Thanks to a 30-year-old California law which imposes a so-called “developer’s tax” on new construction in the state — money that’s earmarked to pay for school construction and facility upgrades and maintenance — Burbank’s schools will reap additional funds from the city’s development boom. But will it be enough to offset the impact of all those new students that will result from the new development?

An April 2016 analysis prepared for the school district suggests maybe not.

The School Fee Justification Study,” prepared for the district by the consulting firm Koppel & Gruber Public Finance, examined what impact an increase in new residential housing might have on the city’s schools, which serve more than 15,000 students in grades K-12. It determined that each additional square foot of construction would cost Burbank schools $4.10. However, developers of residential housing in Burbank will only have to pay $3.48 per square foot — the maximum set by the state.

As a result, Burbank schools could be left with a shortfall of $.62 for each square foot of new residential construction. And the district could be left high and dry when it comes to commercial development too, according to the study.

State law caps the tax on new commercial construction at $.56 per square foot. With the exception of hotels, the bulk of the commercial construction projects proposed for Burbank also fell short of covering projected costs, sometimes by more than 150 percent, according to the school fee study, which set the impact construction of a standard commercial office space at $2.07 per square foot, a large high-rise commercial office space at $1.97 a square foot, and shopping center at $.85 a square foot.

The school district says it plans to use the money it collects on new development to cover roughly $124 million in facilities costs over the next decade, including an almost $40 million-dollar renovation project which would “include modernization of existing classrooms and the replacement of portable classrooms with permanent classrooms,” the report said.

A rudimentary review of five projects currently in development in Burbank — Burbank Town Center/I Heart Burbank, Premiere on First, 115 N. Screenland, First Street Village, and The Avion (airport adjacent property) — indicates that the discrepancy between how much tax the schools can force developers to pay and how much the district says it needs to blunt the impact of new construction could rob Burbank of almost $2.3 million dollars.

How we got the numbers:

We obtained estimates of the potential square footage and use of each project from City of Burbank Planning Board’s website. For residential units, unless a more accurate figure was provided in the developer’s plan, we used 1,173 square feet as the weighted average square footage of the proposed units (an estimate based on information obtained from LA County, according to the district study). We determined the cost impact of each project on school facilities using the BUSD report’s numbers ($4.10), and then compared this to the total revenues the school fees would generate as a result of the developers tax at a rate of $3.48 per square foot.

Because the impact on schools by commercial development varied according to the type of development (shopping centers compared to banks compared to commercial offices, etc.) we relied on the BUSD’s numbers to determine an average commercial cost impact ($1.40 per square foot) and compared it to the maximum school fee assessed on commercial properties ($.56).

Since the BUSD report determined the impact from hotels would be $.49 (below the minimum), and the district can not assess more fees than the cost of impact — we determined each square foot of hotel space should be taxed at a rate of $.49 per square foot. We used 300 square feet (slightly less than the average US hotel room size according to USA Today) to determine the overall square footage of hotel projects proposed.

Burbank Town Center/I Heart Burbank
70,000 square feet of new commercial square footage, approximately 200 hotel rooms and approximately 1,100 housing units

Residential
Total square footage: 1,290,300
BUSD impact ($4.10): $5,290,230
School Fee ($3.48): $4,490,244

Shortfall: $799,986

Commercial
Total square footage 70,000
BUSD impact ($1.40) $98,000
School Fee ($.56) $39,200

Shortfall: $58,800

Hotels
Total square footage 60,000
School Fee ($.49) $29,400

TOTAL SHORTFALL – $888,186

Premiere on First
Two options have been proposed. Both would include 154 residential units. One would include 181,517 square feet of commercial space; the other proposes 126,000 square feet in hotel space and 15,589 square feet of commercial space.

Residential
Total square footage: 180,642
BUSD impact ($4.10) $740,632
School fee ($3.48) $628,634

Shortfall: $111,998

Commercial

Option One – Commercial/No Hotel

Total square footage 181,517
BUSD impact ($1.40) $254,124
School Fee ($.56) $101,646

Shortfall: $152,478

Option Two – Commercial & 230 room hotel

Commercial sq. footage 15,589
BUSD impact ($1.40) $21,825
School Fee ($.56) $8,730

Shortfall: $13,094

Hotel square footage 126,000
School Fee/impact ($.49) $61,740

TOTAL SHORTFALL $165,573

115 N. Screenland
40 residential units with an average size of 1,284. 3000 square feet of commercial use.

Residential
Total square footage 51,360
BUSD impact ($4.10) $210,576
School Fee ($3.48) $178,732

Shortfall: $31,844

Commercial
Total square footage 3,000
BUSD impact ($1.40) $4,200
School Fee ($.56) $1,680

Shortfall: $2,520

TOTAL SHORTFALL: $34,364

First Street Village
261 residential units and 21,265 square feet of commercial space

Residential
Total square footage 306,153
BUSD impact ($4.10) $1,255,227
School Fee ($3.48) $1,065,412

Shortfall: $189,815

Commercial
Total square footage 21,265
BUSD impact ($1.40) $29,771
School Fee ($.56) $11,908

Shortfall: $17,863

TOTAL SHORTFALL: $207,678

The Avion
1,177,489 in commercial construction. 150 room hotel.

Commercial
Total square footage 1,177,489
BUSD impact ($1.40) $1,648,485
School Fee ($.56) $659,394

Hotel sq. footage 45,000
School Fee/impact ($.49) $22,050

TOTAL SHORTFALL: $989,091

COMBINED SHORTFALL FOR ALL PROJECTS CONSIDERED: $2,284,892

It’s important to note that the analysis prepared for the district was a cost projection — the actual cost impact on schools could, in fact, turn out to be much less (or much more).

Also, the school district must meet certain legal requirements before imposing the fee on new construction in the first place. They must:

1. Determine the purpose of the fee;
2. Identify the use to which the fee is to be put;
3. Determine how there is a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed;
4. Determine that there is a reasonable relationship between the need for the public facilities and the type of development project on which the fee is imposed;
5. Determine that there is a reasonable relationship between the amount of the fee and the cost, or portion of the cost of the public facility attributable to the development on which the fee is imposed; and
6. Provide an annual accounting of any portion of the fee remaining unspent or held for projects for more than five (5) years after collection.
So, in fairness, the report prepared for the district should be read in light of the fact that the school district has an impetus to, perhaps, provide the “worst case scenario” in calculating, the potential impact of the new development on schools. After all, it may only assess the developer’s fee if it can show that its needs are equal to or greater than the amount of revenue it would collect from the tax.

But the potential impact of building residences for thousands more families whose children may use the district’s 19 schools should not be discounted either. It is one other important factor residents need to examine as we head to the polls next month. We need a city council that thinks before acting and considers all the ramifications of its decisions. We need a council that puts Burbank families first and won’t greenlight projects that allow outside developers to turn a quick profit and stick Burbank schools with the bill.

http://www.burbankusd.org/files/user/3/file/Developer%20Fees%20-%20Notice%20of%20Public%20Hearing.pdf

http://www.burbankca.gov/departments/community-development/planning
https://www.fixr.com/costs/build-hotel