Fiscal Year Ended June 30, 2022
Development
Impact Fee Report
City of East Palo Alto, CA
This Page is Intentionally Blank
Development
Impact
Fee Report
Table of Contents
TRANSMITTAL LETTER ................................................................................................................. 1 LEGAL REQUIREMENTS FOR DEVELOPMENT IMPACT FEE REPORTING ....................................................... 2 DESCRIPTION OF DEVELOPMENT IMPACT FEES................................................................................... 4 FY 2021-22 FEE SCHEDULE ......................................................................................................... 6 FUND BALANCES ....................................................................................................................... 8 COLLECTION AND USE ................................................................................................................. 9 PARKS AND TRAILS FEES........................................................................................................... 9 PUBLIC FACILITIES FEES...........................................................................................................10 TRANSPORTATION INFRASTRUCTURE FEES....................................................................................11 STORM DRAINAGE INSIDE RBD FEES ..........................................................................................12 STORM DRAINAGE OUTSIDE RBD FEES .......................................................................................13 WATER CAPACITY FEE – BUY IN COMPONENT...............................................................................14 WATER CAPACITY FEE – SUPPLY COMPONENT ..............................................................................15 AFFORDABLE HOUSING IMPACT FEES..........................................................................................16 1 Transmittal Letter
November 18, 2022
Honorable Members of the City Council
Citizens of East Palo Alto, California
State law requires any local agency that imposes development impact fees to prepare an annual report providing specific information about those fees. As such, in accordance with the provisions of the California Government Code Section 66006 (b) and 66001 (d), as amended by Assembly Bill (AB) 518 and Senate Bill (SB) 1693, we submit the Development Impact Fee (DIF) Report for the City of East Palo Alto, California for the fiscal year (FY) ended June 30, 2022.
DIFs are charged by local governmental agencies in connection with the approval of development projects. The purpose of these fees is to defray all or a portion of the cost of public facilities related to the development project. The legal requirements for enactment of a DIF program are set forth in Government Code Sections §66000 - 66025 (the "Mitigation Fee Act"). The Mitigation Fee Act is commonly referred as “AB 1600”.
Previously, the City primarily collected fees pursuant to redevelopment agency agreements or statutory development agreements or collected certain in-lieu fees considered zoning-related use restrictions; such fees and collections are not subject to AB 1600 reporting requirements. Since 2014, the City has adopted Affordable Housing Commercial Linkage fees, Water Capacity fees, and fees related to storm drainage, transportation, parks, and public facilities. It is notable the City imposed a two-year water connection moratorium effectively halting development from July 2016 to August 2018.
State law requires the City prepare and make available to the public the DIF Report within 180 days after the last day of each fiscal year. The City Council must consider the acceptance of the annual report at a regularly scheduled public meeting. The information must be made available to the public no fewer than fifteen days prior to the meeting. This report was filed with the City Clerk’s office and available for public review on November 18, 2022.
Respectfully submitted,
Tomohito Oku
Finance Director
2 Legal Requirements for Development
Impact Fee Reporting
California Government Code Section 66006(b)
California Government Code Section 66006 (b) defines the specific reporting requirements for local agencies that impose AB 1600 impact fees on new development. Annually, for each separate fund established for the collection and expenditure of impact fees, the local agency shall, within 180 days after the last day of each fiscal year, make available to the public the information shown below for the most recent fiscal year. The applicable page numbers for the location where each item can be found in the report are provided for reference.
• A brief description of the type of fee in the account or fund. (Page 4) • The amount of the fee. (Page 6)
• The beginning and ending balance of the account or fund. (Page 8) • The amount collected and interest earned. (Page 8)
• An identification of each public improvement on which fees were expended and the amount of expenditures on each improvement. (Page 9)
• An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines adequate funds have been collected to complete financing on an incomplete public improvement.
o Not applicable during FY 2021-22
• A description of each interfund transfer or loan made from the account or fund, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid and the rate of interest that the account or fund will receive on the loan.
o Not applicable during FY 2021-22
• The amount of refunds made due to adequate funds being collected to complete financing on incomplete public improvements, and the amount of reallocation of funds made due to administrative costs of refunding unexpended revenues exceeding the amount to be refunded. o Not applicable during FY 2021-22
3 California Government Code Section 66001(d)
For all funds established for the collection and expenditure of DIFs, California Government Code Section 66001 (d) has additional requirements. For the fifth fiscal year following the first deposit into the fund and every five years thereafter, the local agency shall make the following findings with respect to that portion of the fund remaining unexpended, whether committed or uncommitted:
• Identify the purpose to which the fee is to be put.
• Demonstrate a reasonable relationship between the fee and purpose for which it is charged. • Identify all sources and amounts of funding anticipated to complete financing of incomplete improvements.
• Designate the approximate dates on which the funding is expected to be deposited into the appropriate account or fund.
As of June 30, 2022, the City has no DIF funds held past the fifth year of the first deposit, therefore no further reporting required.
Capital Improvement Program (CIP)
The State of California Government Code Section 66002 states that local agencies that have developed a fee program may adopt a CIP indicating the approximate location, size, and timing of projects, plus an estimate for the cost of all facilities or improvements to be financed by fees. A formal CIP is recommended, at a minimum, as a five-year plan. The City produces a five-year CIP which helps to maintain and support the City’s General Plan as well as identify infrastructure needed to accommodate the planned development.
Establishment of Reasonable Relationship - Nexus Requirement Since FY 2014-15, the City has adopted the following DIF:
Affordable Housing Commercial Linkage (Update 2020)
Park and Trails, Transportation Infrastructure, Public Facilities, Storm Drainage (2019) Water Capacity (2019)
All fees were adopted following a Nexus Study demonstrating that the fees conform to AB 1600 requirements. Specifically, that there is a reasonable relationship between the infrastructure burdens of development growth and the amount of fee. For information regarding impact fees and related studies please refer to the City’s website at: https://www.cityofepa.org/publicworks/page/city-widedevelopment-impact-fee-program.
Adjustments to the fees shall be made annually in accordance with the Engineering News Record Construction Cost Index. The Fee Nexus studies set forth the relationships between contemplated future 4 development, facilities needed to serve future development and the estimated costs of those improvements based on the current General Plan for build-out. Comprehensive updates to the program are completed on an as-needed basis to ensure the program continues to reflect the appropriate fees in relation to updated costs.
Description of Development Impact Fees
• Affordable Housing Fee – Commercial Development
To enhance the public welfare by imposing a nonresidential development project Housing Impact Fee whereby developers of nonresidential development projects will mitigate the impacts of their projects on the need for affordable housing by contributing to the supply of housing for households with very low, low, and moderate incomes. Further, to implement the Housing Element by creating a mechanism to provide benefits to the community from new development in the form of affordable housing, thereby helping to meet the needs of all socioeconomic elements of the community as provided in the Housing Element. • Parks and Trails Fee
To provide adequate quality open space – through parks and trails – for the broader public health and quality of life of its citizens and workforce. In addition to providing opportunities for physical activity and interaction with the natural environment, additionally, this fee is to be used to conserve the natural open space resources in the city. The City aims to preserve and protect natural resources such as the Baylands, the shoreline, San Francisquito Creek, and significant tree stands through parks and trails projects.
• Public Facilities Fee
To provide a variety of public facilities, including public safety institutions such as police departments, educational amenities, and quality of life services such as libraries and community centers, and governance buildings such as City Hall.
• Transportation Infrastructure Fee
To provide public roads and multi-modal streetscape facilities. East Palo Alto aims to provide adequate roads for its citizens and workforce for general transportation and safety. In addition, constructing sidewalks with street trees, street lighting, benches, and street furniture improves safety, sidewalk space, pedestrian aesthetics, and active transportation. 5 • Storm Drainage Fee
To provide critical infrastructure to prevent flooding of streets during rain events. East Palo Alto aims to improve citywide storm drainage and provide adequate storm drainage for the City and for new development in the Ravenswood Business District (RBD), as stated in the policy directives of the RSP (Goal UTIL-3 and subsequent policies). Due to the specific storm drainage costs associated with the RBD, a specific fee is applied depending upon whether properties are located within the RBD or outside the RBD.
• Water Capacity Fee
To recover the costs of water system infrastructure and water supply to ensure that future development does not place a burden on existing customers. To provide new or increased water system infrastructure capacity needs due to new or intensified development. There are two primary components of this fee, the cost of system buy in and the cost of additional water supply assurance from the San Francisco Public Utilities Commission specifically for purpose of serving new development. The two components of the fee are accounted for and reported separately. The buy-in portion of the fee represents the cost of existing and future infrastructure related directly to new development. The supply portion of the fee represents the cost of water right assurances secured exclusively for serving new development. 6 FY 2021-22 Fee Schedule
TABLE 1. AFFORDABLE HOUSING FEE
TABLE 2. OTHER FEES
TABLE 3. STORM DRAINAGE FEE
Non-Residential1
Commercial
$11.23
1. Fee Per Square Foot
Fee Category
Detached
Accessory
Dwelling Unit
Single-Family/
Townhouse
Multi-family
Housing
Office /
Research &
Development
Industrial Retail
Parks and Trails $1,731 $4,330 $2,983 $1.21 $0.48 $0.80 Public Facilitates $3,037 $7,594 $5,231 $2.10 $0.85 $1.40 Transportation Infrastructure $988 $2,471 $1,859 $7.68 $5.00 $7.68
1. Fee Per Dwelling Unit
2. Fee Per Square Foot
Residential1 Non-Residential2
Fee Category
Detached
Accessory
Dwelling Unit
Single-Family /
Townhouse
Multi-family
Housing
Office /
Research &
Development
Industrial Retail
Storm Drainage (within RBD) $2,028 $5,070
Storm Drainage (outside RBD) $1,174 $2,934
1. Fee Per Dwelling Unit
2. Fee Per Impervious Acre
$73,324
$126,747
Single-Family1 Multi-Family and Non-Residential2
7 TABLE 4. WATER CAPACITY FEE
Single-Family /
Townhouse
Multi-family
Housing
3/4 Inch
Meter
1 inch
Meter
1.5 Inch
Meter
2 Inch
Meter Larger2
$8,535 $5,253 $12,472 $20,787 $41,576 $66,521 $32.82
1. Fee Per Dwelling Unit
2. Fee Per Anticipated Gallon Per Day
Residential Non-Residential 1
8 Fund Balances
Description Parks
and Trails
Public
Facilities
Transportation
Storm
Drainage
Inside RBD
Revenue
Fees $ 8,779 $ 15,396 $ 5,103 $ 2,933
Interest 331 653 1,702 30
Total Revenue $ 9,110 $ 16,048 $ 6,806 $ 2,963
Expenditures $ - $ - $ - $ -
Revenue Over (Under)
Expenditures $ 9,110 $ 16,048 $ 6,806 $ 2,963
Fund Balance
Beginning of Year 32,502 64,309 195,836 575
Fund Balance
End of Year $ 41,612 $ 80,357 $ 202,642 $ 3,537
Description
Storm
Drainage
Outside RBD
Water - Buy In Water - Supply
Revenue
Fees $ 9,200 $ 21,007 $ 4,408
Interest 2,454 498 -
Total Revenue $ 11,655 $ 21,505 $ 4,408
Expenditures $ - $ - $ -
Revenue Over (Under)
Expenditures $ 11,655 $ 21,505
$ 4,408
Fund Balance
Beginning of Year 282,337 388,003
(4,973,493)
Fund Balance
End of Year $ 293,991 $ 409,508 $ (4,969,085)
9 Collection and Use
Parks and Trails Fees
Statement of Revenues, Expenditures and Changes in Fund Balance Last Five Fiscal Years
Five-Year Revenue Test Using First In First Out Method
Description FY17-18 FY18-19 FY19-20 FY20-21 FY21-22
Revenue
Fees $ - $ - $ 11,266 $ 20,924 $ 8,779
Interest - - 124 189 331
Total Revenue $ - $ - $ 11,389 $ 21,113 $ 9,110
Expenditures $ - $ - $ - $ - $ -
Revenue Over (Under)
Expenditures $ - $ - $ 11,389 $ 21,113 $ 9,110
Fund Balance Beginning of Year - - - 11,389 32,502
Fund Balance End of Year $ - $ - $ 11,389 $ 32,502 $ 41,612 Revenue Available
After Expenses: FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 Current Fiscal Year $ - $ - $ 11,389 $ 21,113 $ 9,110
Prior Fiscal Year (2-yr Old Funds) - - - 11,389 21,113
Prior Fiscal Year (3-yr Old Funds) - - - - 11,389
Prior Fiscal Year (4-yr Old Funds) - - - - -
Prior Fiscal Year (5-yr Old Funds) - - - - -
In Excess of Five Prior Fiscal Years - - - - -
Total Revenue Available $ - $ - $ 11,389 $ 32,502 $ 41,612 10 Public Facilities Fees
Statement of Revenues, Expenditures and Changes in Fund Balance Last Five Fiscal Years
Five-Year Revenue Test Using First In First Out Method
Description FY17-18 FY18-19 FY19-20 FY20-21 FY21-22
Revenue
Fees $ - $ - $ 19,757 $ 43,943 $ 15,396
Interest - - 217 393 653
Total Revenue $ - $ - $ 19,973 $ 44,336 $ 16,048
Expenditures $ - $ - $ - $ - $ -
Revenue Over (Under)
Expenditures $ - $ - $ 19,973 $ 44,336 $ 16,048
Fund Balance Beginning of Year - - - 19,973 64,309
Fund Balance End of Year $ - $ - $ 19,973 $ 64,309 $ 80,357 Revenue Available
After Expenses: FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 Current Fiscal Year $ - $ - $ 19,973 $ 44,336 $ 16,048
Prior Fiscal Year (2-yr Old Funds) - - - 19,973 44,336
Prior Fiscal Year (3-yr Old Funds) - - - - 19,973
Prior Fiscal Year (4-yr Old Funds) - - - - -
Prior Fiscal Year (5-yr Old Funds) - - - - -
In Excess of Five Prior Fiscal Years - - - - -
Total Revenue Available $ - $ - $ 19,973 $ 64,309 $ 80,357 11 Transportation Infrastructure Fees
Statement of Revenues, Expenditures and Changes in Fund Balance Last Five Fiscal Years
Five-Year Revenue Test Using First In First Out Method
Description FY17-18 FY18-19 FY19-20 FY20-21 FY21-22
Revenue
Fees $ - $ - $ 6,427 $ 188,061 $ 5,103
Interest - - 71 1,278 1,702
Total Revenue $ - $ - $ 6,498 $ 189,339 $ 6,806
Expenditures $ - $ - $ - $ - $ -
Revenue Over (Under)
Expenditures $ - $ - $ 6,498 $ 189,339 $ 6,806
Fund Balance Beginning of Year - - - 6,498 195,836
Fund Balance End of Year $ - $ - $ 6,498 $ 195,836 $ 202,642 Revenue Available
After Expenses: FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 Current Fiscal Year $ - $ - $ 6,498 $ 189,339 $ 6,806
Prior Fiscal Year (2-yr Old Funds) - - - 6,498 189,339
Prior Fiscal Year (3-yr Old Funds) - - - - 6,498
Prior Fiscal Year (4-yr Old Funds) - - - - -
Prior Fiscal Year (5-yr Old Funds) - - - - -
In Excess of Five Prior Fiscal Years - - - - -
Total Revenue Available $ - $ - $ 6,498 $ 195,836 $ 202,642 12 Storm Drainage Inside RBD Fees
Statement of Revenues, Expenditures and Changes in Fund Balance Last Five Fiscal Years
Five-Year Revenue Test Using First In First Out Method
Description FY17-18 FY18-19 FY19-20 FY20-21 FY21-22
Revenue
Fees $ - $ - $ 379 $ 185 $ 2,933
Interest - - 4 6 30
Total Revenue $ - $ - $ 384 $ 191 $ 2,963
Expenditures $ - $ - $ - $ - $ -
Revenue Over (Under)
Expenditures $ - $ - $ 384 $ 191 $ 2,963
Fund Balance Beginning of Year - - - 384 575
Fund Balance End of Year $ - $ - $ 384 $ 575 $ 3,537
Revenue Available
After Expenses: FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 Current Fiscal Year $ - $ - $ 384 $ 191 $ 2,963
Prior Fiscal Year (2-yr Old Funds) - - - 384 191
Prior Fiscal Year (3-yr Old Funds) - - - - 384
Prior Fiscal Year (4-yr Old Funds) - - - - -
Prior Fiscal Year (5-yr Old Funds) - - - - -
In Excess of Five Prior Fiscal Years - - - - -
Total Revenue Available $ - $ - $ 384 $ 575 $ 3,537
13 Storm Drainage Outside RBD Fees
Statement of Revenues, Expenditures and Changes in Fund Balance Last Five Fiscal Years
Five-Year Revenue Test Using First In First Out Method
Description FY17-18 FY18-19 FY19-20 FY20-21 FY21-22
Revenue
Fees $ - $ - $ 20,509 $ 259,678 $ 9,200
Interest - - 195 1,954 2,454
Total Revenue $ - $ - $ 20,704 $ 261,632 $ 11,655
Expenditures $ - $ - $ - $ - $ -
Revenue Over (Under)
Expenditures $ - $ - $ 20,704 $ 261,632 $ 11,655
Fund Balance Beginning of Year - - - 20,704 282,337
Fund Balance End of Year $ - $ - $ 20,704 $ 282,337 $ 293,991 Revenue Available
After Expenses: FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 Current Fiscal Year $ - $ - $ 20,704 $ 261,632 $ 11,655 Prior Fiscal Year (2-yr Old Funds) - - - 20,704 261,632 Prior Fiscal Year (3-yr Old Funds) - - - - 20,704
Prior Fiscal Year (4-yr Old Funds) - - - - -
Prior Fiscal Year (5-yr Old Funds) - - - - -
In Excess of Five Prior Fiscal Years - - - - -
Total Revenue Available $ - $ - $ 20,704 $ 282,337 $ 293,991 14 Water Capacity Fee – Buy In Component
Statement of Revenues, Expenditures and Changes in Fund Balance Last Five Fiscal Years
Five-Year Revenue Test Using First In First Out Method
1. $103,230 capital expenditures for the Gloria Way Well Supply project, includes correction of prior amount reported of $36,450. Total project cost was approximately $4.0M.
Description FY17-18 FY18-19 FY19-20 FY20-21 FY21-22
Revenue
Fees $ - $ - $ 6,734 $ 390,680 $ 21,007
Interest 1,199 - - 444 498
Total Revenue $ 1,199 $ - $ 6,734 $ 391,124 $ 21,505
Expenditures1$ 103,230 $ - $ - $ - $ -
Revenue Over (Under)
Expenditures $ (102,031) $ - $ 6,734 $ 391,124 $ 21,505 Fund Balance Beginning of Year 92,176 (9,855) (9,855) (3,121) 388,003 Fund Balance End of Year $ (9,855) $ (9,855) $ (3,121) $ 388,003 $ 409,508 Revenue Available
After Expenses: FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 Current Fiscal Year $ - $ - $ - $ 388,003 $ 21,505
Prior Fiscal Year (2-yr Old Funds) - - - - 388,003
Prior Fiscal Year (3-yr Old Funds) - - - - -
Prior Fiscal Year (4-yr Old Funds) - - - - -
Prior Fiscal Year (5-yr Old Funds) - - - - -
In Excess of Five Prior Fiscal Years - - - - -
Total Revenue Available $ - $ - $ - $ 388,003 $ 409,509 15 Water Capacity Fee – Supply Component
Statement of Revenues, Expenditures and Changes in Fund Balance Last Five Fiscal Years
Five-Year Revenue Test Using First In First Out Method
1. $5,056,925 in Capitalizable Expenses related to the SFPUC water supply purchase from Mountain View and Palo Alto.
Description FY17-18 FY18-19 FY19-20 FY20-21 FY21-22
Revenue
Fees $ - $ - $ 1,413 $ 82,019 $ 4,408
Interest - - - - -
Total Revenue $ - $ - $ 1,413 $ 82,019 $ 4,408
Expenditures1$ 5,056,925 $ - $ - $ - $ -
Revenue Over (Under)
Expenditures $ (5,056,925) $ - $ 1,413 $ 82,019 $ 4,408 Fund Balance Beginning of Year - (5,056,925) (5,056,925) (5,055,512) (4,973,493) Fund Balance End of Year $ (5,056,925) $ (5,056,925) $ (5,055,512) $ (4,973,493) $ (4,969,085) Revenue Available
After Expenses: FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 Current Fiscal Year $ - $ - $ - $ - $ -
Prior Fiscal Year (2-yr Old Funds) - - - - -
Prior Fiscal Year (3-yr Old Funds) - - - - -
Prior Fiscal Year (4-yr Old Funds) - - - - -
Prior Fiscal Year (5-yr Old Funds) - - - - -
In Excess of Five Prior Fiscal Years - - - - -
Total Revenue Available $ - $ - $ - $ - $ -
16 Affordable Housing Impact Fees
Statement of Revenues, Expenditures and Changes in Fund Balance No Affordable Housing fees subject to AB 1600 reporting requirements have been collected or expenses incurred through the period ended June 30, 2022.