Government Code sections 66001 and 66006 require school districts to be accountable for developer fees collected and expended on both an annual and five-year basis. A school district collecting developer fees may generally fulfill reporting requirements through its governing board’s adoption of an Annual Report and Five-Year Findings.
As the statutory deadline for the Annual Report for fiscal year 2023-24 is quickly approaching (December 27), we want to remind school districts of new Annual Report requirements which became effective as of January 1, 2024.
DEVELOPER FEE ANNUAL REPORT AND FIVE-YEAR FINDINGS
A school district accounts for developer fees collected and expended on both an annual and five-year basis, pursuant to Government Code sections 66001 and 66006, through its governing board’s adoption of an Annual Report and Five-Year Findings. The Annual Report focuses on the amount of developer fees collected and expended throughout the previous fiscal year, while the Five-Year Findings require a more detailed analysis of a school district’s overall use of developer fees, focusing on the fees which have been collected but not yet expended, and findings related thereto. The purpose is to illustrate the extent to which the collected fees are still necessary to serve, and complete, a district’s school facilities’ needs. School districts are required to make the report and findings available to the public by no later than 180 days following the end of the fiscal year (i.e., December 27).
NEW REPORTING REQUIREMENTS
Assembly Bill No. 516, effective January 1, 2024, requires the Annual Report to contain additional information about the developer fees collected and expended during the previous fiscal year. School districts must now include information identifying whether construction projects listed in prior annual reports commenced as predicted, the reason for any delay, and a revised commencement date if a delay occurred. As school districts prepare their Annual Reports and Five-Year Findings to meet the December 27, 2024, statutory deadline, they will need to further analyze and report on the status of the construction or reconstruction projects that they previously listed in prior reports. In addition, if any refunds were issued, the number of persons or entities identified to receive such refunds must now also be stated together with the amount of refunds.
As a reminder, last year’s court guidance emphasized the importance of reexamining a district’s project list and ensuring the ongoing justification between the information in the Five-Year Findings and the nexus study. This reexamination and maintenance of the Five-Year Findings may be even more critical with the conditions placed on school districts under Senate Bill 937, effective January 1, 2025. Be on the lookout for our forthcoming separate Bulletin on Senate Bill 937!
DWK attorneys in our Business and Property group are available to assist your district with the preparation of its Annual Report and Five-Year Findings, including any questions you may have regarding the new (and old!) reporting requirements. This bulletin is for educational purposes only and does not constitute legal advice. However, we encourage you to contact a DWK attorney in our Business, Property and Construction practice group today for guidance and assistance with meeting the developer fee reporting requirements by the statutory deadline.
