As developer fees increase, so does the amount of money the Hollister School District collects to put toward expansion of school facilities.
In a Sept. 17 report to the Board of Trustees, Assistant Superintendent of Business Services Gabriel Moulaison explained that developer fees pay for the expansion of school facilities in order to accommodate students from new developments. So far this year, revenues have amounted to $3.1 million.
Each year, the school district conducts a needs analysis to determine the amount of fees it can collect. The analysis is not a list of projects, said Moulaison.
“It is a calculation of the amount of space we will need to teach students as we grow,” he said.
The latest analysis, completed in July, determined HSD can collect $3.33 per square foot for residential units, and 50 cents per square foot for commercial space, Moulaison said.
“In 2014 we had a facilities master plan that identified about $150 million in needs for modernization and expansion,” he said. At the time, the school district collected $2.63 per square foot for residential units.
Moulaison told BenitoLink that existing schools are being maintained properly.
“In fact, many of our facilities were modernized using Measure M funding,” he said. “There are just a few areas that need some cosmetic work, but they are otherwise in good shape.”
He also explained there are three levels of developer fees and the district must qualify for each level, which it has.
“For Level I fees, the district must have a justification study compiled to qualify,” he said. “We would only be able to charge an amount set by statute and we would have to split that amount with SBHS District. For Level II fees (which HSD charges) the district must already have a Level I justification study complete and must also perform a School Facility Needs Analysis.”
He said a School Facility Needs Analysis contains a specific calculation that is spelled out in the California Education Code.
“We can only charge the amount that results from that calculation and we do not have to split the fee with SBHS District,” Moulaison said. “Once the analysis and collection are complete the Board of Trustees are asked to consider and vote on a resolution to change the fees to the calculated amount. Level III fees are dependent on a trigger being set at the state level, which has never happened. If the amount of the fees are inappropriate or miscalculated, the District would have to refund the developers the excess fees collected.”
Revenues from 2012 to 2015 sat around $313,000 annually, which Moulaison attributed to a building moratorium. A 2002 sewage spill caused the moratorium that required the city to build a larger wastewater treatment facility. Further delays came about during the Great Recession, during which time no homes were built in the city.
Fees have increased over the last four years and reached a peak of $3.58 million in 2018.
“It dropped between 2018-19 because of the agreement with Anderson Homes and other Santana Ranch developers,” Moulaison said. “We agreed to defer the developer fees from the point of issuing the building permits to when they got certificates of occupancy. So, instead of paying fees ahead of time, they pay them on the back end.”
He said the deferment went into effect in July 2018. Because of the time between when the developer receives building permits and when homes are purchased and occupied, fees are just now coming to the district. That caused a dip in revenues until this year, Moulaison said, and now that the fees are coming in, revenue has begun to increase.
Developer fee expenditures from 2018 to June 30, 2019 include:
- Land for new Rancho Santana Middle School: $5 million (June 2018)
- Personnel: $97,500 (project management)
- Demographer/Fee Study: $45,500 annually
- Legal: $43,200
- Miscellaneous (Rancho Santana): $45,600
- Ending Balance: $5.54million (amount of money in account after all the expenditures)
Outside of the $5 million spent on the new school site, Moulaison said HSD did not finance any large capital projects. That will change as the school is built, which he anticipates will be covered mostly by developer fees.
At the meeting, Trustee Jan Grist asked when construction would begin on the new school.
“We’re hoping to get things going in the next couple weeks,” Moulaison said. “We’re waiting on an environmental study from the Department of Fish and Wildlife.”
Trustee Rob Bernosky asked Moulaison who decided when developer fees are due. Moulaison responded that the decision was in the purchase agreement for the land on which the new Rancho Santana Middle School will be built. Bernosky wondered if collecting fees on the back end was a normal way of doing business. Moulaison said it wasn’t “terribly abnormal.”
Grist asked who benefitted in such an arrangement. Moulaison explained the agreement benefitted Santana Ranch developers because they would not have to borrow money to pay the fees in advance.
Bernosky asked how building permits are tracked if the developers aren’t required to come to the district for verification. Moulaison said the school district, the Hollister Planning Department and the developers all keep track of certificates of occupancy.
“It is us having to stay on top of it,” Moulaison said. “We haven’t had any issues so far.”
Board President Stephen Kain, who attended the meeting remotely with a microphone in his place at the table, recounted issues in the past regarding missing developer fees which BenitoLink reported on in 2018, and wanted assurance that Moulaison was keeping track of the fees and that they were up to date. Moulaison said they were.
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