The City of Rancho Palos Verdes, using a controversial interpretation of state law, has excused some builders from paying developer fees to the Palos Verdes Peninsula School District since last July, city and school officials said.
The loss in revenue for the district, which has been struggling with budget deficits in recent years, could run as high as $150,000, based on district projections of fees that should have been collected from Rancho Palos Verdes.
Three other cities served by the school district--Palos Verdes Estates, Rolling Hills Estates and Rolling Hills--have required all owners of new construction to pay, and other districts in the South Bay said they have encountered no obstacles in collecting the fees.
Aside from legal interpretations, Rancho Palos Verdes Mayor Robert E. Ryan said the city's maverick stand reflects a challenge to the school district's right to impose the developer fees in the first place.
'Fees Are Unfair'
"Some cities may say, well, the district needs the money, so go ahead and give it to them," Ryan said. "But I don't think the district has made a good case for getting the money, and in any case these fees are absolutely unfair."
City Atty. Steve Dorsey rejected contentions that Rancho Palos Verdes is using a loophole in the 1986 School Facilities Act that gave school districts the power to levy fees against new construction, beginning in January of 1987.
The language of the law, Dorsey said, plainly states that fees can be levied only against developers who apply for "discretionary permits"--that is, permits that include a request for variances from standard building codes. Examples are conditional-use permits and exemptions from restrictions on a building's height or setback from property lines.
Exempted by the 1986 law, Dorsey said, are builders who apply for a "ministerial permit"--that is, a routine permit to build in conformance with existing codes.
District officials say they are looking at the same laws as Dorsey and they see no grounds for exempting either category of permits.
Discretionary permits have yielded $127,000 so far in fees from 14 Rancho Palos Verdes projects, with most of that amount coming from two contractors, district spokeswoman Nancy Mahr said. The district had anticipated collecting about half a million dollars by next June, based on average new construction in Rancho Palos Verdes in recent years.
Developers in the other three, much smaller Peninsula cities have paid about $137,000 on 104 projects since June 26 when the school board starting imposing the fees, she said.
In all, the district, which has a budget of $38 million, had projected nearly $1 million a year in developer fees from the four cities. The law restricts use of the money to building new schools or reconstructing old facilities.
"It's true that most cities are just going ahead and having all builders pay the fees," Dorsey said. "Rancho Palos Verdes chose not to follow that path and it is on solid ground."
Definition Limits Fees
The ground is, he said, because the 1986 law refers to a separate government code section for its definition of building projects subject to developer fees. And the definition provided by that section clearly limits the fees to projects requiring discretionary permits, Dorsey said.
Rick Simpson, a consultant for the Assembly Education Committee, said legislators working on the compromise bill in the closing days of the 1986 session intended to make all developers subject to the new fees. But apparently no one noticed a distinction between ministerial and discretionary permits, he said.
Mayor Ryan, a longtime critic of the district's handling of its financial problems, said the developer fees, at $1.50 a square foot, can add about $5,000 to the cost of a typical new home in Rancho Palos Verdes.
"I know the district has money problems," he said, "but it is basically unfair and inequitable to put their burden on the backs of people who want to build a new home."
Ryan contended that the fees are particularly unfair to builders on the east side of the Peninsula.
'Closed Only School in Town'
"It's hard to tell them that they have to pay fees to support the school, when the district closed the only school in town," he said, referring to the scheduled closing of Miraleste High School on the east side this spring.
Besides, Ryan said, developer fees are intended for overcrowded districts that need extra money to build new facilities, not for a system like the Peninsula's that is losing students and closing schools.
Mahr, the district spokeswoman, said the 1986 law also allows districts with declining enrollment to collect fees if they can show a relationship between new construction activities and the needs of local schools. The needs of the Peninsula district--generally rehabilitation of aging facilities--were stated by the school board when it adopted the developer fees, Mahr said.