Santa Clara Unified, San Jose in nearly $5 million dispute over development fees

A project to build a massive school complex in San Jose is at the center of an almost $5 million dispute between the Santa Clara Unified School District and the city.

At issue is $4.87 million that the school district paid the city for “traffic impact mitigation fees” related to construction at the Agnews School Project at 3550 Zanker Road in San Jose. The school district, which has drafted a complaint and is threatening to sue, is asking the fees be refunded because they aren’t the district’s responsibility under an agreement between the district and the city to develop the site.

The project, which covers 55 acres, will include 382,000 square feet of school building space and three schools when it is completed. The Abram Agnew Elementary School, which will cater to 600 students, and the Dolores Huerta Middle School, with room for up to 1,000 students, are slated to open in August 2021. The Kathleen MacDonald High School, which will house 1,600 students, is scheduled to open in August 2022.

Along with the school buildings, the site will have a gym, pool and various outdoor sports playfields.

The district also claims San Jose said it would delay a permit for “offsite improvements” around the Agnews project site until the district paid the $4.87 million in fees by July 29.

According to the district, it paid the fees on July 30 so that it could receive the necessary encroachment permit, but did so “under protest.” And now school leaders want the money back.

Santa Clara Unified and the San Jose City Attorney’s office said they are in negotiations to resolve the matter, but the district said it is prepared to sue if an amicable solution can’t be reached.

Santa Clara Unified Superintendent Stella Kemp said the district is threatening to sue because it believes San Jose has “unfairly levied a fee against us that traditionally has not been levied on public agencies, especially school districts.”

Construction on the Agnews site began in November 2018, with the district originally targeting an August 2020 opening month for the elementary and middle schools. However, weather conditions, inspections and state agency approval processes caused construction delays throughout 2019.

The development of the site is a project nearly a decade in the works. According to the school district, the site’s project was approved in January 2012, and an environmental impact report said the district was not required to pay traffic mitigation fees to San Jose.

Along with the school facilities, construction also includes widening Zanker Road to better handle traffic from the schools. That work includes landscaping, the addition of sidewalks and streetlights and expanding Zanker Road to three lanes in its northbound direction.

In addition to seeking a refund of its $4.87 million payment, Santa Clara Unified is requesting the court issue a statement saying the city’s collection of the traffic impact fees contradicts the city’s North San Jose Area Development Policy, which covers the Agnews school site location.

“We are not developers,” Kemp said. “We are a school district simply seeking to educate children, and the city’s fees puts at risk our ability to educate our community’s children in updated education facilities.”

The fight between the school district and San Jose is the latest in a string of public disputes between the neighboring entities over development projects. San Jose in 2016 sued the City of Santa Clara over a massive development called CityPlace, now known as Related Santa Clara, and the city returned the favor months later by suing over the Santana West project.

Contact Rex Crum at [email protected] or follow him @rexcrum on Twitter.