It’s Never a Good Time to Leave Money on the Table: Increase Your Developer Fees!

By Barry Dragon, EH&A Vice President

Between 2016 and 2020, the maximum levy on residential development increased from $3.48 per sq. ft. to $4.08 per sq. ft. – an increase in Level I fees of over 17%. It is not too early to take advantage of the next increase, tentatively scheduled for January 26, 2022 by commissioning the preparation of a Developer Fee Justification Study (DFJS). The State Allocation Board (SAB) pursuant to Government Code Section 65995 (b)(3), is required to review and consider Level I School (Impact) Fees every even year, “according to the adjustment for inflation set forth in the statewide cost index for class B construction…”.

While the SAB will consider changing the maximum Level I Developer Fees at their January 26 meeting, now is the time to plan and prepare for your ability to increase revenues for school facilities. You don’t want to miss out on maximizing your Developer Fees due, especially if you have current or near-term residential and/or commercial and industrial development in progress or soon to be in progress in your district.

  • School districts desiring to adopt a new Level I Developer Fee Rate should follow the necessary steps, including:
  • Commissioning a DFJS which properly justifies assessment of school facilities fees at the newly increased rate, or higher;
  • Publication and posting of a notice for a public hearing on the proposed Level I School Fee increase to be held at a regularly scheduled meeting of the school district’s governing board;
  • Mailing of the public notice to any party that has requested, in writing, to receive notice of school fee increase proceedings;
  • Making the school district’s fee justification study available to the public;
  • Adopting a resolution approving the Level I School Fee increase after the required public hearing and;
  • Providing notice of the adopted Level I School Fee increase and school district boundaries to the city and county agencies responsible for the issuance of building permits and/or collection of school facilities fees.

Level I School Fee increases are typically effective sixty (60) days after the adoption of a fee increase resolution by the Governing Board of the district. However, in certain circumstances, school districts may adopt an urgency resolution that demonstrates that it is necessary to immediately increase Level I School Fees in order to respond to a current and immediate threat to the public health, welfare or safety.

In addition, school districts must comply with the five-year school fee findings requirement set forth at Government Code Section 66001(d) as well as the annual school fee reporting requirements dictated by Government Code Section 66006.

For further information about the details of increasing your developer fee and the components of a DFJS, please contact Barry Dragon at barry@ehanda.com or at (760)-602-9352.