Developer Group Wants $3 Million in Fees Back From School District

The Newport-Mesa Unified School District would have to return millions of dollars in developer fees and would be barred from collecting similar fees through 1992 under a court order proposed by developers in a lawsuit challenging the assessments.

But district officials, citing significant problems with the developers’ proposed order, said Thursday that they will work out a counterproposal.

That means the final terms of the order will have to be decided by Superior Court Judge Leonard Goldstein, who last month issued a tentative ruling that the district’s system of collecting developer fees is faulty.

Since 1987, Newport-Mesa and dozens of other state districts have taken advantage of a state law that allows them to raise money for capital improvements by assessing fees for local development ranging from large-scale commercial building to home additions.

Newport-Mesa, putting in place the maximum fees allowed by law, has raised more than $3 million through the fees and has spent about $800,000 of that. But in his tentative ruling, issued Nov. 28 after a non-jury trial, Goldstein indicated that he believes that the system of fee assessment is invalid.

As one of the first legal challenges in the state to such developer fees, the Newport-Mesa suit has been watched as a test case by education officials around the state. In his brief ruling last month, Goldstein found that the district had failed to adequately justify the high fees it was charging local developers in relation to its capital needs.

Sent Back to Drawing Board

But Goldstein left details of what his ruling would mean in practice unsettled and sent the attorneys involved back to the drawing board to draft a proposed order.

Late last week, the Building Industry Assn. of Southern California--the group that sued the district--came back with its proposal.

Under that proposal, the district would have to return all the money it has collected from the developers who sued the district, in line with the group’s contention that the district “had no authority to collect fees” to begin with.

And the district would be blocked from imposing the current maximum fees--which it continues to collect--through 1992.

But the building group’s proposal seems to leave some room for more restricted fees, if the district can meet three criteria: giving local residents timely notice to consider proposed fees, providing the public with adequate information to analyze them and establishing with solid evidence a direct link between the district’s capital needs and the fees it wants to charge.

Singling Out a Group

“We’re trying to ensure with this order that the district can’t just recklessly single out a single group--in this case new developers--and make them pay for the general funding needs of the whole district,” said Gregory P. Lindstrom, an attorney for the builders group.

But district officials said they have serious problems with the developers’ proposed solution. They will have until the end of January to give the court a proposal of their own.

Goldstein, on vacation through the end of the month, has not yet seen the developers’ proposed order.

Clayton H. Parker, an attorney representing the school district, said the developers’ proposal includes “substantial errors.”

25 Days ‘to Play With This’

But he declined to say what other options the district might offer to Goldstein: “We have 25 more days to play with this thing, and it’s awfully hard to predict what’s going to happen.”

Newport-Mesa District Supt. John W. Nicoll refused to speculate on the district’s options but said that “obviously we don’t agree with the position taken by the builders.”

Nicoll said the district’s Board of Education last month approved new findings that seek to substantiate its collection of fees, in compliance with new state guidelines.