At the May 25, 2016, State Allocation Board (SAB) meeting, the SAB authorized, for the first time ever, the imposition of Level III Developer Fees finding that no state funds were available for new construction projects. On May 26, 2016, in response to California Building Industry Association (CBIA) filing a Petition for Writ of Mandate challenging the SAB’s finding that state funds are not available for new construction projects, the court issued a temporary restraining order to enjoin and restrain the SAB from the following: (1) to refrain from giving notice that state funds are not available for new construction projects to the Chief Clerk of the Assembly or the Secretary of the Senate, (2) to refrain from taking further action on any finding or determination that state funds are not available for new construction projects, and (3) to refrain from further authorizing the imposition of Level III fees.

The hearing on CBIA’s Petition for Writ of Mandate was held on July 22, 2016, and on August 22, 2016, the court denied CBIA’s Petition for Writ of Mandate and terminated the temporary restraining order. In so ruling, the court held that Government Code section 65997(a) allows for the authorization of Level III Developer Fees when Article 5 funds are insufficient to allow for the continued apportionment for new construction. CBIA argued that $2.2M remained for new construction projects, and that new construction projects should also include the remaining $85.2M for seismic repairs. In rejecting CBIA’s arguments, the court found that even though $2.2M remained for new construction, SAB could not make any new apportionments because the application “next in line” was approved for $15.6M and the statute does not require the SAB to wait for additional funds that may become available in the future. Finally, the seismic repairs funds were not counted towards the new construction funds because they are authorized under Article 8, not Article 5.

In short, the court found that, based on the plain language of the statute, and its legislative history, that there was simply no likelihood of success on the merits that is needed for the issuance of a preliminary injunction. This ruling paves the way for authorized school districts to begin imposing Level III Developer Fees. Please contact us to discuss any potential impacts on your school district’s developer fees.