Acton Agua Dulce Unified School District Data

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III. Revenue From Fees On Residential Development Versus Costs Of School Facilities

This Section compares the projected revenues from fees levied on future residential development to the school facility costs attributable to that development.

State law currently caps Level I Fees at $2.24 per square foot. As demonstrated in the previous section, each square foot of future residential development will generate a school facility cost of $2.61. Any given amount of future development will, therefore, generate more school facility costs than Level I Fee revenue (i.e., for every $1.00 in fee revenue generated by future development, $1.17 in school facility costs are generated).

Information from the Los Angeles County Assessor accessed through the Metroscan software program indicates that 395 residential units were built in the District over the five-year period from 1999 through 2003. Los Angeles County Assessor data for 2004 was incomplete at the time of the drafting of this Report and therefore, is not considered in the calculation of residential development rates. The following analysis assumes that future residential rates will be similar to the 1999 - 2003 period and compares costs and revenues generated by these rates of residential development. For any given amount of residential development, however, school facility costs will be greater than fee revenue by a ratio of $1.17 to $1.00.

A. Fee Revenue from Residential Development Over the Next Five Years

Based on the average square footage from the previous section, 395 residential units will generate 1,048,330 square feet of residential development over the next five years.

If the District were to collect the maximum allowable Level I fee ($2.24) on residential development, the District would collect $2,348,259 in residential developer fees over a five-year projection period.

Table 1-11 Revenue from Residential Developer Fees

B. Fee Revenue from Additions to Existing Residences

Fees will also be generated by additions to existing residences. There is no firm basis for estimating the amount of additions to existing homes that may occur in any given year. This Report does not account for the total fee revenue collected from additions to existing residences. However, the fee revenue calculation for additions is the same as for new units. For example, additions totaling 40,000 square feet would generate $89,600 in fee revenue (40,000 times $2.24). Pursuant to Education Code Section 17620(a)(1)(C)(i), developer fees may be charged on residential additions "only if the resulting increase in assessable space exceeds 500 square feet."

C. Fee Revenue from Reconstruction and Redevelopment

Fees will also be generated by single- and multi-family units in redevelopment projects and single- and multi-family units that replace demolished units (to the extent that the new units are larger than the demolished units). There is no firm basis for estimating the amount of reconstruction and/or redevelopment of existing homes that may occur in any given year, so this Report does not account for the total fee revenue collected from reconstruction and redevelopment. However, the fee revenue calculation for reconstruction and/or redevelopment is the same as for new units. For example, reconstruction and/or redevelopment totaling 50,000 square feet would generate $112,000 in fee revenue (50,000 times $2.24).

D. School Facility Costs Generated by Residential Development Over the Next Five Years

The total school facility cost attributable to future residential development over the next five years is calculated by multiplying the following two factors: (1) the number of new housing units and (2) the facility cost per new housing unit. Table 1-12 shows that the total school facility cost attributable to future development is $2,738,140.

Table 1-12
School Facility Cost Generated by Students from Future Development

E. School Facility Costs Generated by Additions to Existing Residences

Additions to existing residences will have the same financial effect on the District as new residential units. For example, residential additions of 40,000 square feet will generate an additional nine students (assuming the student generation rate for additions is the same as for new residential units) and a school facilities cost to the District of $104,850 (nine students times a per-pupil facilities cost of $11,650). However, as with fee revenues generated by residential additions, this Report does not account for school facility costs generated by additions to existing residences.

F. School Facility Costs Generated by Reconstruction and Redevelopment

Reconstruction and redevelopment of existing homes will have the same financial effect on the District as new residential development. For example, reconstruction

and/or redevelopment of 50,000 square feet will generate an additional 12 students (assuming the student generation rate for additions is the same as for new residential homes) and a school facilities cost to the District of $139,800 (12 students times a per-pupil facilities cost of $11,650). As with fee revenues generated by reconstruction and/or redevelopment, this Report does not account for school facility costs generated by this type of work.

G. Extent of Mitigation of School Facility Costs Provided by Level I Residential Fees

Table 1-13 shows that $2,348,259 in total residential Level I fee revenue will cover only 86 percent of the $2,738,140 in total school facility costs attributable to residential development over the next five years. Some of this shortfall may be recovered from fees on commercial development.

Table 1-13 Facility Cost of Residential Development Versus Fee Revenue

H. Senior Citizen Restricted Housing

As required by law, a lower fee, currently the commercial/industrial maximum of $0.36 per square foot, is established for certain types of residences that are restricted in occupancy to senior citizens. Housing of this type generates employees and has an indirect impact on the school district similar to that from commercial/industrial development projects. To Index

IV. Financial Effect On The District Of New Commercial/Industrial Development

This Section analyzes the costs of providing school facilities for students generated by new commercial/industrial development.

Commercial/industrial development will attract additional workers to the District, and, because some of those workers will have school-age children, will generate additional students in the District. As shown in Section I, adequate school facilities do not exist for these students. New commercial/industrial development, therefore, creates a fiscal impact on the District by generating a need for new school facilities.

The Report multiplies the following five factors together to calculate the school facility cost incurred by the District per square foot of new commercial/industrial development:

A. Employees per square foot of new commercial/industrial development, B. Percent of employees in the District that also live in the District, C. Houses per employee,

D. Students per house, and

E. School facility cost per student.

The Report calculates each of these factors in the next sections. A. Employees per Square Foot of Development

As permitted by State law, the Report uses results from a survey published by the San Diego Association of Governments (SanDAG) (see Appendix) to establish the number of employees per square foot of new commercial/industrial development projects.

Table 1-14 Employees Per Square Foot of Commercial/Industrial Development, by Category

B. Percentage of Employees Residing Within the District

U.S. Census data indicates that approximately 15 percent of people working in the District also live in the District.

C. Number of Households per Employee

U.S. Census data indicates that there are approximately 1.27 workers per household. Likewise, this data indicates that there are 0.79 housing units for every one worker. The Report, therefore, assumes that each new resident worker in the District will demand 0.79 housing units.

D. Number of Students per Dwelling Unit

As outlined in Section II.A., the Report assumes that 0.595 K-12 pupils will reside in each housing unit.

E. School Facility Cost per Pupil

As outlined in Section II.C., the Report estimates that the school facility cost per K-12 pupil is $11,650.

F. School Facility Cost per Square Foot of Commercial/Industrial Development

Table 1-15 calculates the school facility cost generated by a square foot of new commercial/industrial development for each of the categories of commercial/industrial projects listed in Table 1-14.

School facility costs for development projects not included on this list may be estimated by using the closest employee-per-square foot ratio available for the proposed development or by following the District's administrative procedures for appeals of school facility fee imposition.

Table 1-15 Facility Cost Per Square Foot of Commercial/Industrial Development, by Category

The District is justified in collecting the Government Code maximum of $0.36 per square foot for all categories (except rental self-storage) of commercial/industrial development because these categories, on a per square foot basis, generate a school facility cost greater than the Government Code maximum of $0.36. Fee amounts for self-storage and other low-employee-generating businesses should be examined on a case-by-case basis.

G. Calculating School Facility Cost of Commercial/Industrial Development with Residential Fee Offset

A "residential fee offset" is calculated by (1) determining the number of homes that are associated with the employees generated by new commercial/industrial development and (2) calculating the residential fee revenues the District will collect from those homes (note: Based on U.S. Census data the residential fee offset calculation assumes that 14 percent of the homes associated with new employees are new homes).

For purposes of calculating the residential fee offset, this Report estimates that the District will collect $2.24 per square foot of future residential development. This figure is equal to the Level I fee amount justified in this Report.

Subtracting the residential fee offset from the total school facility cost generated commercial/industrial development produces a discounted school facility cost that takes into account revenues from "linked" residential units.

Table 1-16 calculates the facility cost of new commercial/industrial development while taking into account the revenues from linked residential units.

Table 1-16
School Facility Cost of New Commercial/Industrial Development
Discounted By Residential Fee Offset

As the table shows, the school facility cost of all categories (except rental self-storage) is greater than the Government Code maximum of $0.36 per square foot even when that cost is discounted by revenues from linked residential units.

For illustrative purposes, the Report will compare the school facility cost generated by 140,000 square feet of new community shopping center development to the fee revenue it will provide to the District. This analysis is valid, however, for all types of commercial/industrial development except rental self-storage.

If the District charges $0.36 per square foot of commercial/industrial development, it will collect $50,400 from the 140,000 square feet of community shopping center development. Assuming that 14 percent of employees of the community shopping center development live in new homes, the District will also collect $21,126 in revenue from residential developer fees (140,000 square feet x .00153 employees per square foot x 15% employees that live in District x 14% employees that live in new homes x 0.79 housing units per employee x 2,654 square feet per housing unit x $2.24 revenue from developer fees). The 140,000 square feet of community shopping center development will create a school facilities cost of $176,400 (140,000 square feet x $1.26 school facility cost per square foot of community shopping center).

Table 1-17 compares the school facility costs generated by 140,000 square feet of community shopping center development to the fee revenues it provides to the District.

Table 1-17
Comparison of Facility Cost and Fee Revenue Generated by
New Community Shopping Center Development

As the table shows, fee revenue from community shopping center development will cover only 41 percent of the school facility cost it generates, even when that cost is discounted by the revenues from linked new housing units.

All categories of commercial/industrial development (except self-storage) will generate more facility cost than fee revenue, because they all generate a facility cost greater than $0.36 per square foot even when fees from linked residential units are considered. Fee amounts for self-storage and other low employee generating businesses should be examined on a case-by-case basis. To Index

V. Findings

This Section shows that the District meets the requirements of Government Code Section 66001 regarding the collection of developer fees and summarizes other potential funding sources for the District's capital projects.

A. Government Code Section 66001(a)(1)-Purpose of the Fee

The purpose of collecting fees on residential and commercial/industrial development is to acquire funds to construct or reconstruct school facilities for the students generated by new residential and commercial/industrial developments.

B. Government Code Section 66001(a)(2)-Use of the Fee

The District's use of the fee will involve constructing new school facilities. In addition, the fee may be used to construct additional permanent facilities on existing school campuses, and/or constructing and/or reconstructing school campuses. The District will also need to purchase or lease portable classrooms to use for interim housing while permanent facilities are being constructed.

Revenue from fees collected on residential and commercial/industrial development may be used to pay for any of the following:

(1) Land (purchased or leased) for school facilities,

(2) Design of school facilities,

(3) Permit and plan checking fees,

(4) Construction or reconstruction of school facilities,

(5) Testing and inspection of school sites and school buildings, (6) Furniture for use in new school facilities,

(7) Interim school facilities (purchased or leased) to house students generated by new development while permanent facilities are being constructed,

(8) Legal and administrative costs associated with providing facilities to students generated by new development,

(9) Administration of the collection of developer fees (including the costs of justifying the fees) and

(10) Miscellaneous purposes resulting from student enrollment growth caused by new residential development.

C. Government Code Section 66001(a)(3)-Relationship Between Fee's Use and the Type of Project Upon Which Fee is Imposed

Future residential development will cause new families to move into the District and, consequently, will generate additional students in the District. As shown in Section I.B. of this Report, adequate school facilities do not exist for these students. Future residential development, therefore, creates a need for additional school facilities. The fee's use (acquiring school facilities) is, therefore, reasonably related to the type of project (future residential development) upon which it is imposed.

New commercial/industrial development will cause new workers to move into the District. Because some of these workers will have school-age children, commercial/industrial will also generate new students in the District. As shown in Section I.B. of this Report, adequate school facilities do not exist for these students. New commercial/industrial development, therefore, creates a need for additional school facilities. The fee's use (acquiring school facilities) is, therefore, reasonably related to the type of project (new commercial/industrial development) upon which it is imposed.

D. Government Code Section 66001(a)(4)-Relationship Between the Need for the Public Facility and the Type of Project Upon Which Fee is Imposed

The District's current enrollment is larger than its pupil capacity. The District, therefore, does not have sufficient existing capacity to house students generated by future development. Future residential and commercial/industrial development in the District will generate additional students and, consequently, a need for additional school facilities. A relationship exists, therefore, between the District's need to build additional school facilities and the construction of new residential and commercial/industrial development projects.

E. Government Code Section 66001(b)-Relationship Between the Fee and the Cost of the Public Facility Attributable to the Development on Which the Fee is Imposed

This Report demonstrates that the school facility costs attributable to future residential development is $2.61. Level I fees of $2.24 per square foot on residential development are, therefore, fully justified.

This Report also demonstrates that the school facility costs attributable to all categories of commercial/industrial development except rental self-storage range from $0.93 per square foot to $3.93 per square foot, even when fees from linked residential units are accounted for. Level I fees of $0.36 on these types of development are, therefore, fully justified. The school facility cost attributable to rental self-storage units is $0.05 per square foot when fees from linked residential units are accounted for. Fees for this type and other low-employee-generating types of development should be examined on a case-by-case basis.

All school facility costs and fees in this Report are calculated on a per-student basis to ensure that future developments only pay for impacts they cause.

The total cost of providing school facilities for current unhoused students, as documented in Tables 1-4 and 1-8 is $11,253,900. According to District administrators, the District's current Capital Facility Fund balances total approximately $375,000. In addition, the District has received $980,379 in design funding from the State Allocation Board for its planned high school project. Comparing the District's facility cost for unhoused students ($11,253,900) to District funds available for new construction projects ($1,355,379) indicates that the District's total new construction facility costs exceed the current funds available for acquiring new school facilities.

The District also anticipates lease revenue from the lease of the former Acton School site. All anticipated lease revenue is required to (1) offset existing Certificate of Participation debt (approximately $5,965,841) and (2) make lease payments on existing portable classroom buildings.

F. Other Funding Sources

The following is a review of potential other funding sources for constructing school facilities.

1) General Fund

The District's General Fund budget is typically committed to instructional and day-to-day operating expenses and not used for capital outlay uses, as funds are needed solely to meet the District's non-facility needs.

2) State Programs

The District has been approved for eligibility and has received State funding for the design of new school facilities under the 1998 Leroy F. Greene School Facility Program. Even projects funded at 100 percent of the State allowance, however, experience a shortfall between State funding and the District's actual facility needs. State funds for deferred maintenance may not be used to pay for new facilities. State law prohibits use of lottery funds for facilities.

3) General Obligation Bonds

School districts can, with the approval of two-thirds or 55 percent of its voters, issue general obligation bonds that are paid for out of property taxes.

4) Parcel Taxes

Approval by two-thirds of the voters is required to impose taxes that are not based on the assessed value of individual parcels. While these taxes have been occasionally used in school districts, the revenues are typically minor and are used to supplement operating budgets.

5) Mello-Roos Community Facilities Districts

This alternative uses a tax on property owners within a defined area to pay longterm bonds issued for specific public improvements. Mello-Roos taxes require approval from two-thirds of the voters (or land owners if fewer than 12) in an election.

6) Surplus Property

The District does not own any surplus property that could be used to finance additional school facilities.

7) Redevelopment

Redevelopment Agency funds are used as general purpose funds by the District and are not available for capital projects. To Index

VI. RECOMMENDATIONS

This Report recommends that the District levy the maximum statutory fee authorized by Government Code Section 65995, up to $2.61 per square foot of residential development. The Report also recommends that the District levy the maximum fee as authorized by Government Code Section 65995, on all categories, of commercial/industrial development except rental self-storage. Developer fees for this and other types of lowemployee generating developments should be examined on a case-by-case basis.

These recommendations are based on the findings that residential and commercial/industrial development (except for rental self-storage) create a school facility cost for the District that is larger than the revenue generated by charging these fees.

Appendix

Employee Statistics From the San Diego Association of
Governments by Various Categories of Commercial/Industrial Development
(from Traffic Generators Report January 1990)

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