BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                       AB 715


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          ASSEMBLY THIRD READING


          AB  
          715 (Daly)


          As Amended  May 20, 2015


          Majority vote


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          |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.










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          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  








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          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  








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          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  








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          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