her school district could charge $4,000 per house before the new state law.

The Legislature said it wanted to end a crazy quilt of varying local fees on developers by allowing the new statewide fee. The law ended the right of county boards of supervisors to allow school districts to assess their own fees. Instead, the law set a maximum for all districts.

Jacob said that in some cases, including her eastern San Diego County school district, the law doesn’t bring in as much money as did the old per-house fees charged by the school district.