School District Not Required to Evaluate Impact of Private University Housing Project Before Imposing Impact Fees

Miller Starr Regalia
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Miller Starr Regalia

On November 5, 2020, in AMCAL Chico LLC v. Chico Unified School District, __ Cal.App.5th __ (2020) (Case No. C087700), a case involving the Chico Unified School District’s imposition of school impact fees on a dormitory complex to house unmarried Chico State University students, the Third District Court of Appeal affirmed a trial court decision rejecting a developer’s suit seeking a refund of the fees.

Education Code section 17620 authorizes public school districts to levy a fee against new residential developments in order to fund the construction or reconstruction of school facilities to accommodate the increase in students likely to accompany the new developments.  The Mitigation Fee Act (Gov Code § 66000 et seq.) imposes limitations on a district’s assessment of fees by requiring a “reasonable relationship” between the fees assessed and the impact of the type of development on the district’s facilities.

To comply with the “reasonable relationship” requirement, the District commissioned a fee justification study to analyze future development and the corresponding impact on the District.  Based on the fee justification study, the District assessed the project at the residential fee rate of $3.48 per square foot, citing its zoning as a multi-family residential structure.  The developer provided a rationale to the District to exempt the project from the school impact fees, noting that the facility would be rented by the bed, with locks on each bedroom and bathroom for security and privacy, furnished units, shuttle service to the campus, 12-month leases, and residential assistants to work with students. In addition, the physical layout of the building was tailored for students, not the general rental market.  Under protest, the developer paid nearly $550,000 in fees.

The developer filed a complaint alleging three causes of action: (1) the District failed to comply with the Mitigation Fee Act; (2) the fee constituted an invalid special tax because the fee exceeded the cost of the school facilities needed to mitigate the impact of the Project; and (3) the imposition of the fee constituted an invalid taking because there was no nexus between the fee imposed and the impact of the project.

The trial court found that a facility housing college students is not a separate class of residential development. The court also found that the District’s school fee justification study, together with District’s duty and responsibility to prepare for construction and/or reconstruction of school facilities to house potential additional elementary, junior high, and high school students, as a result of that new residential construction, was reasonable. In addition, the court found that the District’s fee did not constitute a special tax and was not a taking without just compensation.

The Court of Appeal noted that there are two ways a local agency can satisfy the Mitigation Fee Act’s “reasonable relationship” requirement.  Section 66001(a) requires the general determination of a reasonable relationship between both the fee’s use and the type of development project on which the fee is imposed and the need for the public facility and the type of development project on which the fee is imposed.  Section 60001(b) requires the more specific determination of a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the fee is imposed.  The Court explained that the difference between subdivision (a) and (b) of section 66001 is revealing because only the latter demands information pertaining to an individual development.  By contrast, section 66001(a) “clearly applies to decisions to impose fees on a class of development projects rather than particular ones.”

The Court explained that the developer’s appeal briefing “at times blurs this distinction” and determined that the word “type” in the context of section 66001(a) “allows an agency to impose a general fee reasonably related to projected development impacts without tying its analysis to an individual project.”  The Court distinguished Warmington Old Town Associates v. Tustin Unified School Dist. and Cresta Bella, LP v. Poway Unified School Dist., dealing with a “type” of residential project involving redevelopment construction that displaces existing residential housing on the same site, and Tanimura & Antle Fresh Foods, Inc. v. Salinas Union High School Dist., dealing with a new residential development project intended to house only adult seasonal farmworkers.  The Court agreed with Tanimura that unlike the general category of redevelopment construction, the student housing designation is not itself a ‘type’ of development and it is highly project specific.

The Court thus held that the District need only make findings based on the general type of construction, such as residential construction, and need not make an individualized determination for each particular development project.  Based on that distinction, the District’s fee study conclusion was reasonable and the mitigation fee was proper under the Mitigation Fee Act.  Having reached that conclusion, the Court perfunctorily held that the fee did not constitute either an invalid special tax or a taking.

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