Every two years the State Allocation Board (“SAB”) adjusts the amount of developer fees. On February 23, 2022, the SAB increased Level I Developer Fees to $4.79 for residential construction and $0.78 for commercial/industrial construction.

Level I Developer Fee Increased:  At the State Allocation Board meeting on February 23, 2022, the Board approved increases of 17.45% in “Level 1” residential and commercial-industrial school facility (“developer”) fees from the current rates of $4.08 per square foot (residential) and $0.66 per square foot (commercial-industrial) to $4.79 (residential) and $0.78 (commercial-industrial). This is the first increase in these fees since January 2020 and reflects substantial inflation in construction costs over the two-year period.

School districts with Level I Fees in effect, may wish to take this opportunity to evaluate the underlying authority supporting the district's Level I Fee program.  Typically, this authority will be in the form of a School Facility Fee Justification Study approved by the district's board under Government Code section 65995. If not updated, these studies may fail to provide adequate justification in support of the Level I Fee, as required by law.  Accordingly, it is important that these studies are regularly reviewed and updated as necessary. 

In addition, school districts may wish to evaluate their present expenditure plans to ensure that fee revenue is being utilized in an authorized manner and to further ensure that the five-year accounting requirements of Government Code section 66001 are being met.

At the same meeting, the school facility program (SFP) new construction and modernization grants for various types of projects were increased on an annual basis for the period since January 1, 2021 by 15.80%.

Bid Threshold for Contracts Increased:  As previously noted in our December 23, 2021 blog post, the State Superintendent adjusted the Section 20011(a) bid threshold to $99,100.  This represents an increase of 2.76% from the previous 2021 threshold of $96,700 bid threshold.

Public Contract Code section 20011(a) requires a school district to competitively bid and award contracts involving an expenditure of more than $50,000, adjusted for inflation, to the lowest responsible bidder.  Contracts subject to competitive bidding include: (1) The purchase of equipment, materials, or supplies to be furnished, sold, or leased to the school district; (2) Services that are not construction services; and (3) Repairs, including maintenance, that are not public projects.

Please note that certain public projects under Section 22002(c), such as construction, have a lower bid threshold requirement in the amount of $15,000, that is not adjusted for inflation. 

School districts may wish to review ongoing bid procedures to ensure that the appropriate bid limitation amounts are being applied to contracts that are determined to be subject to the Public Contract Code.

Should you have any follow-up questions or comments on this information, please contact us by e-mail or by telephone at (714) 573-0900 (Southern California office) or (916) 245-8677 (Northern California office). 

_{This Parker & Covert LLP post is intended for informational purposes only and should not be relied upon as legal advice. Legal issues and principles apply differently, sometimes substantially, depending on context and facts. Review or receipt of this post does not create an attorney-client relationship.}