Berkeley Unified introduces fees for residential and commercial developers

Residential developers will soon be required pay the district $3.48 per square foot, and commercial developers 56 cents. Most nearby districts already have a similar policy.

The new Parker Place complex was approved years ago, so it avoided the new BUSD developer fee policy, which will now apply to all new residential and commercial development. Photo: Natalie Orenstein

The Berkeley Unified School District will begin levying fees on developers of new residential and commercial properties in Berkeley later this spring. Developer fees, already collected by most neighboring districts, are meant to mitigate the impact of new development on school enrollment and facilities.

Residential developers will soon be required to pay the district $3.48 per square foot on all new Berkeley projects, and commercial developers will pay 56 cents per square foot, the maximum fees permitted in California. The district will use the revenue to build and renovate school facilities.

BUSD has not collected developer fees in the past but, after months of discussion, the Berkeley School Board voted unanimously to do so in February. Implementation was originally slated for May 9, but the board looks likely to postpone it another month at its meeting tonight.

“The high-quality schools in Berkeley are a draw for people wanting to live here,” said Judy Appel, School Board member, at a meeting in 2016. “And one of the reasons it is such a profitable place to build residential and commercial property is directly linked to our schools. This is the right thing to do.”

The district projects that the next five years of new residential development will bring 144 new students into the district. BUSD will have to accommodate that increase in enrollment by providing new facilities, the School Board resolution says. Commercial development is also included in the new policy because it will generate new jobs, bringing new employees and their families to Berkeley, according to a district analysis.

The School Board considered — but ultimately decided against — exempting non-profit developers of affordable housing from paying the fees. Developers can appeal the fee for individual projects, however, and senior housing development is only subject to the lower fee of 56 cents per square foot.

The Bonar Street headquarters of the Berkeley Unified School District. Photo: Kaia Diringer

Some local developers are resigned to paying up.

“It’s a pretty big number, but the school district needs money and I think we all get that,” said William Schrader Jr., of Alamo-based The Austin Group, which is responsible for the Varsity Berkeley apartments on Durant Avenue and the new StoneFire apartments on University Avenue.

The fees “will raise the cost of a project, which will theoretically raise rents,” said Schrader. But the fees are familiar to those in the development community, he said.

“This is the only city I’ve done business in that did not have a school fee,” Schrader said.

But he and others said they wished BUSD would levy lower fees on apartment buildings than it does on single-family homes. Most new housing complexes are targeted at residents without kids — students, young professionals and empty-nesters — and are therefore less likely to burden the school district, they argued.

Board members were not convinced. In February, Appel said she hoped new apartment buildings would be family-friendly and Karen Hemphill said families might end up relocating to apartments if rents and home prices continue to rise.

Some local developers, like Mark Rhoades and Stuart Gruendl, also advocated for an exemption for projects that have already submitted initial plans. The new BUSD policy applies to any projects that do not yet have a building permit by the time the policy goes into effect. Some developers argued that a lot of time can pass between a project proposal and the acquisition of a permit, so all projects already in the pipeline should be spared.

“We’ve been talking about this for a year,” countered Appel at a recent board meeting. “It shouldn’t come as a surprise to anybody who’s been working on a project for that period of time. At some point, we’re going to have to say, ‘This is it.'”

William Schrader, who developed the new StoneFire, said many of the buildings that will be subject to the developer fees won’t house BUSD students. Photo: Natalie Orenstein

Rhoades said the school fees contribute to what he views as a tough environment for development in the city.

“I don’t think the fee in and of itself is that significant, but when you put it together with all the rest, Berkeley has a problem,” said Rhoades, whose Rhoades Planning Group has shepherded number of complexes in Berkeley through the planning process, including the brand new Parker Place on Shattuck Avenue and the 302-unit complex at 2211 Harold Way, known as The Residences at Berkeley Plaza.

Berkeley has a relatively large package of application costs, community benefit fees and affordability requirements for new development, and BUSD taxes property owners as well.

The district’s justification study – a required analysis to determine if developer fees are warranted – found BUSD would be justified in collecting even higher fees, but it cannot legally do so. The state began allowing school districts to levy fees on developers in the late 1980s, but the amount they are allowed to collect is capped.

The study, conducted by the Sacramento-based School Facility Consultants, found that each square foot of residential development in Berkeley creates a school facility cost of $4.49, meaning the new fee will offset about three-quarters of the cost.

The developer fees are projected to bring in around $2.9 million over the next five years, covering only a sliver of the district’s estimated $259 million facilities needs. Measure I, the district’s school facilities bond, has generated much more revenue.

BUSD has large facilities projects in the works, including major renovations at Berkeley High School and the West Campus, which may become a brand new elementary school in the future.

Some families say those improvements and expansions are sorely needed. For several years parents have complained about overcrowding at some of Berkeley’s schools.

Natalie Orenstein reports on housing and homelessness for The Oaklandside. She was previously a reporter for Berkeleyside.