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December 23, 2009 > Developer fee justification study

Developer fee justification study

By Dustin Findley

Milpitas Unified School District (MUSD) collects school-impact fees from developers to help offset the increased cost of educating students that move into the school district. A study, usually biennial, is required by the district to make sure the fees are justified.

In addition, periodically the State Allocation Board also approves rate increases. When this occurs, the school district may also increase its rates. A justification study report is required before collecting the higher fees.

MUSD hired consultant Jack Schraeder and Associates to complete the study to prepare for collection of the new fees. The school board accepted the report on December 8 and the State will increase the fees when it meets on January 27, 2010. The school board will need to give seven days notice of a public hearing before adopting a resolution and increasing fees.

There is a 60-day waiting period before fees can be collected unless the board adopts an urgency resolution, based on development of single-family, detached homes.

The study examined existing capacity of schools versus total enrollment. The consultant worked with staff to "load" classrooms according to student-teacher ratios standards defined by the state.

"It may not reflect the actual loading of every classroom in the district but it is legally permitted to utilize state loading standards to look at developer-fee collection," consultancy representative Cheryl King explained to the school board.

MUSD currently has no capacity to house future students from a new development which is the "nexus" that needs to be proven to collect a Level 1 development fee, a statutory fee that took effect in 1987 in the State of California to help districts offset the impact of new development in their school districts. The same nexus applies to a commercial industrial fee. That will also increase in January 2010.

To collect higher Level 2 fees, the first criterion is new-construction. Declining or "flat" enrollment caused many school districts to become ineligible for this level. In response, Assembly Bill 1014, passed a year ago, allows districts to calculate new-construction eligibility in many different ways, using birth rates and certain historical information. The new calculations can significantly change whether or not the district qualifies.

"Being able to collect more than $3.02 per square foot with over 6,000 units on the books could be a significant source of matching funds for state money," said King.

Assistant Superintendent of Business Services Phuong Le explained that once Level 1 fees are approved by the State Allocation Board, the Milpitas school board can pass a resolution to renew Level 1 fees. The school district's business staff will work with King and associates on the feasibility of meeting Level 2 qualifications.

A resolution to collect higher fees will appear before the school board in February 2010.

Given the amount of development, current and planned, the school district may adopt an urgency resolution to avoid the mandated 60 day waiting period for the new fees to take effect.

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