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L. A. Schools Place Fee on Construction : Levy on Homes, Other Developments to Help Pay for Classrooms

December 28, 1986

The Los Angeles Board of Education has tentatively approved collecting developer fees on all new construction within its school district boundaries, starting Thursday, and has scheduled a public hearing on the issue Jan. 5.

"Our pressing need to build new schools makes it imperative that we collect these fees," said Harry Handler, Los Angeles school superintendent.

The action follows enactment of AB 2926, which allows school districts to impose the levy on commercial and industrial, as well as residential builders.

The Los Angeles school district estimates that the levy could provide up to $50 million annually toward the construction of new schools.

Fee for New Homes

Although some cities have been charging developer fees of up to $7,000 per new residential unit, the Los Angeles district had not previously imposed any type of developer charges, the district emphasized in a written statement.

The new law will result in a fee of about $2,250 for a typical home of 1,500 square feet, or $1.50 a square foot, for residential construction and 25 cents a square foot for new industrial and commercial buildings.

The announcement also states that "if school districts do not levy the developer fees, they must match the amount that could have been collected from their general revenues in order to continue receiving state bond money" for school construction, so that "in essence, by having local school districts collect developer fees, the state is able to supplement bond money for new school construction."

Buyers Must Pay

Traditionally, school construction was financed through state bonds, but now 25% of the cost of a new school will be provided through developer fees, DeVere H. Anderson of Encino, president of the Building Industry Assn. of Southern California, said. "The state will put up the balance" so districts will have a real incentive to collect developer fees, he explained.

His organization is opposed to the levies, which are passed on to buyers of new homes in the form of higher prices.

"We feel that it is very unfortunate that the new home buyer has to finance school construction," he said. "It means they are paying more than their fair share for school facilities."

The district cites a report by Wayne Wedin, a La Habra consultant, that says that the "real cost of residential development to school districts is as much as $7,000 per dwelling," and "this could justify developer fees of $4.66 to $7 a square foot if we didn't have the $1.50 limit."

Wedin also said that the "cost impact of commercial/industrial development to school districts can be as much as $5,688 per 1,000 square feet of new commercial space," so "school districts could be justified in charging commercial developer fees of up to $5.68 per square foot if there wasn't a 25-cent limit."

New Jobs and Housing

Wedin's report determined that "there is a causal relationship between new development"--even commercial and industrial development--"and the need for additional schools." He cited a 1984 study in San Francisco that showed how commercial projects resulted in the creation of new jobs and housing.

Under the new state law, the Los Angeles school district will require developers to pay all of the fees due before receiving building permits.

The requirement will apply to projects in portions of 19 cities besides Los Angeles, as well as seven cities within the Los Angeles school district boundaries, including Cudahy, Gardena, Huntington Park, Lomita, Maywood, San Fernando and Vernon.

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