Candid Enterprises, Inc. v. Grossmont Union High School Dist.

Citation39 Cal.3d 878,705 P.2d 876,218 Cal.Rptr. 303
CourtUnited States State Supreme Court (California)
Decision Date26 September 1985
Parties, 705 P.2d 876, 27 Ed. Law Rep. 950 CANDID ENTERPRISES, INC., Plaintiff and Respondent, v. GROSSMONT UNION HIGH SCHOOL DISTRICT, et al., Defendants and Appellants. L.A. 31877.

Page 303

218 Cal.Rptr. 303
39 Cal.3d 878, 705 P.2d 876, 27 Ed. Law Rep. 950
CANDID ENTERPRISES, INC., Plaintiff and Respondent,
GROSSMONT UNION HIGH SCHOOL DISTRICT, et al., Defendants and Appellants.
L.A. 31877.
Supreme Court of California,
In Bank.
Sept. 26, 1985.

Page 305

[39 Cal.3d 880] [705 P.2d 878] Donald E. Smallwood, Daniel A. Nordberg and Fiere & Nordberg, Newport Beach, for defendants and appellants.

Best, Best & Krieger, Dallas Holmes, Gregory V. Moser, Riverside, Breon, Galgani, Godino & O'Donnell, Louis T. Lozano, Emi R. Uyehara, San Francisco, John A. Drummond, Lloyd M. Harmon, Jr., County Counsel, Howard P. Brody, Chief Deputy County Counsel, William W. Taylor and Sandra J. Brower, Deputy County Counsel, San Diego, Robert A. Rundstrom, Kronick, Moskovitz, Tiedemann & Girard, Sacramento, Robert J. Henry and Jacqueline M. Gong, as amici curiae on behalf of defendants and appellants.

Joel L. Incorvaia, Howard J. Barnhorst, II, Stephanie Sontag Nance, Louise M. Quintard and Dorazio, Barnhorst, Goldsmith & Bonar, San Diego, for plaintiff and respondent.

Ronald A. Zumbrun, Robert K. Best, Mark A. Wasser and Timothy A. Bittle, Sacramento, as amici curiae on behalf of plaintiff and respondent.

MOSK, Justice.

The major question we must decide in this case concerns what are commonly referred to as "school-impact fees"--i.e., fees that local [39 Cal.3d 881] governments impose on real property development to cover the costs of [705 P.2d 879] constructing and maintaining school facilities attributable to such development. The

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precise question is whether the School Facilities Act (sometimes hereafter the Act) (Gov.Code, § 65970 et seq.) 1 --which encourages local school boards to identify and local governments to deal with the problem of overcrowding, and to that end permits the imposition of school-impact fees to finance certain temporary facilities--preempts local governments from imposing such fees to finance both temporary and permanent facilities. We answer this question in the negative, and therefore reverse the judgment.

In California the financing of public school facilities has traditionally been the responsibility of local government. "Before the Serrano v. Priest decision in 1971, school districts supported their activities mainly by levying ad valorem taxes on real property within their districts." (Cal.Building Industry Assn., Financing School Facilities (Apr. 1983) p. 3 (hereafter Financing School Facilities).) Specifically, although school districts had received some state assistance since 1947, and especially since 1952 with the enactment of the State School Building Aid Law of 1952 (Ed.Code, § 16000 et seq.), they financed the construction and maintenance of school facilities mainly through the issuance of local bonds repaid from real property taxes.

After the Serrano decision (5 Cal.3d 584, 96 Cal.Rptr. 601, 487 P.2d 124) and to the present day, local government has remained primarily responsible for school facility financing, but has often been thrust into circumstances in which it has been able to discharge its responsibility, if at all, only with the greatest difficulty. In these years, the burden on different localities has been different: extremely heavy on those that have experienced growth in enrollment, light on those that have experienced decline, and somewhere in between on those that have remained stable.

In the early 1970's, because of resistance to increasing real property taxes, localities throughout the state began to experience greater difficulty in obtaining voter approval of bond issues to finance school facility construction and maintenance. As a result, a number of communities chose to impose on developers school-impact fees--such as those at issue here--in order to make new development cover the costs of school facilities attributable to [39 Cal.3d 882] it. (See, e.g., Builders Assn. of Santa Clara-Santa Cruz Counties v. Superior Court (1974) 13 Cal.3d 225, 118 Cal.Rptr. 158, 529 P.2d 582.)

With the passage of Proposition 13 in 1978 the burden of school financing became even heavier. "Proposition 13 prohibits ad valorem property taxes in excess of 1%, except to finance previously authorized indebtedness. Since most localities have reached this 1% limit, school districts cannot raise property taxes even if two-thirds of a district's voters wanted to finance school construction." (Financing School Facilities, supra, at p. 4; see Ed.Code, § 17786 ["the Legislature recognizes that the ad valorem tax is no longer available as a source of revenue for the construction of necessary school facilities"].) Moreover, although Proposition 13 authorizes the imposition of "special taxes" by a vote of two-thirds of the electorate, such special taxes have rarely been imposed, remain novel, and as consequence are evidently not perceived as a practical method of school facility financing--especially in view of the need for a two-thirds vote of the electorate to approve them. (Financing School Facilities, supra, at pp. 4, 14.)

In the face of such difficulties besetting local governments, the state has not taken over any substantial part of the responsibility of financing school facilities, less still full responsibility. To be sure, in order to implement the Serrano decision the Legislature has significantly increased assistance to education. But it has channeled by far the greater part of such assistance into educational programs and the lesser part [705 P.2d 880] into school facilities; in fiscal year 1981-1982, for example, only 3.6 percent went

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for such facilities. (Financing School Facilities, supra, at pp. 3, 4, 6.) The Legislature has developed "no long-term, comprehensive solution to the acute and chronic facilities financing needs of local school districts," but rather has enacted merely "a series of stop-gap, patchwork measures." (Id. at p. 6.) Moreover, because of, among other things, the state budget crisis in the early 1980's and other factors the Legislature has not adequately funded such measures as it has enacted--indeed, "[i]n the past several years, state-supported construction finance has waned...." (Id. at pp. 6, 16.) Thus, although the burden of financing school facilities appears too heavy for some localities to bear, they continue to bear it in large part alone.

In 1974 the Board of Supervisors of San Diego County adopted in the form relevant here a land-use policy, designated Policy I-43 (sometimes hereafter the Policy), to help assure orderly growth in the face of widespread and rapid development and a consequent general increase in population. In the Policy, the board of supervisors described the basic problem: [39 Cal.3d 883] "In many cases, ... the required public services have not ... been installed by the time the development shows a need. The result has been that residents in the newly developed areas have been inadequately served with schools." It then went on to frame a solution: "Before giving approval to development proposals involving a special use permit or a rezoning, ... the proponent of the development proposal ... [must] make certain provisions, in conjunction with appropriate governmental agencies, to insure: [p] That the proponent of the development present evidence satisfactory to the Planning Commission, at the time of its consideration of the matter, and to the Board of Supervisors at the time of its consideration of the matter that public school services will in fact be provided concurrent with the need." As evidence that such services and facilities would be provided, the county accepted so-called "school-availability" letters from the local school districts.

In 1977 respondents Grossmont Union High School District (the District) and its governing board (the Board) recognized that developments being proposed at that time might cause overcrowding, and sent letters to that effect to the county. On the basis of such letters, the planning commission concluded that the District could not in fact provide adequate school facilities concurrent with the need created by the proposed developments, and accordingly permitted few if any such developments to proceed.

In the fall of 1977 the predecessor of petitioner Candid Enterprises, Inc. expressed its willingness to enter into an agreement with the District to permit its development to proceed: it would agree to pay fees for school facilities and the District would issue a school-availability letter to the county indicating that such facilities would be provided. 2 The District approved the agreement in principle and, in order to facilitate it and others like it, adopted Revised Policy FF, which allowed for assessment, under Policy I-43, of school-impact fees from developers, to be used for temporary or permanent facilities. In the spring of 1978 the District entered into an agreement with petitioner's predecessor secured by the real property under development. By its terms the developer agreed to pay the established fees at the time it sought building permits, and the District issued a school-availability letter advising the county of the agreement and of its ability to provide adequate school facilities through use of the fees.

Meanwhile, the School Facilities Act had become effective on January 1, 1978. Under the Act, cities and counties were authorized to enact ordinances to require developers to pay fees for temporary school facilities. [39 Cal.3d 884] ( § 65974.) In the spring of 1978 the board of supervisors enacted such an [705 P.2d 881] ordinance, designated Ordinance 5120. Shortly thereafter, in order to facilitate

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agreements with developers for the payment of fees for temporary facilities under the Act, the District adopted a resolution finding that conditions of overcrowding existed and that it lacked financial resources to provide additional needed school facilities.

In 1978 and 1979 the District assessed some developers...

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