1 MINUTES
CITY COUNCIL - SPECIAL MEETING (WORKSHOP)
CITY OF BANNING, CALIFORNIA
January 13, 2026 Council Chambers
4:00 p.m. 99 E. Ramsey Street
In Chambers Banning, CA 92220
The following information comprises the minutes for the special meeting of the Banning City Council, a joint meeting of the City Council and Banning Utility Authority, and the Banning City Council sitting in its capacity as the Banning Successor Agency Board.
1. CALL TO ORDER – 4:01 p.m.
COUNCIL MEMBER PRESENT ABSENT
Barrington, Cindy X
Flynn, Sheri X Miller, Leroy X
Royce, Richard X
Wallace, Colleen X
2. WORKSHOP
2.1 Review of the Proposed Updates to the City of Banning Development Impact Fees Recommendation: Provide direction to staff and the City's consultant Nate Smith, Deputy Director of Public Works/City Engineer introduced the Development Impact Fee Workshop.
The purpose of the workshop was to present information, provide background, and seek direction from the Council regarding the implementation of development impact fees Development impact fees are charges to new development to mitigate citywide impacts. They address community-wide impacts beyond project-adjacent improvements, such as increased use of downtown areas and schools. These fees are authorized by the state under the Mitigation Fee Act (AB 1600 and Government Code 66000), allowing developers to either pay the fee or build a project from the Nexus study in lieu of payment, with credit given. AB 602 recently modified the Act, requiring a reasonable relationship between development types and fees. The update aims to comply with AB 602, which was not in place during the last fee study adoption.
Current fees were adopted in 2019 via resolution 2019-112 and ordinance 1551, covering fire, general facilities, parks, police, traffic, wastewater, and water. State regulations mandate updates at least every eight years. Matrix Consulting was contracted via Resolution 2024-92 for DIF updates, following their previous work on user fee updates.
Khushboo Ingle from Matrix Consulting presented the impact fee analysis. The City last conducted a study in 2019, and new regulations require analysis every eight years, aligning with the City's 2026 timeline. The analysis uses 2040 as the horizon timeframe. A new electric impact fee is proposed due to the City's ownership of the infrastructure. The study also compares fees to other jurisdictions. The goal is to ensure future development proportionately pays for infrastructure impacts, lessening the burden on the general fund and complying with state regulations, specifically AB 1600's nexus criteria and AB 602's 2 requirement for residential fees to be proportional to square footage. This shifts the current per-dwelling unit basis to a per-square-foot basis. The study must be reevaluated every eight years.
The methodology involves projecting future growth using City and regional documents and then examining City master plans and other documents to determine infrastructure impacts. The study considers all current impact fees and the proposed electric impact fee, focusing on capital costs like infrastructure, facilities, and vehicles for each service area (fire, police, etc.), excluding staffing and operational costs.
The electric impact fee results cover five land use types: single-family, multifamily, commercial, office, and industrial. There is no current existing fee for this. The study calculates the maximum justifiable fee, which is the maximum fee allowed under state law. The City can set the fee lower than this amount.
The single-family and multifamily fire fees were converted to a per-square-foot basis. There is a significant difference in under-recovery levels. This variance is common when switching to square footage for residential fees. The non-residential side shows less of a difference.
For general facilities, the residential side shows a subsidy, while the non-residential side is slightly over the maximum justifiable fee. The city must lower the fee to at least the maximum justifiable amount, but could lower it further.
Parks and recreation fees are typically only charged on residential land uses, as residents are the primary users of the infrastructure. It is a common fee that shows a larger under-recovery.
Similar to fire, police impact fees show a larger impact on residential land uses, but not as large of a difference as with non-residential land uses.
Comparing the current traffic and transportation fee is difficult because it is broken down by every possible land use type, making it complicated to administer. The goal is to make it consistent with other impact fees for easier calculation for developers
For wastewater, there are set fees for single-family and multifamily. The multifamily maximum justifiable fee is lower than the current fee, requiring the City to lower it to that amount or lower. The non-residential fee is currently calculated specifically for each project, but the process aims to establish a fixed fee.
There is a larger discrepancy between the current fee and the maximum justifiable fee. The current fees are the same as those calculated in 2019, which is important to consider given cost increases since then.
The nexus analysis calculates the maximum fee, but the council has the policy decision to set fees lower, balancing growth and development with infrastructure needs.
Impact fees can only fund infrastructure needs, excluding staffing and operational costs. It is recommended to adopt annual inflationary factors, using a construction cost index factor instead of CPI, as it is more closely tied to infrastructure and development costs.
Nate Smith explained that the fees are increasing due to significant cost escalations since 2019. The land use basis is similar to 2019, with project costs updated to reflect current field conditions. Construction costs have increased more than general inflation. The DIF is paid by all new development, including large subdivisions and single homes, applied uniformly on a per-square-foot basis.
Development agreements can impact DIF rates or applicability. For example, Atwell's agreement includes providing open space in lieu of paying the parks DIF. Previous resolutions allowed CPIU adjustments, but Atwell's development agreement locks their DIF in for 10-year intervals, so the DIF has remained static since 2019.
The fees in the report are the maximum justifiable fees. The Council can reduce the fees, but cannot raise them or transfer them between land use types. The movement to square footage is mandated by AB 602, which is driving residential adjustments. Currently, smaller homes pay a greater proportion of DIF than larger homes, which AB 602 aims to correct.
Police, fire, general facilities, and parks DIF rates are based on existing facilities and equipment needing replacement over 25 years. Traffic, sewer, water, and electric rates are based on adopted Nexus studies and capital lists. The land use breakdown (single-family, multifamily, commercial, office, industrial) matches WRCOG's TUMF program and is similar to RCA's MSHCP breakdown, providing alignment and predictability.
3 Implementing DIF is a City Council policy direction. Staff prepare the report to identify needs and maximum costs, and the Council decides how to proceed. Options include implementing the full DIF, partial fees, staggered fees, or reducing/removing fee categories. Increased development fees can impact economic growth and development.
If the Council chooses not to implement the full DIF, funding may be needed from other sources or infrastructure projects may need to be removed. Utilities could be covered by user rates, grants, or the general fund.
Council Member Flynn asked about the electric impact fee, noting the lack of a current fee and limited discussion in the report. Art Vela, Interim City Manager explained that electric impact fees are not industry standard, but the City has always had them for other utilities. The fee was added to the scope of work to align with City standard practice and facilitate project fee collection. The lack of a fee in the past was attributed to it not being industry standard.
Council Questions and Discussion
● Council Member Flynn inquired about the electric impact fee, comparative surveys, and fire impact fees
● The electric impact fee is new, as it was not industry standard in the past ● Council Member Flynn noted that the City's current residential fire impact fees are on the lower end compared to surrounding jurisdictions and suggested raising them ● Council discussed the approach to setting fees, considering the maximum justifiable fee versus the impact on economic development
● The Council wants to avoid being the highest of all surrounding cities Comparative Analysis
● WRCOG does a comparative analysis every two years, looking at prototype buildings and impact fees by jurisdiction
● As of 2022, Banning's current fee structure is below average ● The updates would likely put Banning on the above-average side Timeline and Next Steps
● The next step is to return to the City Council to adopt the fees ● The public hearing is scheduled for February 10th
● The second reading would then happen on February 24th ● Staff needs direction on where to set the fees
● Council agreed to adjust for overcharges, introduce the electric fee, and consider the fire fee ● The council aims for a happy medium between competitiveness and covering costs
3. PUBLIC COMMENTS - Agenda Items Only
A letter was received and read from Building Industry Association of Southern California, Inc. (Attachment 1)
4. ADJOURNMENT
A motion Council Member Flynn to adjourn the Special City Council meeting (workshop), Seconded by Mayor Pro Tem Barrington. Meeting adjourned at 4:59 p.m.
Minutes prepared by:
4 Sandra B. Calderon
Deputy City Clerk
These minutes have been prepared as Summary Minutes in accordance with City Council Resolution 2025-22 and Government Code Sections 36814, 40801, and 54953(c)(2).
The entire discussion of this meeting may be viewed here:
https://banningca.granicus.com/player/clip/276?view_id=1&redirect=true January 13, 2025
Mayor Richard Royce
City of Banning
99E. Ramsey Street
Banning, CA. 92220
RE: Agenda Item 2.1: Review of the Proposed Updates to the City if Banning Development Impact Fees
Honorable Mayor and Councilmembers:
On behalf of the Riverside County Chapter of the Building Industry Association of Southern California and our hundreds of home builders, trade partners, and suppliers throughout our region, we are writing today to respectfully request continuance and stakeholder consultation on Agenda Item 2.1: Review of the Proposed Updates to the City of Banning Development Impact Fees.
The Riverside County Chapter of the Building Industry Association of Southern California is the organization that represents the building community in western Riverside County and specifically Banning. Our organization was only made aware of the draft nexus study and this agenda item on January 8, 2026 and the city has provided no briefing or consultation to impacted stakeholders. The proposal before you will have significant cost increases and effect on the home building industry and impede the City’s ability to achieve its housing goals.
Typically, our industry is engaged in these discussions with local jurisdictions months in advance to make sure there is a clear understanding and careful vetting of the assumptions in the study and their potential cost impact on housing production. Given the significance of the proposed increases and the minimal time industry has had to review the materials, we believe further stakeholder consultation is in order.
We respectfully ask for your continuation of Agenda Item 2.1: Review of the Proposed Updates to the City of Banning Development Impact Fees. Additionally, we ask the city to host a workshop to give our industry adequate time to review the data and understand its impact on housing production in Banning.
Given the housing affordability and access crisis we believe this is a reasonable request.
Sincerely,
Lou Monville
Senior Vice President, Riverside County Chapter
Building Industry Association of Southern California
Attachment 1