B.1.4.2 Developer Fees

Since January 1, 1987, school districts are authorized to levy a fee, charge, dedication or other requirement (collectively referred to as “developer fees”) against any construction within the boundaries of the district to help the district mitigate the impact of new development on the district’s facilities.207 These developer fees may only be used for projects to accommodate students resulting from the new development.

While districts are authorized to impose fees on new development pursuant to Education Code Section 17620, Government Code Section 65995 actually establishes the corresponding fee schedule. The initial fees established in 1987 are referred to as Level 1 developer fees and were established with a cap of $1.50 per square foot on new residential construction and $0.25 per square foot for commercial/industrial construction. Beginning in 2000, the maximum allowable amount of developer fees has been adjusted every 2 years based on the change in the statewide cost index for class B construction by the SAB.208 The fees, last adjusted in 2018, were increased to $3.79 and $0.61 per square foot, respectively. To levy Level I Fees, a school district must prepare an analysis commonly referred to as a “School Fee Justification Study.”

Additional fee levels were established as a result of the passage of Proposition 1A, the Class Size Reduction Kindergarten-University Public Education Facilities Bond Act of 1998. In corresponding legislation, Senate Bill 50 (SB 50), the Leroy F. Greene School Facilities Act of 1998, districts were authorized to levy “alternative school fees” or what have become known as Level II Fees and Level III Fees.209 As with Level I fees, there are requirements for the levying of alternative school fees that include the preparation of a School Facilities Needs Analysis. Districts using developer fees to finance school construction are constrained by the inherent limitations of it as a “pay-as-you-go” revenue source.