Developer Turns to Legislators in Fight Over School Fees

A politically active Orange County developer has enlisted the help of several state legislators in an effort to get back more than $300,000 in fees paid under protest in connection with the construction of a Placentia apartment complex.

The Placentia Unified School District, which levied the fees to help pay for new school buildings, would be forced to refund the money to Sandcastle Partners of Orange if a bill introduced by Assemblyman Dennis L. Brown (R-Signal Hill) becomes law.

The developer contends that it had a deal with the school district that the fees would come to only $15,000. The school district reneged on that agreement, after state law changed, permitting the district to charge more, the developer maintains. School officials insist that the deal was only an informal agreement with the apartment project’s previous owner and that it was never ratified by the school board.

The fees have been the subject of a running battle between the developers and the school district since 1986.

Brown’s measure, introduced Feb. 16, is unusually narrow in that it is written specifically for Sandcastle Partners and would affect no other developers or school districts. Of thousands of bills introduced in the Legislature every year, almost all are general in nature, proposing laws that would apply statewide or at least to entire counties.

Brown’s measure states that “reimbursement is required” for fees paid under protest to the Placentia Unified School District for projects approved by the city before Sept. 1, 1986. The Sandcastle Partners project is the only one that fits that description.

Brown, whose district does not include the site of the development or any part of the Placentia school district, said he introduced the bill at the request of Newport Beach attorney Gregory N. Weiler, who represents the developers and lives in Seal Beach, which is in Brown’s district.

“This is just meant to make them (school district officials) honor the previous agreement they had with the developer down there,” Brown said. “It seems to me like there’s been an injustice here. Even if it didn’t affect anyone in my area, it seemed like a change in the law that seemed reasonable.”

Brown, chairman of the Assembly Republican Caucus, said he was told that the district had been “a little bit arrogant” in its treatment of Sandcastle Partners. He said the bill was intended to force the district to negotiate in good faith with the developer.

“Hopefully this legislation will be an incentive for them to be a little more receptive to try to work something out,” he said.

Neither officials of Western National Properties, general partner in Sandcastle Partners, nor Sandcastle’s Sacramento lobbyist could be reached for comment.

Bruce Dannemeyer, an attorney for Sandcastle, said the district violated a contract when it refused to accept $15,000 in fees, as it had agreed to do in discussions with the previous owners of the 240-unit apartment project.

“It’s clear that there were negotiations between the school district and the developer” on the fee, said Dannemeyer, son of Rep. William E. Dannemeyer (R-Fullerton). “The amount they agreed on was $15,000. Everything was fine until suddenly Sandcastle got hit with a bill for $300,000.”

John Perry, assistant superintendent with the Placentia district, said the district was justified in charging the higher fees.

Perry said school officials had an understanding with Sand Dollar developers, the previous owners of the project, that the school-building fees would be set at $15,000. The developers agreed on that amount when the Placentia City Council approved a zoning change in June, 1986.

No OK From Trustees

In June, a district official wrote to the developers thanking them for their cooperation and asking that the $15,000 be transferred to the school district.

But, Perry said, the district’s board of trustees never formally accepted the deal. And, he said, attempts to collect the $15,000 from Sandcastle after it purchased the property in 1986 proved fruitless. The district therefore considered the earlier agreement void, Perry said.

In the meantime, the law was changed, allowing school districts to impose fees on developers directly, rather than having to go through the city or county in which the project would be located. The law applied to any projects not yet under construction on Sept. 1, 1986.

The district decided to levy fees on the Sandcastle Partners project totaling $304,068, the amount for which the project was liable under the new law. After the higher fees were levied, the developer responded in February, 1987, by sending a check for $15,000, Perry said.

“We said, ‘Hold on--we don’t even know who you are,’ ” Perry said of the district’s reaction when it received the partnership’s check.

Sandcastle, in order to obtain its building permits, paid the higher fees under protest and continued to argue its case. Then, last summer, Perry said, he got calls about the matter from state Sen. John Seymour (R-Anaheim) and Assemblyman John R. Lewis (R-Orange). An aide to state Sen. William Campbell (R-Hacienda Heights), who represents part of the school district’s territory, also called, Perry said.

“It was obvious they had been lobbied,” Perry said. “They wanted to know what the story was. I gave them our side of the story. The side they had gotten was somewhat slanted.”

Several players on the developer’s side of the dispute are active in Orange County and California politics.

Western National Properties contributed $500 to Campbell and $2,500 to Seymour in 1986, as well as $150 to Brown in 1987. Michael Hayde, the company’s president, contributed $150 to Lewis and $1,000 to Seymour, who describes Hayde as a longtime supporter.

The California Business Properties Assn., whose lobbyist is representing Sandcastle in Sacramento, contributed $500 to Brown and $500 to Lewis last year.

Seymour, who said he got involved in the dispute at Hayde’s request, said he believes that the firm “got ripped off” by the school district.

“They (school officials) had agreed and found that ($15,000) to be acceptable to mitigate any school construction problems,” Seymour said. “It was only after the door opened for them to gain a larger sum of money that they decided that what they asked for before wasn’t enough.”

Seymour said he called school administrators to urge them to reach a settlement.

Lewis said he contacted Perry after the developer asked him to intervene. He said he asked the district for information but took no position on the matter.

“I thought the Western National folks had made a pretty good case on the merits, but I understand Placentia’s position also about the growth and their need for revenue (to build schools),” Lewis said. “I was hoping they could negotiate and come to some kind of compromise.”