- “The district has misrepresented the actual need for new school facilities by ignoring its ongoing enrollment decline and its reliance on interdistrict transfer students to fill classrooms.” – Palomino Place, LLC
DAVIS — A major Davis housing development is now at the center of a legal dispute after its developer filed suit against the Davis Joint Unified School District, claiming that recently imposed school impact fees are unlawful, excessive and unconstitutional.
On Sept. 5, Palomino Place, LLC, managed by longtime Davis developer J. David Taormino, filed a verified petition for writ of mandate in Yolo County Superior Court. The lawsuit challenges DJUSD’s decision to impose the maximum statutory developer fee of $5.17 per square foot of residential construction on the Palomino Place project. The petition alleges violations of the California Mitigation Fee Act and the Takings Clause of the U.S. Constitution and seeks declaratory relief to invalidate the district’s decision.
According to the petition, the district has misrepresented the actual need for new school facilities by ignoring its ongoing enrollment decline and its reliance on interdistrict transfer students to fill classrooms.
The filing cites DJUSD’s own Student Population Forecast, which projected that resident student enrollment will continue to decline by 3 percent over the next five years. The forecast acknowledged that total enrollment has slightly increased only because the district has accepted more than 1,000 students from outside Davis, including from Woodland, Dixon and West Sacramento.
The petition notes that without those interdistrict transfers, there is sufficient capacity in existing facilities to house students generated by new housing projects. According to district data, transfer students make up 13 percent of elementary enrollment, more than 18 percent of junior high enrollment, and nearly 17 percent of high school enrollment. The developer contends that DJUSD is not required to accept those students, and therefore the district cannot justify new facilities as a basis for imposing the maximum development fee on local projects.
The legal filing argues that the district’s fee program imposes a burden on Davis homebuyers while providing capacity for students from outside the city. The petition states that the district’s approach effectively requires local developments to subsidize facilities for nonresident students, even though those families have not contributed through development fees of their own.
Palomino Place, approved by the Davis Planning Commission in January, is slated to bring 193 homes to the community. The project includes 50 affordable apartments, 38 townhomes, and 105 cottages and single-family homes. The developer’s own materials highlight the goal of attracting young families and supporting local schools by providing more attainable housing opportunities.
Using the methodology in DJUSD’s Developer Fee Justification Study, the project is expected to generate 69 students: 39 in elementary grades, 15 in junior high and 15 in high school. The petition asserts those students can be accommodated in existing facilities without the need for new construction, especially if the district reduces its acceptance of interdistrict transfers.
Superintendent Matt Best has repeatedly warned of the district’s declining enrollment. Earlier this year, he said, “As we are projecting forward into the future, we know that we will continue to see a decline in the number of resident students. We’re expecting an (overall) about 100 student decline year over year for the next 10 years at least.”
The petition points out that the expected annual decline in students far exceeds the number of students projected to come from Palomino Place.
The district adopted the maximum Level 1 fee in September 2024 after a presentation by Government Financial Services consultant Lori Raineri.
When asked at the meeting how the proposed rates compared to other districts, Raineri said, “I don’t know anybody who is charging anything different than what you would be charging. So, that could happen, but it would only happen if their facility needs justified something less.”
Following her presentation, the Board of Education unanimously approved the new rate, which took effect in November 2024.
The lawsuit argues that the district’s justification study and board action were perfunctory, automatically raising fees to the maximum allowable amount without fully considering actual needs. While the study found that elementary schools were slightly over capacity, it did not account for the 539 transfer students in those grades. Without them, the petition states, DJUSD elementary schools would have room for 450 additional students.
The petition also cites the Palomino Place environmental report, which concluded that DJUSD enrollment has been declining while interdistrict transfer enrollment has increased. The report found that the district “currently has the capacity to accept new students.” Despite having the opportunity to respond, the district did not challenge that assessment.
The lawsuit contends that imposing the maximum fee on Palomino Place violates the Mitigation Fee Act because the district has not demonstrated a reasonable relationship between the project’s impacts and the cost of new facilities. The filing states that the project is not creating an adverse impact requiring additional schools and therefore the fee cannot be justified.
The petition also raises constitutional claims, arguing that the fee constitutes an unlawful taking of property under the Fifth Amendment. The U.S. Supreme Court has held that development exactions must have an “essential nexus” to the project’s impacts and be “roughly proportional” to those impacts. The developer asserts that DJUSD has not met either standard, because adequate capacity exists to serve the 69 new students expected from Palomino Place.
“The Project is not creating an adverse impact that needs to be addressed,” the filing states, adding that the district has “not and cannot establish that there is an ‘essential nexus’ between the fee charged and the Palomino Place project’s anticipated impacts.”
In comments cited by the Davis Enterprise and the Vanguard, Taormino has argued that Davis residents are being unfairly charged to cover costs driven by nonresident enrollment.
“There are over 1,000 out-of-district transfer students attending DJUSD schools. Those students are occupying space that would otherwise be available for Davis resident students generated by new housing projects. Yet DJUSD is charging Davis homebuyers the maximum impact fee to build facilities that are not actually needed for those students,” he said.
The petition notes that neither of the two largest proposed developments in Davis — the Shriners Property with 1,100 units and Village Farms with 1,800 units — were required by DJUSD to set aside land for new school facilities. The developer argues that this inconsistency further undermines the district’s justification for imposing maximum fees on Palomino Place.
The lawsuit seeks a writ of mandate compelling DJUSD to comply with the Mitigation Fee Act, a declaration that the fees are unconstitutional as applied to Palomino Place, and an order invalidating the district’s determination. The petition also states that the developer will seek attorney’s fees if successful.
Taormino, who has lived and worked in Davis for more than 56 years, signed the verification for the petition. He asserts that the district’s actions delay and add significant costs to the project, including its deed-restricted affordable housing units.
DJUSD has not yet filed a formal response in court.
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“The developer contends that DJUSD is not required to accept those students”
But those that are here have a legal right to continue throughout their school years so long as their interdistrict status remains continuous. The district cannot revoke ID transfers except under extreme circumstances, and those circumstances are not arbitrary. Any decision to end interdistrict transfer agreements would be a gradual process. It would take several years for the ID students to clear out of the system.
Despite causing this situation himself (e.g., as a developer of Spring Lake), I suspect that the developer has a valid legal claim.
Perhaps this will cause the district to think twice about trying to address its excess capacity by poaching out-of-district students in the future.
Hopefully, there’s some way for BOTH of these entities to lose (the developer AND the school district).
“I suspect that the developer has a valid legal claim.”
Based on what?
“Perhaps this will cause the district to think twice about trying to address its excess capacity by poaching out-of-district students in the future.”
This lawsuit has no bearing on that and as Don’s post demonstrates, the district is operating within state laws. The lawsuit only addresses the specific fees for this project, not the legality of the district taking out of district students.
“Hopefully, there’s some way for BOTH of these entities to lose (the developer AND the school district).”
I hope people reading this understand that a man who does not live in the school district, and does not have kids, is rooting for the school district to suffer here because he doesn’t like housing.
Given that Ron O doesn’t appear to be fighting new housing in Woodland, I suspect he has a deeper financial motivation to undermine new housing in Davis.
You can “suspect” whatever you want, but it probably wouldn’t explain my opposition to DISC – a campaign I actually worked on with your former commission member. (It’s unfortunate that he’s now advocating for Covell Village, Act II.)
As far as Woodland is concerned, it’s pretty much a lost cause for someone like me. (Not that everything is bad about it – in some ways it functions better than Davis I think.)