Cotati City Council
Agenda Staff Report
Item type: PUBLIC HEARINGS (ACTION)
To: City Council
Subject: APPROVAL OF A RESOLUTION TO AMEND THE GENERAL
PLAN TO INCLUDE A NEW DEVELOPMENT FUNDING
POLICY AND INTRODUCTION OF AN ORDIANNCE
AMENDING THE COTATI MUNICIPAL CODE TO
IMPLEMENT THE UPDATED GENERAL PLAN POLICY
Date: October 13, 2026
Written by: Noah Housh, Director of Community Development Recommendation
It is recommended by the Planning Commission that the City Council:
1. Adopt Resolution No. X amending the Cotati General Plan to further establish policies requiring new development to mitigate its fiscal impacts; and
2. Introduce an Ordinance to modify the Cotati Municipal Code (CMC) to include objective development standards to implement the updated general plan policies to ensure that new development contributes toward the municipal service costs it creates and does not impose an ongoing fiscal burden on, or degrade service levels to, existing residents and businesses.
Background
As demonstrated in recent budget documents and fiscal studies including the 2015 Fiscal Impact Study by David Taussig & Associates Inc. and a 2026 analysis by Kosmont, California cities can face ongoing fiscal challenges in providing municipal services to new residential development.
Since the adoption of Proposition 13, property tax revenues generated by new housing have not always covered the full cost of police protection, park maintenance, roadway maintenance, stormwater management, administrative services, and other municipal operations required to serve new residents. As a result, many jurisdictions have sought mechanisms that ensure growth does not create an ongoing fiscal deficit and/or erode the quality of services provided to existing residents. Specific to Cotati, the attached and referenced studies specifically identify that the property and sales tax increases derived from the development of new residential units do not create enough tax revenue to fund the additional services the City will be required to provide to the residents of those units.
One of the most widely used tools is the Community Facilities District (CFD), established pursuant to the Mello-Roos Community Facilities Act of 1982. CFDs are a geographically defined area where property owners may fund a portion of municipal services and facilities through a voter-approved special tax levied on properties within the district.
The legal authority for using CFDs to offset the fiscal impacts of development was reinforced in a California Court of Appeal decision involving the City of San Ramon and provides support for the implementation of such policies. In that case, San Ramon conditioned a new development on providing a funding mechanism to cover the difference between the costs of serving the project and the revenues generated by the project. and the developer petitioned the City to establish a CFD as a means of satisfying the condition. It later sued arguing that the City’s condition and the CFD were unlawful. The Court upheld the City’s actions.
The City of Cotati has a mechanism similar to San Ramon’s. The City established Public Services CFD 2017-01 through Resolution No. 2017-60, specifically designed to support municipal services including police protection, park maintenance, roadway and landscape maintenance, stormwater services, and other ongoing municipal functions associated with new development. When the City considers new development projects, it conditions them on annexing to the CFD. Since its formation, multiple residential projects have been annexed into the CFD through the City’s discretionary development review process.
Because the existing framework is discretionary, it relies on the City staff, the Planning Commission, or City Council proposing and/or adopting a condition of approval governing the project. Such conditions, like any discretionary actions, are subject to negotiation and may change from time to time. Given recent changes in state housing laws which move more project decision making processes to ministerial actions, staff recommends that the City’s existing policy should be made objective. Doing so would ensure, to the greatest extent possible, that the policy could be applied to “by right” projects that the City must approve if they meet the City’s “objective standards.” The proposed policy changes also ensure that the City’s policy is underpinned by the City’s General Plan.
On September 21, 2026, the Planning Commission considered updating the General Plan and modifying municipal code through the attached draft resolution and ordinance at a noticed public hearing. After conducting the public hearing and considering the proposed policy changes, the Commission voted unanimously (4-0-1) to recommend that the City Council approve the policy changes. More details on the Commission consideration are provided below.
Analysis/Discussion
For each new residential unit constructed within the City, Cotati receives only a limited share of the resulting property tax revenue, together with modest increases in sales tax and other local revenues. Fiscal analysis conducted during the formation of CFD 2017-01 determined that revenues generated by new residential development do not fully offset the cost of providing municipal services to those homes. Consequently, new development may result in a net fiscal burden on existing residents if mechanisms are not established to recover those service costs.
The City Council established CFD 2017-01 specifically to address this challenge and to ensure that growth contributes to the ongoing costs of police protection, park maintenance, roadway maintenance, stormwater services, and other municipal operations from which these future residents will benefit. This finding that new residential units are a net cost to the City was reaffirmed by a recent (2026) fiscal analysis conducted to inform the potential formation of a Enhanced Infrastructure Financing District (EIFD). The proposed policy framework is intended to respond to both the changing nature of housing policy and the continued funding deficit created by new residential development by formalizing the City's longstanding objective that growth should pay its fair share of the municipal service costs it creates and that those costs should not be shifted onto existing taxpayers.
General Plan Amendment
California planning law establishes the General Plan as a community's long-term policy framework and requires all actions taken by the City to be consistent with the General Plan.
Instituting the City's growth funding philosophy within the General Plan would provide a policy foundation for funding strategies while allowing implementation of individual efforts through separate mechanisms and Council actions. As such, staff recommend adding one additional policy (stated below) to the Community Services and Facilities Element of the General Plan.
Proposed Policy CSF-1.7: Growth Participation in Municipal Service Funding New development shall contribute its fair and proportional share toward the ongoing municipal service costs generated by that development that exceed the revenues generated by that development, if any, which is referred to as the deficit. The City shall determine the amount of the deficit from time to time based on individual development types (multi-family, single family, commercial) on either a city-wide level or narrower geographies if appropriate. The determination shall be based on factors including development revenues, service demand, development intensity, anticipated fiscal impacts, geographic service areas, and the relationship between development and the public services necessary to serve that development. The City shall provide at least one funding mechanism that development can use to satisfy the obligation.
Cotati Municipal Code Amendment
The second element of the staff recommended policy changes to address the financial impacts of serving future development is an amendment to the Cotati Municipal Code (CMC). The language proposed below is intended to create an objective development standard, consistent with other zoning level land use regulations, that applies when a service funding deficit is identified. These amendments specifically reference the CFD as the City’s identified tool for addressing the funding shortfall and propose a tiered approach to covering the actual cost of annexing to the CFD (currently running approximately $2000-$3000). As proposed, the City would fund the annexation process for smaller developments (defined as four units or less), while larger developments (five or more residential units) will fund the process for their inclusion into the CFD. Development of ADUs and residential additions are proposed to be exempt from annexation into the CFD.
Proposed CMC Section 17.30.110: Satisfaction of General Plan Growth Financing Policy A. General Plan Policy CF-1.7 requires development to contribute toward any fiscal deficit created by the development, requires the City to determine the deficit from time to time, and requires the City to make available a funding mechanism that allows a development to satisfy the obligation. This section implements the policy and establishes an objective standard that requires compliance with General Plan Policy CF-1.7.
B. The City Council shall determine the deficit from time to time based on the factors set forth in Policy CSF-1.7. The City Council may determine that residential additions, accessory dwelling units, and junior accessory dwelling units, due to their accessory nature, do not have a deficit. All development projects shall, in accordance with General Plan Policy CSF-1.7, contribute funding to eliminate the deficit. The proposed mechanism used to satisfy the foregoing requirement shall be confirmed by the Director prior to the issuance of the first building permit in the development project, and the Director shall confirm that an enforceable mechanism to satisfy the requirement is in place prior to the granting of any occupancy.
C. The City maintains one or more Community Facilities Districts into which development projects can be annexed as a means of satisfying the obligation. Development projects of 5 or more units shall pay the costs of annexation.
General Plan Consistency
Staff has identified that the proposed amendments to the General Plan and Title 17 (Land Use) of the Cotati Municipal Code to establish a City policy mechanism by which residential growth shall pay its fair share of municipal service costs are consistent with the current General Plan.
The policy intent of the General Plan is to ensure future growth does not degrade the current level of City services, as is demonstrated by the existing objectives and policies listed below.
Objective CSF 1A Ensure that New Growth and Development do not Exceed the City’s Ability to Provide Necessary Public Services and do not Overburden Existing Public Services and Facilities
Policy CSF 1.1 Require all development projects to demonstrate, to the satisfaction of the City Engineer, that the City’s public services and utilities can accommodate the increased demand for services associated with the project.
Policy CSF 1.2 Require new development to offset or mitigate impacts to public services and facilities to ensure that service levels for existing users are not degraded or impaired by new development, to the satisfaction of the City Engineer.
Policy CSF 2.33 Ensure that the Police Department has adequate staff and equipment to accommodate existing and planned population growth in Cotati.
The proposed General Plan and municipal code text amendments will help to further the established objectives and policies of the General Plan identified above, primarily by ensuring adequate funding is available to offset the financial costs each new residential unit imposes on the provision of city services. Specifically, the proposed policy language in CSF1-7 ensures the financial impact of each new residential unit is calculated on a regular basis and that a mechanism to make certain these deficits can be compensated is always available to developers of residential units.
The proposed CMC revisions similarly build on the existing General Plan policy direction, creating objective development standards applicable to all new residential units by which the financial impacts to the provision of city services are funded. As residential development projects are increasingly moving to by-right, ministerial review and decision-making processes (SB 35, AB 2011, SB 684, etc.), situations are created whereby the city cannot ensure this new growth does not degrade current service levels or exceed the city’s ability to provide the necessary public services. The traditional mechanism of a condition of approval on a residential project is not available to a ministerially approved project, so the staff has had to identify a contemporary policy mechanism to ensure General Plan consistency. The change in the regulatory framework of housing approvals necessitates updated development standards to ensure the City’s General Plan policies are implemented for future residential projects constructed in Cotati.
Findings.
Amendments to the General Plan and municipal code are governed by CMC Section 17.62.070, which sets forth the process by which the City may amend the land use policy documents of the City. In addition to the noticing and public hearing requirements, this section directs that certain findings must be made by the Planning Commission and City Council in their action(s) to amend the General Plan and/or municipal code. Specifically, the Planning Commission and City Council must find that the proposed General Plan Amendment to establish City policy that growth should pay its fair share of municipal service costs and the amendment to the Municipal Code implementing the General Plan policy through objective development standards applicable to future residential development:
a. Is consistent with the goals and policies of all elements of the General Plan, and any applicable specific plan.
b. The proposed amendments would not be detrimental to the public interest, health, safety, convenience, or welfare of the city.
c. The proposed project has been reviewed in compliance with the California Environmental Quality Act (CEQA)
d. The proposed amendment is internally consistent with other applicable provisions of this Zoning Code.
e. Additional finding for zoning code amendments: The proposed amendment is internally consistent with other applicable provisions of this Zoning Code; Staff has identified that the findings can be made to support the proposed changes to the Cotati General Plan and municipal code in that the proposed General Plan amendments will serve to implement the existing policy direction of the General Plan which directs that future growth not exceed the City’s ability to provide services, that the new units can be serviced by the City, that the current levels of service being provided are not degraded, and that adequate police services can be maintained. The proposed General Plan amendment is intended to both provide an ongoing mechanism to ensure these findings are met for all future residential growth, and to also ensure the cost of these services is known as development occurs. The CMC amendments also ensure these same considerations are made by creating an objective policy applicable to all future residential development.
September 21, 2026, Planning Commission Consideration
During their second September meeting, the Commission considered a draft resolution and ordinance proposing to amend the Cotati General Plan and municipal code to create additional policy to minimize the financial impacts of new residential development on the provision of city services. After considering the materials and discussing the potential consequences of inaction, the Commission voted unanimously (4-0-1) to recommend that the City Council support the proposed policy changes and adopt the resolution to amend the general plan and introduce the ordinance to amend the code to implement the amended policies.
Financial Considerations
Other than the staff time to create the updated policies, there are no direct fiscal impacts to the current fiscal year or adopted City budget. However, these amendments are intended to ensure the costs of future development are adequately funded, and potential impacts to current residents are offset by alternative funding sources into future fiscal years.
Environmental Issues
The proposed General Plan Amendment and City Council Policy are exempt from the California Environmental Quality Act pursuant to CEQA Guidelines Section 15061(b)(3), the Commonsense Exemption, because it can be seen with certainty that the proposed action will not result in a direct or reasonably foreseeable physical change in the environment. The actions establish policy guidance only and do not impact development potential, approve any specific development project or allow any infrastructure improvements.