September 1, 2003 - From the September, 2002 issue

TPR Rebuttal: LAUSD Developer Facilities Fees Were Assessed & Applied Justly and Lawfully

In the August 2002 issue, TPR ran an article entitled "Home Owners/Developers Overturn LAUSD Facilities Fee Assessment", which provided attorney Pam Schmidt's perspective on a recent decision by L.A. Superior Court Judge Ralph Dau to invalidate the LAUSD's 2001 Resolution adopting Level 2 Alternative School Facilities Fees. Ms. Schmidt represented the plaintiff developers in the case. Following is a rebuttal to that article by Clare Bronowski, a partner at Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro LLP, who represents LAUSD in this case and on appeal.

Despite plaintiffs' characterization of the court's ruling on LAUSD's 2001 Level 2 school fees as "a major victory for residential builders, developers and homeowners," the court decision in this case is quite limited and will have little or no impact on LAUSD's ability to collect Level 2 fees in the future. In addition, the court has subsequently ruled that there was no evidence that the case was pursued for anything but the private benefit of the developer plaintiffs. The case is now on appeal by LAUSD.

The trial court's ruling invalidated LAUSD's 2001 Resolution approving Level 2 School Fees for 2001-2002, which raised school fees on new residential construction from $2.05 to $3.55 per square foot. Under State law, Level 2 fees must be justified and adopted on an annual basis, and the decision on the 2001 Resolution in no way limits LAUSD's ability to adopt Level 2 fees in future years. In fact, by the time this article is published, LAUSD will most likely have adopted a new resolution setting Level 2 fees for 2002-2003, and the fee currently recommended is the same $3.55 per square foot fee adopted in the 2001 Resolution.

The authorizing legislation for Level 2 fees is SB 50, codified at Government Code 65995 et seq. The purpose of SB 50 is to allow school districts to impose additional school fees on new residential development to help defray the cost of new facilities required to house students generated by new housing within each school district.

SB 50 requires a school district to conduct a School Facilities Needs Analysis (Needs Analysis), which provides the justification for imposition of Level 2 fees and calculates the amount of the fee according to a complex statutory formula. Government Code Section 65995.5 specifies the data that must be evaluated in the Needs Analysis, such as the extent of overcrowding in the district, the number of unhoused students, existing school building capacity, surplus property available to the district, projected enrollment growth and identification of other potential sources of revenue. In reviewing LAUSD's 2001 Resolution, the court determined that LAUSD did not accurately follow the formula provided under this state law.

The complex formula provided under SB 50 is judicially untested and is extremely difficult to apply to a district as large and as diverse as LAUSD. LAUSD has approximately 738,000 students, and its territory includes over 33 different municipalities. Applying the somewhat ambiguous SB 50 formula to a school district as large and complex as LAUSD was, at best, difficult. For example, just gathering building permit data from 33 jurisdictions is a rigorous task; then, addresses of identified new construction from these 33 jurisdictions must be matched to addresses from over 700,000 LAUSD students to determine the impact of new housing, according to the state formula.

Unlike plaintiffs' characterization, there was no evidence or implication in the case that LAUSD blatantly ignored the law or willfully imposed an unsupported fee. LAUSD prepared a full Needs Analysis, went through a lengthy public review and public hearing process, and worked with the local chapter of the Building Industry Association (BIA), which is the leading organization representing home builders in the area. The BIA supported the 2001 Level 2 fee and did not support or join plaintiffs' lawsuit


LAUSD does not agree with the Superior Court judge's decision in this case and is vigorously appealing the court's decision. In the meantime, LAUSD has undertaken an extensive process of data collection and analysis to ensure that the Needs Analysis supporting the 2002 Level 2 fee resolution will be as thorough and complete as it possibly can be. The results of that extensive process are now publicly available, and the 2002 Needs Analysis, prepared by LAUSD, with the assistance of three professional consultant firms, will be considered for adoption by the Board of Education in early October.

Finally, the plaintiffs' characterization of themselves as a group of "home owners and housing developers" is also misleading. Although the plaintiffs present this case as a case won on behalf of "residential builders, developers and homeowners," there was no evidence presented to the court that the plaintiffs were a broad based "Coalition" or that they brought this litigation for any other reason than to save themselves millions of dollars in Level 2 fees. Indeed, although the "Coalition for Affordable Housing in Los Angeles" is named as a plaintiff, there was no evidence presented in this case that the "Coalition" consisted of anyone other than the two named plaintiffs-Marina Two Holding Partnership and Sondermann-Ring Partners-Topanga, two entities developing new apartments controlled by real estate mogul Doug Ring.

When the plaintiffs sought to recover their attorneys fees for this case from LAUSD, the judge denied the plaintiffs' attorneys fee motion on the basis that the evidence showed that the two named plaintiffs merely sought to save over $4 million in school fees for their own projects. While public interest litigants may recover their attorneys fees, here, the court found that the plaintiffs' individual stake in the litigation-to avoid paying millions in school fees-was too high to justify an award of fees.

LAUSD is committed to providing quality education and building suitable facilities for all students-using all available funding sources including funding from new residential development in compliance with state law. A fair, reasonable, and fully-justified Level 2 school fee will be imposed by LAUSD as appropriate to ensure that all residential developers pay their fair share toward public education.


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