(a) Notwithstanding any other provision of law, a project shall be accorded, subject to subdivision (b), the priority status that otherwise is accorded under Section 17017.7 to a project for which state funding is requested for only 50 percent of the cost, if all of the following conditions are met:

(1) The applicant district documents to the satisfaction of the board that it has incurred bonded indebtedness in an amount not less than 95 percent of the bonding capacity of the district. “Bonded indebtedness” for the purposes of this section includes, but is not limited to, funding provided pursuant to Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code.

(2) The applicant district agrees that up to 95 percent of the unexpended bonding capacity of the district, existing on or after the date of the district’s first application for project funding pursuant to this section, shall apply toward the cost of projects.

(3) Either of the following apply:

(A) The applicant district agrees that developer fees imposed pursuant to Section 17620 shall apply toward the cost of projects for which the district requests state funding pursuant to this chapter, not to exceed 50 percent of the cost of any project. Fees needed for interim housing for capital outlay purposes for modernization and new construction projects, school district administration capital outlay projects, and capital outlay projects for transportation needs, are exempt from this requirement.

(B) The applicant is a school district with an average daily attendance of 2,500 or less.

(b) An applicant district qualifying for the priority status described in subdivision (a) as to any project shall continue to be accorded that status for all subsequent projects under this chapter until the time that the bonding capacity of the district determined for purposes of that subdivision increases by 20 percent.

(c) The condition set forth in paragraph (2) of subdivision (a) shall apply until either the applicant district’s eligibility under this section terminates pursuant to subdivision (b), or funding for the district is approved and apportioned under this chapter for a project for which 50 percent or more of the cost is provided by the district from funding sources other than any state program administered by the board, whichever occurs first.

(d) Notwithstanding any other provision of law, as to any project for which priority status is accorded pursuant to subdivision (a), the estimate of average daily attendance for the applicant district may be calculated, upon request of the district, in the manner set forth in subdivision (a) of Section 17040.3.

(e) The board may recalculate program allowances and apportionments pursuant to this section.

(Amended by Stats. 1998, Ch. 957, Sec. 1. Effective January 1, 1999.)