Opinion
B159777.
7-1-2003
COALITION FOR AFFORDABLE HOUSING et al., Plaintiffs and Respondents, v. CITY OF LOS ANGELES BOARD OF EDUCATION et al., Defendants and Appellants.
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, Patricia L. Glaser and Clare Bronowski for Defendants and Appellants. Jeffer, Mangels, Butler & Marmaro, Benjamin M. Reznik, Pamela S. Schmidt and Derek J. Jones for Plaintiffs and Respondents.
The Board of Education of the City of Los Angeles (the Board) and the Los Angeles Unified School District (collectively, the District) appeal from a judgment entered against the District and in favor of Coalition for Affordable Housing in Los Angeles (the Coalition) and two of its members, Marina Two Holding Partnership (Marina Two), and Sondermann-Ring Partners-Topanga (Sondermann-Ring), following a court trial. The trial court determined that an August 2001 resolution of the Board (the Resolution) imposing alternative school facilities fees — Level 2 (Level 2 fees) is invalid and unenforceable, enjoined the District from collecting Level 2 Fees under the Resolution, and ordered the District to refund Level 2 fees collected under authority of the Resolution to any person who paid them under protest. We reverse.
LEGISLATIVE BACKGROUND
In the 1970s, faced with increased resistance to rising property taxes and a wave of residential development that caused serious overcrowding in local schools, local governments began imposing fees on developers to cover the cost of new school facilities made necessary by new housing. (See Candid Enterprises, Inc. v. Grossmont Union High School Dist. (1985) 39 Cal.3d 878, 881-882, 218 Cal. Rptr. 303, 705 P.2d 876; Shapell Industries, Inc. v. Governing Board (1991) 1 Cal.App.4th 218, 225-226.) In 1977, the Legislature passed the School Facilities Act (Gov. Code, § 65970 et seq., effective Jan. 1, 1978) authorizing cities and counties to enact ordinances requiring residential developers to pay fees to finance temporary school facilities necessitated by new development. (See Candid Enterprises, Inc. v. Grossmont Union High School Dist., supra, 39 Cal.3d at pp. 883-884, 887.) In 1986, the legislation was expanded, authorizing the governing boards of school districts to require local governments to impose school-impact fees subject to certain monetary limitations. (§ 53080, subd. (a) (now Ed. Code, § 17620, subd. (a)); § 65995; see Balch Enterprises, Inc. v. New Haven Unified School Dist. (1990) 219 Cal. App. 3d 783, 788.) The parties agree that at the time in issue, these Level 1 fees were capped at $ 2.05 per square foot for residential development. (See § 65995.)
All statutory references are to the Government Code, unless otherwise indicated.
Despite the limitations on Level 1 fees, school districts continued to impose fees above the state-mandated maximum amount by employing other land use laws such as the California Environmental Quality Act. (See Mira Development Corp. v. City of San Diego (1988) 205 Cal. App. 3d 1201, 1217-1218, 252 Cal. Rptr. 825; William S. Hart Union High School Dist. v. Regional Planning Com. (1991) 226 Cal. App. 3d 1612, 1621-1624, 277 Cal. Rptr. 645; Murrieta Valley Unified School Dist. v. County of Riverside (1991) 228 Cal. App. 3d 1212, 1234, 279 Cal. Rptr. 421.) In 1998, the Legislature enacted statutes authorizing imposition of alternative school fees in excess of the basic Level 1 statutory fees where the school district meets statutory hardship requirements. (See §§ 65995.5, 65995.6 (Level 2), & 65995.7 (Level 3).) The legislation prohibits school districts from imposing additional school mitigation fees on residential development by employing other land use laws. ( § 65995, subd. (a); Ed. Code, § 17620, subd. (a).)
This case involves only Level 2 fees on residential construction.
Section 65995.5 establishes that a school district must "conduct and adopt" a school facilities needs analysis in order to assess a Level 2 fee. (§ 65995.5, subd. (b)(2).) The school facilities needs analysis is a report supporting findings that additional school facility capacity is needed to accommodate students from new residential development. (§ 65995.6, subds. (a), (b).) The maximum Level 2 fee is calculated according to a formula set forth in section 65995.5, subdivision (c). Section 65995.6, subdivision (f) requires the preparation of a new school facilities needs analysis for each year in which a Level 2 fee is imposed. (§ 65995.6, subd. (f).)
PROCEDURAL AND FACTUAL BACKGROUND
In July 2000, the Board adopted a Level 2 fee of $ 3.50 per assessable square foot on new residential construction. The Board also adopted a school facilities fee plan (SFFP) in connection with both Level 1 and Level 2 fees, dated March 2000. The Level 2 fee became effective in September 2000, and expired in September 2001. The Coalition opposed adoption of the 2000 Level 2 fee. Its action challenging the fee was dismissed for failure to meet the filing requirements for a validation action.
In 2001, the Board sought to adopt a new Level 2 fee. The Districts 2001 school facilities needs analysis (the SFNA) concluded that the District was severely overcrowded, that it met the prerequisites for the imposition of a Level 2 fee, and that the maximum Level 2 fee which could be imposed was $ 4.06. The SFNA also relied in part upon the earlier SFFP.
The Coalition opposed adoption of the fee resolution. The Coalition challenged the SFNA in a letter to the Board in which the Coalition objected to the SFNA on a number of grounds, and attached materials prepared in connection with the Coalitions challenge to the Boards adoption of the 2000 Level 2 fee. The opposition identified the following purported defects in its August 23, 2001 letter, objecting to the adoption of the Resolution: (1) reliance upon Southern California Association of Governments (SCAG) figures for estimating new development; (2) failure to identify the census tracts used to determine student generation rates; (3) use of a small sample of new units to determine the student generation rate; (4) use of inflated and unsubstantiated figures for land and facilities costs; (5) failure to inventory school property or other resources available to meet the need to build new schools; and (6) reliance on old data.
The Coalition does not challenge the SFNAs calculation of per student facilities costs in this action.
Attorneys for the District prepared a response to the opposition which was transmitted to the Board. In August 2001, following a public hearing, the Board adopted the findings and conclusions of the SFNA as its own, and adopted the Resolution which set Level 2 fees of $ 3.55 per assessable square foot of residential construction.
Level 2 fee amounts stated include the Level 1 amount. That is, the Level 2 fee of $ 3.55 added $ 1.50 to the existing statutorily authorized Level 1 fee of $ 2.05.
In October 2001, the Coalition filed its action challenging the Resolution and seeking to enjoin the imposition of Level 2 fees by the District. The complaint alleges that the Resolution is arbitrary, capricious, and lacking in evidentiary support, and that the Board did not adequately consider all relevant factors in making its decision. It also alleges that the SFNA is inadequate and that the Board failed to conduct the SFNA in accordance with statutory requirements. Marina Two challenged the Resolution as applied to its residential project, which it asserts is of a type that will not generate students.
The District answered the complaint, denying its moving allegations. The matter was tried to the court. The trial was bifurcated, with Marina Twos as-applied challenge deferred pending a decision on the as-written challenge. The administrative record was admitted into evidence, the parties briefed the issues, and the trial court heard extensive oral argument. The trial court issued a 24-page written decision. Judgment was entered in favor of the Coalition invalidating the Resolution, enjoining the District from collecting Level 2 fees under authority of the Resolution, and ordering the District to refund Level 2 fees paid under authority of the Resolution to any person who had paid them under protest. In light of the ruling, Marina Twos separate claim was deemed moot. This appeal followed.
DISCUSSION
I. Standard of review
The decision to impose developer fees for school facilities is a legislative, as opposed to a quasi-judicial, decision. (Shapell Industries, Inc. v. Governing Board , supra, 1 Cal.App.4th at p. 231; Balch Enterprises, Inc. v. New Haven Unified School Dist., supra, 219 Cal. App. 3d at p. 791; Warmington Old Town Associates v. Tustin Unified School Dist. (2002) 101 Cal.App.4th 840, 849-850 .) The agencys decision is reviewed for abuse of discretion; review is limited to determinations of whether the agencys action was arbitrary, capricious, or lacking in evidentiary support and whether it failed to conform to procedural requirements. (Garrick Development Co. v. Hayward Unified School Dist.
(1992) 3 Cal.App.4th 320, 328.) Limited review is grounded on the doctrine of separation of powers, which sanctions the legislative delegation of authority to the agency and acknowledges the presumed expertise of the agency. (Ibid.) The determination of whether the agency acted arbitrarily is a question of law, and the trial and appellate courts are governed by the same standard. (Shapell Industries, Inc. v. Governing Board, supra, 1 Cal.App.4th at p. 233.)
II. Statutory scheme
Section 65995.5 requires that a school district meet certain prerequisites to imposing Level 2 fees. It must apply to the State Allocation Board for new construction funding; conduct and adopt a school facilities needs analysis in accordance with the requirements of section 65995.6; and comply with two of the following four requirements: (1) demonstrate a substantial enrollment of elementary students on a multi-track year-round schedule; (2) in the previous four years, place a local general obligation bond to finance school facilities on the ballot and receive at least 50 percent plus one of the votes cast; (3) incur a specified amount of debt for the purposes of capital improvements; (4) demonstrate that at least 20 percent of the teaching stations within the district are relocatable classrooms.
This appeal involves only one of the prerequisites. The Coalition takes the position — and the trial court found — that the District failed to conduct and adopt a school facilities needs analysis in accordance with the governing statute.
A school facilities needs analysis is conducted to determine the scope of the need for school facilities created by new development. Section 65995.6 provides guidelines for its preparation: "The school facilities needs analysis . . . shall be conducted by the governing board of a school district to determine the need for new school facilities for unhoused pupils that are attributable to projected enrollment growth from the development of new residential units over the next five years. The school facilities needs analysis shall project the number of unhoused elementary, middle, and high school pupils generated by new residential units, in each category of pupils enrolled in the district. This projection of unhoused pupils shall be based on the historical student generation rates of new residential units constructed during the previous five years that are of a similar type of unit to those anticipated to be constructed either in the school district or the city or county in which the school district is located, and relevant planning agency information, such as multiphased development projects, that may modify the historical figures." (§ 65995.6, subd. (a).)
The governing board is required to identify and consider each of the following in determining the funds necessary to meet its facility needs: "any surplus property owned by the district that can be used as a schoolsite or that is available for sale to finance school facilities," "the extent to which projected enrollment growth may be accommodated by excess capacity in existing facilities," and "local sources other than fees, charges, dedications, or other requirements imposed on residential construction available to finance the construction or reconstruction of school facilities needed to accommodate any growth in enrollment attributable to the construction of new residential units." (& sect; 65995.6, subd. (b)(1), (2), (3).)
The maximum Level 2 fee is calculated by the following formula: (A — B) / C, as outlined below. A is the number of unhoused pupils multiplied by the sum of statutorily established facilities costs and one-half the estimated site acquisition costs. B is the amount of funds the school district has available to build new school facilities. C is the projected total square footage of assessable residential space to be constructed during the next five-year period. ( § 65995.5, subd. (c).)
In reviewing the adequacy of the SFNA, we must ensure that the agency has adequately considered all relevant factors and has demonstrated a rational connection between the factors, the choice made, and the purposes of the enabling statute. (California Hotel & Motel Assn. v. Industrial Welfare Com.
(1979) 25 Cal.3d 200, 212, 157 Cal. Rptr. 840, 599 P.2d 31.) "On appeal the Districts choices will be presumed to be correct and the courts may not question its wisdom or substitute different choices where the issues are fairly debatable. [Citations.] If reasonable minds might differ, the Districts determinations must be upheld. [Citations.]" (Shapell Industries, Inc. v. Governing Board, supra, 1 Cal.App.4th at p. 239.) Our review of the record leads us to the conclusion that the District adequately considered the relevant factors and demonstrated a rational connection among the factors, its decision, and the purposes of the enabling statute.
III. The SFNA
The SFNA is an 18-page document dated June 8, 2001, and prepared for the District by Schoolhouse Services (Schoolhouse), with an address in Redwood City. There are seven exhibits attached to the report, including SCAG forecasts of population growth and of employment growth and a statement of the qualifications and experience of Schoolhouse. The statement lists more than 100 school districts for which Schoolhouse has conducted or participated in studies.
The SFNA contains separate sections covering the following topics: projection of new development, student generation rates, new development enrollment, capacity availability, commercial and industrial fee revenue, square feet of residential construction, and fee amounts. It projects 60,000 new residential units in the District for the 2001-2005 period and computes the Level 2 fee based upon that projection.
a. New housing units
Section 65995.5, subdivision (c)(3) provides that the projected total square footage of assessable residential space anticipated to be constructed during the next five years "shall be based on information available from the city or county within which the residential units are anticipated to be constructed or a market report prepared by an independent third party. "The District chose the second option. The SFNA, prepared by Schoolhouse, is in effect a market report prepared by an independent third party.
The SFNAs projection of new homes is based primarily upon data published by SCAG as part of the Regional Transportation Plan (RTP). RTPs provide data for transportation planning purposes and contain projections of household growth. According to Schoolhouse, SCAG is a regional agency with responsibility for making development forecasts for the area, and its forecasts reflect input and feedback from the cities and counties within the region. Schoolhouse reported the published SCAG forecast to be 86,000 units. That number was used in the 2000 needs analysis. The report notes that the Districts potential for growth is constrained by the limited land available for easy development, that more growth is occurring in outlying areas, and that much of the development in the District will be on infill sites. Based on these factors, as well as "proposed updated forecasts from SCAG" and "general planning consensus," Schoolhouse reduced the 86,000 figure by 30 percent. Attached to the SFNA as exhibits are draft 2001 RTP update forecasts of population and employment growth. The administrative record also includes the 1998 RTP, an excerpt from the technical appendix to the 1998 RTP, the 2001 RTP, and an excerpt from the technical appendix to the 2001 draft RTP update.
The SFNA states that the SFFP contains a more extensive description of the methodology for projecting new development. The SFFP notes that SCAG is the Los Angeles County regional planning agency that prepares forecasts of household, population and employment growth based upon regional economic growth considerations and the availability and zoning of the vacant land in each subarea. Because SCAGs forecasts are for cities, Schoolhouse used directly the forecast for the City of Los Angeles and the other eight cities entirely in the District. For cities only partially in the District and for the unincorporated Los Angeles County area, Schoolhouse used earlier research to determine the percentages of projected new development inside the District and within those cities.
The Coalition objects to Schoolhouses projections on the grounds that the SCAG data is based upon housing need, rather than historical housing growth, and because Schoolhouses calculations are not included in the SFNA. The Coalition contends the District should not have relied upon the SCAG materials, but instead should have relied upon data from the California Department of Finance, which shows fewer than 10,000, residential units built in the District over the previous five years. We disagree. The statute does not require that a market report be based upon historical data. While the Coalitions expert stated that the SCAG data is a poor predictor of housing construction and "seldom used for that purpose in the real estate industry," his position is a matter of expert opinion. The appropriateness of the SCAG data is a matter upon which reasonable minds could differ, and we will not impose upon the District our view of which data is more reliable.
Nor did the District abuse its discretion in relying upon data from 1985 to 1997 to predict the distribution of types of units to be built. Because SCAG data does not project development by type, Schoolhouse relied upon the historical data from the City of Los Angeles. It shows that apartments constituted almost 80 percent of the units during that period. The SFNA states, "Though the minority of the District outside the City of Los Angeles has a greater percentage of lower density housing being constructed, it will probably be insufficient to off-set the trend in the City of Los Angeles. We therefore used our judgment to adjust the percentages cited a small amount away from single family units to allocate the 60,000 units to the various types of development . . . ." The historical data is appropriate to meet the states requirements for projecting distribution of unit types.
Moreover, we do not interpret section 65995.6 to require disclosure of each step in converting raw planning data to an expert opinion of projected future growth. Shapell Industries, Inc. v. Governing Board addressed this issue in connection with Level 1 fees: "Since the process required of the District will necessarily involve predictions regarding population trends and future building costs, it is not to be expected that the figures will be exact. Nor will courts concern themselves with the Districts methods of marshalling and evaluating scientific data." (Shapell Industries, Inc. v. Governing Board, supra, 1 Cal.App.4th at p. 235.) We agree with that statement. There are many factors which bear upon growth in housing. The District had before it the SFNA and the Coalitions opposing analysis. Schoolhouses principal, Richard Recht, reported that he had been an urban economist and planner for more than 30 years, including consulting, academic research, and teaching. The District could properly rely upon his expertise in forecasting future development. The SFNA was not impermissibly vague in failing to detail the computations involved.
b. Projection of unhoused pupils
Section 65995.6, subdivision (a) states that the school facilities needs analysis shall project the number of unhoused elementary, middle, and high school pupils generated by new residential units in each category of pupils enrolled in the district "based on the historical student generation rates of new residential units constructed during the previous five years that are of a similar type of unit to those anticipated to be constructed either in the school district or the city or county in which the school district is located, and relevant planning agency information, such as multiphased development projects, that may modify the historical figures."
In order to determine the "student generation rates" (SGRs) for each type of unit, Schoolhouse conducted a survey "matching the addresses of the new housing units constructed as identified in the City of Los Angeles building permit records with the addresses of current students thus providing a count of the students in these newly constructed homes." The survey analyzed a representative sample of over 2,500 building permit records located in the census tracts with the largest amount of new development. The SFNA projects the number of students generated by the 60,000 new residential units to be 21,641.
The Coalition challenges the SFNA on the grounds that its SGRs are based upon a sampling of housing units, that the census tracts from which the sampling was obtained are not identified, and that the SFNA uses data from the wrong historical period. We conclude that the SFNA is adequate in these respects.
The District serves over 700,000 students living in an area of over 700 square miles. In light of the Districts size, use of a representative sampling was a reasonable means of obtaining the necessary data. Nor do we perceive that the District was required to do more in the SFNA than to identify its methodology with a reasonable degree of specificity. It was not required to also marshal the specific data relied upon.
The SFNA indicates that Schoolhouse used permits from four years, 1993-1996, in conducting its sampling. It explains that at the time the survey was conducted, the latest available student enrollment data was for October 1999. Schoolhouse used the 1993— 1996 permits because of a two-year delay between when permits are taken out and when occupancy of the new housing units typically occurs. Thus, students enrolled in October 1999 would be generated by construction permits issued up to October 1997. Schoolhouse did not use samples from 1997. It had previously conducted a sample of 1992-1996 permits for its 2000 SFNA, and discarded those permits from 1992 as beyond the five-year period required by the statute. In addition to using samples of permits from four of the five years, Schoolhouse discussed the matter of SGRs with the Boundary Adjustment Unit of the District, "the office most involved in analyzing student generation characteristics." Schoolhouse determined that the Boundary Adjustment Unit currently used a significantly larger generation factor.
In light of the Districts size and the difficulty of the undertaking, we conclude that the failure to include a sampling of permits issued during 1997 does not invalidate the report. The sampling used fell within the five year period required by the statute and was sufficient to meet the statutes purpose.
The Coalition also objects to the SFNAs identification of four types of units — single-family, duplexes, multifamily/apartment, and condominiums, while the statute identifies three types — single-family detached, single-family attached, and multifamily. The SFNA acknowledges the three types of housing specified in the legislation, but notes that single-family attached is ambiguous and does not conform to the data available from the City of Los Angeles. That category would include both duplexes and condominiums. The SFNA considered the four categories separately. The average unit size was later calculated to be the same for both duplexes and condominiums. The SGRs were calculated separately for each category of housing unit. The Districts analysis was a reasonable adaptation to the data available.
c. The Level 2 fee calculation
As a part of its fee determination, the Board is required to identify and consider "any surplus property owned by the district that can be used as a schoolsite or that is available for sale to finance school facilities," "the extent to which projected enrollment growth may be accommodated by excess capacity in existing facilities," and "local sources other than fees, charges, dedications, or other requirements imposed on residential construction available to finance the construction or reconstruction of school facilities needed to accommodate any growth in enrollment attributable to the construction of new residential units." ( § 65995.6, subd. (b)(1), (2), (3).)
The SFNA reports that the District has "considered whether any other sources of local funds exist . . . . The District owns some closed properties and District staff continually evaluate whether one or more properties should be sold in order to put the asset value to better use. Given the severe difficulty of finding available property, however, property is usually retained in recognition of the fact that there will be a future need for additional school facilities . . . . Even if a property were to be sold, the overwhelming need for repairs and modernization of existing schools and for additional facilities to accommodate existing enrollment would cause such a modest amount of funds to be quickly exhausted. No other sources of local funding were identified which were not dedicated or needed for other purposes. [P] The District also considered, as called for by the law, whether projected enrollment could be accommodated in excess capacity in existing facilities. The calculations for eligibility for state funding for new construction identified an enormous shortage of enrollment capacity; there is no excess capacity available."
The SFNA satisfied the "surplus properties" and "excess capacity" requirements. It identified the existence of other real property owned by the District, but explained that the properties are not available to be used as, or sold to finance, school sites. The SFNA states that the District is so severely overcrowded that it lacks facility capacity for over 150,000 existing students. Thus, any existing properties would be used to satisfy existing needs.
The SFNA demonstrates that the Board considered other sources of local funding. The SFFP contains a discussion of "Measure BB" and Proposition 1A bond funds. It explains that those funds are needed to mitigate existing capacity shortfalls. The SFNA also provides substantial evidence that any available funding from other local sources is more than consumed by an extreme shortfall in existing capacity. The report adequately addresses the "other local financing" requirement.
d. Failure to respond
Section 65995.6, subdivision (c) requires the governing board of a school district to respond to all written comments received. The statute does not specify any required method, format, or length of responses. The Board, through its counsel, prepared a response to the letter for the Boards information. The response was transmitted to the Board. It briefly addresses the points raised in the Coalitions letter, although it does not specifically address the attached materials (letters, a consultants report, and a complaint concerning the 2000 Level 2 fee assessment).
The trial court concluded that the statute does not authorize the Boards attorneys to respond for the Board and that the response prepared was not meaningful. We disagree. The response, although abbreviated, adequately fulfilled the statutory requirement, and nothing in the statute prohibits the Board from authorizing its legal counsel to address the matters raised, particularly where the commenting party has previously sued the District based upon similar points.
e. As-applied challenge and exemption for affordable housing
The trial court did not address Marina Twos as-applied challenge to the resolution. We will remand the matter for the trial courts consideration in the first instance.
The Resolution also adopts a fee of $ 2.05 per square foot of assessable space for builders of affordable housing. That is, builders of affordable housing would pay only Level 1 fees. The Coalition contends the statute does not allow an exemption for certain builders absent a showing that the residential development will not generate new students. Since the trial court also did not address this issue, we will remand the matter to the trial court for its consideration in the first instance.
DISPOSITION
The judgment appealed from is reversed. The matter is remanded to the trial court for further proceedings in connection with Marina Twos as-applied challenge and the exemption for affordable housing. Appellants shall recover their costs of appeal from respondents.
We concur: BOREN, P.J. and 27 DOI TODD, J.