The Los Angeles school district is considering a proposal to more than double fees on new residential projects, sparking an uproar from local developers and affordable housing advocates.
The proposal would raise an estimated $15 million to $20 million a year by increasing the fees from the current $1.93 per square foot to $4.55 per square foot that new-housing developers pay the district. The proposal also calls for raising the fees on commercial projects slightly from 31 cents to 33 cents per square foot.
The district plans to use the money, in combination with matching funds from the $9 billion state education bond passed in 1998, to help build new schools. The legislation that put the bond on the ballot also cleared the way for school districts to raise developer fees.
The increase initially came before the L.A. School Board on March 28, but members postponed consideration for 30 days. As currently worded, it would take effect immediately upon passage.
Developers and affordable housing advocates say the fee hike would hit affordable and moderately-priced housing projects hard, discouraging investment in the very type of development that is most needed. They have mounted a hastily prepared campaign against the proposal.
“If they pass this, it will have a devastating impact on the moderate end of the housing market,” said Jan Breidenbach, executive director of the Southern California Association of Non-Profit Housing. “Developers simply won’t build low- and moderate-income housing, further squeezing the hundreds of thousands of people already living in overcrowded conditions.”
Among the hardest hit, opponents say, will be developers of apartment buildings in moderate- and low-income areas.
“Because renters in those areas may not be able to make higher rent payments, developers on these marginal projects won’t be able to get funding,” said Ben Reznick, chairman of the land-use department at the L.A. law firm of Jeffer, Mangels, Butler & Marmaro.
School district officials counter that the fees are necessary because the district is desperately short on classroom space.
“The district is right now short 125,000 seats. More than 20 percent of our classrooms are inside portable buildings, and we’re on multi-track, year-round schools,” said Joseph Zeronian, interim chief financial officer for the LAUSD. “And every new house that is built in the region will generate an additional 0.4 students. Therefore, it is legitimate that we charge a fee on the developer.”
What’s more, he said, if the district doesn’t raise fees on developers, it risks forfeiting millions of dollars in state funds.
“We are doing this to demonstrate to the state that we are doing everything the law allows to raise our own funds,” Zeronian said. “We have passed the largest local school bond in U.S. history, and as a result, we have exceeded the 15 percent bonding cap for the district. But if state officials come back to us and say we have not raised developer fees to the maximum allowed by state law, they can turn around and say we’re not doing enough and deny us the funds.”
LAUSD board member David Tokofsky said he favors granting exemptions for projects that meet certain affordable-housing standards. But building industry officials want a smaller fee hike across the board and a delay in implementation until at least Jan. 1, 2001.
“We recognize that the law allows for an increase, but we don’t believe the level of increase has been adequately justified,” said Ray Pearl, deputy director of government affairs for the L.A.-Ventura County chapter of the Building Industry Association. “Also, there was way too little advance warning of a hike. Developers need at least six months to a year to plan their projects; they can’t factor such a huge hike in the cost of projects into their financing plans in the space of a few weeks.”
