Client: McKeehan, Bernard and Wood
Shapell Industries sued the Milpitas Unified School District (MUSD) for setting residential and commercial development fees which Shapell alleged to be improper. The law offices of McKeehan, Bernard and Wood, representing Shapell Industries, commissioned Gruen Gruen + Associates (GG+A) to review the studies used by MUSD to justify the fees.
GG+A found the School District studies flawed in many respects. There were significant conceptual as well as arithmetic mistakes in the reports. Most importantly, MUSD had not adequately shown how residential and commercial development would impact enrollments. They assumed that the costs associated with the total enrollment increases should be paid for with developer fees, despite the fact that about one-half of the increased enrollments were arising from demographic changes among the existing housing stock.
At the start of the project, GG+A presented a proposal to the MUSD to estimate the impact of development on MUSD’s enrollments, which was to be jointly funded by Shapell and the District. The School District refused.
The case eventually went to court and the judge ruled in favor of Shapell Industries. The School District was ordered to give back all residential and commercial fees collected from Shapell Industries.
The report by GG+A outlining the flaws in the School District studies was referred to extensively in the court’s verdict. The judge ruled that the District had been “arbitrary and capricious” in implementing the fees, based on the lack of adequate study of the impact of new development.