BILL ANALYSIS Ó AB 715 Page 1 ASSEMBLY THIRD READING AB 715 (Daly) As Amended May 20, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+---------------------+---------------------| |Education |7-0 |O'Donnell, Chávez, | | | | |Kim, McCarty, | | | | |Santiago, Thurmond, | | | | |Weber | | | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: Specifies that for the purpose of calculating developer fees levied by school districts for the construction or reconstruction of school facilities, a walkway that is not considered "assessable space" can be covered or uncovered, and a detached accessory structure includes a detached bike storage locker. FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel. AB 715 Page 2 COMMENTS: Background. Prior to the enactment of SB 50 (L. Greene), Chapter 407, Statutes of 1998, which established the School Facility Program (SFP), developers were assessed a mitigation fee of $1.50 per square foot of livable space for each newly constructed house. This fee provided a share of the funds needed for the construction of schools to accommodate new pupils expected to be served as a result of the new development. In addition to this fee, local governments also had the authority, confirmed by the courts through litigation popularly known as the Mira, Hart and Murrieta line of cases, to require developers to pay for additional school-related expenses as identified in local environmental impact reports. SB 50 established the current SFP and changed the method for determining the share of school construction costs that developers would pay, which provided consistency in the amount of fees developers pay to build schools to accommodate new developments. SB 50 suspended the threat of lawsuits and the ability of local governments to deny new developments on the basis of inadequate schools. SB 50 established three levels of fees. Level I is the mitigation fee based on the square footage of a residential or commercial structure. SB 50 increased the pre-SB 50 fee from $1.50 to $1.93 per square foot with an inflation adjustment every two years according to the class B construction index as determined by the State Allocation Board, the body that allocates state bond funds and oversees the administration of the SFP, at its January meeting. The fee is currently at $3.36 per square foot for residential construction and $0.54 per square foot for commercial/industrial construction, and is assessed if the district conducts a Justification Study that establishes the connection between the development coming into the district and the assessment of fees to pay for the cost of the facilities needed to house future students. Levels II and III are based on availability of state bond funds. The developer fee amounts are based on the state grant levels for Level II and twice the state AB 715 Page 3 grant levels for Level III. Assessable space. SB 50 defined "assessable space" for residential construction as all of the square footage within the perimeter of a residential structure. SB 50 excluded any carport, walkway, garage, overhang, patio, enclosed patio, detached accessory structure, or similar area. Staff notes that current law specifies what is "assessable," not what is "livable" versus "nonliveable." Staff also notes that current law does not specify what is assessable as the perimeter within an "apartment unit" but the perimeter of a "residential structure." What does this bill do? This bill, sponsored by the California Apartment Association, makes changes to the areas that are excluded in the calculation of the fees by specifying that a walkway can be covered or uncovered and that a detached accessory structure includes a detached bike storage locker. "Assessable space" is determined by a city or county building department and the fee must be determined and paid to a school district before a building permit is issued. According to the author's office, the intent of this bill is not to expand excluded areas, but to provide some level of clarification and consistency. Because the law is not specific, building departments throughout the state have different interpretations of what is assessable. Walkways. Current law specifies that what is assessable includes the area "within" the perimeter of a residential building. It is up to city or county building departments to determine which areas "within" the perimeters are counted, commonly in accordance with California building standards practices. While walkways outside an exterior wall or a door are not counted, a hallway or walkway inside a residential structure is counted. According to the author, this bill is intended to clarify that walkways may be AB 715 Page 4 covered or uncovered and is not intended to affect hallways inside the perimeter of a residential building. Detached bike storage lockers. Under current law, a detached accessory structure is not counted as assessable space. This bill clarifies that a detached accessory structure includes a detached bike storage locker. Therefore, a detached bike storage locker would be treated in the same way a detached accessory structure is treated and would be assessed or not assessed consistently. Arguments in support. The California Apartment Association states, "Advances in apartment design and construction have created confusion for local jurisdictions regarding what is considered 'assessable space' under state statute. As environmental consciousness and bike ridership have increased, many new apartment structures have added detached bike storage lockers and other types of storage, which are separate from the apartment unit. Similarly, many developers have put covers on walkways to accommodate tenants and those with disabilities. AB 715 would make it clear that covered walkways and detached bike lockers and storage are exempt from assessment, just as 'walkways' and 'detached accessory structures' are today in current law." Arguments in opposition. The Orange County Department of Education (OCDE) continues to have concerns with this bill and shares information regarding a recent dispute. The OCDE states, "Prior to this bill being introduced, there was disagreement about how livable space should be defined in a development in a part of the City of Santa Ana that is in the Tustin Unified School District [USD]. The developer in this case challenged the payment of fees on internal hallways that the developer deemed to be 'non-livable space.' An appeal to the City's Planning Commission found for the school district. What is at stake is no small amount of developer fee revenue. In all, developers in this portion of the district have challenged the internal hallway fees which total $930,343,000. Should AB 715 have been in law when AB 715 Page 5 these fees had been levied, the fee revenue, which serves as a part of the local school construction match in Tustin USD, would have been reduced by almost $1 million." Financing school facilities. SB 50 not only standardized the amount and levels of developer fees, the bill also established a funding program that relies on a partnership between the state, through state bond funds; local communities, through local bond funds; and developers, through developer fees. The last statewide bond was passed in November 2006. Funds for the construction of new schools and the modernization of existing facilities were exhausted in 2012. The Governor, in his 2015 to 2016 budget, proposes to decrease the level of state funding substantially and increase local contributions by adjusting the tax rates for local bonds and modifying developer fees by consolidating the three levels into one fee at a level between Level II and Level III, subject to local negotiation. School districts argue that with the lack of state bond funds, now is not the time to adjust the fees. Analysis Prepared by: Sophia Kwong Kim / ED. / (916) 319-2087 FN: 0000494