HYPOTHETICAL

QUESTIONS

In 1997, several landowners in a small but growing city in the Central Valley formed a Community Facilities District, pursuant to which the landowners and the local School District agreed that as full mitigation for school fees due under State law, the local School District would impose a tax (secured by a lien against the properties) of $9800 for each single family detached residential unit built, to be paid at the time a building permit issues. The fees are to escalate (or decrease) based upon an identified cost index.

The School District also is permitted to consider in lieu of payment of the special taxes other forms of mitigation, including the construction of school facilities by the owners of the properties within the CFD.

It is now 1999 and a developer that proposes to develop adjacent properties, only one of which is in the CFD, is seeking development approvals from the local City Council. The Developer has asked its land use attorneys and school fees consultant the following questions:

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1. I understand that the Leroy F. Greene School Facilities Act of 1998 ("SB50")     limits the school impact fees that I can be required to pay in connection with     my proposed development. Is that also true with respect to the property within    the CFD?

2. I understand that under SB50 there are "Level 1" fees and higher "Level 2" and     even "Level 3" fees. What are those fees, and under what circumstances can     they be imposed on my project?

3. Can the Planning Commission or City Council deny my project if I refuse to     pay school impact fees in excess of those set forth in SB50 or the CFD?

4. Does SB50 affect the City's environmental review of my project under    CEQA?

5. I also understand that SB50 made grant funds (in excess of $9 billion?)    available to assist in the construction of new schools. If I were to construct a    school facility in lieu of paying the fees, what grant funds might be available to    assist me?

6. I also anticipated that about 10% of my residential units will be considered     "affordable" residential units. Does SB50 make any provision for those units?

The questions asked by the Developer along with your questions will be answered in next week's email.

YADDA, YADDA, YADDA

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