Developer Fee Justification Study
Wheatland Union High School District
January 27, 2020
Mrs. Nicole Newman, Superintendent
Board of Trustees
Tony Lopez, President
Shawndel Meder, Clerk
Anna Newman, Member
Frank D. Webb, Jr., Member
Patricia Agles, Member
2901 35th St. Sacramento, CA 95817 916.706.3538 www.kinginc.com
TABLE OF CONTENTS EXECUTIVE SUMMARY ... 1 DEVELOPER FEES: BACKGROUND ... 3 DEVELOPER FEE JUSTIFICATION: RESIDENTIAL DEVELOPMENT ... 5 Wheatland Union High School District ... 5 Capacity and Enrollment ... 6 Projected Residential Development ... 7 Student Generation Rates ... 8 Projected School Facilities Needs ... 8 New Construction Cost vs. Modernization ... 9 DEVELOPER FEE JUSTIFICATION: COMMERCIAL/INDUSTRIAL PROJECTS ... 10 Commercial/Industrial Development Fee Calculations ... 10 SUMMARY AND FINDINGS ... 13 LEVYING/ADMINISTRATION OF THE FEES ... 14 Government Code 66016 Procedural Requirements ... 14 Urgency Adoption of Fees ... 14 Notification of Local Authorities ... 15 Administrative Requirements ... 15 Government Code Section 66001 (a) (2): Use of Fees ... 15 Time Limitation ... 15 Reporting Requirements ... 16 Government Code Section 66001 (a) (3): Use of Fees ... 16 Government Code Section 66001 (a) (4): Relationship Between the Need for the Public Facility and the Type of Project Upon Which the Fee is Imposed ... 16 REVENUE SOURCES/FUNDING FACILITIES ... 17 State School Facility Program ... 17 General Obligation Bonds ... 17 Parcel Taxes ... 17 Mello‐Roos Community Facilities Districts ... 18 RECOMMENDATIONS ... 19 SOURCES ... 20
EXECUTIVE SUMMARY
The Wheatland Union High School District (“District”) serves 9th‐12th grade students in the City of Wheatland, a large portion of the community of Plumas Lake, residents of the Beale Air Force Base, and surrounding portions of unincorporated Yuba County, California. In January 2020, the State Allocation Board’s biennial inflation adjustment changed the fee to $4.08 per square foot for residential construction and $0.66 per square foot for commercial/industrial construction. The District splits its collected developer fees with its feeder elementary school districts, with WUHSD retaining 40% of the collected fee. The following Developer Fee Justification Study demonstrates the District is justified in collecting 40% of the Statutory Level I residential and statutory commercial/industrial fees on future development based on the following analysis: The District’s total enrollment in 2019‐20 was 870 students; Based on State loading standards, the District has a classroom capacity of 1,183 students; Based on approved development certified by the Planning Departments for the City of Wheatland (1,323 Units) and the County of Yuba (6,271 Units), 7,594 new residential units are projected to be constructed over the next twenty years; It is estimated that the average square footage of new homes will be 2,000 square feet; Student generation rates, based on State Allocation Board standards, are 0.2 students per unit for a 9‐12 school district; The new units are projected to generate 1,519 9‐12 students for the District to house; Many District facilities are over 20 years old, inadequate and in need of modernization to house these students; It is fiscally more prudent to extend the useful life of an existing facility than to construct new facilities when possible; The cost to modernize facilities is approximately 42.2% of the cost to construct new facilities;
Therefore, the total estimated cost to reconstruct and modernize facilities for the students generated from new development is $62,444,571.
Based on the cost of reconstructed school facilities, the impact equates to $4.11 per square foot residential development;
All categories of commercial/industrial development except for mini‐storage create a modernization cost to the District of $5.79 per square foot;
Mini‐storage construction creates a cost of $0.09 per square foot;
The District should proceed with adopting its 40% share of the statutory Level I Developer Fees, currently $1.63 per square foot for residential construction and $0.26 per square foot for commercial/industrial construction, except for mini‐storage which is charged at $0.09 per square foot.
DEVELOPER FEES: BACKGROUND
School districts are continually engaged in construction and/or improving capital facilities throughout their districts. Districts may use various sources of funds for these capital facility projects, including developer fees, State program funds, redevelopment funds, certificates of participation, sale of capital assets, and mitigation measures. In September 1986, the Governor signed into law Assembly Bill 2926 (Chapter 887/Statutes 1986), which granted school district governing boards the authority to impose developer fees. This authority is codified in Education Code Section 17620, et seq. which states in part "...the governing board of any school district is authorized to levy a fee, charge, dedication or other requirement against any construction within the boundaries of the district for the purpose of funding for the construction or reconstruction of school facilities." Per Government Code Section 65852.2, Section 1.3 (f)(3)(A), “A local agency, special district, or water corporation shall not impose any impact fee upon the development of an accessory dwelling unit less than 750 square feet. Any impact fees charged for an accessory dwelling unit of 750 square feet or more shall be charged proportionately in relation to the square footage of the primary dwelling unit.” School districts were provided a mechanism to assist in funding with the adoption of the Mitigation Fee Act (Government Code Section 66000 et seq.). This act governs the imposition of fees by a district as a condition of approval of a development project. In order to impose such a fee, a reasonable connection must exist between the new development and the construction and/or improvement of school facilities for which the fees are to be assessed. Level I fees (also known as statutory fees) are adjusted every two years according to the inflation rate for Class B construction as determined by the State Allocation Board. With the passage of SB50 in 1998, a cap was placed on the amount that could be charged under the Level I fee calculation. The law allowed for adjustments of the cap as noted in Government Code Section 65995(b)(3), which specifies in part that “…fees shall be increased every two years, according to the adjustment for inflation set forth in the statewide cost index for Class B Construction, as determined by the State Allocation Board at its January meeting, which increase shall be effective as of the date of that meeting.”
Level II developer fees are outlined in Government Code Section 65995.5 and allow a school district to impose a higher fee on residential construction only if certain conditions can be met and a study conducted to provide justification for the higher residential fee per square foot.
Currently (January 2020), Government Code Section 65995 authorizes school districts to collect statutory fees on future development of no more than $4.08 per square foot for residential construction and $0.66 for commercial/industrial construction (Level I fees). The Wheatland Union High School District splits collected developer fees with its feeder elementary school districts, retaining 40% of collected fees. Therefore, WUHSD can collect residential fees at a rate of $1.63 per square foot and commercial/industrial fees at a rate of $0.27 per square foot. This following section of the study will show that justification exists for levying developer fees in the Wheatland Union High School District.
DEVELOPER FEE JUSTIFICATION: RESIDENTIAL DEVELOPMENT
Wheatland Union High School District The Wheatland Union High School District is located in Yuba County, California and serves City of Wheatland, a large portion of the community of Plumas Lake, residents of the Beale Air Force Base, and surrounding portions of unincorporated Yuba County. The District currently serves 870 students at one high school facility. Figure 1 provides the location of the District’s communities and school site. Figure 1. Wheatland Union High School DistrictCapacity and Enrollment
The District’s capacity calculation utilizes State loading standards of 27 9‐12 students per classroom. Table 1 outlines the capacity vs. the enrollments for the current school year, noting unused capacity.
Table 1. District Capacities and Enrollments
Schools Capacity 2019‐20 Enrollments Unused Capacity
Wheatland Union HS 1,183 870 313
Projected Residential Development
Residential development generates students for the District to house in facilities, new and/or renovated. Therefore, it is imperative to research residential development to project growth within the District. According to the planning agencies served by the District, the City of Wheatland and the County of Yuba, 7,594 new residential units are approved and planned to be constructed over the next 20 years. Table 2 shows the specific units with approved tentative or final maps that are included in this analysis.
Table 2. Planned Residential Units Included in Analysis
Development Name Jurisdiction Number of Remaining Units
Rio Del Oro Villages (8,12,14, 15, 16) Yuba County 195 Rio Del Oro Village (Danna 70) Yuba County 309 River Oaks East Village 1 Yuba County 186 Bear River Yuba County 1,928 Plumas Ranch Village 6 Yuba County 72 Plumas Lake Phase 2A Yuba County 164 Woodside Village Yuba County 286 River Oaks South Village Yuba County 259 Sawyer’s Landing Yuba County 215 Northpoint Subdivision Yuba County 215 Country Club Estates Yuba County 1,681 Riverside Meadows Yuba County 427 River Oaks Yuba County 334 Caliterra Ranch City of Wheatland 552 Heritage Oaks Estates ‐ East City of Wheatland 598 Heritage Oaks Estates ‐ West City of Wheatland 173 Total 7,594
Student Generation Rates
The average number of students generated by each housing unit provides a student generation rate or “yield factor”. The number of students emanating from new housing units within the District’s boundaries was assessed for the District utilizing the State of California, State Allocation Board analysis. This yield rate is accepted statewide as the measure for growth purposes. These generation rates can then be applied to the projected housing units to assist in determining the new students entering the District. Table 3 provides the summary of this research and analysis. Table 3. Student Generation Rates and Students Generated 9‐12 Students Per Residential Housing Unit Projected Number of Units Total Students Generated 0.2 7,594 1,519 Projected School Facilities Needs As stated previously, the Wheatland Union High School District has available capacity to house some of the 9‐12 students from projected new residential development. However, as new students are generated by development, the need to increase the useful life of school facilities becomes more apparent. To calculate the modernization needs generated by students from new development, the District must analyze the number of new units to be constructed, the square footage of those units, and, utilizing the student generation rates, the number of students to be generated by those developments. Once this analysis is completed, the per pupil cost to house those students can be calculated based on the cost to modernize facilities. To calculate the average square footage, residential units constructed within the District over the last five years were surveyed. The result of this analysis is displayed in Table 4. Table 4. Housing Units and Projected Residential Square Footage
Total Projected Housing Units Average Square Footage Total Projected Square Footage
7,594 2000 15,188,000
New Construction Cost vs. Modernization The cost per student to construct new high school facilities within the Wheatland Union High School District is $97,415 as shown in Table 5. The cost to modernize facilities is 42.2% of new construction costs. This percentage is based on the comparison of the per pupil grant for the State School Facility Program modernization program and the State per pupil new construction grant. In addition, the State program provides additional grants for American with Disabilities Act (ADA) and Fire, Life and Safety (FLS). When analyzing the cost to construct new facilities, the State provides $16,756 per 9‐12 pupil and $6,565 to modernize facilities. While this is 39.2% as a base grant, once the ADA and FLS are added into the grant, the percentage becomes 42.2% of the cost of new construction. Table 5. Cost per Student for New Construction Grade Level New Construction Cost per Student 9‐12 $97,415 Since the new construction cost per student is $97,415, the modernization cost per student for the Wheatland Union High School District is 42.2% of this value, or $41,109. This modernization cost per student is multiplied by the total students generated from Table 3 to determine the District’s total modernization need (Table 6). Dividing the total modernization need by the total projected square footage in Table 4 provides the modernization facilities cost per square foot (Table 7). Table 6. District Total Modernization Need
Modernization Cost per Student Total Students Generated Total Modernization Need
$41,109 1,519 $62,444,571
Table 7. District Modernization Facilities Cost per Square Foot
Total Modernization Need Total Projected Square Footage Facilities Cost per Square Foot
$62,444,571 15,188,000 $4.11
The Wheatland Union High School District is justified in collecting residential developer fees at a rate that exceeds 40% the current statutory Level I fee ($1.63). Therefore, the District is justified to collect the full amount of its 40% share of the statutory fee per square foot of new residential construction, currently $1.63.
DEVELOPER FEE JUSTIFICATION: COMMERCIAL/INDUSTRIAL PROJECTS
California Assembly Bill 181 provides that a district “must determine the impact of the increased number of employees anticipated to result from commercial/industrial development upon the cost of providing school facilities within the district. For the purposes of making this determination, the study shall utilize employee generation estimates that are based on commercial and industrial factors within the district, as calculated on either an individual project or categorical basis”. However, Assembly Bill 530 modified the requirements of AB 181 by allowing the use of a set of statewide employee generation factors. These factors are identified in the San Diego Association of Governments report, “San Diego Traffic Generators”. This study has become the standard in the industry for the calculation of the commercial/industrial fees.
Commercial/Industrial Development Fee Calculations
The construction of commercial/industrial buildings within a community generates new employees and, therefore, new residents for a school district. The link between creating new jobs and student enrollment has been acknowledged by the State Allocation Board and in statute. However, this link is not as directly quantifiable as that of the new residential unit. Not all new employees relocate to the community. Some of the workers that move closer to their new job, however, will have school‐age children and, therefore, generate additional students for the District to house in its current facilities. Therefore, this new commercial/industrial development will create an impact to the District by generating a need for facility modernization.
To determine the impact of this development, several factors must be analyzed to calculate the modernization cost per square foot of new commercial/industrial development. Assembly Bill 530
entitled San Diego Traffic Generators published by the San Diego Association of Governments in 1990. This report demonstrates the number of employees generated per square foot of commercial/industrial development, by category. Table 8 displays these categories and the number of employees generated for each square foot of space.
Table 8 also displays the number of District households represented by each employee generated. This measurement is sourced from the 2000 United States Census.
Table 8.Commercial/Industrial Factors
Development Category Employees/Square Foot District Households/Employee
Agriculture 0.00031 0.688 Banks 0.00282 0.688 Commercial Offices 0.00478 0.688 Community Shopping Centers 0.00109 0.688 Corporate Offices 0.00268 0.688 Industrial Parks 0.00168 0.688 Industrial/Business Parks 0.00221 0.688 Lodging 0.00155 0.688 Medical Offices 0.00427 0.688 Neighborhood Shopping Centers 0.00362 0.688 Scientific R&D 0.00304 0.688 Average 0.00255 0.688 It is important to note the mini‐storage category of commercial development as an exception to the rates in Table 8. This type of development has a much lower impact than all other categories of commercial/industrial development, with only 0.00006 employees generated per square foot. This employee generation rate in combination with the 9‐12 student generation rate per household produces a total impact of $0.09 per square foot of mini‐storage development. Therefore, the District can collect developer fees on mini‐storage construction up to $0.09 per square foot. This is the fee for only 9‐12 students generated and is not split with the elementary school district, which will collect a separate fee. For all other types of commercial/industrial development, the impact per square foot is
development that will be completed in the District over the next 20 years needs to be determined. Historically, the square footage of commercial/industrial development is approximately 5% of the residential total. Using the residential total from Table 4 as a basis, the resulting commercial industrial square footage total is 759,400 (15,188,000* 0.05).
Multiplying the commercial/industrial square footage (759,400) by the average employees per square foot (0.00255) yields the number of new employees generated by new commercial/industrial development in the Wheatland Union High School District (1,937 employees).
As shown in Table 8, each employee generated represents 0.688 new households for the District. Therefore, 1,937 employees equate to 1,333 District households (1,937 * 0.688).
An additional adjustment is required to avoid “double counting” employees moving into the District who purchase new homes and pay residential developer fees. Based on Census data, 40% of the District’s workers also live in the District. After the 40% adjustment, there will be 533 District households. Using the student generation rates from Table 3, these 533 new District households will generate 107 9‐12 students. Table 6 shows the modernization cost per student as $41,109, meaning that 107 new students generated by commercial/industrial development will cost $4,398,663 ($41,109 * 107). This total modernization cost from commercial/industrial development is then divided by the total square footage of commercial/industrial development to determine that the District’s 40% share of the justified Level 1 fee is $5.79 ($4,398,663 / 759,400). The Wheatland Union High School District is therefore justified in collecting $5.79 for each square foot of commercial or industrial construction within its boundary, except for mini‐storage, which should be collected at $0.09 per square foot. Since 40% of the maximum statutory fee for commercial/industrial development is $0.26 per square foot, the District should collect $0.26 for all commercial and industrial development that is justified at a higher amount.
SUMMARY AND FINDINGS
This study finds that the Wheatland Union High School District is justified in the collection of its 40% share of the statutory developer fees per square foot of both residential and commercial/industrial construction. The District should move forward with adopting the new fees. This requires the District to follow the appropriate notices for a public hearing and meeting all noticing requirements. This justification is based on the following conclusions of the study: While the District currently has capacity to house its students, there remains a need to modernize its school facilities to serve new students who are generated from new development; o Modernization costs are 42.2% of new construction costs; Residential development will generate 0.2 9‐12 students per unit for the District to house; o The District’s modernization cost for students generated from residential development is $4.11 per square foot; Commercial/Industrial calculations also indicate a cost to house pupils that would be generated from local housing as a result of residents moving into the District;
o This modernization cost for students generated from commercial/residential development is $5.79 per square foot, except for mini‐storage development which is $0.09 per square foot; The District meets the criteria to impose the statutory developer fee. Due to these factors, the District should proceed with adopting its 40% share of the statutory Level I Developer Fees, currently $1.63 per square foot for residential construction and $0.26 per square foot for commercial/industrial construction, except for mini‐storage which is charged at $0.09 per square foot.
LEVYING/ADMINISTRATION OF THE FEES
Government Code 66016 Procedural Requirements In order to levy the fees for residential and commercial/industrial construction, a school district must conduct one “public and open meeting” at a regularly scheduled board meeting. This meeting provides the public with an opportunity to comment on the proposed fees. The following requirements must be met in order to conduct the public hearing: 1. Notice of the meeting must be published in a newspaper of general circulation twice prior to the meeting. a. The first notice must be published at least 10 days prior to the meeting date. b. During this notice period, the study must be made available to the public at sites where the document can be reviewed and or obtained in writing. This accessibility should be included in the public notice. 2. At least 14 days prior to the hearing, a notice must be mailed to interested parties filing a written request for mailed notices. These parties may request and receive copies of the documentation supporting the fee. 3. At a regularly scheduled Board of Education meeting, the governing board will open a hearing and provide time for public comment on the matter. After receiving comments, the Board closes the hearing and acts on adopting the resolution to collect the fees. 4. The effective date of the new fees is 60 days following adoption of the board resolution. Urgency Adoption of FeesGovernment Code 66017(b) allows a local agency to adopt the fees with urgency if the action is deemed by the Board of Education necessary to “protect the public health, welfare and safety.” This action requires a 4/5 vote of the governing board.
Notification of Local Authorities The governing board shall submit a copy of the adopted resolution to the local planning agencies. Administrative Requirements The District must maintain a special account for the developer fees collected and any interest which accrues from the fees collected. Government Code Section 66001 (a) (2): Use of Fees The District’s use of the fee will involve construction and/or reconstruction of school facilities and/or additional permanent facilities on existing school campuses. In addition, the District may need to purchase or lease portable classrooms to use for interim housing while permanent facilities are being constructed. Revenue from fees collected on residential and commercial/industrial development may be used to pay for any of the following: 1. Design of School Facilities; 2. Purchase of land for School Facilities; 3. Construction or reconstruction of school facilities; 4. Testing and inspection of school sites and school buildings;
5. Interim school facilities to house students generated by new development while permanent facilities are being constructed;
6. Legal and administrative costs associated with providing facilities to students generated by new development;
7. Administration of the collection of developer fees; and
8. Miscellaneous purposes resulting from student enrollment growth caused by new residential development.
Time Limitation
These collected developer fees must be used or encumbered within five years of collection or become refundable.
Reporting Requirements
In the fifth fiscal year following the first deposit into the account or fund, and every five years thereafter, a district shall make an accounting available to the public. This accounting is required within 180 days after the last day of the fiscal year.
This accounting will identify a description of the fee and its amount as well as a beginning and ending fund balance. Also, in the report will be the portion of the collected funds that have been expended, those remaining funds, and the purpose to which those have been and will be put to use. The report must also identify the approximate date upon which a school district anticipates receiving adequate revenue to complete any improvements required as a result of students generated from residential or commercial construction projects. Government Code Section 66001 (a) (3): Use of Fees Future residential development will cause new families to move into the District and, consequently, generate additional students in the District. In order to provide facilities for students, the District will need to modernize, and construct facilities. The fee’s use is therefore reasonably related to the type of project upon which it is imposed.
In addition, new commercial/industrial development will cause new workers to move into the District. Because these workers will have school‐age children, the District will need to provide facilities for these students. The fee’s use is reasonably related to the type of project upon which it is imposed.
Government Code Section 66001 (a) (4): Relationship Between the Need for the Public Facility and the Type of Project Upon Which the Fee is Imposed
As demonstrated in this report, current District school facilities are inadequate and require renovation/reconstruction. Existing residents and residents from new development, both residential and commercial/industrial, should share in these costs. Therefore, the need for adequate school facilities is directly related to the new residential and commercial/industrial development projects upon which the fee is imposed.
REVENUE SOURCES/FUNDING FACILITIES
The District may also utilize other sources of funding for constructing school facilities. These funding sources include: State School Facility Program Senate Bill 50 reformed the State School Building Lease‐Purchase Program in August, 1998. The new program, entitled the School Facility Program, provides funding under a “grant” program once a school district establishes eligibility. Funding required from districts is a 50/50 match for construction projects and a 60/40 match for modernization projects. While there is generally a shortfall between State funding and the District’s actual facility needs, the State monies aid in assisting the District in its facility needs. General Obligation Bonds School districts can, with the approval of 2/3 or 55% of voters, issue General Obligation Bonds which are paid out of property taxes. The Wheatland Union High School District was successful in passing Measure U in November 2012, which authorized $9 million in bonds “to improve the quality of education at Wheatland High School, repair leaky roofs, replace inadequate electrical systems, modernize and renovate outdated classrooms, restrooms and school facilities, replace deteriorating plumbing systems, and improve student access to computers and modem technology.” Parcel Taxes Approval by 2/3 of the voters is required to impose taxes that are not based on the assessed value of individual parcels. The revenues from these taxes are usually minor. Parcel taxes are typically not used for capital outlay. Instead, revenue from such programs is generally used to fund curriculum, instructional enhancements, and other non‐facility related expenditures.Mello‐Roos Community Facilities Districts
This alternative uses a tax on property owners within a defined area to pay long‐term bonds issued for specific public improvements. Mello‐Roos taxes require approval from 2/3 of the voters in an election.
RECOMMENDATIONS
This report recommends that the Wheatland Union High School District levy its 40% share of the maximum statutory fee authorized by Government Code Section 65995 on new residential development (currently $1.63 per square foot). This report also recommends that the Wheatland Union High School District levy its 40% share of the maximum statutory fee authorized by Government Code Section 65995 (currently $0.27 per square foot) on all categories of commercial/industrial development (except mini‐ storage) per their fee split agreement with the elementary school districts feeding into District.These recommendations are based on the findings that residential and commercial/industrial development create a school facility cost for the Wheatland Union High School District.
