Developer Impact Fees Increase Over 17% from SAB Approval

By Bob Nicholson, EHA/MGT Vice President

Last month at the February State Allocation Board (SAB) meeting, development impact fees were increased from the 2020 rate of $4.08 to $4.79 per square foot for new residential construction and from $0.66 to $0.78 per square foot for new commercial/industrial construction. This totals to more than a 17% increase for each fee. SAB will revisit the developer impact fees again in 2024. Districts have authority to collect development impact fees for residential, commercial, and industrial development per GC 65995 and EC 17620.

School districts are required to adopt a Developer Fee Justification Study (DFJS) to charge and collect development impact fees. The DFJS should be completed in even numbered years after the SAB approves a change in fees. The study establishes the need for the fee, nexus between the fee and type of development to be assessed, and its reasonableness in relation to the type of school facilities provided. EHA/MGT has been creating these studies for school districts for years with great success.

A DFJS is prepared in accordance with GC 66000 in order to establish the nexus between the impact of new residential and commercial/ industrial development and the need for the construction and/or reconstruction of school facilities in the district. Finding that a fee is justified, a school district is then authorized to charge the fee after notice and a public hearing.

Although the justification study will identify the amount that should be collected to mitigate school construction needs, the law limits the amount that can be collected to $4.79 per square foot of residential and $0.78 per square foot of commercial/industrial development. This base line fee can be increased only if specific criteria are met.

To get your DFJS started, call Bob Nicholson or email him at bob@ehanda.com.