Effective January 1, 2025, Senate Bill 937 may change the timing of development impact fee (“Developer Fee”) collection for certain school districts. Historically, school districts could collect Developer Fees prior to the issuance of a building permit under Education Code section 17620(b). However, “notwithstanding any other law,” SB 937 prohibits requiring payment of Developer Fees until the date of final inspection, or issuance of a certificate of occupancy, whichever occurs first. SB 937 reflects a significant shift in practice, potentially requiring additional action by school districts to implement an exception or requiring districts to secure the payment of fees through coordination with the applicable local agency issuing building permits. This new law may affect facilities construction timing and related funding, and may impact the ability for school districts to plan for the facilities needed to accommodate student enrollment.
An exception to SB 937’s delayed fee collection rule may apply if:
(A) the local agency determines that the fees or charges will be collected for public improvements or facilities for which an account has been established and funds appropriated and for which the local agency has adopted a proposed construction schedule or plan prior to final inspection or issuance of the certificate of occupancy; or
(B) the fees or charges are to reimburse the local agency for expenditures previously made.
Another feature of SB 937 is that it gives local agencies issuing permits (such as cities and counties), the discretion to require a property owner to provide a performance bond, letter of credit, or execute a contract with the local agency, promising future payment as a condition of issuance of a building permit. SB 937 allows the school district imposing the fee to enforce any such contract even if it is not a party to such agreement.
If a school district wishes to use an exception, it should plan carefully to document and implement the application of the exception, and communicate with the local permitting agency about the impact of the exception on the timing of fee collection. If no exception applies, school districts should coordinate with permitting agencies to encourage the requirement of a bond, letter of credit or contract to secure the payment of the fee.
F3 attorneys are available to answer any questions regarding SB 937 and can provide assistance navigating these new requirements.