EAST PALO ALTO CITY COUNCIL
REGULAR SESSION AMENDED
AGENDA
Tuesday, March 4, 2025, 6:30 PM
EPA Government Center
2415 University Avenue, First Floor
East Palo Alto, CA 94303
NOTICE
This meeting will be held virtually and in- person at the Council Chambers located on 2415 University Ave, First Floor East Palo Alto, CA 94303. The virtual portion of this City Council meeting will be conducted in accordance with City of East Palo Alto Resolution adopted pursuant to Assembly Bill 361.
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International numbers available: https://zoom.us/u/aMWYF4KT East Palo Alto City Council March 4, 2025 Agenda
1 1. CALL TO ORDER AND ROLL CALL
2. APPROVAL OF THE AGENDA
3. APPROVAL OF CONSENT CALENDAR
3.1 Women's History and Culture Month Proclamation
Recommendation: Accept the proclamation.
Gov’t Code § 84308: Not applicable
3.2 Ramadan Proclamation
Recommendation:
Present the proclamation.
3.3 Honoring American Red Cross Month for March 2025
Recommendation:
Present the proclamation.
3.4 City Council Meeting Minutes
Recommendation:
Adopt the February 18, 2025, City Council Meeting Minutes.
4. CLOSED SESSION
5. PUBLIC COMMENT
6. INFORMATIONAL REPORTS
6.1 Westside Area Plan
Recommendation: Receive an informational report from staff concerning the Westside Area Plan and provide direction to staf f for potential updates if changes are needed.
7. SPECIAL PRESENTATIONS
8. PUBLIC HEARINGS
8.1 Adoption of Nexus Study Update and Updated Parks and Trails, Public Facilities, Transportation, Storm Drainage, and Water Capacity East Palo Alto City Council March 4, 2025 Agenda
2 Development Impact Fees
Recommendation: 1, Conduct a public hearing to receive public comments. 2, Consider the Development Impact Fee Financial Feasibility Analysis and Development Impact Fee Comparison Survey. 3, Adopt a resolution:
a, Finding that the proposed action is exempt from the requirements of the California Environmental Quality Act (“CEQA”) because it is not a project as it has no potential to result in direct or reasonably foreseeable indirect physical change to the environment (14 Cal. Code Regs. §15378(a)); the project does not create a funding mechanism or other government fiscal activity that involve any commitment to a specific project which may result in a potentially significant physical impact on the environment (14 Cal. Code Regs. §15378(b) (4) ); and projects that may receive funding with development impact fees would be required to comply with applicable project-specific CEQA requirements at the time such projects are proposed for implementation b. Approving the Development Impact Fee Nexus Study Update and updated parks and trails, public facilities, transportation, storm drainage, and water capacity development impact fees; and
c. Directing staff to file a Notice of Exemption for the updated development impact fees.
9. POLICY AND ACTION
9.1 East Palo Alto Library Project Update
Recommendation:
Adopt a resolution:
1. Approving the updated concept design and space programming for the new East Palo Alto Library;
2. Approving the 1 parking space per 400 square-feet floor area ratio; and
3. Finding that the proposed City Council action:
1. is consistent with an existing Specific Plan (Ravenswood Business District Specific Plan);
2. constitutes a subsequent action related to the Library Site which is adequately covered in an adopted Mitigated Negative Declaration (MND), certified by the City Council on March 21, 2023
(Resolution No. 2023-26);
3. is not a separate “project” for California Environmental Quality Act (CEQA) purposes but is a subsequent approval related to a previously approved project (CEQA Guidelines § 15378(c));
4. does not require further environmental review for the reasons set forth in CEQA Guideline Sections 15162; and
5. Requires no further analysis or environmental documentation; and
6. Constitutes merely a step in furtherance of the original project for which environmental review was performed and no supplemental or subsequent CEQA has been triggered, and no further
East Palo Alto City Council March 4, 2025 Agenda
3 environmental review is required.
9.2 Recruitment and Retention Incentive Plan for the Recruitment of Hard-toFill positions Recommendation:
1. Approving a resolution establishing the City of East Palo Alto’s Recruitment Incentive Plan with sign-on bonuses as presented; and
2. Approving Side Letters that amend the Memorandum of Understanding between the City of East Palo Alto and the Police Officers’ Association (POA), the Memorandum of Understanding between the City of East Palo Alto and the Management Employee’s Association (MEA), and the Memorandum of Understanding between the City of East Palo Alto and the Service Employee.
3. Finding that the proposed action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(4), because it is a fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant impact on the environment.
9.3 Authorization to Execute Soil Stockpiling Agreement with Sycamore Real Estate Investment LLC and P. Kavanagh Construction Co.
Recommendation:
By resolution:
1. Authorize the City Manager to negotiate and execute a Soil Stockpiling Agreement with Sycamore Real Estate Investment LLC and P.
Kavanagh Construction Co.
2. Direct the City Manager to deposit all funds from the agreement into a segregated account dedicated to parks and recreation projects, unless otherwise directed by the City Council to allocate funds toward other uses; and
3. Find the action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(4), in that it is a fiscal activity that will not result in direct or indirect changes in the environment.
10. COUNCIL REPORTS
11. ADJOURNMENT
East Palo Alto City Council March 4, 2025 Agenda
4 Upcoming meetings:
March 8, 2025 9:00 a.m. Strategic Planning Retreat
March 18, 2025 6:30 p.m. Regular Meeting
March 25, 2025 6:00 p.m. Study Session
This AGENDA is posted in accordance with Government Code Section 54954.2(a) This Notice of Availability of Public Records: All public records relating to an open session item which are not exempt from disclosure pursuant to the Public Records Act, that are distributed to the majority of the City Council will be available for public inspection at the City Clerk’s Office, 2415 University Avenue, East Palo Alto, CA at the same time that the public records are distributed or made available to the City Council. Such documents may also be available on the East Palo Alto website www.cityofepa.org subject to staff’s ability to post the documents prior to the meeting. Information may be obtained by calling (650) 853-3100.
The City Council meeting packet may be reviewed by the public in the Library or the City Clerk's Office. Any writings or documents pertaining to an open session item provided to a majority of the City Council less than 72 hours prior to the meeting, shall be made available for public inspection at the front counter at the City Clerk's Office, 2ND Floor, City Hall, 2415 University Avenue, East Palo Alto, California 94303 during normal business hours. Information distributed to the Council at the Council meeting becomes part of the public record. A copy of written material, pictures, etc. should be provided for this purpose.
East Palo Alto City Council Chambers is ADA compliant. Requests for disability related modifications or accommodations, aids or services may be made by a person with a disability to the City Clerk's office at (650) 853-3127 no less than 72 hours prior to the meeting as required by Section 202 of the Americans with Disabilities Act of 1990 and the federal rules and regulations adopted in implementation thereof.
DECLARATION OF POSTING
This Notice is posted in accordance with Government Code §54954.2(a) or §54956. Members of the public can view electronic agendas and staff reports by accessing the City website. Under penalty of perjury, this Agenda was posted to the public at least 72 hours prior to the meeting.
POSTED: February 21, 2025
AMENDED: February 28, 2025
ATTEST:
James Colin
City Clerk
East Palo Alto City Council March 4, 2025 Agenda
5 CONSENT ITEM 3.1
EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: March 4, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: James Colin, City Clerk
SUBJECT: Women's History and Culture Month Proclamation Recommendation
Present the proclamation for Women's History and Culture Month.
Attachments
1. Proclamation
6 PROCLAMATION OF THE CITY OF EAST PALO ALTO
DESIGNATING MARCH 2025 AS
“WOMEN’S HISTORY AND CULTURE” MONTH
WHEREAS, women in East Palo Alto, in California, the nation and the world and from all backgrounds have contributed to the growth and development of communities; and WHEREAS, women have played and continue to play critical roles in the cultural, economic, political religious, educational, and social life of our city and the nation; and WHEREAS, women of all ages, from children to seniors, continue to face structural barriers of discrimination in all spheres of life based on gender; and
WHEREAS, women constitute a significant portion of the labor force working inside and outside of the home, still earning less than men for similar work; and
WHEREAS, women have in recent years, again raised issues of humanitarian concern in the world such as sexual harassment and abuse, domestic violence, and sexual and economic exploitation; and WHEREAS, women have been instrumental in the development of all social movements for justice and the betterment of society and continue to be so; and
WHEREAS, girls and young women in East Palo Alto deserve and need support to grow into strong and dedicated members of our community; and
WHEREAS, organizations such as Girls to Women, Boys and Girls Club of the Peninsula, Youth United for Community Action, and many others are working to empower young women.
NOW THEREFORE, BE IT RESOLVED that I, Martha Barragan, Mayor of the City of East Palo Alto, and on behalf of the City Council, hereby proclaim March 2025 as Women’s History and Culture Month in the City of East Palo Alto and call upon all residents to support and observe and rededicate themselves to creating a community where the rights and the contributions of all women are acknowledged and respected.
Dated: March 4, 2025
Martha Barragan, Mayor
7 CONSENT ITEM 3.2
EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: March 4, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: James Colin, City Clerk
SUBJECT: Ramadan Proclamation
Recommendation
Present the proclamation.
Attachments
1. Proclamation
8 PROCLAMATION OF THE CITY OF EAST PALO ALTO
CELEBRATING THE HOLY MONTH OF RAMADAN
WHEREAS, the City of East Palo Alto boasts a small but growing Muslim community representing a wide array of backgrounds, from African Americans, to Arabs, and other nationalities, as well as those who grew up Muslim, as well as converts; and
WHEREAS, the Bay Area has one of the highest concentrations of Muslims in the nation with approximately 250,000 residents from ethnically diverse backgrounds; and WHEREAS, Muslims represent small business owners, city staff and officials, civic leaders, and residents that have enriched East Palo Alto’s historically multiethnic and culturally rich communities; and WHEREAS, Ramadan, represents one of the five pillars of Islam, and is, above all, a time of introspection and spiritual reinvigoration for the entire umma, that is the global Arabic community; and WHEREAS, civic responsibility and social justice is at the heart of Islamic teachings, as evidenced by the words of the Prophet Muhammad (peace be upon him), “Allah will aid a servant (of His) so long as the servant aids his brother,” one whose spirit of mutual aid and care for one another mirrors our own city’s ethos; and
WHEREAS, during the month of Ramadan, Muslims are obliged to partake in acts of alms-giving (or zika in the Arabic), thus underscoring the religion’s alignment with the values of our beloved city, and WHEREAS, the observance of the Muslim holy month of Ramadan commences at dusk in March, and continues for one lunar month, from sunrise to sunset each day.
NOW, THEREFORE, the City Council of the City of East Palo Alto, celebrates Ramadan and expresses its deepest appreciation to the Muslims of East Palo Alto and throughout the Bay Area and world on this occasion; and we affirm our commitment to ensuring that our City values remain welcoming and compassionate to all peoples and that we pursue policies that respect the dignity and rights of all working people, regardless of race, religion, immigration status, or country of origin, and the City Council urges the people of East Palo Alto to join in celebrating the holy month of Ramadan and taking this month to honor the Muslim community and reflect on the health and wellbeing of family, friends, and fellow citizens.
Dated: March 4, 2025
Martha Barragan, Mayor
9 CONSENT ITEM 3.3
EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: March 4, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: James Colin, City Clerk
SUBJECT: Honoring American Red Cross Month for March 2025 Recommendation
Present the proclamation.
Attachments
1. Proclamation
10 PROCLAMATION OF
THE CITY COUNCIL OF EAST PALO ALTO
HONORING AMERICAN RED CROSS
MONTH FOR MARCH 2025
WHEREAS, American Red Cross Month is a special time to recognize and thank our Everyday Heroes—those who reach out to help people in need; and
WHEREAS, American Red Cross heroes help disaster victims recover. They give blood to help hospital patients. They brighten the day of injured service members. They step forward to help someone having a heart attack; and
WHEREAS, we would like to remember our heroes here in the City of East Palo Alto who help people in need. They work tirelessly to assist their neighbors when they need a helping hand; and WHEREAS, across the country and around the world, the American Red Cross responded to disaster. When an injured service member ended up in a hospital far from home, the American Red Cross offered comfort. When a hospital patient needed blood, American Red Cross blood donors helped them. When a lifeguard saved a drowning child or when someone stepped up to help a heart attack victim, the American Red Cross was there; and WHEREAS, we dedicate the month of March to all those who support the American Red Cross mission to prevent and alleviate human suffering in the face of emergencies. Our community depends on the American Red Cross, which relies on donations of time, money and blood to fulfill its humanitarian mission.
NOW THEREFORE, BE IT RESOLVED, that I, Martha Barragan, Mayor of the City of East Palo Alto, and on behalf of the City Council, hereby proclaim March 2025 as American Red Cross Month and encourage the community to be compassionate courageous and maintain the sense of civic duty that is aligned with the mission of the American Red Cross to prevent and relieve human suffering.
Dated: March 4, 2025
Martha Barragan, Mayor
11 CONSENT ITEM 3.4
EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: March 4, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: James Colin, City Clerk
SUBJECT: City Council Meeting Minutes
Recommendation
Adopt the February 18, 2025, City Council Meeting Minutes.
Attachments
1. February 18, 2025, City Council Meeting Minutes.
12 EAST PALO ALTO CITY COUNCIL
REGULAR SESSION AGENDA
Tuesday, February 18, 2025, 6:30 PM
EPA Government Center
2415 University Avenue, First Floor
East Palo Alto, CA 94303
1. CALL TO ORDER AND ROLL CALL
The City Council meeting was called to order by Mayor Barragan at 6:30 PM.
Attendee Name Title Status Arrived
Martha Barragan Mayor Present
Mark Dinan Vice Mayor Present
Carlos Romero Councilmember Present
Ruben Abrica Councilmember Present
Webster Lincoln Councilmember Present
2. APPROVAL OF THE AGENDA
Mayor Barragan, at the request of Councilmember Lincoln, proposed to move item
13.2, “Commission Appointments”, to follow item 11 “Adjournment of the EPASD Board meeting” on the agenda.
A motion to approve the agenda with those amendments was made by Vice Mayor Dinan, seconded by Councilmember Romero, and passed unanimously.
3. APPROVAL OF CONSENT CALENDAR
Councilmember Lincoln pulled item 3.5 Authorize the Purchase of Vehicles for the Building Services Division for discussion.
A motion to approve the consent calendar was made by Councilmember Romero, seconded by Vice Mayor Dinan, and passed unanimously.
3.1 Award the Pulgas Avenue Mini-Roundabouts Project (ST-12)
3.2 Budget Ordinance Amendments - Second Reading and Adoption
3.3 FY 2024-25 Second Quarter Treasury Report
3.4 Purchasing Ordinance
13 Councilmember Lincoln asked clarifying questions regarding electric vehicle alternatives.
A motion to approve item 3.4 was made by Councilmember Lincoln, seconded by Councilmember Romero, and passed unanimously.
3.5 Authorize the Purchase of Vehicles for the Building Services Division
3.6 City Council Meeting Minutes
4. CLOSED SESSION
5. PUBLIC COMMENT
The following speakers provided public comments:
- Uhila Makoni
- Gail Wilkerson
6. SPECIAL PRESENTATIONS
6.1 CAFE Action Plan on Aging
Maurice Baker, Community Services Manager, introduced the presenters Ann O’Brien Keighran and Cynthia Nakayama, from the Center for Age Friendly Excellence.
7. INFORMATIONAL REPORTS
7.1 Capital Improvement Project informational presentation Humza Javed, Public Works Director provided a presentation regarding the Capital Improvement Projects.
The following speakers provided public comments:
- Gail Wilkerson
- Jeff Poetsch
8. ADJOURN CITY COUNCIL REGULAR MEETING TO THE EAST PALO
ALTO SANITARY DISTRICT BOARD MEETING
Board President, Mark Dinan started the meeting at 8:16 pm. All board members were present.
14 9. APPROVAL OF EPASD BOARD MEETING CONSENT CALENDAR
9.1 Adopting a Resolution Terminating an Emergency
A motion to approve item 9.1 was made by Councilmember Romero, seconded by Mayor Barragan, and passed unanimously.
10. EPASD POLICY AND ACTION
10.1 East Palo Alto Sanitary District Advisory Committee Appointments City Clerk, James Colin, presented the item and facilitated the appointment of the EPASD Advisory Committee.
After interviewing the applicants, the Council made the following appointment:
Name Seat Initial Term Subsequent Term
Gail Wilkerson City of East Palo Alto
Alternate Seat
2025-28 2028-2031
Gail Wilkerson forfeited her seat on the Public Works and Transportation Commission to accept her seat on the EPASD Advisory Committee.
11. ADJOURN EAST PALO ALTO SANITARY DISTRICT BOARD MEETING
AND RECONVENE CITY COUNCIL REGULAR MEETING
12. PUBLIC HEARINGS
12.1 Development Code Text Amendment (ZTA24-001) to amend various Chapters and Sections of Title 18 (Development Code) of the East Palo Alto Municipal Code
Salifu Yakubu, Senior Planner and Elena Lee, Planning Manager provided a presentation on the Development Code Text Amendments.
A motion to approve item 12.1 was made by Councilmember Romero, seconded by Vice Mayor Dinan, and passed unanimously with Councilmember Abrica being absent.
15 13. POLICY AND ACTION
13.1 Mid-year Budget Amendment for Fiscal Year 2024-25
Tomohito Oku, Finance Director, provided a presentation on the Mid-year budget.
A motion to approve item 9.1 was made by Councilmember Lincoln, seconded by Vice Mayor Dinan, and passed unanimously with Councilmember Abrica being absent.
13.2 Commission and Committee Appointments
City Clerk, James Colin, presented the item and facilitated the appointments of the Public Works and Transportation Commission.
Name Seat Term
Ravneel Chaudhary Seat 6 5/31/2024-5/31/2027
Neal Ramaswamy Seat 8 (alternate) 5/31/2024-5/31/2027
A motion to appoint the alternate was made by Councilmember Romero and Seconded by Vice Mayor Dinan and passed with Councilmember Lincoln abstaining to vote.
14. COUNCIL REPORTS
Mark Dinan wished Councilmember Lincoln a Happy Birthday.
Councilmember Lincoln reported that he attended an event honoring Sharifa Wilson at the Black Legends Awards ceremony.
15. ADJOURNMENT
The meeting was adjourned at 10:47 pm
16 INFORMATIONAL Report 6.1
EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: March 4, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Elena Lee, Planning Manager
Amy Chen, Community & Economic Development Director
SUBJECT: Westside Area Plan
Recommendation
Receive an informational report from staff concerning the Westside Area Plan and provide direction to staff on any potential updates.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority: Promote Housing, Economic and Workforce Development Background
The Westside of East Palo Alto is a distinct part of the city, geographically separated by Highway 101 and the San Francisquito Creek from the rest of East Palo Alto and neighboring Palo Alto.
It also shares a border with Menlo Park. This 107-acre area contains nearly 77% of East Palo Alto’s multifamily housing, including numerous rent-controlled units. Additionally, the area features the University Circle commercial office development and the Four Seasons Hotel.
Recognizing the Westside’s unique challenges – such as limited public services and open space, infrastructure deficiencies, and the abundance of rental units registered under the City’s Rent Stabilization and Just Cause Eviction Ordinance, the City adopted the Westside Area Plan1 1 Chapter 11: Westside Area Plan:
https://www.cityofepa.org/sites/default/files/fileattachments/community_amp_economic_development/page/2731/ epa_gp_chapter_11_westside_area_plan_final_201807271719056868.pdf 17 INFORMATIONAL Report 6.1
(WSAP) in 2016 as a chapter (Attachment 1) of the Vista 2035 General Plan Update (General Plan).
2 Developed with substantial public input, the WSAP includes the following 14 guiding principles:
1. Avoid displacement;
2. Ensure a community-driven process;
3. [Include] on-going community participation in decision-making processes;
4. Provide affordable rental housing;
5. Maintain diversity;
6. Promote diverse ownership;
7. Improve housing equality;
8. Maintain a diversity of housing types and unit sizes;
9. Connect the Westside to the City and the region;
10. Address infrastructure deficiencies;
11.Ensure that new development pays for its fair share [for development impacts];
12.Provide diverse parks, community facilities and shopping for all residents;
13.Improve public safety; and
14.Beautify the Westside.
Woodland Park Development and Amendments
On November 1, 2022,
3 the City Council approved a General Plan Amendment to introduce the Neighborhood Center Overlay (NCO) land use designation. They also conducted a first reading of the Development Code Amendment to establish the corresponding NCO zoning designation and a Development Agreement for the Woodland Park Euclid Improvement project (Woodland Park) proposed by Sand Hill Partners within the Westside area. Two weeks later, on November 15, 2022,
4 the Council formally approved the Development Code amendment and the Woodland Park Development Agreement.
5 Previously, the subject properties had land use designations of High Density Residential and Urban Residential. The City Council also approved a Relocation Plan for the project.
The Woodland Park project involved demolishing 161 residential units, 160 of which are rent controlled, to construct three new buildings ranging from 5 to 13 stories. The development would include a total of 605 units, creating 444 net new units. The project included a lobby, a 625- space parking garage, community spaces, neighborhood serving retail, and a park area. The project had to comply with the WSAP before receiving approval. 2 https://www.cityofepa.org/planning/page/vista-2035-general-plan 3 Approval staff report for General Plan Amendment, Design Review and first reading approval of Development Code Amendment and Development Agreement:
https://eastpaloalto.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=1810&Inline=True. 4 Second Reading for Development Code Amendment and Development Agreement staff report:
https://eastpaloalto.iqm2.com/Citizens/FileOpen.aspx?Type=1&ID=1818&Inline=True 5 Woodland Park Euclid Improvements - General Plan Amendment, Zoning Amendment and Design Review Application Page: https://www.cityofepa.org/planning/project/woodland-park-euclid-improvements-general-planamendment-zoning-amendment-and Woodland Park Euclid Improvements - General Plan Amendment, Zoning Amendment and Design Review Application Webpage: https://www.cityofepa.org/planning/project/woodland-parkeuclid-improvements-general-plan-amendment-zoning-amendment-and 18 INFORMATIONAL Report 6.1
On July 16, 2024, the City Council approved a Design Review permit amendment, 6 modifying
building heights, adjusting building and parking configurations, and reducing the total residential unit count. Instead of the originally planned three different buildings, the revised project included two 8-story buildings with 550 units (389 net new units). The revised project retained the park, community spaces and retail areas. The Development Agreement and Relocation Plan remained unchanged.
Following this approval, the applicant submitted another design review amendment7 on November 25, 2024, proposing an underground parking addition for one of the two buildings. All other project aspects remained unchanged. Staff is currently reviewing this application, which is subject to an administrative (staff level) approval. The City Council may call up this decision, and it can also be appealed to the Planning Commission.
City Council Concerns and Westside Area Plan Review
During the discussion of the initial project in 2022, the City Council expressed concerns that increasing density might conflict with the General Plan and WSAP, particularly its emphasis on community engagement. Additionally, Council members worried that approving this project might prompt other property owners to request similar increases, potentially undermining the WSAP’s community planning process. As a result, the Council directed staff to assess whether amendments were necessary to manage future density increase rquests. In 2023, the Westside Area Plan Follow Up was added to the City Council priority list.
Analysis
Neighborhood Center Overlay (NCO) Designation
The Woodland Park project’s General Plan and Development Code amendments introduced the NCO designation, allowing for increased density and building heights beyond the standards permitted under High Density Residential (HDR) and Urban Residential (UR) land use and Development Code designations. Attachment 2 provides the complete definition for the designations. The NCO designation applies on a project-by-project basis, requiring City Council approval and compliance with WSAP policies. The designation encourages mid-rise and highrise residential development with ground floor neighborhood-serving commercial and community spaces. Key development standards include:
Allowed Land Uses: High-density multifamily housing (e.g., rental apartments, condominiums, single-room occupancy (SRO) units) with neighborhood serving retail and community facilities.
Density/Intensity: 86.1–175 units per acre (250–525 residents per acre). Height Limit: Up to 13 stories and 135 feet.
Parking Design: Structures must not face primary public streets. 6 Woodland Park Euclid Improvements Design Review Amendment Application Webpage:
https://www.cityofepa.org/planning/project/woodland-park-euclid-improvements-design-review-amendment 7 https://www.cityofepa.org/planning/project/woodland-park-euclid-improvements-second-amendment 19 INFORMATIONAL Report 6.1
Refinements to Increase Context-Sensitivity
To ensure future projects align with the community’s vision, staff made several modifications to the applicant’s proposed amendments within the General Plan and Development Code Amendments to reduce intensity and increase context-sensitivity for future development applications seeking the NCO Zone. These changes include:
Reducing the maximum residential density from 180 dwelling units per acre to 175 dwelling units per acre;
Increasing the rear setback to 10 feet;
Adding an increased rear setback requirement of 20 feet for projects with rear yards adjacent to residential low density or medium density zones; Reducing the height limit as measured in stories from 15 to 13 stories; and Ensuring future projects comply with off-street parking requirements or request reductions through a Transportation Demand Management (TDM) Plan or a Conditional Use Permit.
The NCO designation could increase intensity of development on the project site compared to existing regulations. However, the Westside Area Plan sets forth a process and requirements for projects that request increases in intensity above existing general plan and zoning regulations and would require City Council approval, which includes a robust public process and a legislative change, for every application. In addition, new applications would also be subject to the City’s preliminary review and public outreach requirements in chapter 18.82.0308 of the Development Code before formal applications should be filed. This will require multiple community meetings and public hearings with the City Council and Planning Commission.
Westside Area Plan Consistency with Policies for Increasing Intensity The WSAP provides prerequisites and a process for new developments that increase intensity over allowed zoning in Policies 5.2-5.5. The WSAP includes 11 goals and 83 policies intended to support the guiding principles and to guide development. The 11 goals are as follows:
W-1 Prevent displacement and preserve affordable housing; W-2 An equitable, inclusive and constructive Community Process; W-3 Create new, high-quality affordable housing;
W-4 A diverse land use mix to create a livable Westside; W-5 The long-term development of new buildings and a new street network to improve housing opportunities and improve quality of life;
W-6 Building and site design to support a beautiful Westside and a high-quality pedestrian environment;
W-7 Beautification and greening of the Westside;
W-8 Accessible and well-maintained parks and public facilities; W-9 Better streets and transportation options for residents and visitors; 8 https://library.municode.com/ca/east_palo_alto/codes/code_of_ordinances?nodeId=EAPAALDECO2018EDCUOR NO02-2022ADMA32022_TIT18DECO_ART7PEPRPR_CH18.82APPRPR_18.82.030APSU 20 INFORMATIONAL Report 6.1 W-10 An adequate and efficiently administered parking supply on the Westside; and W-11 Safe, sufficient, and well-maintained infrastructure and services.
The Westside Area Plan Goal W-5 and other policies acknowledge that increases in height and intensity over existing zoning may be considered for future developments if certain requirements are met. Goal W-5 states, “The long-term development of new buildings and a new street network to improve housing opportunities and improve quality of life. Intent: To establish a longterm process and framework for future development, to establish clear prerequisites and parameters for any future increases in density and height on the Westside over what is currently allowed in zoning, and to ensure that the community’s vision for the Westside is maintained in the long term” (emphasis added).
The only mechanism by which a project can increase residential density and associated development standards over existing zoning is to request the Council’s approval of the NCO designation or the amendment of an existing zoning district or rezoning to a higher intensity zoning district, (unless the applicant uses the State Density Bonus, which limits the City’s discretion and allows a certain number of concessions over development standards depending upon the amount of affordable housing provided). The Westside Area Plan does not set forth a maximum allowable increase in intensity over existing zoning and only sets maximum height for certain areas of the Westside (Westside Area Plan Policy 5.14), which do not include the project site. The required City Council approval process would ensure that a project would have to demonstrate compliance with the General Plan, and the WSAP in particular, including robust public engagement.
Modifications to Limit Applicability of NCO Overlay
Per Council’s direction, the Development Code Amendment that established the Neighborhood Center Overlay district had been revised to narrow the properties that could apply for a rezoning to the NCO zone in the future. The revised area includes the area within the Westside Area Plan zoned R-HD-5 or R-UHD bounded by West Bayshore Road, Euclid Avenue, O’Connor Street, and Manhattan Avenue and those parcels within the Westside Area Plan with frontage on Euclid Avenue, as shown below.
21 INFORMATIONAL Report 6.1
Area of Potential Future NCO Rezoning
This approved prohibition protects the lower density neighborhoods in the northern part of the West Side Area. The West Side Area Plan provides a process to consider increased intensity.
The process is legislative and at the discretion of the City Council. The reduction in areas where this NCO overlay can apply also reduces applicability to the southern portion of the plan area where the allowed density is already higher (not low density).
Any potential changes to implement the NCO overlay would be subject to City Council approval.
So, any such changes would be subject to a thorough review and public process, including the preliminary review process and robust public outreach as required by the Municipal Code. It is not likely that any projects that could intensify development within the reduced area will happen immediately because a thorough process would be required.
Some of the key WSAP policies that are required before any increase in intensity can be approved include the following:
22 INFORMATIONAL Report 6.1
WSAP Policy 5.2
WSAP Policy 5.2 states development projects proposing increases in intensity “must undergo a rigorous public process and meet the anti-displacement goals of this Chapter and all other applicable City policies and regulations.”
WSAP Policy 5.3
WSAP Policy 5.3 sets forth the following prerequisites:
Prevents displacement of existing residents.
Provides for some income-restricted affordable housing. Preserves “right of return” for existing residents.
Maintains the City’s rent stabilization program.
Includes new parks and open spaces or contributes to the provision of new parks and open spaces if it is a single project.
Improves streets and infrastructure or contributes to the provision of new streets and infrastructure if it is a single project.
Improves the fiscal health of the City.
Beautifies the area.
WSAP Policy 5.4
WSAP Policy 5.4 Sets forth the development process for increased intensities as follows:
For areas on the north side of University Avenue or south of Clark Avenue to San Francisquito Creek, proposed increases in intensity over the currently allowed zoning intensity may be approved on a project-by-project basis. These projects shall be required to meet the policies set forth in this document in addition to any other city policies and shall be required to enter into a development agreement and/or pay fees to support the development of new parks, open spaces, infrastructure and community facilities necessary to support a higher level of development on the Westside. 23 INFORMATIONAL Report 6.1
Figure 11-12 from WSAP
WSAP Policy 5.5
WSAP Policy 5.5 sets forth the following application requirements for projects requesting increased intensities.
Proposed general plan and zoning for each parcel, including uses, building heights, and maximum development intensities.
Development program that identifies parcel-by-parcel information on existing and proposed uses.
Affordable housing plan, including the amount, levels of affordability and location of each housing unit.
Relocation plan for existing tenants that incorporates policies 5.10, 5.11, and 5.12 of this chapter.
Fiscal impact analysis for the City
24 INFORMATIONAL Report 6.1 Description and analysis of how the City’s rent stabilization program may be continued in the future, including sources of funding.
Park and open space plan, including the number, acres and locations of new parks and open spaces (or contribution to parks and open spaces for single-parcel projects).
A water supply assessment with guarantees of long-term water availability and new sources of water.
Infrastructure improvement plan, including detailed information on all infrastructure and utilities (or contribution to Westside infrastructure improvements). Street network plan, including proposed street cross sections. Community Impact Report that details how the project applicant will satisfy the prerequisites for increases in intensity or change in use in Policy 5.3. Community involvement strategy.
Any additional information and level of detail requested by the City to ensure that the proposed project meets the vision of the community.
Conclusion/Next Steps
Staff seeks City Council confirmation that the revised NCO Development Code amendment appropriately limits the overlay’s applicability while maintaining compliance with WSAP policies.
The requirement that each NCO rezoning request receive City Council approval ensures continued adherence to the WSAP’s planning process. If the Council determines that additional policy amendments are necessary, staff requests direction to prepare those changes for a future meeting.
Fiscal Impact
There is no fiscal impact for this item.
Public Notice
The public was provided notice by making the agenda and report available on the City’s website and on a bulletin board located at City Hall: 2415 University Avenue, East Palo Alto.
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.
Government Code § 84308
Applicability of Levine Act: No, as the proposed action entails no entitlement.
Analysis of Levine Act Compliance: Not applicable.
25 INFORMATIONAL Report 6.1
Attachments
1. Westside Area Plan Chapter 11
2. NCO General Plan Land Use Designation Definition and Development Code Chapter 26 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-1
11. Westside Area Plan
Overview
The Westside Area Plan provides a detailed
vision, guiding principles, and goals and
policies for the Westside area of East Palo Alto.
It focuses on tools to preserve a stock of
affordable housing and improve the quality of
life for residents. Topics addressed include
land use and development policies,
transportation, infrastructure and housing.
This is a stand-alone chapter of the General
Plan and the goals and policies located herein
shall be consistent with the General Plan’s
other Elements.
Statutory Requirements
This chapter is not required by law, but addresses an
area within the City’s boundaries that is facing critical issues including development pressure, loss of affordable housing and infrastructure deficiencies.
Issues and Opportunities
Geography
The Westside area – shown in Figure 11-1 – is bounded
by Highway 101 to the northeast, San Francisquito Creek and the City of Palo Alto to the southwest, and a
meandering boundary line shared with Menlo Park to the
west and northwest. The Westside area encompasses
107 acres, approximately eight percent of the City’s land area but has a relatively high population density,
containing 22 percent of East Palo Alto’s residents. The neighborhood is geographically isolated from the rest of East Palo Alto by Highway 101 and from Palo Alto by San Francisquito Creek. Highway 101 is a significant barrier for Westside residents as it is dangerous to cross for
pedestrians who would wish to access services, retail,
and community facilities elsewhere in the City. In fact, there are only six ways in or out of Westside: West
Bayshore Road to the southeast, Newell Bridge across
the San Francisquito Creek to Palo Alto, University
Avenue through the center of the neighborhood,
Woodland Ave to the southwest, and either East O’Keefe
Street or Donohoe Street into the east side of the
Willows neighborhood.
Figure 11-1: Westside Area
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Population/Demographics
With 6,075 residents, the Westside contains
approximately one fifth of East Palo Alto’s total
population (see Figure 11-2), even though it is less than one-tenth of the City’s land area. This greater population density is due to the multi-family housing stock
abundantly present throughout the neighborhood.
Overall, the Westside has a similar proportion of children as the rest of East Palo Alto, but noticeably fewer
residents over 65, indicating a younger population. The ethnic composition of the Westside is essentially the
same as the rest of the City, with Hispanic/Latino
residents comprising the majority (68%). However, there are substantially more Spanish speakers who are not
fluent in English residing in the Westside (48%) compared with 34 percent of the City as a whole. The only other
noticeable difference is the greater rate of White
residents (12%) compared to six-percent citywide. In fact, there are several block groups in the Westside where
White residents are the majority ethnic group, something that occurs nowhere else in the City, underscoring the
West side’s ethnic diversity.
Generally, Westside residents have a greater level of
educational attainment, with 37 percent of residents
holding an Associates or Bachelor’s degree compared to
only 20 percent citywide. Presumably this contrast is due the presence of students attending nearby Stanford
University. However, in the Westside, there are
noticeably fewer 15 to 17 and 18 to 19-year-olds enrolled in school compared to the rest of the City. Incomes on
the Westside are slightly lower than average City
incomes ($46,401 vs. $50,137), owing mainly to a smaller proportion of residents earning more than $75,000.
Existing Land Use
The Westside has a different mix of uses than the rest of the City. As is shown in Table 11-1 and Figure 11-3, land use on the Westside is predominantly residential,
accounting for 81 percent of the land area. Of the
residential land uses, multi-family housing accounts for the greatest land area by far at 48 percent of the total land area in the Westside. Comparatively, the vast
majority of the City’s multi-family uses are located on the Westside. There are several pockets of extremely dense
development, upwards of 60 and 70 dwelling units per
acre (du/a), shown in Figure 11-4. These areas are along the southern part of East O’Keefe Street, and within the superblock bounded by Cooley Ave, Newell Rd,
Woodland Ave, and West Bayshore Rd. In addition to
residential uses, there are eight acres of office use and one acre of commercial use on the Westside. These uses
are found in the University Circle area and include the Four Seasons Hotel and three 6-story office buildings.
There are also a few retail uses spread throughout the
Westside including two convenience stores, a
laundromat and a small number of restaurants. There are approximately six acres of vacant land in the Westside.
Land Use Acres %
Residential - Mobile Home 1 1%
Residential - Single Family 14 13%
Residential – Duplex/Fourplex 21 19%
Residential - 5 or more Units 51 48%
Commercial 1 1%
Lodging 3 3%
Office 8 8%
Institutional or Public Facilities 1 1%
Light Industrial 1 1%
Baylands and Marshland 0 0%
Parks & Recreation Facilities 0 0%
Parking 0 0%
Vacant Land 6 6%
Total 107 100%
Source: East Palo Alto GIS, 2013
Table 11-1: Existing Land Use - Westside
Figure 11-2: Population Count
28 CHAPTER 11: WESTSIDE AREA PLAN
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Figure 11-3: Existing Land Use
29 CHAPTER 11: WESTSIDE AREA PLAN
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Figure 11-4: Existing Density (du/acre)
30 CHAPTER 11: WESTSIDE AREA PLAN
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Housing
The Westside contains the majority of the City’s
multifamily housing stock (77%) and rent-controlled
rental housing (95%), much of which is owned by one
owner. Currently, there are 2,700 total residential units on the Westside, and 2,185 of those are subject to the
Rent Stabilization Ordinance (80% of units are rentcontrolled).
Household size on the Westside is noticeably smaller
than in the rest of the City (three members per
household instead of the City average of four, as shown in Figure 11-5). Westside has a higher proportion of oneperson households than the rest of East Palo Alto; single person households account for 37 percent of the
Westside, compared to 21 percent Citywide.
Compared to the rest of East Palo Alto and the
surrounding area, the Westside has a much larger
proportion of housing structures with five or more units.
Three-quarters (74%) of the buildings on the Westside
have 5 or more units compared to only 35 percent
Citywide (see Table 11-2).
Over 80 percent of units are renter-occupied,
significantly higher than the average in the rest of East Palo Alto as well as the surrounding cities. This illustrates how the Westside’s multi-family rental housing serves a unique niche in the local market.
As far as the characteristics of the rent-controlled units, they are mostly affordable to low income [50%-80% of
Average Median Income (AMI), or $50,601 to $80,960]
and very low income families (30-50% AMI, or $30,361 to $50,600).
Figure 11-6 illustrates the full break-down of unit prices.
At present, market rents are also affordable to low
income households. Turnover is extremely high with 75%
living in their unit for 4 years or less, which, during extremely tight housing markets, blunts the effectiveness of rent control. Also, as shown in Figure 11-8, the
majority of buildings were built prior to 1970, with most buildings dating back to the 1960s or even 1950s. Only a handful of modern condominium developments were
built in the last twenty years.
City Westside
S.F. Detached 4,190 (54%) 378 (14%)
S.F. Attached 388 (5%) 189 (7%)
2, 3, or 4 units 310 (4%) 135 (5%)
5 or more units 2,715 (35%) 1,998 (74%)
5 to 9 units 233 (3%) 297 (11%)
10 to 19 units 465 (6%) 216 (8%)
20 + units 2,017 (26%) 1,485 (55%)
Mobile Home 155 (2%) 10 (0%)
Total 7,759 2,700
Table 11-2: Building Units by Type Figure 11-5: Household Size Extremely Low
Income
3%
Very
Low
Income
44%
Low
Income
52%
Moderate
Income
1%
Figure 11-6: Affordability of Units
31 CHAPTER 11: WESTSIDE AREA PLAN
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Figure 11-7: Existing Units
32 CHAPTER 11: WESTSIDE AREA PLAN
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Figure 11-8: Age of Structures
33 CHAPTER 11: WESTSIDE AREA PLAN
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One-fifth of the rental units on the Westside are
“extremely overcrowded,” meaning that there are more
than 1.5 people per room. However, owner-occupied
units on the Westside show little to no overcrowding,
reflecting a significant disparity in lifestyles.
Urban Design and Character
The character of the Westside is generally dominated by the University Circle hotel and office development. The five to six story office project is one of the most
prominent developments along the Highway 101 corridor
and creates a strong gateway to Palo Alto while it hides the neighborhood behind it. South of University Avenue, the neighborhood is also hidden from public view behind an unassuming three-story apartment complex and the
dense growth along the San Francisquito Creek. While
being very prominent on Highway 101 and University
Avenue, the University Circle project is set back from the street and buffered by landscaping and surface parking
along both University and Woodland Avenues. The
setback nature of the project and the walls created by
the structured parking on Manhattan Avenue sets the
project off from the rest of the Westside neighborhoods.
The structure and development pattern of the Westside,
outside of the recently developed University Circle
project, follows historical patterns of development. Prior to the construction of Highway 101, in the Willows
neighborhood, O’Connor Street and Donohoe Street fed
into the retail core on University Avenue with singlefamily homes with orchards behind. During a period of strong growth, O’Keefe Street was added between the
streets, and multi-family housing was developed in the
open orchard land. The area south of University Avenue
had much less development prior to the construction of
Highway 101 and consisted of houses located along
Woodland Avenue and mainly agricultural lands east of
Cooley Avenue. When the agricultural lands developed,
Newell Road was extended to Bayshore Road. West of
Cooley Avenue, a single-family neighborhood extended
to the previous alignment of University Avenue. This
neighborhood largely remains intact and has been infilled with a variety of multi-family apartment projects.
Building Form and Character
The building types on the Westside are a mix of singlefamily homes and two-to-three story multi-family buildings, as shown on Figure 11-9. The multi-family
buildings are a mix of tuck-under or podium buildings
with a few larger developments that have surface
parking, and a few alley-loaded developments. The
quality of the buildings and associated open space varies greatly from property to property. Some projects have
considerable open space, including shared courtyards
and pools. Some projects have virtually no common open
space but include larger covered private balconies.
Recently, much of the multi-family housing has been
cosmetically updated with fresh paint.
Citywide Westside
Owner Not overcrowded 79% 99%
Overcrowded 19% 0%
Extremely overcrowded 2% 0%
Renter Not overcrowded 60% 58%
Overcrowded 18% 19%
Extremely overcrowded 22% 23%
Table 11-3: Number of Overcrowded Units
34 CHAPTER 11: WESTSIDE AREA PLAN
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Figure 11-9: Existing Building Types
35 CHAPTER 11: WESTSIDE AREA PLAN
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Transportation
The Westside neighborhood has the highest percentage
of zero vehicle households in the City. While nine percent of all households in East Palo Alto have no access to a vehicle, approximately 13 percent of households in the
Westside are zero vehicle households. Significantly
higher densities in the Westside may hide this trait and suggest that the area is primed for enhanced transit
service and improved bicycle and pedestrian facilities.
Roadways and Streetscapes
University Avenue is the only arterial providing direct access to the Westside, connecting to the rest of East
Palo Alto to the east of Highway 101, and to the city of Palo Alto to the west. West Bayshore and Woodland
Avenue are classified as collector streets, while all other streets in the neighborhood are local streets.
Traffic passing through the neighborhood is highest on
University Avenue, which serves an estimated volume of
over 25,000 vehicles per day, consistent with typical
volumes for many four-lane arterial streets. Woodland
Avenue provides direct access to the Westside from
University Avenue, and carries relatively low volumes of traffic, serving an estimated volume of up to about
11,000 vehicles per day on the short segment
immediately north of University Avenue.
The streets in the Westside north of University Avenue
were developed under prior County jurisdiction and have not been completed with curbs/gutters and sidewalks.
East O’Keefe Street is wider and has sidewalks on each
side of the street, and lighting and power lines as well.
Manhattan Avenue and Euclid Avenue are fully
constructed, with curb, gutter and sidewalks. Donohoe
Street, Green Street, and other side streets (Oakwood
Drive, Addison Avenue and Ralmar Avenue) have not
been fully improved with new curbs and gutters; they
have only limited sidewalks and street lighting. Similarly West Bayshore Road has not been improved with
sidewalks, curb and gutter.
The variation of the streetscapes changes the character of the neighborhood, making for a more rural, or less
urban, quality to the neighborhood. Though this could be considered positive, it makes walking and biking
potentially more dangerous, with narrow driveways, and
no designated pedestrian or bike pathways. The lack of
lighting also makes security and safety a greater issue as lighting of the street is limited by tree coverage that blocks light from taller posts.
Figure 11-10: Sidewalk Gaps
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South of University Avenue, a similar pattern exists. West Bayshore Road, Cooley Avenue, Newell Road and Clarke
Avenue are mostly improved, while Woodland Avenue
along the creek, and Scofield and Capitol Avenues are not completed. The condition of the streets has the single
greatest effect on the “feel” or character of the area.
Bicycle and Pedestrian Network
As shown in Figure 11-10, the majority of streets in the Westside lack sidewalks. However, various pedestrian
improvement plans exist, the largest of which is the
planned bicycle/pedestrian crossing of Highway 101,
which will likely be built at West Bayshore and Newell
Road. On the Westside, the City is also considering
construction of a bicycle/pedestrian cut-through path
connecting Capitol Avenue to University Avenue via a
small Caltrans right-of-way.
The intersection of University Ave and Woodland Street
has been particularly hazardous for pedestrians, with
over 30 collisions recorded during the five-year span
between 2007 and 2011.
As with pedestrian infrastructure, bicycle infrastructure is also severely limited in the Westside. The only existing routes are Class II lanes on University Avenue (which end abruptly at the Highway 101 overpass), though planned
new infrastructure includes the striping of lanes on the University Avenue overpass and the new
bicycle/pedestrian crossing of Highway 101. The lack of bicycle facilities within and adjacent to the Westside
likely contributes to the rate of bicycle collisions in the city, particularly at the University Avenue and Donohoe Street intersection just outside of the Westside, where the Class II bicycle lanes along University end as they cross Highway 101. Completing the bicycle lanes over
Highway 101 will help provide a connected, safe bicycle route along the whole length of University Avenue.
Transit Network
There is a lack of public transit throughout the Westside.
Service by SamTrans and AC Transit is limited to lines
along University Avenue (see Figure 11-11), which may
require a lengthy walk for residents at the southernmost and northernmost ends of the Westside neighborhood.
In addition, access to transit stops on University Avenue is not ideal, due to gaps in the sidewalk network and
barriers to direct pedestrian access approaching
University Avenue.
Figure 11-11: Transit Network
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Parking
On-Street Parking Supply
There is a significant parking problem on the Westside.
This is as a result of limited on-street parking and
relatively few off-street parking spaces given the number of dwelling units or the number of residents (on average) per unit. Parking is most difficult to find in the evenings and this problem is exacerbated by ordinances in both
Palo Alto and Menlo Park restricting overnight parking to residents living in their respective neighborhoods.
On-street parking is permitted in the residential portions of the Westside. However, on-street parking is not
permitted adjacent to the commercial development on
street segments adjacent to newer commercial
development to the north of University Avenue, accessed from Woodland Avenue.
Some of the on-street parking supply is informal, in
unmarked spaces and along streets that lack curbs. Table 11-4 describes the current Westside supply of on-street parking by type. There are an estimated 1,076 on-street parking spaces on the Westside.
Table 11-4: On-Street Parking Supply in
Westside Neighborhood, by Type
On-Street Parking
Type
On-street parking capacity
(number of vehicles)
Parallel Informal 352
Parallel Curbed 594
Perpendicular
Informal 99
Perpendicular
Curbed 31
Total 1,076
On-Street Parking Demand
Based on observations, the on-street parking supply
within the Westside area is mostly occupied during midday hours, while off-street parking supply appears to be underutilized. In addition, the unregulated nature of the on-street parking supply – which has no time limitations – contributes to the high occupancy rate and low rate of turnover.
Off-Street Parking Supply
The off-street parking in the Westside is mostly in surface lots or the garages of apartment complexes, with an
estimated supply of approximately one parking space per dwelling unit. There are approximately 2,113 registered regulated rental units on the Westside, 85 percent of
which (1,790) are owned by Equity Residential. These
1,790 apartments include 1,704 off-street parking
spaces, suggesting a roughly 1:1 ratio of parking spaces per unit. Using this logic, approximately 2,011 off-street spaces exist on the Westside.
Total Westside Residential Parking Supply
Total parking supply within the residential portions of the Westside neighborhood is estimated to be approximately
3,087 spaces – thus a total parking supply of 1.5 parking spaces per dwelling unit (based on 2,113 existing
dwelling units and 1,076 on-street parking spaces).
Parks and Public Facilities
There are no public parks or community facilities in the Westside, despite the large number of residents living in the area. Westside residents typically use parks and
other community in adjacent jurisdictions or travel over Highway 101 to access parks in East Palo Alto. In order to provide an average of 1.5 acres of park space per 1,000 residents, an additional nine acres of parks and open
space would be required in the Westside.
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Guiding Principles
The Guiding Principles listed below summarize the vision and direction for the future of the Westside. These
Guiding Principles were developed by the Westside Area
Plan Advisory Committee, in coordination with the public at advisory committee meetings and Town Hall public
workshops.
1) Avoid displacement. Existing renters should have
the right to continue to live on the Westside. If
housing is renovated, existing residents should be
provided with a similar size unit, with similar
amenities, at comparable rents.
2) Ensure a community-driven process. The future of
the Westside should be planned by and for the
community, with a focus on meeting community
needs, reflecting community voices, improving
quality of life for residents and building the capacity of residents to influence the decision-making
process.
3) On-going community participation in decisionmaking processes. Community members should actively engage in decision-making processes for
plans and projects throughout the community,
particularly those that significantly affect the
Westside such as the Newell Bridge replacement and
other creek-related projects.
4) Provide affordable rental housing. One of the
highest priorities for the Westside Area Plan should
provide long-term affordable rental housing for East
Palo Alto residents.
5) Maintain diversity. Over time, the Westside should
continue to serve and enhance the lives of the
diverse population that currently resides in the area.
6) Promote diverse ownership. Over time, the
Westside should transition from having a single,
majority property owner to ownership by a larger
number of property owners. If possible,
homeownership by existing Westside and East Palo
Alto residents should be encouraged.
7) Improve housing quality. Rental housing on the
Westside should be healthy, safe and have amenities
that provide for a high quality of life for residents,
including sufficient parking for existing and future
residents. Rental housing should be up to code and
well-maintained for the safety and comfort of its
tenants.
8) Maintain a diversity of housing types and unit sizes.
The Westside should have a variety of rental housing
types and unit sizes that provide high-quality
housing for a diversity of residents including families, young professionals, and seniors.
9) Connect the Westside to the City and the region.
The Westside should be better connected – both
physically and psychologically – to the rest of East
Palo Alto and areas beyond. This includes
transportation connections, access to shopping and
jobs, enhanced visibility and representation, and a
shared identity with the rest of East Palo Alto.
10) Address infrastructure deficiencies. There should be upgrades to the current infrastructure to address
deficiencies on the Westside. This includes improved
water quality and supply, improving flood protection
from San Francisquito Creek, and upgrading existing
water and sewer infrastructure.
11) Ensure that new development pays its fair share.
New development on the Westside should be
required to provide community benefits for
Westside and East Palo Alto residents via the
leveraging of the Westside’s assets for the maximum
benefit of the community.
12) Provide diverse parks, community facilities and
shopping for all residents. There should be a
diversity of parks, public facilities, retail and services on or accessible to the Westside that serve Westside
residents, including families with children, and the
broader East Palo Alto community. This could
include playgrounds, plazas, community centers,
retail and restaurants.
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13) Improve public safety. Reducing crime and
promoting a safe environment throughout the
Westside should be a top priority. Increased police
patrolling and street lighting should be improved in
areas of high crime.
14) Beautify the Westside. The physical environment of
the Westside should be enhanced to become more
attractive. This includes adding street trees,
renovating streets to add curbs and gutters,
improving the visual character of buildings, requiring
high-quality design for renovation and new
buildings, and adding parks and open space,
including recreation opportunities along San
Francisquito Creek.
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Goals and Policies
This section provides the goals and policies for the
Westside of the City of East Palo Alto. The goals and
policies are intended to complement the citywide goals
and policies found in the Plan.
Goal W-1.Prevent displacement and
preserve affordable housing.
Intent: To avoid displacement and preserve affordable
housing by continuing to provide housing in the Westside for a diverse array of income levels and demographics,
while protecting the existing supply of affordable housing and improving the quality of housing for those who live in the Westside.
Policies:
1.1 Preservation of housing. The City should have as a
goal to avoid displacement of current residents.
Maintain regulations that encourage the
preservation of existing housing, including rentcontrolled housing, and development of new housing that accommodates households that are
diverse in size, type and level of affordability.
1.2 No net loss in housing. Require there to be no net
loss in the number of residential units or the
number of income-restricted affordable housing
units during any future reconstruction or
renovation on the Westside (also see Policy 3.3).
1.3 Home ownership. Encourage a mix of home
ownership and rental housing on the Westside.
1.4 Diversity of housing types. Encourage a diversity
of housing types in the Westside such as large
apartments, walk-up apartments, stacked flats,
townhomes, live-work housing, fourplexes,
triplexes and duplexes.
1.5 Diversity of unit sizes and types. Encourage a
diversity of small, medium, and large units for
individuals, families, seniors, students, and other
demographics to encourage a diverse and vibrant
population on the Westside.
1.6 High-quality housing. Ensure that the existing and
new housing stock is built and maintained to a
high level of quality to protect health, safety, and
aesthetics on the Westside.
1.7 Funding for affordable housing. Continually seek
new local funding sources for publicly-supported,
income-restricted affordable housing.
1.8 Maintain a viable Rent Control program. Maintain
a financially solvent Rent Stabilization Program
even if units are removed from the program
through new development.
Goal W-2.An equitable, inclusive, and
constructive Community Process.
Intent: To ensure that the community is represented,
consulted, and respected in any future planning and
development process on the Westside.
Policies:
2.1 Outreach and participation. Ensure ongoing
participation in the decision-making process for
the Westside.
2.2 Westside Advisory Committee. For future master
planning and other long range planning process,
develop an advisory committee that reflects the
diversity of residents and business interests.
Goal W-3. Create new, high-quality
affordable housing.
Intent: To increase the amount of affordable housing on the Westside and strive for a mix of housing types that meets the income levels of existing residents.
3.1 Expansion of income-restricted affordable
housing. Ensure that future land use and
development decisions expand the number and
diversity of income-restricted affordable housing
units. Prioritize the creation of permanent incomerestricted affordable housing over new rentcontrolled housing, to ensure long-term benefits to housing affordability.
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3.2 Affordable housing location. Ensure that incomerestricted affordable housing is not concentrated in any single area but rather is spread throughout
the Westside in a variety of building types and
locations.
3.3 Land swap to achieve no net loss. Allow new
development to relocate housing on the Westside
to other parts of the City if it results in no net loss of housing units in the City (per Policy 1.2), and if it locates new housing closer to existing public
facilities and services such as parks, schools, and
community centers.
3.4 Mix of affordability levels. Encourage housing in
the Westside to encompass a range of deeper
affordability levels, including for those with
moderate, low, very low, and extremely low
incomes, as well as market rate housing. Strive for
a maximum mix of income -restricted affordable
housing for every development project and on the
Westside overall that at a minimum matches the
percentages of the City’s Below Market Rate
Housing Program, as found in the Housing Element
of the General Plan.
3.5 Incentives for affordable housing. Allow increases
to permitted density and height for projects that
provide income-restricted affordable housing over
the current requirements for inclusionary housing
and/or in lieu fees.
3.6 Affordability for current residents. To the greatest extent feasible, target new income-restricted
affordable housing to the income levels of current
residents.
Goal W-4.A diverse land use mix to
create a livable Westside.
Intent: To maintain and enhance the residential character of the Westside while allowing neighborhood-serving
retail and services to create a more livable neighborhood focused on the well-being and quality of life of residents.
Policies:
4.1 Land use designations. Until a future master plan
or other detailed planning process occurs,
maintain land use designations and zoning districts
that are consistent with the zoning code or the
amount of development currently constructed,
whichever is greater.
4.2 Development within established zoning
parameters. Development applications that do not
propose to increase intensity or height over the
established zoning regulations may proceed within
the regulations and parameters established by the
zoning code.
4.3 Retail uses. Allow retail uses and services in the
Westside, either as the ground floor of a mixeduse residential building, or as a stand-alone neighborhood-serving retail building. Strive for
new retail development to serve the needs of
Westside residents or to help improve the fiscal
health of the City.
4.4 O’Connor retail node. Support and expand the
existing small-scale retail node on O’Connor Street
between Euclid Avenue and Manhattan Avenue,
with a focus on uses that serve the needs of
residents in surrounding neighborhoods.
4.5 Prohibited uses. Prohibit retail uses with large
parking lots that do not provide as their primary
business the provision of groceries. Prohibit
industrial and manufacturing uses, automobile
service or sales, and drive-through restaurants as a
single use on a lot on the Westside.
4.6 University Circle. Allow the University Circle
project to add development over the time horizon
of the General Plan so long as it meets the vision
for the Westside, is designed to integrate with the
adjacent neighborhood, and provides direct and
measurable benefits for the City and the residents
of the Westside.
4.7 Code enforcement. Work collaboratively and
proactively with building owners to address code
violations, particularly those that affect health,
42 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-17
safety, and aesthetic quality in the Westside.
Goal W-5.The long-term development
of new buildings and a new street
network to improve housing
opportunities and improve quality of
life.
Intent: To establish a long-term process and framework
for future development, to establish clear prerequisites and parameters for any future increases in density and
height on the Westside over what is currently allowed in zoning, and to ensure that the community’s vision for the Westside is maintained in the long term.
Policies:
5.1 Transformation over time. Pursue mechanisms
and tools to allow increases in intensity to improve
the quality of life for Westside residents.
5.2 Development intensity or change or use. Any
development project that proposes an increase in
intensity over the existing unit count and/or a
change in use must undergo a rigorous public
process and meet the anti-displacement goals of
this Chapter and all other applicable City policies
and regulations.
5.3 Prerequisites for new development per Policy 5.2
(above). Increases in development intensity over
the currently allowed zoning intensity on the
Westside must meet the criteria listed below.
Specific information on each of the items shall be
required as part of the development application
process. The following are the prerequisites for
increased development intensity:
• Prevents displacement of existing
residents.
• Provides for some income-restricted
affordable housing.
• Preserves “right of return” for existing
residents.
• Maintains the City’s rent stabilization
program.
• Includes new parks and open spaces or
contributes to the provision of new parks
and open spaces if it is a single project.
• Improves streets and infrastructure or
contributes to the provision of new
streets and infrastructure if it is a single
project.
• Improves the fiscal health of the City.
• Beautifies the area.
5.4 Development process for increased intensities or
changes in use. Any proposed increases in allowed
development intensity or change in use per Policy
5.2 must prepare a master plan, Specific Plan or
similar planning document according to the
project location as listed below:
• For areas on the north side of University
Avenue or south of Clark Avenue to San
Francisquito Creek, proposed increases in
intensity over the currently allowed
zoning intensity may be approved on a
project-by-project basis. These projects
shall be required to meet the policies set
forth in this document in addition to any
other city policies and shall be required to
enter into a development agreement
and/or pay fees to support the
development of new parks, open spaces,
infrastructure and community facilities
necessary to support a higher level of
development on the Westside.
• For the area between University Avenue
and Clarke Avenue, proposed increases in
intensity over the currently allowed zoning
intensity shall be required to prepare a
master plan, specific plan, or similar
planning document. In some instances, a
developer agreement may be appropriate.
43 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-18
5.5 Application information for increased intensity.
Prior to any approval in increased development
intensity or change in use, project applicants must
provide detailed information on the overall
development plan and, at minimum, include the
following information:
• Proposed general plan and zoning for
each parcel, including uses, building
heights, and maximum development
intensities.
• Development program that identifies
parcel-by-parcel information on existing
and proposed uses.
• Affordable housing plan, including the
amount, levels of affordability and
location of each housing unit.
• Relocation plan for existing tenants that
incorporates policies 5.10, 5.11, and 5.12
of this chapter.
• Fiscal impact analysis for the City
• Description and analysis of how the City’s
rent stabilization program may be
continued in the future, including sources
of funding.
Figure 11-12: Development Process
44 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-19
• Park and open space plan, including the
number, acres and locations of new parks
and open spaces (or contribution to parks
and open spaces for single-parcel
projects).
• A water supply assessment with
guarantees of long-term water availability
and new sources of water.
• Infrastructure improvement plan,
including detailed information on all
infrastructure and utilities (or
contribution to Westside infrastructure
improvements).
• Street network plan, including proposed
street cross sections.
• Community Impact Report that details
how the project applicant will satisfy the
prerequisites for increases in intensity or
change in use in Policy 5.3.
• Community involvement strategy.
• Any additional information and level of
detail requested by the City to ensure that
the proposed project meets the vision of
the community.
5.6 Replacement of affordable housing stock.
Incentivize and, to the extent permissible, require
projects that propose to redevelop sites with
existing units subject to registration under the
Rent Stabilization Ordinances adopted by the
voters on April 12, 1988 and June 8, 2010 (RSO
units) or other income-restricted affordable
housing units to include as part of the project the
replacement of affordable housing units
comparable to the existing units on a one-for-one
basis. Replacement housing shall be built in
tandem with the market-rate projects and shall be
of the same quality and location.
The method for providing replacement affordable
housing shall be determined by the City Council on
a project-by-project basis or shall be identified as
part of an area-wide adopted Master Plan.
However, when considering how to replace
affordable housing, the City Council shall consider
the following options:
• Replace with RSO Units. Replace RSO units
on a one-for-one basis with new deedrestricted RSO units with the same number of bedrooms.
• Replace with Income-Restricted Units. A
developer shall dedicate land and additional
local gap financing for the development of
new income-restricted units. The land
dedicated to the City shall be sufficient to
develop an equivalent number of units (and
bedrooms), based on existing zoning
densities. Developer shall also contribute
additional local gap financing in an amount
determined on a project by project basis, or
upon a Policy or Master Plan adopted by
the City Council. The amount of additional
local gap financing shall take into account
the average median income of a given
project’s occupants; the type of tax credits,
financing, or other equity capital used; the
in-lieu fee generated by the overall project;
and other financial aspects. The purpose of
land dedication is to preserve the
affordability of replacement housing in
perpetuity. The City shall own the land and
issue a Request for Proposals for affordable
housing developers to develop the projects
on the land.
• Other Approved Option. This option can
consist of some combination of the options
articulated in this Policy or some other
option provided it achieves the goal of
replacing affordable housing units
comparable to the existing units displaced
by new development.
5.7 Affordable housing as a community benefit.
Consider the provision of additional or
replacement affordable housing units to be a
component of community benefits when
considering legislative land use changes,
development agreements, or statements of
45 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-20
overriding consideration, in particular for
residential projects.
5.8 Replacement affordable housing for density
bonus projects. Require that density bonus
projects, including those seeking bonuses under
provisions of the Government Code for properties
with existing rental and rent-controlled dwelling
units subject to affordability requirements, or
which had such dwelling units removed from rentcontrol, either through demolishment or other means, within the five-year period prior to
application, provide for replacement units on a
one-for-one basis to the extent required and
permissible under applicable law.
5.9 First right of return. Require that existing tenants displaced by new development or rehabilitation of
existing dwelling units be afforded the following
rights:
• The ability to return to a unit at the same
level of affordability (measured in monthly
rent) as the prior unit.
• The ability to return to a unit of comparable
size with the same or greater number of
bedrooms.
• The ability to return to replacement
housing regardless of immigration status, to
the extent that this can occur under current
law. If tenants are unable to return due to
immigration status, the project sponsor
shall find the tenant a comparable unit in
terms of size and cost to the original unit.
5.10 Relocation plan. Prior to project approval, require development projects that are proposing increases
in intensity or to demolish RSO units, to prepare,
and the City approve, a “relocation plan” that
accounts for all tenants displaced by new
construction. The tenants shall have housing
provided from the moment they are displaced
until they are relocated into a replacement unit.
The relocation plan must meet the following
criteria:
• Provide temporary housing within East
Palo Alto or within 10 miles of the prior
home.
• Does not require the crossing of the
Dumbarton Bridge.
• Must not pay more in rent than paying in
the prior home.
• All costs of relocation must be paid for by
the project sponsor.
• Moving process between units must occur
quickly and efficiently and to minimize the
inconvenience of the tenant.
• Replacement housing must be completed
within one and a half years to minimize
impacts to tenants.
5.11 Relocation benefits. Require that sponsors of new
development projects offer tenants the choice
between reserving replacement housing or
receiving relocation payments as defined by City of
East Palo Alto Ordinances.
5.12 Land use vision for the Westside. Due to the
Westside’s predominant role in providing
affordable housing, development is directed to the
other areas of the City, including the Ravenswood
Business District, Bay Road, and University Ave.
Require that any redevelopment or planning
process on the Westside incorporate the following
into its process or development proposal:
• Housing focus. Maintain a predominant
residential focus for the majority of the
Westside while allowing for the possibility
of new non-residential uses.
• Neighborhood amenities. New
development should include local-serving
retail, commercial and service uses and
also provide a neighborhood meeting and
focal point for the community. To the
extent feasible, locate new retail adjacent
to public spaces.
• New supermarket. Seek to attract a
Westside supermarket with fresh, healthy
and affordable food. Locate the
46 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-21
supermarket in a mixed use building south
of University Avenue on the “main street.”
• Office and other non-residential uses.
Consider new non-residential
development uses on the Westside as
part of a master planning process if the
non-residential development results in
overall benefits to the City and the
Westside, does not reduce the total
number of housing units in the City,
provides direct community benefits.
• New streets. If significant redevelopment
of the Westside occurs through a master
planning process, seek opportunities to
create new streets in the Westside that
provide for improved vehicular access and
pedestrian and bicycle circulation. New
streets also increase the opportunity for
new open space.
5.13 Existing building renovation. Encourage existing
buildings to conduct small and large-scale
renovations. This could range from minor
improvements to facades and interiors to
structural improvements to complete renovations
of individual units. Any renovation or
rehabilitation shall comply with requirements for
replacement housing as set forth in Policy 5.9.
5.14 Gradation of height. Design new development so
that there is transition in building height. The
greatest height and intensity should be focused
towards Highway 101 and University Avenue,
transitioning to lower heights no more than three
stories near San Francisquito Creek and along the
western portion of O’Keefe Street that is adjacent
to residential neighborhoods.
5.15 Neighborhood transitions and character. For new
multi-family development in the Westside that is
adjacent to existing single-family residential
neighborhoods, provide transitions in height,
increased build setbacks and landscaping to
minimize the impact on adjacent low density
residential uses.
47 CHAPTER 11: WESTSIDE AREA PLAN
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Goal W-6. Building and site design to
support a beautiful Westside and a
high-quality pedestrian
environment.
Intent: To ensure that future and existing development on the Westside generates a more aesthetically pleasing and pedestrian-oriented environment. This is particularly
important where the ground floors of buildings meet the street and sidewalk network, framing the public realm
and visual character of the Westside.
Policies:
6.1 Existing building renovation. Encourage existing
buildings to conduct small and large-scale
renovations. This could range from minor
improvements to facades and interiors to
structural improvements to complete renovations
of individual units.
6.2 Building quality and character. Improve the
quality and aesthetic appeal of existing buildings
and housing in the Westside, and encourage high
quality architecture, materials, and pedestrianoriented facades in new construction.
6.3 Frequent pedestrian entries and windows.
Include regular pedestrian entries onto public
space and transparent windows along the ground
floor of new buildings, particularly in areas with
ground-floor retail.
6.4 Building articulation. Use articulation strategies
for new development to reduce the visible bulk of
buildings, add visual interest, and add pedestrianoriented character and detail. These could include massing breaks as well as projections, minor
stepbacks, architectural details, and variations in
materials to distinguish between upper and
ground floors.
6.5 Engaging residential facades. Encourage new
ground-floor residential uses throughout the
Westside with transparent windows, stoops,
porches, and other façade treatments to engage
the pedestrian environment, provide “eyes on the
street,” and create sense of ownership and
stewardship among residents.
6.6 Elevated ground-floor residential. Elevate new
ground-floor residential space above the sidewalk
level to provide privacy and ensure high-quality,
usable residential spaces.
6.7 Parking frontage. Whenever possible, locate
parking and vehicle areas in the Westside behind
or under buildings, and should not be located on
street corners.
6.8 Building length. Limit the length of individual new buildings or building masses along the street
frontage to create human-scaled buildings with
access to fresh air and daylight.
6.9 Garage and driveway entries. Limit the number of
new garage entries and driveway curb cuts
crossing the sidewalk to encourage a more
complete and comfortable pedestrian
environment in the Westside.
6.10 Placement of utilities. Locate visible utilities – including all “dry” utility access, above-ground
equipment, trash containers, and utility boxes –
behind or to the side of buildings, behind
buildings, behind screening, and away from street
corners.
6.11 Loading docks and service access. Ensure that
loading docks and service entrances in the
Westside are screened from the right-of-way and
adjacent properties; are accessed via alleys, side
streets, or services access driveways; and are
internal to the building envelop and equipped with
closable doors to improve the aesthetics of the
public realm and limit noise.
48 CHAPTER 11: WESTSIDE AREA PLAN
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Goal W-7. Beautification and
greening of the Westside.
Intent: To introduce more green space, natural features, and design features within the public realm. A beautiful, green public realm can increase quality of life on the
Westside, provide a calm and livable environment, and
emphasize the Westside’s natural setting.
Policies:
7.1 Greening and streetscape. Provide additional
street trees, landscaping and green space
throughout the Westside to improve the area’s
visual appeal and increase residents’ connection
with nature.
7.2 Connections to parks and nature. Encourage
physical connections and visual sightlines to parks,
public space, San Francisquito Creek, and other
beautiful outdoor areas.
7.3 Street furnishings. Improve existing streets or
construct new streets with a diversity of street
furnishings including benches, directional signage,
bollards, bicycle parking, and trash receptacles.
7.4 Street lighting. Provide adequate and consistent
street lighting for safety and nighttime pedestrian
activity throughout the Westside.
7.5 Green streets. Integrate “green streets” concepts
into street, sidewalk, public space design to
minimize the impacts of stormwater runoff and to
add visual interest and appeal.
7.6 University Circle integration. Seek opportunities
to better integrate the University Circle area into
the surrounding neighborhoods, including through
new street and pedestrian connections, more
pedestrian-focused streetscape and façade design,
better public access into and across the site, and
better crossings of adjacent streets.
Goal W-8. Accessible and wellmaintained parks and public facilities.
Intent: To increase the overall amount of park space,
natural areas, and accessible community spaces on the
Westside, providing locations for recreation, respite, and social events.
Policies:
8.1 San Francisquito Creek. Establish a trail or linear park along the creek as part of a redevelopment of
the Westside or as part of the creek flood
protection project.
8.2 New central park. Establish a large (at least 1.5
acre), centrally located park south of University
Avenue – potentially near the intersection of
Cooley Avenue and an extended Scofield Avenue –
providing open space amenities for Westside
residents.
8.3 Other new parks and public space. Seek
opportunities to provide other new pocket parks,
plazas, tot lots, playground for children, recreation
facilities, and other parks and public spaces
throughout the Westside, including in the
following locations:
• At the intersection of East Clarke Avenue
and Woodland Avenue.
• On O’Connor Street between Euclid
Avenue and Manhattan Avenue.
• On a new street connection between
Donohoe Street and East O’Keefe Street.
8.4 Community Meeting Space. Pursue the following
new community meeting spaces in the Westside,
with at least one space on either side of
University:
• One Small community meeting space (at
least 500 square feet).
• One Medium-sized community space (at
least 1,250 square feet).
49 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-24
• One Large community space (at least
2,500 square feet).
• Community spaces may be stand-alone
independent facilities, or may be
incorporated into a larger development,
but should provide easily accessible public
meeting spaces for a variety of
community meetings, educational efforts,
civic events, social events, or other
neighborhood activities.
Goal W-9.Better streets and
transportation options for residents
and visitors.
Intent: To improve the street network on the Westside
and provide a better-connected, safer, and more
complete transportation system, achieving incremental
improvements by leveraging new development and
infrastructure improvements.
Policies:
9.1 New street connections. Should redevelopment
occur, establish new street connections across
existing large blocks whenever possible,
prioritizing connections in the following locations:
• Mid-block between East O’Keefe Street
and Donohoe Street.
• Mid-block between Euclid Avenue and
Manhattan Avenue, south of O’Connor.
• Into or through University Circle.
• From Cooley west to San Francisquito
Creek.
• Multiple connections through the large
block between Cooley Avenue and Newell
Road.
• Through the large block between Newell
Road and East Clarke Avenue.
• From Cooley west to San Francisquito
Creek.
9.2 Safe pedestrian network. Develop a safe
pedestrian network throughout the Westside,
including regular crosswalks, consistent sidewalks,
traffic calming where necessary, special crossing
treatments in areas of high pedestrian traffic, and
better access across University Avenue and
Highway 101.
9.3 Safe bicycle network. Implement a safe, complete,
and well-connected bicycle network through the
Westside, emphasizing connections to the existing
bicycle networks in Menlo Park, Palo Alto, and the
rest of East Palo Alto.
9.4 Transit service. Work with regional transit
providers to provide increased frequency of transit
service, additional routes, easily accessible transit
stops, and direct service to shopping and
employment destinations.
9.5 Complete Streets. Implement the concepts of
Complete Streets, balancing the needs of
automobiles, cyclist, pedestrians, and transit as
appropriate when improving streets or creating
new streets.
9.6 Sidewalks. Ensure sidewalks are provided on both
sides of all streets in the Westside, with wider
sidewalks in retail areas, and replace and repair
missing sidewalks.
9.7 Pedestrian crosswalks. Provide better and more
frequent pedestrian crosswalks, with special
priority treatments such as bulbouts, elevated
crosswalks, in-pavement markers or texture, or
high-visibility crosswalks in areas with high levels
of pedestrian activity.
9.8 Scofield Main Street extension. Prioritize the
extension of Scofield Avenue east to link to West
Bayshore and Newell Road, providing a new main
street and east-west spine for this area of the
Westside. Prioritize ground floor retail uses along
this extension.
9.9 Improve access across Highway 101. Complete a
new pedestrian bridge Highway 101 at Newell
Road. Establish a new connection across Highway
50 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-25
101 north of University Avenue, either by reopening and improving the existing pedestrian underpass or by constructing a new bridge over
the freeway.
9.10 Newell Bridge. Complete the new Newell Bridge
connecting the Westside to Palo Alto across San
Francisquito Creek and align the bridge with
existing streets.
9.11 University Avenue crossings. Improve pedestrian
crossings of University Avenue at Woodland
Avenue and at the freeway interchange in order to
improve transportation safety and enable
improved pedestrian connections from the
Westside.
9.12 University Avenue overpass. Fully implement safe
bicycle and pedestrian facilities on the University
Avenue overpass of Highway 101, ensuring that
bicycle facilities are integrated with the bicycle
network on either side of the overpass.
9.13 Newell Road bicycle facilities. Prioritize Class II bicycle lanes or other high-quality bicycle facilities
along Newell Road, providing a connection
between the new Newell Bridge and the planned
pedestrian/bicycle overpass over Highway 101 at
Newell Road.
Goal W-10. An adequate and
efficiently administered parking
supply on the Westside.
Intent: To make efficient use of the Westside’s parking supply, provide sufficient parking supply, and reduce the demand for parking in order to create a convenient
parking system for residents on the Westside.
Policies:
10.1 Parking for new development. Ensure an
appropriate supply of parking for new
development.
10.2 Parking regulation. Ensure adequate
enforcement, permitting, and monitoring of onstreet parking in the Westside.
10.3 Off-street parking allocation. Work with building
owners to provide a fair, efficient, consistent, and
integrated approach to allocating parking spaces
to tenants. Work with property owners and
manager to improve the parking situation for
existing residents.
10.4 Increase opportunities for residents parking. Seek opportunities to ensure an adequate supply of
parking for residents and visitors on the Westside
including:
• Constructing public parking lots or
garages.
• Providing incentives for new projects to
provide additional parking spaces as part
of the projects for existing residents and
visitors.
• Encouraging all existing and new nonresidential development to allow residents to park in parking lots during
non-business hours.
10.5 Transportation demand management. Encourage
efforts to reduce transportation demand and trip
generation, and require significant transportation
demand management planning as part of any
future master planning process in the Westside.
10.6 Mechanized Parking. Encourage the use of
mechanized parking in new construction and
major renovations of existing buildings.
51 CHAPTER 11: WESTSIDE AREA PLAN
CITY OF EAST PALO ALTO: GENERAL PLAN 2035 | 11-26
Goal W-11. Safe, sufficient, and wellmaintained infrastructure and services.
Intent: To address deficiencies in infrastructure in order to protect health and safety in the Westside, while
enabling sufficient infrastructure capacity and services for new and existing development.
Policies:
11.1 Infrastructure upgrades. Replace aging wet and
dry infrastructure throughout the Westside to
ensure safe and reliable provision of services for
new and existing residents.
11.2 Higher quality drinking water. Take active steps to ensure a more reliable and plentiful source of
potable water for the Westside, in coordination
with citywide efforts to secure the City’s supply.
11.3 Flood protection. Continue to work with adjacent
cities and the Army Corps of Engineers to reduce
flooding risks from the San Francisquito Creek.
11.4 Public Safety Services. Ensure that police, fire, and EMS services to the Westside are sufficient to
protect residents’ health and safety, and are kept
at a level commensurate with any changes in
population on the Westside.
11.5 Infrastructure for new development. Ensure that
new development in the Westside pays its fair
share for infrastructure and utility improvements
that it necessitates.
11.6 Waste and recycling. Provide adequate trash and
recycling services to keep pace with the number of
residents on the Westside.
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56 PUBLIC HEARING ITEM 8.1
EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: March 4, 2025
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Hanson Hom, Deputy Manager, Special Projects
Humza Javed, Public Works Director
Tomohito Oku, Finance Director
SUBJECT: Adoption of Nexus Study Update and Updated Parks and Trails, Public Facilities, Transportation, Storm Drainage, and Water Capacity Development Impact Fees Recommendation
1. Conduct a public hearing to receive public comments.
2. Consider the Development Impact Fee Financial Feasibility Analysis and Development Impact Fee Comparison Survey.
3. Adopt a resolution:
a. Finding that the proposed action is exempt from the requirements of the California Environmental Quality Act (“CEQA”) because it is not a project as it has no potential to result in direct or reasonably foreseeable indirect physical change to the environment (14 Cal. Code Regs. §15378(a)); the project does not create a funding mechanism or other government fiscal activity that involve any commitment to a specific project which may result in a potentially significant physical impact on the environment (14 Cal. Code Regs. §15378(b)(4)); and projects that may receive funding with development impact fees would be required to comply with applicable project-specific CEQA requirements at the time such projects are proposed for implementation
b. Approving the Development Impact Fee Nexus Study Update and updated parks and trails, public facilities, transportation, storm drainage, and water capacity development impact fees; and
c. Directing staff to file a Notice of Exemption for the updated development impact fees. 57 PUBLIC HEARING ITEM 8.1
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority: Implement the Comprehensive Transportation and Mobility Plan Priority: Ensure Our Financial and Organizational Health Priority: Improve the City's Water Infrastructure
Priority: Develop and Implement a Comprehensive Facilities Master Plan Priority: Enhance Community Services and Parks for Residents Executive Summary
The City adopted parks and trails, public facilities, transportation, storm drainage, and water capacity development impact fees in 2018 and 2019. To update these fees, the City conducted a Nexus Study Update (Attachment 2), a Financial Feasibility Analysis (Attachment 3), and Development Impact Fee Comparison Survey (Attachment 4).
These reports, dated January 2025, incorporate revisions based on public feedback received on prior drafts released for public review in June and November 2024.
The recommended updated impact fees are detailed in Attachment 1, Exhibit B, of the Resolution, which also defines possible fee reductions, adjustments, or credits. A comparison of the recommended fees and current fees (Attachment 5), highlights the following key changes:
Parks and trails and storm drainage fees would generally increase for all land use types.
Public facilities and transportation fees may increase or decrease depending on land use type.
Water capacity fees would generally decrease for all land use types.
While the overall cost of facility and infrastructure improvements to support planned growth has risen, this increased cost is distributed across a larger potential development capacity (more square footage of potential development), which could help to balance the financial impact.
The recommended impact fees reflect the maximum justifiable fees in the Nexus Study Update, with two recommended adjustments:
Reduced impact fees for larger accessory dwelling units (ADUs) over 750 square feet to support potential development of a viable affordable housing option (state law exempts ADUs of 750 square feet or less from impact fees); and A continued reduction in the transportation impact fee for new retail development, setting it at the same rate as office development to ease constraints on building desired retail and restaurant spaces in the City.
58 PUBLIC HEARING ITEM 8.1
Background
The City of East Palo Alto implemented development impact fees in 2018 (water capacity) and 2019 (public facilities, parks and trails, transportation, and storm drainage) under Municipal Code Chapters 13.24 and 13.28. Authorized by California Government Code Section 66000 et seq. ("Mitigation Fee Act"), as amended by AB 602 and other applicable state laws, these fees help fund infrastructure to support future development, ensuring that developers contribute their fair share rather than burdening existing community members with disproportionate costs.
Development impact fees apply to new or expanded residential, office, industrial, and retail developments. or a change of use to an existing building that requires a planning approval or building permit. The impact fees are allocated for projects identified in the Nexus Study Update.
Why Update the Fees?
Significant new data since 2018/2019 supports a fee update, including:
2024 - Capital Improvement Program (CIP) Update;
2024 - Ravenswood Business District/4 Corners (RBD) Specific Plan & Subsequent Environmental Impact Report (SEIR)
2024 - Library Project Scope Update based on 2017 Library Needs Assessment. 2023 - Parks, Recreation, and Open Space Master Plan
2022 - Water System Master Plan
2021 - Facilities Master Plan Report
The 2025 Nexus Study Update incorporates these updates, while the Financial Feasibility Analysis reflects projected near-term market conditions and the Fee Comparison Survey reflects current regional impact fee structures.
City Council Review & Public Engagement
The City Council has discussed the impact fee updates in several meetings:
October 17, 2023 - authorized Willdan Financial Services (“Willdan”) to prepare a nexus study update and analyses (see Item 9.1 on the October 17, 2023 City Council Meeting Agenda).
April 2, 2024 – Reviewed fee update rationale and methodology (see Item 9.1 on the April 2, 2024 City Council Meeting Agenda.
July 2, 2024 – Discussed draft Nexus Study, Feasibility Analysis, and Fee Comparison Survey, along with potential policy options (see Item 9.1 on the July 2, 2024 City Council Meeting Agenda).
59 PUBLIC HEARING ITEM 8.1
November 12, 2024 – Considered special district financing for infrastructure needs (see Item 5.2 on the November 12, 2024 City Council Agenda). The Council directed staff to further study citywide options and options for the RBD Specific Plan Area. Staff expects to release a request for proposals later this year.
Throughout this process, City and Willdan staff engaged with RBD developers for feedback. Public review drafts were issued on June 18 and November 20, 2024, each with a 30-day review period.
Public Hearing and Next Steps
In compliance with the Mitigation Fee Act, as amended by AB 602, notices for this City Council hearing and the 30-day public review period were published and distributed on February 1 and 21, 2025. The revised reports (dated January 2025) include revisions to respond to public feedback on previous drafts which are summarized in this staff report, with all comment letters included in Attachment 6. If the updated fees are approved by the City Council on March 4, 2025, the fees would become effective 60 days later or on May 5, 2025.
Analysis
A. NEXUS STUDY UPDATE
The Nexus Study (Attachment 2) sets the maximum justifiable development impact fees that can be charged to developers to fund the capital improvement projects that are necessary to meet the public facility and infrastructure demands of new development.
Cities can choose to set impact fees at less than the maximum allowed to achieve or balance land use, economic development, fiscal, community benefits, and other important policy objectives. While fees can be set below the maximum justifiable amounts, doing so results in cities subsidizing new development by assuming a larger financial share of the cost of public improvements that are necessary to accommodate new development. For East Palo Alto, reducing impact fees is particularly challenging given the volume of capital needs for which the City is responsible.
The Nexus Study only includes capital improvement projects that are necessary to accommodate the City’s planned growth, and the estimated Net Project Cost is shown in Table A (Table E.3 in the Nexus Study.) Project costs are derived from the City’s CIP and supporting plans and studies and deducts funds that have already been secured by the City. Additionally, Table A excludes projects that are primarily required to address existing deficiencies. Using the methodology applied to each impact fee, the total Net Project Cost is divided into two parts: the portion allocated to potential Development Fee Revenue, which supports new development (50.4%), and the Additional Funding Required, which represents the City’s responsibility to meet the needs of the existing population (49.6%).
60 PUBLIC HEARING ITEM 8.1
The total share of public facility and infrastructure improvements allocated to new development is factored into unit cost based on land use type. These costs are calculated as follows: per square feet for parks and trails, public facilities, and transportation fees; by meter size for water capacity fees; and per impervious acre for storm drainage fees.
Table B (Table E.1 in the Nexus Study) outlines the maximum justifiable impact fees the City can adopt.
Table A: Non-Impact Fee Funding Required
Fee Category
Net Project
Cost
Development
Fee Revenue
Additional
Funding
Required
Parks and Trails $ 89,743,000 $ 57,203,152 $ 32,539,848 Public Facilities 120,300,000 45,965,096 74,334,904
Citywide Transportation 21,470,203 8,574,073 12,896,130 RBD Transportation 26,924,274 21,287,735 5,636,539
Water 66,332,000 24,480,850 41,851,150
Storm Drainage 78,589,000 45,890,900 32,698,100
Total $ 403,358,477 $ 203,401,806 $ 199,956,671
Sources: Tables 3.7, 4.6, 5.3, 6.3, 7.4, and 8.4.
Table B: Maximum Justified Development Impact Fee Schedule Land Use
Parks and
Trails
Public
Facilities
Citywide
Transportation
RBD
Transportation Water1
Storm
Drainage2 Administration3 Total
Non RBD
Residential per Sq. Ft.
Single Family $ 10.57 $ 8.49 $ 0.58 $ - $ 4.52 Varies $ 0.24 $ 24.40 Multifamily 14.69 11.80 0.64 5.45 Varies 0.33 32.91
Nonresidential per Sq. Ft.
Retail $ 1.50 $ 1.21 $ 2.69 $ - Varies Varies $ 0.05 $ 5.45 Office and R&D 2.25 1.81 1.28 - Varies Varies 0.05 5.39 Industrial 0.90 0.72 0.80 - Varies Varies 0.02 2.44
RBD
Residential per Sq. Ft.
Single Family $ 10.57 $ 8.49 $ 0.58 $ 2.14 $ 2.72 Varies $ 0.25 $ 24.75 Multifamily 14.69 11.80 0.64 2.40 3.27 Varies 0.33 33.13 Nonresidential per Sq. Ft.
Retail $ 1.50 $ 1.21 $ 2.69 $ 10.00 Varies Varies $ 0.15 $ 15.55 Office and R&D 2.25 1.81 1.28 4.75 Varies Varies 0.10 10.19 Industrial 0.90 0.72 0.80 2.96 Varies Varies 0.05 5.43
1 Nonresidential w ater fee varies by meter size. Refer to Table 7.9 for more information. 2 Storm drainage fee based on impervious surface. Refer to Table 8.4 for more information.
Sources: Tables 3.9, 4.7, 5.5, 6.6, 7.9 and 8.5.
3 Administrative charge of 1.0 percent for (1) legal, accounting, and other administrative support and (2) impact fee program administrative costs including revenue collection, revenue and cost accounting, mandated public reporting, and fee justification analyses. 61 PUBLIC HEARING ITEM 8.1
Table B has been updated from the previous draft Nexus Study Update (June 2024) to reflect the following key changes:
1. General Revisions:
a. Revisions have been made to the Nexus Study Update in response to public comments received on the earlier June 2024 and November 2024 drafts. These revisions are summarized below and comment letters on both drafts are included in Attachment 6.
b. Development potential now aligns with Scenario 2 of RBD Specific Plan, allowing up to 3.35 million square feet of office/research and development space, 1,600 additional residential units, and modest increases in allowable industrial and retail development.
c. Public facility and infrastructure improvement projects and cost estimates have been further updated to align with the 2024 CIP.
d. The proportional allocation of project costs between existing and new development and between RBD and non-RBD development have been reviewed and adjusted where deemed appropriate. Project were also reviewed to confirm that impact fees will not fund existing deficiencies. Additional explanations clarify the nexus study methodology, with references to relevant plans and studies that are the source for the cost allocations.
e. The discussion for each impact fee has been expanded to address compliance with the Mitigation Fee Act, AB 602 requirements, and nexus study guidelines from the California Department of Housing and Community Development (HCD).
2. Revisions to Parks and Trails and Public Facilities Impact Fees:
The worker weighing factor has been reduced from 0.31 to 0.19 to reflect lower anticipated workforce usage of public parks, recreation, and public facilities compared to City residents. This adjustment considers recent hybrid work trends, where employees work remotely for a portion of the week, though policies vary by employer.
This adjustment results in both impact fees being reduced for non-residential development, and increased fees for residential development. As a result of this adjustment, both impact fees have been reduced for non-residential development and increased for residential development.
3. Revisions to Transportation Impact Fees:
a. The previous methodology for allocating vehicle trips assumed that both existing and new development will reduce vehicle trips to 40 percent below standard trip generation rates to comply with the City’s Transportation Demand Management (TDM) Ordinance. For existing development, the 40 percent trip reduction 62 PUBLIC HEARING ITEM 8.1
requirement only pertains to non-residential uses with 100 or more employees.
Existing development in the City is predominately residential and much of the existing non-residential development does not meet the employee threshold.
Therefore, for the purpose of the Nexus Study, the allocation methodology has been adjusted to reflect that only new development meets the TDM trip reduction requirement. The result is that a higher proportion of total forecasted vehicle trips has been allocated to existing development with a reduction in transportation impact fees for new development. Additionally, the TDM trip reduction captures “internal” trips for mixed-use development.
b. For the RBD transportation impact fee, with the Loop Road eliminated from the RBD Specific Plan and Nexus Study, the impact fee has been substantially reduced for new RBD development.
4. Revisions to Water Capacity Impact Fees:
The project list was updated to reflect the 2024 CIP and Water System Master Plan, resulting in slightly revised water capacity impact fees. The project-by-project allocation of costs to new development was reviewed and adjusted where appropriate.
5. Revisions to Storm Drainage Impact Fee:
Following Council discussion in July 2024 and public comments on the high cost of RBD storm drainage improvements, staff conducted further review of the Utility Infrastructure Study (UIS) prepared for the RBD Specific Plan update. The UIS outlined two primary storm drainage solutions for the RBD:
a. Constructing a new Runnymede Pump Station; or
b. Implementing alternative system improvements instead of the new pump station.
Staff determined that constructing the Runnymede Pump Station is the preferred solution, allowing the removal of nine projects from the impact fee list. While the Runnymede Pump Station project scale has been upsized to handle a 100-year storm event, the overall result is a reduction in required infrastructure improvements for new RBD development, leading to lower storm drainage impact fees.
B. FEASIBILITY ANALYSIS
The Feasibility Analysis (Attachment 3) has been updated to reflect the revised development impact fees in the Nexus Study. Additional revisions incorporate public input from the development community and updated data on construction, financing, and operating expenses. Key updates to development prototype modeling include:
Adjusted non-residential lease rates (reduced to $5.70-$6.00/sf), operating and leasing expenses, financing costs (increased from 5% to 10%), and capitalization rates (reduced to 4.0-6.5%).
A higher ratio of structured parking to surface parking for higher-density projects. 63 PUBLIC HEARING ITEM 8.1
Inclusion of school mitigation fees from both school districts.
Staff considered comments that the appropriate developer profit margin should be assumed to be at least 15%. Staff believes the assumption in the Financial Feasibility Analysis of 12% developer profit margin is appropriate based on its expert consultants.
Similarly, staff and its expert consultants agree that the use of residential rents of $4.00- $4.25/sf continue to be valid. Vacancy rates for all prototypes were maintained at 5% although staff recognizes comments regarding current high vacancy rates for office space.
The Feasibility Analysis does not include the following items which are pending further analysis:
Sanitary sewer impact fees which will be determined through a nexus study A possible special financing district for public improvements and maintenance A RBD transportation management association
The Feasibility Analysis continues to include the City s existing inclusionary housing requirements and commercial linkage fees. Additionally, the City is participating in a Grand Nexus Studywith San Mateo County and other cities to evaluate the impact of inclusionary housing and commercial linkage programs.
Findings on Development Feasibility
As shown in Table C below, the feasibility conclusion remains consistent with the conclusion of the prior drafts. The financial modeling indicates that most development prototypes, particularly higher-density residential, office, and mixed-use development, are infeasible or marginal in the near-term. Lower-density prototypes such as townhouses may be feasible. Industrial projects may also be feasible if industrial land prices are lower.
For other development types, feasibility depends on improvements in market conditions, financing availability, land acquisition costs, and construction expenses. The financial modeling further demonstrates that even if all development impact fees were waived, most prototypes would still be infeasible due to broader economic and market challenges.
Until these factors improve, reducing City impact fees will have minimal influence on overall project feasibility.
64 PUBLIC HEARING ITEM 8.1
TABLE C
Residual Land Value Summary (1)
(per land square foot)
Symbol Development Prototype
Residual
Land Value
w/ impact fees
Residual
Land Value
w/o impact fees
R1 For-Sale Townhouse/Single-Family Attached $53 $109
R2 Medium Density Residential ($152) ($82)
R3 High Density Residential ($313) ($142)
M1 Medium Density Mixed Commercial/Residential ($446) ($378) M2 High Density Mixed Commercial/Residential ($844) ($709) OL1 Medium Density Office/Life Science ($638) ($614)
OL2 High Density Office/Life Science ($1,384) ($1,349)
Flex Low Density Flex Space ($105) ($87)
I1 Industrial (warehouse) $13 $22
(1) A residual land value model is used to assess feasibility and indicates the maximum price a developer can pay for land to construct a feasible project. Residual land values below $50 per square foot (or $2.2 million per acre) generally indicate low feasibility based on the current market value of land.
C. IMPACT FEE COMPARISON SURVEY
The Impact Fee Comparison Survey (Attachment 4) compares the maximum justifiable impact fees from the Nexus Study Update with the current development impact fees charged by surrounding cities, including Menlo Park, Mountain View, Palo Alto, Redwood City, San Mateo, and Union City. While not required for the Nexus Study, this comparison provides another lens for evaluating impact fees.
Impact fees vary significantly by city and land use type, reflecting differences in capital improvement needs, community service standards, growth projections, policies, potential funding sources, and other factors. Fees for specific categories, such as parks and transportation, also vary widely among cities.
The fee comparison shows that, cumulatively, the maximum justifiable impact fees are within the range of total fees charged by the surveyed cities. They are neither the highest nor the lowest for any prototype. Since facility and infrastructure needs, and other factors differ by city, this fee comparison should be used for general reference, rather than as a direct policy guide.
D. POSSIBLE FEE ADJUSTMENTS
The maximum justifiable impacts fees calculated in the Nexus Study are not required to be adopted by the City. The City Council may choose to adopt lower fees to align with 65 PUBLIC HEARING ITEM 8.1
broader policy goals. Reducing fees for a particular land use type would require the City to subsidize that development type by covering a greater share of infrastructure costs.
The City would need to secure additional funding to offset this increased fiscal obligation.
Adjustments could be appropriate to balance multiple priorities, such as economic development, housing, and infrastructure needs.
In addition to project-specific fee credits, adjustments, or reductions outlined in the recommended Development Impact Fee Schedule (Fee Resolution, Exhibit B,) the following fee adjustments are considered:
1. Transportation Impact Fee for Retail Uses
Retail development is financially challenging, even in strong economic conditions. The 2019 feasibility analysis indicated that retail development projects often struggle, and the General Plan (Policies 1.8 and 2.2) prioritizes attracting community serving retail and restaurant businesses, particularly at Four Corners and along Bay Road. The RBD Specific Plan reinforces these policies, encouraging mixed-use development with ground-floor commercial uses at these locations.
Retail uses generate more vehicle trips per square foot than residential, office, or industrial projects. While the Nexus Study allows for a higher transportation impact fee for retail, doing so could discourage retail development, particularly for mixed-use projects, which are already financially challenging.
Currently, retail and office projects are charged the same transportation impact fee rate. Staff recommends maintaining this policy, as reflected in the recommended Development Impact Fee Schedule. The projected impact of this adjustment is shown in Table D:
TABLE D
Adjusted Transportation Impact Fee for Retail Space
(per square foot)
Within RBD Outside RBD
Current 2024 Impact Fee $8.84 $8.84
Maximum Justifiable Fee $12.69 $2.69
Recommended Adjusted Fee
(same rate as office/R&D)
$6.03 $1.28
2. Accessory Dwelling Units (ADUs)
In November 2023, the City Council supported exploring strategies to incentivize and reduce development constraints for the construction of ADUs. Various options were discussed including reducing zoning, permitting, and financial constraints. Since then:
a. Zoning changes have streamlined ADU permitting to align with state laws. 66 PUBLIC HEARING ITEM 8.1
b. The City is collaborating with San Mateo County and other cities to develop financing, resources, seminars, and ADU construction support programs for homeowners. Model ADU plans are also available online.
c. The City’s 2023-2031 Housing Element contains policies to facilitate the construction of ADUs as an affordable housing alternative, including Policy 1.8, which directs the City to consider waiving, reducing, or deferring permits and development impact fees for ADUs.
Pursuant to Government Code Section 66324, ADUs 750 square feet or smaller are exempt from impact fees, while larger ADUs can be charged impact fees proportionately in relation to the square footage of the primary dwelling unit. For example, a 2,000 square-foot primary dwelling unit with a proposed 1,000 square-foot ADU could result in 50 percent of the impact fee that would be charged for a new primary dwelling on the same site. (Government Code Section 66324, subd.(c)(1)) In East Palo Alto, impact fees can be a significant financial obstacle to constructing a larger ADU. To reduce this financial constraint, staff suggests assessing impact fees only on the square footage above 750 square feet if those fees are less than the amount calculated in proportion to the square footage of the primary dwelling unit.
Using a 1000-square-foot ADU for illustration, the financial effect of the fee reduction is shown in Table E.
TABLE E
Adjusted Total ADU Impact Fees (1)
Example: 1,000-square-foot ADU
ADU
(within RBD)
ADU
(outside RBD)
Current 2024 Impact Fees $15,018 $14,032
Maximum Justifiable Fee
(assessed on entire unit, or 1,000 sf
for example)
$32,141 $27,084
Recommended Adjusted Fee
(assessed on space above 750 sf
only, or 250 sf for example)
$8,035 $6,771
(1) Combined parks and trails, public facilities, transportation, storm drainage, and water capacity fees. Assumes ADU will have a separate water meter from primary dwelling.
3. Consideration of Adjustments to Residential Impact Fees Residential impact fees are projected to increase more than non-residential impact fees. A key reason for this difference is that a lower worker weighting factor has been applied in the Nexus Study Update than in the previous 2019 nexus study which lessens the impact of new development on parks and public facilities.
The City Council could consider adjusting the residential impact fees to alleviate the fee increase on housing projects. However, this would require the City to subsidize 67 PUBLIC HEARING ITEM 8.1
new development. Additionally, the Feasibility Analysis indicates that even with reduced fees, current economic conditions would still hinder project viability. a. Comparison with Quimby Fees: The most significant fee increase applies to the parks and trails impact fee, which is based on the City’s first-ever adopted Parks Master Plan. The parks and trails fee only applies rental housing. In contrast, ownership housing (e.g. residential subdivisions and condos) is subject to parkland dedication or in-lieu fees under Chapter 18.62 of the Municipal Code through the authority granted by the Quimby Act (Government Code Section 66477).
For a 1,000 sq. ft. unit:
The Quimby in-lieu fee for a condominium unit ranges from $17,886 to $25,2031 depending on land value.
The maximum justifiable parks and trails fees for a rental housing unit would be $14,8402.
While the parks fee would increase under the Nexus Study, it remains lower than the Quimby fee for a comparable condominium. Staff does not recommend reducing the parks and trails impact fee given the identified facility needs in the Parks Master Plan.
b. Transit Priority Area: Under Government Code Section 66005.1, cities must reduce transportation impact fees for housing projects located within a transit priority area if certain conditions are met. One of the conditions is if a housing project is located within 1/2-mile radius of a “major transit stop.” A major transit stop was defined, among other criteria, as “the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.” No bus stops in East Palo Alto met this definition.
AB 2553, signed into law in September 2024, amended the definition of a major transit stop by increasing the service internal from 15 minutes to 20 minutes. The only location in East Palo Alto that could potentially qualify under the amended definition is University Avenue/Bay Road where SamTrans Routes 296 and 281 stop at this intersection. Route 296 meets this definition with 15-minute service intervals during the AM/PM weekday peak hours (7-10 am and 4-7 pm), but Route 281 does not fully qualify with 19 to 21-minute service intervals during peak hours.
While University Avenue/Bay Road does not fully meet the definition of a major transit stop,the City Council could still consider reducing transportation impact fees for residential projects located within 1/2-mile radius of this intersection to 1 Calculated as follows: 3 acres/1,000 population (per Chapter 18.62 of Municipal Code) x $2.2 to $3.1 million/acre x 2.71 persons/multi-family unit for East Palo Alto per U.S. Census American Communities Survey 2 Calculated as follows: $14.84/square foot (parks and trails fee, plus 1% administrative charge) x 1,000 square feet 68 PUBLIC HEARING ITEM 8.1
prioritize housing near transit. Attachment 7 shows the 1/2-mile radius from this intersection. Staff notes, however, that the transportation modeling and methodology for the Nexus Study Update already incorporate a 40 percent trip reduction city-wide for new development to reflect compliance with the Citys TDM ordinance. The recommended fee schedule does not currently include a reduced transportation impact fee for housing projects located within 1/2-mile radius of University Avenue/Bay Road. If service intervals for the bus routes change substantially in the future or other applicable state laws are enacted, the transportation impact fee for qualifying projects should be revisited. c. Affordable/Senior Housing Projects: For affordable or inclusionary housing units, staff suggests that, on a project-by-project basis, the City Council could consider offsetting the impact fees for these units with financial assistance. This assistance could be available through the City’s commercial linkage fees, inclusionary housing in-lieu fees, or Measure HH revenue. The Development Impact Fee Schedule also allows reducing transportation impact fees for affordable and senior housing development based on typically lower vehicle trips generated by these projects.
4. Fee Payment
Beginning on January 1, 2025, payment of impact fees for designated residential development projects,as defined by Government Code Section 66007 (SB 937), are not due until final inspection or issuance of a certificate of occupancy, whichever occurs first. The fee resolution reflects this state law change. Payment of impact fees for other projects continue to be due prior to building permit issuance. However, the fee resolution includes a provision that allows the City Council to approve or authorize the City Manager to approve alternative payment terms for a specific project, such as through a development agreement,
Fiscal Impact
The Development Impact Fee Schedule would ensure that new development will assume its fair share allocation for public facilities and infrastructure improvements that are necessary to accommodate growth as identified in the City s CIP and Nexus Study. The Nexus Study identifies capital improvement projects totaling approximately $403 million dollars. The maximum amount that can be funded with development impact fees is approximately $203 million. and the City will need to identify other funding sources or financing mechanisms for the remaining $200 million.
Impacts fees are collected at issuance of building permits or approval of occupancy and are placed in special capital improvement funds. A special fund has been established for each impact fee. The collected fees can only be used for the purposes identified in the Nexus Study for each fee and cannot be used for general government services or other projects. A one percent administrative charge will be added to the impact fees to cover administrative, monitoring. and reporting requirements.
Per the Mitigation Fee Act, an annual AB1600 report is published to disclose the status of each special fund and state-mandated findings on the unexpended fund balance must be 69 PUBLIC HEARING ITEM 8.1
made every five years per Government Code section 66001 subdivision (d). AB 1600 reports are available at https://www.cityofepa.org/finance/page/ab1600-developmentimpact-fee-reports. At least every eight years, an updated nexus study must be prepared to incorporate any necessary updates to capital improvement projects and cost estimates, funding status, proportionate allocations, and forecasted development.
Public Notice
Pursuant to the Mitigation Fee Act (Government Code Sections 66016 and 66016.5), on February 1 and 21, 2025, notices were distributed on: 1) the availability of the revised Nexus Study Update, Feasibility Analysis, and Fee Comparison Survey on the Citys website; and 2) a scheduled City Council public hearing on March 4, 2025, to consider adoption of the revised Nexus Study Update and updated parks and trails, public facilities, transportation, storm drainage, and water capacity development impact fees. The notices were published in the local newspaper, emailed to interested parties and stakeholders, and posted on the bulletin board at City Hall, 2415 University Avenue, East Palo Alto.
Environmental
Approval of this Resolution is exempt from the requirements of the California Environmental Quality Act (CEQA) because: it is not a project as it has no potential to result in direct or reasonably foreseeable indirect physical change to the environment (14 Cal. Code Regs. §15378(a)); and the project does not create a funding mechanism or other government fiscal activity that involve any commitment to a specific project which may result in a potentially significant physical impact on the environment (14 Cal. Code Regs. §15378(b)(4)). Projects that may receive funding with development impact fees would be required to comply with applicable project-specific CEQA requirements at the time such projects are proposed for implementation.
Government Code § 84308
Applicability of Levine Act: No, as the proposed action does not involve an entitlement within the meaning of the Levine Act.
Analysis of Levine Act Compliance: Not applicable.
Attachments
1. Development Impact Fee Resolution with Exhibit A: Nexus Study Update, and Exhibit B: Updated Impact Fee Schedule
2. Development Impact Fee Nexus Study Update (January 31, 2025)
3. Development Impact Fee Financial Feasibility Analysis (January 30, 2025)
4. Development Impact Fee Comparison Survey (January 31, 2025)
5. Comparison of Existing and Recommended Development Impact Fees
6. Public Comment Letters: 6 letters on June 2024 draft reports, and 3 letters on November 2024 draft reports
7. University Avenue/Bay Road 1/2-mile Radius Map
70 RESOLUTION NO. ___
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EAST PALO
ALTO ADOPTING A NEXUS STUDY UPDATE AND UPDATED PARKS AND
TRAILS, PUBLIC FACILITIES, TRANSPORTATION, STORM DRAINAGE, AND
WATER CAPACITY DEVELOPMENT IMPACT FEES
WHEREAS, California Government Code Section 66000 et seq (“Mitigation Fee Act”), as amended by Assembly Bill 602, and other applicable state law authorize cities to impose development impact fees to require developers to contribute to the proportional cost of facility and infrastructure improvements that will benefit their development projects; and WHEREAS, the City of East Palo Alto (“City”) has determined that future planned growth per its General Plan will place increased demands on the City’s parks, trails, and public facilities and the City’s transportation, storm drainage, and water capacity infrastructure; and expanding and upgrading these facilities will be required to adequately serve future development; and WHEREAS, the City has determined that failure to upgrade and expand parks and trails, public facilities, transportation, storm drainage, and water capacity infrastructure will result in substandard conditions, will overburden existing infrastructure, and will lead to unacceptable operating conditions; and WHEREAS, pursuant to Mitigation Fee Act and other applicable state laws and Chapters 13.24 and 13.28 of the City’s Municipal Code, the City prepared nexus studies and adopted water capacity development impact fees in July 2018, and parks and trails, public facilities, transportation, and storm drainage development impact fees in April 2019; the fees are deposited in capital improvement funds that will only be expended for projects covered by the fees; the fees will be reevaluated every five years with findings about the unexpended portion of the funds pursuant to Government Code section 66001 subdivision (d); and
WHEREAS, in June 2024, the City adopted an updated Capital Improvement Program (“CIP”) that includes projects that are necessary to serve new development as identified in the City’s Park, Recreation, and Open Space Master Plan (2023), Water System Master Plan (2022), Facilities Master Plan Report (2021), Library Needs Assessment (2017), Storm Drainage Master Plan (2014), and supporting studies; and
WHEREAS, in December 2024, the Ravenswood the Business District/4 Corners Specific Plan (“Specific Plan”) was updated to increase the development potential within the Specific Plan area, including increasing the allowable amount of office/research and development space from 1.3 million square feet to 3.35 million square feet and allowing up to 1,600 new residential units; and 71 WHEREAS, the Specific Plan Final Environmental Impact Report (“FEIR”), certified in December 2024, includes a Transportation Impact Analysis (2023) and Utility Infrastructure Study (2023) that identified additional transportation, storm drainage, and water capacity public improvements which are necessary to accommodate the increased development potential within the Specific Plan area; and
WHEREAS, the City has determined that existing and future revenue sources are insufficient to fund the public facilities and infrastructure improvements identified in the City’s updated CIP and Specific Plan FEIR, and these facilities and improvements are critical for meeting the needs of the forecasted population and workforce in the City; and
WHEREAS, recognizing that updated development impact fees are necessary to reflect the updated CIP and Specific Plan FEIR, the City retained Willdan Financial Services (“Willdan”) to prepare: 1) a Nexus Study Update to determine the maximum justifiable impact fees that can be reasonably charged to new development; 2) a Financial Feasibility Analysis to analyze the potential financial impact of impact fees on projects feasibility; and 3) a Fee Comparison Survey of impact fees charged by surrounding cities; and WHEREAS, prior draft reports prepared by Willdan of the Nexus Study Update, Financial Feasibility Analysis, and Fee Comparison Survey were released for 30-day public review periods on June 19, 2024, and November 20, 2024; written and oral comments were received on these prior draft reports at stakeholder meetings; and public comments were received at City Council meetings during the preparation of the reports on April 2, 2024, July 2, 2024, and November 12, 2024; and
WHEREAS, based on City Council and public comments on the prior draft reports, a Nexus Study Update (revised January 31, 2025), hereto attached as Exhibit A and incorporated by reference, a Financial Feasibility Analysis (revised January 30, 2025), and a Fee Comparison Survey (revised January 31, 2025) were released on February 1, 2025, for a 30-day public review period; and WHEREAS, pursuant to Government Code Sections 66016 and 66016.5, notices of availability of the Nexus Study Update and a City Council public hearing to consider adoption of said Nexus Study Update and adoption of updated parks and trails, public facilities, transportation, storm drainage, and water capacity development impact fees were published in the local newspaper, posted at City Hall, and emailed to interested parties and stakeholders on February 1, 2025, and February 21, 2025: and
WHEREAS, on March 4, 2025, the City Council held a noticed public hearing to receive public comments on the Nexus Study Update, Financial 72 Feasibility Analysis, Fee Comparison Survey, and recommended updates to the parks and trails, public facilities, transportation, storm drainage, and water capacity impact fees; and
WHEREAS, pursuant to the Mitigation Fee Act and other applicable state laws, the City Council makes the following findings, with specific findings for each development impact fee contained in the Nexus Study Update, hereto attached as Exhibit A and incorporated by reference:
1. Purpose of Fee: Pursuant to Section 66001(a)(1) of the Mitigation Fee Act, the development impact fees are designed to ensure that new development will not burden existing development in the City with the cost of public facilities and infrastructure improvements that are required to accommodate growth, specifically, public facilities and infrastructure relating to parks and trails, public facilities, transportation, storm drainage, and water capacity. The purpose of the fees is to provide a funding source from new development in the City for facilities and infrastructure to serve that development. The fees advance a legitimate City interest by enabling the City to provide facilities and improvements to serve new development in the City.
2. Use of Fee Revenues: Pursuant to Section 66001(a)(2) of the Mitigation Fee Act, the development impact fees will be used to expand the capacity of public facilities and infrastructure improvements to serve new development in the City. Fees will be used to fund projects located within the City limits. A list of planned facilities and improvements for each fee is listed in the Nexus Study Update. Fees will be expended solely and exclusively for the purposes identified in the Nexus Study Update and City’s CIP and not for general revenue purposes.
3. Relationship Between Use of Fees and Type of Development Project:
Pursuant to Section 66001(a)(3) of the Mitigation Fee Act, the City will restrict fee revenue to the acquisition of land, construction of public facilities and infrastructure improvements, and purchase of related capital equipment required to meet the demand for parks and trails, public facilities, transportation, storm drainage, and water capacity caused by new development. Projects funded by the fees will provide a citywide network of facilities and infrastructure that will be accessible to residents and workers associated with new development. Using the estimated project costs and prescribed allocation methodology for each fee, the resulting fees ensure that new development will only fund its fair share of improvements, and impact fee revenue will not be used to correct existing deficiencies. A deficiency associated with existing development’s share of the planned facilities and improvements will not be funded by impact fee revenue. Additional explanations of the reasonable relationship between the use of each fee and the development types on which they are 73 imposed is included within the Nexus Study Update and is hereby incorporated by this reference. Thus, a reasonable relationship exists between the use of fee revenue and the new development that will pay the fees.
4. Relationship Between Need for Public Facility and Type of Development Project: Pursuant to Section 66001(a)(4) of the Mitigation Fee Act, new residential and non-residential development will generate additional population growth. An increase in residents and workers will increase the demand for public facilities and infrastructure improvements. Facilities and infrastructure needs for each fee are based on standards that represent the demand generated by new development for those facilities and infrastructure. For each fee, demand is measured by a single facility standard (e.g., cost per capita or vehicle trip) that can be applied across land use types to ensure a reasonable relationship to the type of development. The standards vary by development types, and depending on the fee, facility or infrastructure design and demand factors. For the parks and trails and public facilities fees, a worker is weighted less than one resident based on an analysis of the relative use demand between residential and non-residential uses.
The standards used to allocate facilities costs to new development is also used to determine if planned facilities and infrastructure will partially serve the existing service population by correcting existing deficiencies.
This approach ensures that new development will only be responsible for its fair share cost of planned facilities and infrastructure, and that the fees will not unfairly burden new development with the cost of improvements associated with serving the existing population. Additional explanations of the reasonable relationship between the need for the public facility and the type of development on which fees are imposed is included within the Nexus Study Update and is hereby incorporated by this reference.
5. Proportionality: Pursuant to Section 66001(b) of the Mitigation Fee Act, the reasonable relationship between each impact fee for a specific new development project and the cost of the facility and infrastructure improvements attributable to that project is based on the estimated demand for those improvements that are generated by the project. Fees for a specific project are based on the project’s size. Larger development projects can result in a higher service population resulting in higher fee revenue than smaller projects in the same land use classification. Thus, the fees ensure a reasonable relationship between a specific new development project and the cost of the facilities attributable to that project. For each fee, the Nexus Study Update defines the assumptions that drive the proportionality of the fees between the land uses defined in this study.
74 As described in Section 13.28.080 of the City’s Municipal Code and the recommended Development Impact Fee Schedule (Exhibit B), development projects that construct and dedicate public facilities or infrastructure improvements beyond their required obligation are potentially eligible to receive credit against their impact fees.
Development projects can satisfy their obligations through a combination of fees, dedications, credits, or construction of improvements.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF EAST PALO ALTO, as follows:
1. FINDINGS. The recitals set forth in this resolution are incorporated as findings and determinations by the City Council.
2. CALIFORNIA ENVIRONMENTAL QUALITY ACT. Approval of this Resolution is exempt from the requirements of the California Environmental Quality Act (“CEQA”) because: it is not a project as it has no potential to result in direct or reasonably foreseeable indirect physical change to the environment (14 Cal. Code Regs. §15378(a)); and the project does not create a funding mechanism or other government fiscal activity that involve any commitment to a specific project whi may result in a potentially significant physical impact on the environment (14 Cal. Code Regs. §15378(b)(4)). Projects that may receive funding with development impact fees would be required to comply with applicable project-specific CEQA requirements at the time such projects are proposed for implementation.
3. NEXUS STUDY UPDATE. Pursuant to the Mitigation Fee Act and other applicable state laws, the City Council hereby adopts the Nexus Study Update, dated January 31, 2025, prepared by Willdan Financial Services, and attached hereto as Exhibit A and incorporated by reference; and
4. UPDATED DEVELOPMENT IMPACT FEES. Pursuant to the Mitigation Fee Act and other applicable state laws and Chapters 13.24 and 13.28 of the City of East Palo Alto Municipal Code, the City Council hereby adopts the updated park and trails, public facilities, storm drainage, and transportation, water capacity, and storm drainage development impact fees as prescribed in Exhibit B attached hereto and incorporated by reference.
5. EFFECTIVE DATE. The updated development impact fees shall be effective sixty (60) days after the adoption of this fee resolution and shall apply to all qualifying development projects, except for projects that have been issued a valid and active building permit by the City or are recognized as a vested project by the City before the effective date.
Impact fees shall apply to new development projects, expansion of 75 existing buildings or structures, or a change of use that requires a planning approval or building permit.
6. ANNUAL FEE ADJUSTMENT. Beginning on July 1, 2026, and annually thereafter on July 1, development impact fees shall be automatically adjusted by the City Manager or designee, without further City Council action necessary, by a percentage equal to the change in the Construction Cost Index as most recently published by the Engineering New Record (20-Cities Average).
7. SEVERABILITY. If any section, subsection, clause or phrase of this Resolution is for any reason held to be unconstitutional, or otherwise invalid, such decision shall not affect the validity of the remaining sections hereof.
8. NOTICE OF EXEMPTION. The City Manager is authorized to file a Notice of Exemption for the updated development impact fees with the San Mateo County Clerk within five (5) working days of the date of the adoption of this fee resolution.
PASSED AND ADOPTED this 4th day of March, 2025, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
SIGNED:
Martha Barragan, Mayor
ATTEST: APPROVED AS TO FORM:
James Colin, City Clerk John D. Lê, City Attorney
76 EXHIBIT A
CITY OF EAST PALO ALTO
DEVELOPMENT IMPACT FEE NEXUS STUDY UPDATE
Prepared by Willdan Financial Services
Revised: January 31, 2025
77 78
79 CITY OF EAST PALO ALTO
DEVELOPMENT IMPACT FEE NEXUS
STUDY UPDATE
PUBLIC REVIEW DRAFT
JANUARY 31, 2025
Oakland Office Corporate Office Other Regional Offices
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Fax: (888) 326-6864 Seattle, WA
Washington, DC
www.willdan.com
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81 i
TABLE OF CONTENTS
EXECUTIVE SUMMARY .......................................................................... 5 Background and Study Objectives 5
Facility Standards and Costs 5
Use of Fee Revenues 6
Impact Fee Zones 6
Development Impact Fee Schedule Summary 7
Other Funding Needed 10
1. INTRODUCTION ......................................................................... 11 Organization of the Report 11
Public Facilities Financing in California 11
Study Objectives 12
Guiding Documents 12
Fee Program Maintenance 13
Administrative Costs 13
Study Methodology 13
Types of Facility Standards 14
New Development Facility Needs and Costs 14
2. GROWTH FORECASTS ............................................................... 16 Land Use Types 16
Impact Fee Zones 16
Existing and Future Development - Citywide 17
Existing and Future Development - RBD 18
Occupant Densities 20
3. PARKS AND TRAIL FACILITIES..................................................... 21 Service Population 21
Existing Park Inventory 22
Parkland and Park Facilities Unit Costs 23
Planned Facilities 24
Cost Allocation 24
Existing Level of Service 24
Future Level of Service 25
Use of Fee Revenue 25
Non-Fee Funding Required 25
Fee Schedule 26
Mitigation Fee Act Findings 27
Purpose of Fee 27
Use of Fee Revenues 27
Benefit Relationship 27
Burden Relationship 27
Proportionality 28
82 City of East Palo Alto Development Impact Fee Nexus Study Update ii
4. PUBLIC FACILITIES .................................................................... 29 Service Population 29
Facility Inventories and Standards 30
Existing Inventory 30
Planned Facilities 31
Cost Allocation 32
Existing Level of Service 32
Future Level of Service 32
Use of Fee Revenue 33
Non-Fee Funding Required 33
Fee Schedule 34
Mitigation Fee Act Findings 34
Purpose of Fee 34
Use of Fee Revenues 35
Benefit Relationship 35
Burden Relationship 35
Proportionality 36
5. TRANSPORTATION FACILITIES..................................................... 37 Trip Demand 37
Trip Growth 37
Project Costs 38
Fee per Trip Demand Unit 40
Projected Fee Revenue 40
Fee Schedule 40
Mitigation Fee Act Findings 41
Purpose of Fee 41
Use of Fee Revenues 41
Benefit Relationship 41
Burden Relationship 42
Proportionality 42
6. RBD TRANSPORTATION FACILITIES ............................................ 44 Trip Demand 44
Trip Growth 45
Project Costs 45
Fee per Trip Demand Unit 46
Projected Fee Revenue 46
Fee Schedule 47
Mitigation Fee Act Findings 47
Purpose of Fee 47
Use of Fee Revenues 48
Benefit Relationship 48
Burden Relationship 48
Proportionality 49
7. WATER CAPACITY..................................................................... 50 Water Demand 50
EDU Generation by New Development 50
83 City of East Palo Alto Development Impact Fee Nexus Study Update iii
Current Water System Asset Valuation 51
Facility Needs and Costs 54
Buy In Component 57
Water Supply Component 57
Total Cost per EDU 58
Projected Fee Revenue 59
Fee Schedules 60
Mitigation Fee Act Findings 61
Purpose of Fee 61
Use of Fee Revenues 61
Benefit Relationship 62
Burden Relationship 62
Proportionality 62
8. STORM DRAIN FACILITIES .......................................................... 63 Storm Drain Demand 63
Impervious Surface Generation by New Development 63
Planned Facilities 64
Projected Fee Revenue 67
Fee per Impervious Acre 67
Existing Impervious Surface 67
Mitigation Fee Act Findings 68
Purpose of Fee 68
Use of Fee Revenues 68
Benefit Relationship 68
Burden Relationship 69
Proportionality 69
9. AB 602 REQUIREMENTS............................................................ 70 Compliance with AB 602 70
66016.5. (a) (2) - Level of Service 70
66016.5. (a) (4) – Review of Original Fee Assumptions 71 66016.5. (a) (5) – Residential Fees per Square Foot 71
66016.5. (a) (6) – Capital Improvement Plan 71
Housing and Community Development Nexus Study Template 72 Step 1: Reasoning Behind Impact Fee Program 72
Step 2: Existing and Future Development Projections 72
Step 3: Determination of Facility Standards 72
Step 4: Cost of Facilities to Serve New Development 72
Step 5: Fair Share Allocation of Facility Costs to New Development 72 Step 6: Maximum Fee Based on Nexus Analysis 72
Step 7: Financial Impact of Fees 72
Step 8: Fee Adoption and Program Implementation 72
10. IMPLEMENTATION...................................................................... 73 Impact Fee Program Adoption Process 73
Inflation Adjustment 73
Reporting Requirements 73
CEQA 73
Programming Revenues and Projects with the CIP 1
84 City of East Palo Alto Development Impact Fee Nexus Study Update iv
85 5
Executive Summary
This report summarizes an analysis of development impact fees needed to support future development in the City of East Palo Alto through 2045. It is the City’s intent that developers pay the cost of public facilities and infrastructure improvements necessitated by their development in the form of a development impact fee, also known as a public facilities fee, to the extent permitted by law. This study calculates the maximum justifiable fee schedule that can be charged to new development. As a policy decision to incentivize development, the City Council could choose to implement fees that are less than the maximum justified amounts in this study. Should the City Council adopt fees lower than the maximum justified amounts then either the City would need to use other funding sources to subsidize the facility needs of new development, or else service standards would decrease over time. The public facilities and improvements included in this analysis are divided into the fee categories listed below:
Parks and Trails
Public Facilities
Citywide Transportation
Ravenswood Business District
(RBD) Transportation
Water Capacity
Storm Drainage
Background and Study Objectives
The primary policy objective of a development impact fee program is to ensure that new development pays the capital costs associated with growth. The primary purpose of this report is to calculate fees that will enable the City to expand its inventory of public facilities, as new development creates increases in service demands.
The City imposes public facilities and infrastructure impact fees under authority granted by the Mitigation Fee Act (the Act), contained in California Government Code Sections 66000 et seq., as recently amended by AB 602. This report provides the necessary findings required by the Act for adoption of the fees presented in the fee schedules contained herein.
Though not legally required, all development impact fee-funded capital projects are linked to the City’s Capital Improvement Plan (CIP). Using a CIP can help the City identify and direct its fee revenue to public facilities projects that are required to accommodate future growth. By providing a nexus between fee revenues and specific capital projects, the City can help ensure a reasonable relationship between the impact of new development and the intended use and amount of fee revenues, as required by the Mitigation Fee Act.
Facility Standards and Costs
There are several approaches typically used to calculate facilities standards and allocate the costs of planned facilities to accommodate growth in compliance with the Mitigation Fee Act requirements.
The system plan approach is based on a master facility plan in situations where the needed public facilities and infrastructure improvements to serve both existing and new development. To ensure rough proportionality, this approach allocates existing and planned facilities across existing and new development to determine new development’s fair share of facility and infrastructure needs.
This approach is used when it is not possible to differentiate the benefits of new public facilities between new and existing development, such as a fire station that will respond to calls from both existing and new development. Often the system plan is based on increasing facility standards, so the City must find non-impact fee revenue sources to fund existing development’s fair share of planned facilities. This approach is used for the parks and trail, and public facility fees in this report. 86 City of East Palo Alto Development Impact Fee Nexus Study Update 6 The planned facilities approach allocates costs based on the ratio of planned public facilities that are necessitated by the increase in demand associated with new development. This approach is appropriate when specific planned facilities that only benefit new development can be identified, or when the specific share of facilities benefiting new development can be identified. Examples include street improvements to avoid deficient levels of service or a sewer trunk line extension to a previously undeveloped area. This approach is used for the transportation, water facilities and storm drainage facilities fees in this report.
The buy-in method is typically used when the existing system has sufficient capacity to serve new development now and into the future. Under the buy-in methodology, new development “buys” a proportionate share of existing capacity at the current value of the existing facilities. This approach is typically used for utility fees, where existing facilities are built with excess capacity to serve future development. This approach is used for a component of the water capacity fees in this report pertaining to the City’s existing water assets. The buy-in approach is not used for any other fee categories.
The existing inventory approach is based on a facility standard derived from the City’s existing level of facilities and existing demand for services. This approach results in no facility deficiencies attributable to existing development. This approach is often used when a long-range plan for new facilities is not available. Only the initial facilities to be funded with fees are identified in the fee study. Future facilities to serve growth will be identified through the City’s annual capital improvement plan and budget process and/or completion of a new facility master plan. This approach is not used in this report because the fee calculations are driven by facilities master plans, though the existing level of service is identified as appropriate to comply with provisions of AB 602.
Use of Fee Revenues
The Mitigation Fee Act requires that this analysis “Identify the use to which the fee is to be put. If the use is financing public facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in Section 65403 or 66002, may be made in applicable general or specific plan requirements, or may be made in other public documents that identify the public facilities for which the fee is charged.”1 Each chapter in
this report identifies the appropriate use of impact fee revenues for each impact fee category.
Impact fee revenue must be spent on new facilities or expansion of current facilities to serve new development. Facilities can be generally defined as capital acquisition items with a useful life greater than five years. Impact fee revenue can be spent on capital facilities to serve new development, including but not limited to land acquisition, construction of buildings, infrastructure, the acquisition of vehicles or equipment, information technology, software licenses and equipment.
Impact Fee Zones
In some cases, fees in this study are calculated for different geographies. The parks and trails facilities and public facilities impact fees are calculated Citywide because those facilities comprise a network of facilities that provide benefit to anyone in the City regardless of where they are located.
However, the transportation infrastructure, water capacity, and storm drainage impact fees make a distinction between facilities needed to serve the Ravenswood Business District/4 Corners Specific Plan (RBD) area and the other non-RBD areas of the City. Consequently, growth projections are presented for the entire City (including RBD), and for RBD separately. Figure 1 displays the RBD boundaries.
1 California Government Code §66001 (a) (2).
87 City of East Palo Alto Development Impact Fee Nexus Study Update 7 Figure 1: Ravenswood Business District/4 Corners Specific Plan Boundaries
Development Impact Fee Schedule Summary
Table E.1 summarizes the development impact fees that meet the City’s identified needs and comply with the requirements of the Mitigation Fee Act.
Table E.2 summarizes the City’s current impact fee schedule, as of July 2024. 88 City of East Palo Alto Development Impact Fee Nexus Study Update 8 Table E.1: Maximum Justified Development Impact Fee Schedule Land Use
Parks and
Trails
Public
Facilities
Citywide
Transportation
RBD
Transportation Water1
Storm
Drainage2 Administration3 Total
Non RBD
Residential per Sq. Ft.
Single Family $ 10.57 $ 8.49 $ 0.58 $ - $ 4.52 Varies $ 0.24 $ 24.40 Multifamily 14.69 11.80 0.64 5.45 Varies 0.33 32.91
Nonresidential per Sq. Ft.
Retail $ 1.50 $ 1.21 $ 2.69 $ - Varies Varies $ 0.05 $ 5.45 Office and R&D 2.25 1.81 1.28 - Varies Varies 0.05 5.39 Industrial 0.90 0.72 0.80 - Varies Varies 0.02 2.44
RBD
Residential per Sq. Ft.
Single Family $ 10.57 $ 8.49 $ 0.58 $ 2.14 $ 2.72 Varies $ 0.25 $ 24.75 Multifamily 14.69 11.80 0.64 2.40 3.27 Varies 0.33 33.13 Nonresidential per Sq. Ft.
Retail $ 1.50 $ 1.21 $ 2.69 $ 10.00 Varies Varies $ 0.15 $ 15.55 Office and R&D 2.25 1.81 1.28 4.75 Varies Varies 0.10 10.19 Industrial 0.90 0.72 0.80 2.96 Varies Varies 0.05 5.43
1 Nonresidential w ater fee varies by meter size. Refer to Table 7.9 for more information. 2 Storm drainage fee based on impervious surface. Refer to Table 8.4 for more information.
Sources: Tables 3.9, 4.7, 5.5, 6.6, 7.9 and 8.5.
3 Administrative charge of 1.0 percent for (1) legal, accounting, and other administrative support and (2) impact fee program administrative costs including revenue collection, revenue and cost accounting, mandated public reporting, and fee justification analyses. 89 City of East Palo Alto Development Impact Fee Nexus Study Update 9 Table E.2: Current Impact Fee Schedule
Parks and
Trails
Public
Facilities
Storm Drain
(RBD)
Storm Drain
(Non-RBD) Transportation Water Capacity Total (RBD)
Total (NonRBD)
Residential - Fees per Dwelling Unit
Single-Family $ 4,987 $ 8,746 $ 5,840 $ 3,379 $ 2,845 $ 9,831 $ 32,249 $ 29,788 Townhouse 4,987 8,746 - - 2,845 9,831 26,409 26,409
Multi-Family Housing 3,435 6,025 - - 2,142 6,050 17,652 17,652 Detached ADU 1,995 3,498 2,336 1,351 1,138 6,050 15,017 14,032 Nonresidential - Fees per Square Foot
Office/Research & Development $ 1.40 $ 2.42 $ - $ - $ 8.84 $ - $ 12.66 $ 12.66 Industrial 0.55 0.99 - - 5.76 - 7.30 7.30
Retail 0.92 1.61 - - 8.84 - 11.37 11.37
Nonresidential - Fees per Impervious Acre
Other Non-Residential $ - $ - $ 146,007 $ 84,467 $ - $ - $ 146,007 $ 84,467 Nonresidential - Fees per Water Meter Size
Meter Size - 3/4" $ - $ - $ - $ - $ - $ 14,368 $ 14,368 $ 14,368 Meter Size - 1" - - - - - 23,946 23,946 23,946
Meter Size - 1.5" - - - - - 47,894 47,894 47,894
Meter Size - 2" - - - - - 76,629 76,629 76,629
Source: City of East Palo Alto Comprehensive Fee Schedule, Effective July 1, 2024. 90 City of East Palo Alto Development Impact Fee Nexus Study Update 10 Other Funding Needed
Impact fees may only fund the share of public facilities related to new development in East Palo Alto. They may not be used to fund the share of facility needs generated by existing development or by development outside of the City. As shown in Table E.3, approximately $200 million in additional funding will be needed to complete the facility projects associated with new development projects that the City currently plans to develop. The “Additional Funding Required” column shows non-impact fee funding required to fund a share of the improvements partially funded by impact fees. Non-fee funding is needed because these facilities are needed partially to remedy existing deficiencies and partly to accommodate new development.
The City will need to develop alternative funding sources to fund existing development’s share of the planned facilities. Existing development’s share must be funded with any funding source other than impact fee revenue. Potential sources of revenue include but are not limited to existing or new general fund revenues, existing or new taxes, special assessments, and grants.
Table E.3: Non-Impact Fee Funding Required
Fee Category
Net Project
Cost
Development
Fee Revenue
Additional
Funding
Required
Parks and Trails $ 89,743,000 $ 57,203,152 $ 32,539,848 Public Facilities 120,300,000 45,965,096 74,334,904
Citywide Transportation 21,470,203 8,574,073 12,896,130 RBD Transportation 26,924,274 21,287,735 5,636,539
Water 66,332,000 24,480,850 41,851,150
Storm Drainage 78,589,000 45,890,900 32,698,100
Total $ 403,358,477 $ 203,401,806 $ 199,956,671
Sources: Tables 3.7, 4.6, 5.3, 6.3, 7.4, and 8.4.
91 11
1. Introduction
This report presents an analysis of the need for public facilities to accommodate new development in the City of East Palo Alto. This chapter provides background for the study and explains the study approach under the following sections:
Organization of the Report;
Public Facilities Financing in California;
Study Objectives;
Fee Program Maintenance; and
Study Methodology.
Organization of the Report
The determination of a development impact fee begins with the selection of a planning horizon and development of growth projections for population and employment. These projections are used throughout the analysis of different facility categories and are summarized in Chapter 2.
Chapters 3 through 8 identify facility standards and planned facilities, allocate the cost of planned facilities between new development and existing development, and identify the appropriate development impact fee for each of the following facility categories:
Parks and Trails
Public Facilities
Citywide Transportation
RBD Transportation
Water
Storm Drainage
Chapter 9 describes how this study complies with the requirements of AB 602.
Chapter 10 details the procedures that the City must follow when implementing a development impact fee program. Impact fee adoption procedures are found in California Government Code Sections 66016 through 66018.
Public Facilities Financing in California
The changing fiscal landscape in California during the past 45 years has steadily undercut the financial capacity of local governments to fund infrastructure. Four dominant trends stand out:
The passage of a string of tax limitation measures, starting with Proposition 13 in 1978 and continuing through the passage of Proposition 218 in 1996; Declining popular support for bond measures to finance infrastructure for the next generation of residents and businesses;
Unfunded state and federal mandates; and
Steep reductions in federal and state assistance.
Faced with these trends, many cities and counties have had to adopt a policy of “growth pays its own way.” This policy shifts the burden of funding infrastructure expansion from existing ratepayers and taxpayers onto new development. This funding shift has been accomplished primarily through the imposition of assessments, special taxes, and development impact fees also known as public facilities fees. Assessments and special taxes require the approval of all property owners and are appropriate when the funded facilities are directly related to the real property. Development impact 92 City of East Palo Alto Development Impact Fee Nexus Study Update 12 fees, on the other hand, are an appropriate funding source for facilities that benefit all development within the identified impact fee geography.
Study Objectives
The primary policy objective of a public facilities fee program is to ensure that new development pays the capital costs associated with growth. Policy 3.1 of the City’s General Plan states “New development. Require new development to pay its fair share of required improvements to public facilities and services through impact fees or other financial and regulatory mechanisms.” The primary purpose of this report is to update the City’s impact fees based on the most current available facility plans, project cost estimates, and growth projections. The proposed fees will enable the City to expand its inventory of public facilities necessitated by new development. This report supports the General Plan policy stated above.
The City imposes public facilities fees under authority granted by the Mitigation Fee Act (the Act), contained in California Government Code Sections 66000 et seq., as recently amended. This report provides the necessary findings required by the Act for the adoption of the fees presented in the fee schedules presented in this report.
East Palo Alto is forecast to have moderate growth through this study’s planning horizon of 2045.
This growth will create an increase in demand for public services and the facilities required to deliver them. Given the revenue challenges described above, East Palo Alto enacted a development impact fee program for water capacity improvements in 2018 and transportation infrastructure, parks and trails, public facilities, and storm drainage improvements in 2019 to ensure that new development funds its share of facility costs associated with growth. This report makes use of the most current available growth forecasts and capital facilities planning documents to update the City’s existing fee program to ensure that the fee program accurately represents the facility needs resulting from new development.
Guiding Documents
This analysis uses but is not limited to data from the following documents as the basis of the fee calculations:
General Plan (2016): Informs land use assumptions and provides policy guidance. Ravenswood Business District / 4 Corners Specific Plan Update (2024): Informs land use assumptions and provides policy guidance. City staff expect that the City Council will review the draft document prior to this nexus study and implementing resolution. Ten Year Capital Improvement Program (CIP) Update FY 2024-2025 Capital Budget (2024): Identifies planned facilities, costs, and other identified funding for capital projects. Parks Master Plan (2023): Identifies capital needs related to parks and trails Water System Master Plan (2022): Identifies capital needs related to water facilities. Also identifies flow generation assumptions used to allocated fee responsibility. Storm Drainage Master Plan (2014): Identifies capital needs related to storm drain facilities.
Also identifies impervious surface assumptions used to allocated fee responsibility. East Palo Alto City Facilities Master Plan Report (2021): Identifies capital needs related to City administration, corporation yard and police facilities. East Palo Alto Library Needs Assessment (2017): Identifies capital needs related to library facilities.
RBD Transportation Impact Analysis (2023): Identifies capital needs related to RBD transportation projects.
93 City of East Palo Alto Development Impact Fee Nexus Study Update 13 RBD Utilities Infrastructure Study (2023): Identifies capital needs related to RBD utilities projects.
Fee Program Maintenance
Once a fee program has been adopted it must be properly maintained to ensure that the revenue collected adequately funds the facilities needed by new development. To avoid collecting inadequate revenue, the inventories of existing facilities and costs for planned facilities must be updated periodically for inflation, and the fees recalculated to reflect the higher costs. The use of established indices for each facility included in the inventories (land, buildings, and equipment), such as the California Construction Cost Index, is necessary to accurately adjust the impact fees.
While fee updates using inflation indices are appropriate for annual or periodic updates to ensure that fee revenues keep up with increases in the costs of public facilities, it is recommended to conduct more extensive updates of the fee documentation and calculation (such as this study) when significant new data on growth forecasts and/or facility plans become available. For further detail on fee program implementation, see Chapter 10.
Administrative Costs
The administration of an impact fee program to comply with the requirements of the Mitigation Fee Act imposes costs on the City for capital budgeting, fee adjustments, mandated annual reports and 5-year reviews of the impact fee program, as well as periodic impact fee update studies and legal review. It is common practice in California for cities to add a small administrative charge to impact fees to cover those costs. These costs are primarily City staff costs necessary to administer the impact fee program.
This study assumes 1% of the maximum justified fee to estimate the administrative costs associated with the fee program. To validate this assumption, Willdan reviewed the administrative costs associated with other cities in California in FY2022-23. Those costs ranged from 1.32% to
1.52% of collected impact fee revenue in the other jurisdictions. Thus, the assumed 1.0% of fee revenue is conservative.
Study Methodology
Development impact fees are calculated to fund the cost of facilities required to accommodate growth. The six steps followed in this development impact fee study include:
1. Estimate existing development and future growth: Identify a base year for existing development and a growth forecast that reflects increased demand for public facilities;
2. Identify facility standards: Determine the facility standards used to plan for new and expanded facilities;
3. Determine facilities required to serve new development: Estimate the total amount of planned facilities, and identify the share required to accommodate new development;
4. Determine the cost of facilities required to serve new development: Estimate the total amount and the share of the cost of planned facilities required to accommodate new development net of other identified funding;
5. Calculate fee schedule: Allocate facilities costs per unit of new development to calculate the development impact fee schedule; and
6. Identify alternative funding requirements: Determine if any non-fee funding is required to complete projects.
94 City of East Palo Alto Development Impact Fee Nexus Study Update 14 The key public policy issue in development impact fee studies is the identification of facility standards (step #2, above). Facility standards document a reasonable relationship between new development and the need for new facilities. Standards ensure that new development does not fund deficiencies associated with existing development.
Types of Facility Standards
There are three separate components of facility standards:
Demand standards determine the amount of facilities required to accommodate growth, for example, park acres per thousand residents, square feet of library space per capita, or gallons of water per day. Demand standards may also reflect a level of service such as the vehicle volume-to-capacity (V/C) ratio used in traffic planning. Design standards determine how a facility should be designed to meet expected demand, for example, park improvement requirements and technology infrastructure for City office space. Design standards are typically not explicitly evaluated as part of an impact fee analysis but can have a significant impact on the cost of facilities. Our approach incorporates the cost of planned facilities built to satisfy the City’s facility design standards.
Cost standards are an alternate method for determining the amount of facilities required to accommodate growth based on facility costs per unit of demand, such as service population, vehicle trips, water flow generation or impervious surface. Cost standards are useful when demand standards were not explicitly developed for the facility planning process. Cost standards also enable different types of facilities to be analyzed based on a single measure (cost or value) and are useful when different facilities are funded by a single fee program. Examples include facility costs per capita, cost per vehicle trip, or cost per gallon of water per day.
New Development Facility Needs and Costs
A number of approaches are used to identify facility needs and costs to serve new development.
This is often a two-step process: (1) identify total facility needs, and (2) allocate to new development its fair share of those needs.
There are several common methods for determining new development’s fair share of planned facilities costs: the system plan method, the planned facilities method, the buy in method and the existing inventory method. The formula used by each approach and the advantages and disadvantages of each method is summarized below:
System Plan Method
This method calculates the fee based on the value of existing facilities plus the cost of planned facilities, divided by demand from existing plus new development:
Value of Existing Facilities + Cost of Planned Facilities Existing + New Development Demand
This method is useful when planned facilities need to be analyzed as part of a system that benefits both existing and new development. It is difficult, for example, to allocate a new fire station solely to new development when that station operates as part of an integrated system of fire stations that together achieve the desired level of service.
The system plan method ensures that new development does not pay for existing deficiencies.
Often facility standards based on policies such as those found in General Plans are higher than the existing facility standards. This method enables the calculation of the existing deficiency required to bring existing development up to the policy-based standard. The local agency must secure non- = cost per unit of demand
95 City of East Palo Alto Development Impact Fee Nexus Study Update 15 fee funding for that portion of planned facilities required to correct the deficiency to ensure that new development receives the level of service funded by the impact fee. This approach is used for the parks and trail, and public facility fees in this report so that new development can fund its fair share of the future level of service indicated by the planned facilities..
Planned Facilities Method
The planned facilities method allocates costs based on the ratio of planned facility costs to demand from new development as follows:
Cost of Planned Facilities
New Development Demand
This method is appropriate when planned facilities will entirely serve new development, or when a fair share allocation of planned facilities to new development can be estimated. An example of the former is a wastewater trunk line extension to a previously undeveloped area. An example of the latter is a portion of a roadway that has been identified as necessary to mitigate the impact from new development through traffic modeling analysis. Under this method new development will fund the expansion of facilities at the standards used in the applicable planning documents. This approach is used for the transportation, water capacity and storm drainage facility fees in this report because the share of facilities needed to accommodate growth can be identified.
Buy-In Method
The buy-in method is based on the value of the existing system’s capacity. This method is typically used when the existing system has sufficient capacity to serve new development now and into the future. Under the buy-in methodology, new development “buys” a proportionate share of existing capacity at the current value of the existing facilities.
The buy-in fee is determined by taking the current value of assets (replacement cost new, less depreciation) divided by the current capacity provided by the system. Responsibility for new capital improvements is then shared equally by all customers. A simplified version of the calculation equation is:
Present Value of Existing Facilities
Existing System Capacity
This approach is typically used for utility fees, where existing facilities are built with excess capacity to serve future development. This approach is used for a component of the water capacity fees in this report pertaining to the City’s existing water assets. The buy-in approach is not used for any other fee categories.
Existing Inventory Method
The existing inventory method allocates costs based on the ratio of existing facilities to demand from existing development as follows:
Current Value of Existing Facilities
Existing Development Demand
Under this method new development will fund the expansion of facilities at the same standard currently serving existing development. By definition the existing inventory method results in no facility deficiencies attributable to existing development. This method is often used when a longrange plan for new facilities is not available. Only the initial facilities to be funded with fees are identified in the fee study. Future facilities to serve growth are identified through an annual capital improvement plan and budget process, possibly after completion of a new facility master plan. This approach is not used to calculate fees in this report, though the existing level of service is identified to comply with AB 602.
= cost per unit of demand
= cost per unit of demand
= cost per unit of demand
96 16
2. Growth Forecasts
Growth projections are used as indicators of demand to determine facility needs and allocate those needs between existing and new development. This chapter explains the source for the growth projections used in this study based on a 2023 base year and a planning horizon of 2045.
Estimates of existing development and projections of future growth are critical assumptions used throughout this report. These estimates are used as follows:
The estimate of existing development in 2023 is used as an indicator of existing facility demand and to determine existing facility standards. The estimate of total development at the 2045 planning horizon is used as an indicator of future demand to determine total facilities needed to accommodate growth and remedy existing facility deficiencies, if any. Estimates of growth from 2023 through 2045 are used to (1) allocate facility costs between new development and existing development, and (2) estimate total fee revenues.
The demand for public facilities is based on the service population, dwelling units or nonresidential development creating the need for the facilities.
Land Use Types
To ensure proportionality between each fee and the impact of development by type of development, growth projections distinguish between different land use types. The land use types that impact fees have been calculated for are defined below.
Single Family Residential: Detached and attached one-unit dwellings. Fees are calculated per square foot of living space.
Multifamily Residential: All attached multifamily dwellings including duplexes and condominiums. Fees are calculated per square foot of living space, excluding common areas and garages.
Retail: All commercial, retail, and educational development. Office and Research & Development: All general, professional, medical, and R&D office development.
Industrial: All manufacturing and other industrial development, warehouse and distribution center development
Some developments may include more than one land use type, such as a mixed-use development with both residential and commercial uses. Another similar situation would be a warehousing facility that contains office space. In those cases, the facilities fee would be calculated separately for each land use type included within the building.
The City has the discretion to determine which land use type best reflects a development project’s characteristics for purposes of imposing an impact fee and may adjust fees for special or unique uses to reflect the impact characteristics of the use.
Impact Fee Zones
To ensure the requisite nexus between the fee and the development, in some cases, fees in this study are calculated for different geographies. The parks and trail facilities and public facilities fees are calculated Citywide because those facilities comprise a network of facilities that provide benefit 97 City of East Palo Alto Development Impact Fee Nexus Study Update 17 to anyone in the City regardless of where they are located. However, the transportation facilities, water facilities and storm drainage facilities fees make a distinction between facilities needed to serve the Ravenswood Business District/4 Corners Specific Plan Area (RBD) and the other non RBD areas of the City. Consequently, growth projections are presented for the entire City (including RBD), and for RBD separately.
Existing and Future Development - Citywide
Table 2.1 shows the estimated number of residents, dwelling units, employees, and building square feet in East Palo Alto, both in 2023 and in 2045. The base year estimates of residents and dwelling units come from the California Department of Finance. The projected population increase was estimated by multiplying the estimated increase in dwelling units by current occupancy density assumptions of 3.79 residents per single family unit and 2.71 residents per multifamily unit, based on data from the US Census’ American Community Survey. The projected increase in dwelling units is consistent with the non-RBD increase in dwelling units from City of East Palo Alto Development Impact Fee Program Nexus Study, 2019, plus the projected increase in dwelling units from Ravenswood Specific Plan Update.
Base year employees were estimated based on data obtained from the U.S. Census Bureau’s OnTheMap Application. The projected Citywide increase in employment is based on the non-RBD increase in building square feet from the 2019 Nexus Study, plus the projected increase in employment from the Ravenswood Specific Plan Update shown in Table 2.2.
Base year nonresidential building square feet estimated were by Raimi and Associates as part of the RBD Specific Plan Update. The increase in building square feet is based on the increase in building square feet from the 2019 Nexus Study for non-RBD development plus the increase in square feet from the Ravenswood Specific Plan Update, also shown in Table 2.2. 98 City of East Palo Alto Development Impact Fee Nexus Study Update 18 Table 2.1: Existing and New Development - Citywide
Existing and Future Development - RBD
Table 2.2 shows the estimated number of residents, dwelling units, employees, and building square feet in RBD, both in 2023 and in 2045. The base year estimates of dwelling units were provided by Raimi and Associates. The dwelling units were multiplied by the estimates of current occupant density by type of unit to estimate current population. The projected population increase was estimated by multiplying the estimated increase in dwelling units from the Specific Plan growth scenario by the same occupancy density assumptions.
2023 2045 Increase
Residents 1 28,430 38,402 9,972
Dwelling Units 2
Single Family 4,732 5,725 993
Multifamily 3,409 5,700 2,291
Total 8,141 11,425 3,284
Employment 3
Retail 1,799 2,356 557
Office and R&D 2,560 12,658 10,098
Industrial 323 648 325
Total 4,682 15,661 10,979
Building Square Feet (000s) 3
Retail 550 883 333
Office and R&D 725 4,764 4,039
Industrial 200 525 325
Total 1,475 6,172 4,697
Sources: California Department of Finance, Table E-5, 2023; Ravensw ood Specific Plan Update Transportation Analysis; OnTheMap Application, http://onthemap.ces.census.gov; Table 2.3, Raimi and Associates; Willdan Financial Services.
1 2023 population and dw elling units identified in Table E-5, from the California Department of Finance. Population increase estimated by multiplying increase in dw elling units by current occupancy density assumptions of 3.79 residents per single family unit and 2.71 residents per multifamily unit, based on ACS data.
Increase in dw elling units based on non-RBD increase in dw elling units from City of East Palo Alto Development Impact Fee Program Nexus Study, 2019, plus projected increase in dw elling units from Ravensw ood Specific Plan Update. 2 Current estimates of primary jobs from the US Census' OnTheMap. Increase in employment based on non-RBD increase in building square feet from the 2019 Nexus Study, plus projected increase in from Ravensw ood Specific Plan Update show n in Table 2.2.
3 Base year building square feet estimated by Raimi and Associates. Increase in building square feet identified in 2019 Nexus Study for non-RBD development plus increase in square feet from the Ravensw ood Specific Plan Update. 99 City of East Palo Alto Development Impact Fee Nexus Study Update 19 Base year employees were estimated based on data obtained from the U.S. Census Bureau’s OnTheMap Application. The projected increase in employment is based on the projected increase in building square feet, and the occupancy density assumptions from Table 2.3.
Base year nonresidential building square feet estimated were by Raimi and Associates as part of the RBD Specific Plan Update. The increase in building square feet is also consistent with the RBD Specific Plan Update.
Table 2.2 : Existing and New Development - RBD
(3.35m Square Feet Scenario)
2023 2045 Increase
Residents 1 1,168 5,504 4,336
Dwelling Units 1
Single Family 203 203 -
Multifamily 147 1,747 1,600
Total 350 1,950 1,600
Employment 2
Retail 95 283 188
Office and R&D 533 8,871 8,338
Industrial 120 445 325
Total 748 9,599 8,851
Building Square Feet (000s) 3
Retail 125 237 112
Office and R&D 200 3,535 3,335
Industrial 125 450 325
Total 450 4,222 3,772
3 Base year building square feet estimated by Raimi and Associates.
Increase in building square feet identified in feet from the Ravensw ood Specific Plan Update Transportation Analysis.
Sources: Ravensw ood Specific Plan Update Transportation Analysis; OnTheMap Application, http://onthemap.ces.census.gov; Raimi and Associates; Table 2.3, Willdan Financial Services.
1 Base year dw elling units identified by Raimi and Associates. Assumes same proportion of single family to multifamily in RBD as Cityw ide. Projection of dw elling units based on Ravensw ood Specific Plan Update Transportation Analysis. Population estimated by multiplying increase in dw elling units by current occupancy density assumptions of 3.79 residents per single family unit and 2.71 residents per multifamily unit, based on ACS data. 2 Current estimates of primary jobs from the US Census' OnTheMap.
Projection based on increase in building square feet from the Ravensw ood Specific Plan Update Transportation Analysis and occupancy density assumptions from Table 2.3.
100
City of East Palo Alto Development Impact Fee Nexus Study Update 20 Occupant Densities
All fees in this report are calculated based on dwelling units or building square feet. Occupant density assumptions ensure a reasonable relationship between the size of a development project, the increase in service population associated with the project, and the amount of the fee.
Occupant densities (residents per dwelling unit or workers per building square foot) are the most appropriate characteristics to use for most impact fees. The fee imposed should be based on the land use type that most closely represents the probable occupant density of the development.
The average occupant density factor used in this report is shown in Table 2.3.
The residential density factors are calculated based on the latest available data from the American Community Survey for the City of East Palo Alto. The assumptions of average square feet per type of dwelling unit are divided by the dwelling unit density assumptions to determine square feet of living space per person, by type of unit. These figures are used to calculate the fees per square foot of living space for the parks and trail facilities and public facilities fees.
The nonresidential occupancy factors are derived from data from the City’s General Plan Update and are consistent with assumptions from the RBD Specific Plan Update.
Table 2.3: Occupant Density
Persons per
Unit or 1,000
Sq. Ft.
Square Feet
per Unit
Square Feet
per Person
Residential
Single Family 3.79 1,700 449
Multifamily 2.71 875 323
Nonresidential
Retail 1.67 1,000 600
Office and R&D 2.50 1,000 400
Industrial 1.00 1,000 1,000
Sources: U.S. Census Bureau, 2022 American Community Survey 5-Year Estimates, Tables B25024 and B25033; East Palo Alto General Plan Update (Water Supply Assessment), Raimi + Associates; Willdan Financial Services. 101
21 3. Parks and Trail Facilities
The following chapter documents the nexus analysis, demonstrating the need for new parks and trail facilities demanded by new development.
Service Population
Parks and trail facilities in East Palo Alto serve residents and workers. Therefore, demand for services and associated facilities are based on the City’s service population including residents and workers.
Table 3.1 shows the existing and future projected service population for parks and trail facilities.
While specific data is not available to estimate the actual ratio of demand per resident to demand by businesses (per worker) for this service, it is reasonable to assume that demand for these services is less for one employee compared to one resident, because nonresidential buildings are typically occupied less intensively than dwelling units. The 0.19-weighting factor for workers is based on an assumption that workers work from home on average 32% of the time. This assumption is the percentage of full paid days working from home for the San Franciso Bay Area in 2024 as identified in the U.S. Survey of Working Arrangements and Attitudes (SWAA) data. The
27.2-hour onsite workweek is divided by the total number of non-onsite work hours in a week (140.8) and the resulting weighting factor reflects the degree to which workers create demand for these types of facilities. Data from ABAG’s 2050+ Plan Update corroborates the SWAA conclusion and states that share of work from home time was about 31% in 2023.2
2https://planbayarea.org/sites/default/files/meetings/attachments/6012/6aii_24_0557_PowerPoint_Plan_Bay_Area_2050_ Draft_Blueprint_Key_Findings_0.pdf.
102
City of East Palo Alto Development Impact Fee Nexus Study Update 22 Table 3.1: Parks and Trail Facilities Service Population Existing Park Inventory
The City of East Palo Alto owns and maintains several parks throughout the city. Table 3.2 summarizes the City’s existing parkland inventory in 2023. All facilities are located within the city limits. In total, the inventory includes a total of 23.89 acres of improved parkland. 103
City of East Palo Alto Development Impact Fee Nexus Study Update 23 Table 3.2: Existing Park Inventory
Parkland and Park Facilities Unit Costs
Table 3.3 displays the unit costs necessary to acquire and improve parkland in East Palo Alto. The land cost assumption is based on the City’s assumed cost to acquire an acre of land for a library.
An estimate of $1,200,000 per acre for standard parkland improvements is based on the identified life cycled replacement cost estimate from the City’s recent Parks Master Plan. In total, it is assumed to cost $4.5 million to acquire and improve an acre of parkland in East Palo Alto.
Table 3.3: Park Facilities Unit Costs
Table 3.4 displays the replacement cost of the City’s existing park facilities. The total cost per acre from Table 3.3 is multiplied by the total existing improved acres from Table 3.2 to determine the replacement cost of the City’s parks.
Name
Developed
Acres
Jack Farrell Park 3.73
Pocket Park at Newbridge 0.14
Bell Street Park 2.56
Joel Davis Memorial Park 1.94
Martin Luther King Jr. Park 5.49
Cooley Landing 10.03
Total 23.89
Source: East Palo Alto, Parks, Recreation, and Open Space Master Plan, Final Draft, March 24, 2023.
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City of East Palo Alto Development Impact Fee Nexus Study Update 24 Table 3.4: Replacement Cost of Existing
Park Facilities
Planned Facilities
Table 3.5 displays the City’s planned parks and trail facilities. These facilities were identified in the City’s Parks, Recreation, and Open Space Master Plan. The planned facilities will serve both existing and new development Citywide. The cost of these facilities, net of existing identified funding is $89.7 million.
Table 3.5: Planned Parks and Trail Facilities
Cost Allocation
Existing Level of Service
Table 3.6 expresses the City’s current parks and trail facilities level of service in terms of an existing cost per capita. This cost per capita is not used in the fee calculation, rather it is shown here for informational purposes only. Once the planned facilities have been constructed and new development has increased the City’s service population the resulting facility cost per capita will be higher than the cost per capita shown in Table 3.6. The increased facility standard is needed to ensure that the City can fund the planned parks and trail facilities identified in Table 3.5.
Park Acres 23.89
Replacement Cost per Acre $ 4,460,000
Total Replacement Cost $ 106,549,400
Sources: Tables 3.2 and 3.3.
Project
Number Project Name Total Cost Funded Net Cost
PK-04 MLK JR Park Expansion $ 21,000,000 $ - $21,000,000 PK-06 New Trails and Sidewalks in Ravenswood 15,000,000 - 15,000,000 PK-07 San Francisquito Park and Trail 5,108,000 - 5,108,000 PK-08 Jack Farrell Park Improvements 2,421,000 115,000 2,306,000 PK-09 Baylands Park 4,400,000 - 4,400,000
PK-10 Bell Street Park Improvements 16,000,000 - 16,000,000 PK-11 New Parks in Ravenswood/4 Corners Area 22,300,000 - 22,300,000 PK-12 Hetch Hetchy Aqueduct Linear Park 3,100,000 - 3,100,000 PK-14 Park Fitness Equipment Installation 95,000 - 95,000 PK-20 Rutgers Trail Gate 100,000 50,000 50,000
PK-21 Pocket Park at Newbridge 384,000 - 384,000
Total $ 89,908,000 $ 165,000 $89,743,000
Source: City of East Palo Alto Ten Year Capital Improvement Program (CIP) Update FY 2024-2025 . 105
City of East Palo Alto Development Impact Fee Nexus Study Update 25 Table 3.6: Existing Level of Service
Future Level of Service
Table 3.7 shows new development’s projected per capita investment in parks and trail facilities at the planning horizon. This level of service drives the fee calculation. This value is calculated by dividing cost of existing and planned facilities by the projected service population at the planning horizon.
Fees calculated using the system standard approach ensure that both existing and future service populations will have contributed the same amount per capita at the planning horizon. The new facilities and the existing facilities will serve both existing and new development, so it is appropriate to allocate costs to both existing and new development. Existing development’s proportional share of these facility costs is also referred to as an “existing deficiency.” Existing deficiencies cannot be funded with impact fee revenue.
Table 3.7: Parks and Trail Facilities System Standard
Use of Fee Revenue
The City can use parks and trail facilities fee revenues for the construction or purchase of buildings, land, vehicles and equipment that are part of the system of parks and trail facilities serving new development. A list of planned facilities is included in Table 3.5.
Non-Fee Funding Required
Completing the planned facilities will provide a higher value of facilities per capita than is currently provided in East Palo Alto. Impact fee revenue may not be used to increase the level of service provided to existing development. Therefore, impact fee revenue will not fully fund the planned parks and trail facilities and some non-fee funding will be required. Table 3.8 shows the projected Value of Existing Facilities A $ 106,549,400
Existing Service Population B 29,320
Existing Cost per Capita C = A / B $ 3,634
Sources: Table 3.1 and 3.4.
Value of Existing Facilities A $ 106,549,400
Cost of Planned Facilities B 89,743,000
Total System Value (2045) C = A + B $ 196,292,400
Future Service Population (2045) D 41,378
Cost per Capita E = C / D $ 4,744
Cost per Worker
F = E x Worker
Weighting Factor 901
Sources: Tables 3.1, 3.4, 3.5.
106
City of East Palo Alto Development Impact Fee Nexus Study Update 26 fee revenue representing new development’s share of facility costs, and the non-fee funding required through 2045 needed to correct existing deficiencies. After accounting for the projected future impact fee revenue, approximately $32.5 million in non-fee funding will be needed to complete the planned parks and trail facilities. The City will need to use alternative funding sources to fund existing development’s share of the planned facilities. Potential sources of revenue include but are not limited to existing or new general fund revenues, existing or new taxes, special assessments, and grants.
New development’s contribution to the value of the entire system of facilities at the planning horizon (including existing plus future facilities) is equal to new development’s proportional share of service population at the planning horizon.
Table 3.8: Projected Fee Revenue
Fee Schedule
Table 3.9 shows the maximum justified parks and trail facilities fee schedule. The cost per capita is converted to a fee per square foot of new development based on the square feet per person assumptions shown in Table 2.3.
Table 3.9: Parks and Trail Facilities Fee Schedule
Projected Service Population Growth 12,058
Cost per Capita 4,744
Projected Fee Revenue $ 57,203,152
Net Project Cost $ 89,743,000
Projected Fee Revenue 57,203,152
Existing Deficiency $ 32,539,848
Sources: Tables 3.1, 3.4, 3.5.
A B C = A / B
Cost per Sq. Ft. per Fee per
Land Use Capita Capita Sq. Ft.
Residential
Single Family $ 4,744 449 $ 10.57
Multifamily 4,744 323 14.69
Nonresidential
Retail $ 901 600 $ 1.50
Office and R&D 901 400 2.25
Industrial 901 1,000 0.90
Sources: Tables 2.3 and 3.7.
107
City of East Palo Alto Development Impact Fee Nexus Study Update 27 Mitigation Fee Act Findings
The five statutory findings required for adoption of the parks and trail facilities fees documented in this chapter are presented below and supported in detail by the analysis above. All statutory references are to the Act.
Purpose of Fee
Identify the purpose of the fee (§66001(a)(1) of the Act).
The parks and trail facilities fee is designed to ensure that new development will not burden the existing service population with the cost of parks and trail facilities required to accommodate growth. The purpose of the fees documented in this chapter is to provide a funding source from new development for capital improvements to serve that development. The fees advance a legitimate City interest by enabling the City to provide parks and trails to serve new development.
Use of Fee Revenues
Identify the use to which the fees will be put. If the use is financing facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in §65403 or §66002, may be made in applicable general or specific plan requirements, or may be made in other public documents that identify the facilities for which the fees are charged (§66001(a)(2) of the Act).
Parks and trail facilities fees, if enacted by the City, would be used to fund expanded parks and trails to serve new development Citywide. Facilities funded by these fees are designated to be located within the City limits. A list of planned parks and trails projects is included in Table 3.5 which were sourced from the City’s CIP.
Benefit Relationship
Determine the reasonable relationship between the fees' use and the type of development project on which the fees are imposed (§66001(a)(3) of the Act).
The City will restrict fee revenue to the acquisition of land, construction of facilities and buildings, and purchase of related equipment, furnishings, vehicles, and services used to serve new development. Facilities funded by the fees are expected to provide a citywide network of facilities accessible to the residents and workers associated with new development, who represent demand for parks and trails facilities. Using the system plan cost allocation methodology outlined in Chapter 1, and the cost per capita standard calculated in Table 3.7, the resulting fees ensure that new development will only fund its fair share of improvements, and impact fee revenue will not be used to correct existing deficiencies. A deficiency associated with existing development’s share of the planned facilities is identified in Table 3.8, which will not be funded by impact fee revenue. Thus, a reasonable relationship can be shown between the use of fee revenue and the new development residential and non-residential use classifications that will pay the fees.
Burden Relationship
Determine the reasonable relationship between the need for the public facilities and the types of development on which the fees are imposed (§66001(a)(4) of the Act).
New residential and nonresidential development will generate additional population growth. An increase in residents and workers will increase the demand for parks and trail facilities. Facilities need is based on a facility standard that represents the demand generated by new development for those facilities. For the parks and trail facilities fee, demand is measured by a single facility standard (cost per capita at the planning horizon) that can be applied across land use types to 108
City of East Palo Alto Development Impact Fee Nexus Study Update 28 ensure a reasonable relationship to the type of development. The service population standards are calculated based upon the number of residents associated with residential development and the number of workers associated with non-residential development. To calculate a single, per capita standard, one worker is weighted less than one resident based on an analysis of the relative use demand between residential and non-residential development. See the Service Population section above for a discussion of the worker weighting factor.
The standard used to allocate facilities costs to new development is also used to determine if planned facilities will partially serve the existing service population by correcting existing deficiencies. This approach ensures that new development will only be responsible for its fair share of planned facilities, and that the fees will not unfairly burden new development with the cost of facilities associated with serving the existing service population.
Proportionality
Determine how there is a reasonable relationship between the fees amount and the cost of the facilities or portion of the facilities attributable to the development on which the fee is imposed (§66001(b) of the Act).
The reasonable relationship between each facilities fee for a specific new development project and the cost of the facilities attributable to that project is based on the estimated residential and nonresidential population growth the project will accommodate. Fees for a specific project are based on the project’s size. Larger development projects can result in a higher service population resulting in higher fee revenue than smaller projects in the same land use classification. Thus, the fees ensure a reasonable relationship between a specific new development project and the cost of the facilities attributable to that project. See Table 2.3 for the occupancy density assumptions that ensure proportionality of the fees between the land uses included in this study.
Development projects that dedicate parks and trail facilities to the City as part of the project are eligible to receive credit against their impact fee obligation. Development projects can satisfy their obligations through a combination of fees and dedication/credits. Section 13.28.080 of the City’s municipal code details the City’s criteria for receiving credits. 109
29 4. Public Facilities
The purpose of the public facilities impact fee is to fund the public facilities needed to serve new development. A maximum justified fee is presented based on the system plan standard of public facilities per capita.
Service Population
Public facilities serve both residents and businesses. Therefore, demand for services and associated facilities are based on the City’s service population including residents and workers.
Table 4.1 shows the existing and future projected service population for public facilities. While specific data is not available to estimate the actual ratio of demand per resident to demand by businesses (per worker) for this service, it is reasonable to assume that demand for these services is less for one employee compared to one resident, because nonresidential buildings are typically occupied less intensively than dwelling units. The 0.19-weighting factor for workers is based on an assumption that workers work from home on average 32% of the time. This assumption is the percentage of full paid days working from home for the San Franciso Bay Area in 2024 as identified in the U.S. Survey of Working Arrangements and Attitudes (SWAA) data. The 27.2-hour onsite workweek is divided by the total number of non-onsite work hours in a week (140.8) and the resulting weighting factor reflects the degree to which workers create demand for these types of facilities.
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City of East Palo Alto Development Impact Fee Nexus Study Update 30 Table 4.1: Public Facilities Service Population
Facility Inventories and Standards
This section describes the City’s public facility inventory and facility standards.
Existing Inventory
The City’s public facility inventory consists of relatively few facilities compared to other cities because most facilities that provide services are leased. Table 4.2 summarizes the City’s owned inventory of public land, buildings and vehicles. All facilities provide services to residents and people who work in the City. The assumed cost of land acquisition is based on the City’s estimate for acquired land for a future library. In total, the City’s existing inventory of public facilities is estimated at $37.4 million.
111
City of East Palo Alto Development Impact Fee Nexus Study Update 31 Table 4.2: Existing Public Facilities Inventory
Planned Facilities
Table 4.3 summarizes the planned public facilities needed to serve the City through 2045. The City plans for many new facilities including a city hall, community development building, corporation yard, library and police department building. New facilities costs are estimated to total approximately $120.3 million through 2045, net of existing identified funding. These new facilities will serve both existing and new development, so it is appropriate to allocate costs to both existing and new development. Existing development’s proportional share of these facility costs is also referred to as an “existing deficiency.”
The new City Hall, Police Station, Corporation Yard, and Library were identified in part in the City’s 2021 Facilities Master Plan (FMP), which examined the existing facilities providing services to the City, and the need to expand those facilities to accommodate additional future staff needed to serve the City as it grows. City Hall is currently fully utilized and is approximately 13,800 square feet. The FMP identified additional space needs of between 5,100 and 7,800 square feet to serve the City’s future needs. The Police Station is currently fully utilized and is approximately 13,000 square feet.
The FMP identified additional space needs of between 7,500 and 13,200 square feet to serve the City’s future needs. The Corporation yard is also fully utilized and is approximately 5,300 square feet. The FMP identified additional space needs of between 1,150 and 1,580 square feet to serve the City’s future needs. Similarly, the City’s 2017 Library Needs Assessment was used to provide recommendations for a new library which will expand the City’s library capacity to serve existing and new development. The existing library is leased and is approximately 10,800 square feet, including shared components. The planned library is approximately 25,000 square feet. 112
City of East Palo Alto Development Impact Fee Nexus Study Update 32 Table 4.3: Planned Public Facilities
Cost Allocation
Existing Level of Service
Table 4.4 expresses the City’s current public facilities level of service in terms of an existing cost per capita. This cost per capita is not used in the fee calculation, rather it is shown here for informational purposes only. Once the planned facilities have been constructed and new development has increased the City’s service population the resulting facility cost per capita will be higher than the cost per capita shown in Table 4.4. The increased facility standard is needed to ensure that the City has adequate facilities to provide public services to the City.
Table 4.4: Existing Level of Service
Future Level of Service
Table 4.5 shows new development’s projected per capita investment in public facilities at the planning horizon. This level of service drives the fee calculation. This value is calculated by dividing cost of existing and planned facilities by the service population at the planning horizon. The value per capita is multiplied by the worker weighting factor of 0.19 to determine the value per worker.
Fees calculated using this system standard approach ensure that both existing and future service populations will have contributed the same amount per capita at the planning horizon. The new facilities and the existing facilities will serve both existing and new development, so it is appropriate to allocate costs to both existing and new development. Existing development’s proportional share of these facility costs is also referred to as an “existing deficiency.” Existing deficiencies cannot be funded with impact fee revenue.
Project
No. Description Total Cost Funded Net Cost
FA-05 New Police Department Building 25,000,000 - 25,000,000 FA-06 Corporation Yard 100,000 - 100,000
FA-07 City Hall Purchase 50,000,000 - 50,000,000
FA-09 New Facilities in Ravenswood Specific Plan Area 10,000,000 - 10,000,000 FA-11 City Facility Energy Upgrades 100,000 - 100,000
FA-13 City Hall Tenant Improvement 1,350,000 350,000 1,000,000 FA-16 City of East Palo Alto Library 36,000,000 1,900,000 34,100,000 Total $ 122,550,000 $ 2,250,000 $ 120,300,000
Source: City of East Palo Alto Ten Year Capital Improvement Program (CIP) Update FY 2024-2025 .
Value of Existing Facilities A $ 37,418,363
Existing Service Population B 29,320
Existing Cost per Capita C = A / B $ 1,276
Sources: Tables 4.1 and 4.2.
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City of East Palo Alto Development Impact Fee Nexus Study Update 33 Table 4.5: Public Facilities System Standard
Use of Fee Revenue
The City can use public facilities fee revenues for the construction or purchase of buildings, land, and equipment that are part of the system of public facilities serving new development. A list of planned facilities is included in Table 4.3.
Non-Fee Funding Required
Completing the planned facilities will provide a higher value of facilities per capita than is currently provided in East Palo Alto. Impact fee revenue may not be used to increase the level of service provided to existing development. Therefore, impact fee revenue will not fully fund the planned public facilities and some non-fee funding will be required. Table 4.6 shows the projected fee revenue and the non-fee funding required through 2045. After accounting for the projected future impact fee revenue, approximately $74.3 million in non-fee funding will be needed to complete the planned public facilities. The City will need to use alternative funding sources to fund existing development’s share of the planned public facilities. Potential sources of revenue include but are not limited to existing or new general fund revenues, existing or new taxes, special assessments, and grants.
New development’s contribution to the value of the entire system of facilities at the planning horizon (including existing plus future facilities) is equal to new development’s proportional share of service population at the planning horizon.
Value of Existing Facilities A $ 37,418,363
Cost of Planned Facilities B 120,300,000
Total System Value (2045) C = A + B $157,718,363
Future Service Population (2045) D 41,378
Cost per Capita E = C / D $ 3,812
Cost per Worker F = E x Worker
Weighting Factor 724
Sources: Tables 4.1, 4.2 and 4.3.
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City of East Palo Alto Development Impact Fee Nexus Study Update 34 Table 4.6: Revenue Projection - System Standard
Fee Schedule
Table 4.7 shows the maximum justified public facilities fee schedule. The cost per capita is converted to a fee per square foot of new development based on the square feet per person assumptions shown in Table 2.3.
Table 4.7: Public Facilities Fee Schedule
Mitigation Fee Act Findings
The five statutory findings required for adoption of the public facilities fees documented in this chapter are presented below and supported in detail by the analysis above. All statutory references are to the Act.
Purpose of Fee
Identify the purpose of the fee (§66001(a)(1) of the Act).
Cost per Capita $ 3,812
Growth in Service Population (2023 to 2045) 12,058
Projected Fee Revenue $ 45,965,096
Cost of Planned Facilities $ 122,550,000
Identified Funding - Library Project 1,900,000
Identified Funding - City Hall Tenant Improvements 350,000 Projected Fee Revenue 45,965,096
Existing Deficiency $ 74,334,904
Sources: Tables 4.1, 4.3 and 4.4.
A B C = A / B
Cost per Sq. Ft. per Fee per
Land Use Capita Capita Sq. Ft.
Residential
Single Family $ 3,812 449 $ 8.49
Multifamily 3,812 323 11.80
Nonresidential
Retail $ 724 600 $ 1.21
Office and R&D 724 400 1.81
Industrial 724 1,000 0.72
Sources: Tables 2.3 and 4.5.
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City of East Palo Alto Development Impact Fee Nexus Study Update 35 The public facilities fee is designed to ensure that new development will not burden the existing service population with the cost of public facilities required to accommodate growth. The purpose of the fees documented in this chapter is to provide a funding source from new development for capital improvements to serve that development. The fees advance a legitimate City interest by enabling the City to provide public facilities to serve new development.
Use of Fee Revenues
Identify the use to which the fees will be put. If the use is financing facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in §65403 or §66002, may be made in applicable general or specific plan requirements, or may be made in other public documents that identify the facilities for which the fees are charged (§66001(a)(2) of the Act).
Public facilities fees, if enacted by the City, would be used to fund expanded public facilities to serve new development Citywide. Facilities funded by these fees are designated to be located within the City limits. A list of planned public facilities projects is included in Table 4.3 (Planned Public Facilities), which is sourced from the City’s adopted Capital Improvement Plan.
Benefit Relationship
Determine the reasonable relationship between the fees' use and the type of development project on which the fees are imposed (§66001(a)(3) of the Act).
The City will restrict fee revenue to the acquisition of land, construction of facilities and buildings, and purchase of related equipment, furnishings, vehicles, and services used to serve new development. Facilities funded by the fees are expected to provide a citywide network of facilities accessible to the residents and workers associated with new development, who represent demand for public facilities. Using the system plan cost allocation methodology outlined in Chapter 1, and the cost per capita standard calculated in Table 4.5, the resulting fees ensure that new development will only fund its fair share of improvements, and impact fee revenue will not be used to correct existing deficiencies. A deficiency associated with existing development’s share of the planned facilities is identified in Table 4.6, which will not be funded by impact fee revenue. Thus, a reasonable relationship can be shown between the use of fee revenue and the new development residential and non-residential use classifications that will pay the fees.
Burden Relationship
Determine the reasonable relationship between the need for the public facilities and the types of development on which the fees are imposed (§66001(a)(4) of the Act).
New residential and nonresidential development will generate additional population growth. An increase in residents and workers will increase the demand for public facilities. Facilities need is based on a facility standard that represents the demand generated by new development for those facilities. For the public facilities fee, demand is measured by a single facility standard (cost per capita at the planning horizon) that can be applied across land use types to ensure a reasonable relationship to the type of development. The service population standards are calculated based upon the number of residents associated with residential development and the number of workers associated with non-residential development. To calculate a single, per capita standard, one worker is weighted less than one resident based on an analysis of the relative use demand between residential and non-residential development. See the Service Population section above for a discussion of the worker weighting factor.
The standard used to allocate facilities costs to new development is also used to determine if planned facilities will partially serve the existing service population by correcting existing deficiencies. This approach ensures that new development will only be responsible for its fair share 116
City of East Palo Alto Development Impact Fee Nexus Study Update 36 of planned facilities, and that the fees will not unfairly burden new development with the cost of facilities associated with serving the existing service population.
Proportionality
Determine how there is a reasonable relationship between the fees amount and the cost of the facilities or portion of the facilities attributable to the development on which the fee is imposed (§66001(b) of the Act).
The reasonable relationship between each facilities fee for a specific new development project and the cost of the facilities attributable to that project is based on the estimated residential and nonresidential population growth the project will accommodate. Fees for a specific project are based on the project’s size. Larger development projects can result in a higher service population resulting in higher fee revenue than smaller projects in the same land use classification. Thus, the fees ensure a reasonable relationship between a specific new development project and the cost of the facilities attributable to that project. See Table 2.3 for the occupancy density assumptions that drive the proportionality of the fees between the land uses included in this study.
Development projects that build and dedicate public facilities to the City as part of the project are eligible to receive credit against their impact fee obligation. Development projects can satisfy their obligations through a combination of fees and dedication/credits. Section 13.28.080 of the City’s municipal code details the City’s criteria for receiving credits. 117
37 5. Transportation Facilities
This chapter summarizes an analysis of the need for transportation infrastructure to accommodate new development. The chapter documents a reasonable relationship between new development Citywide and an impact fee for funding these facilities.
Trip Demand
The need for transportation facilities is based on the trip demand placed on the system by development. A reasonable measure of demand is the number of PM peak hour vehicle trips, adjusted for pass-by trips. Pass-by trips are intermediate stops between an origin and a destination that require no diversion from the route, such as stopping to get gas on the way to work. Vehicle trip generation rates are a reasonable measure of demand on the City’s system of transportation facilities across all modes because alternate modes (transit, bicycle, pedestrian) often substitute for vehicle trips. Pass-by trips are deducted from the trip generation rate.
Table 5.1 shows the calculation of trip demand factors by land use category based on the pass-by trip adjustment described above. The data for trip rates, and the pass-by trip assumption all come from the latest data available from the Institute of Traffic Engineers. The trip generation rates for existing development do not assume that existing development will achieve a 40% trip rate reduction. Trip rates for future development do assume that new development will achieve a 40% trip reduction. This analysis assumes that part of the 40% trip reduction will be due in part to internal trip capture from mixed- use development characteristics.
Table 5.1: Adjusted Trip Rates
Trip Growth
The planning horizon for this analysis is 2045. Table 5.2 lists the 2023 and 2045 land use assumptions used in this study. The trip demand factors calculated in Table 5.1 are multiplied by the existing and future dwelling units and building square feet to determine the increase in trips caused by new development Citywide.
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City of East Palo Alto Development Impact Fee Nexus Study Update 38 Table 5.2: Land Use Scenario and Total Trips
Project Costs
Cost estimates are summarized in Table 5.3 and were sourced from the City’s CIP. Any funding that has been identified for these projects is netted out of the total cost. The net costs for the two traffic signals projects are allocated 100% to new development because they are solely needed to accommodate growth. The costs for the remaining projects are allocated to new development proportionally to new development’s share of trip demand at the planning horizon identified in Table
5.2 because the projects will serve both existing and new development.
Trip Trip
Land Use
Demand
Factor
(Existing)
DU or
1,000 Sq.
Ft. Trips
Demand
Factor
(New)
DU or
1,000 Sq.
Ft. Trips
DU or
1,000 Sq.
Ft. Trips
Citywide
Residential - per Dwelling Unit
Single Family 0.99 4,732 4,685 0.59 993 586 5,725 5,271 Multifamily 0.57 3,409 1,943 0.34 2,291 779 5,700 2,722 Subtotal 8,141 6,628 3,284 1,365 11,425 7,993
Nonresidential - per 1,000 Sq. Ft.
Retail 2.70 550 1,485 1.62 333 540 883 2,025
Office and R&D 1.28 725 928 0.77 4,039 3,110 4,764 4,038 Industrial 0.80 200 160 0.48 325 156 525 316
Subtotal 1,475 2,573 4,697 3,806 6,172 6,379
Total Trips 9,201 5,171 14,372
Share of Total Trips 64.0% 36.0% 100.0%
Sources: Tables 2.1 and 5.1.
2023 Growth 2023 to 2045 2045
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City of East Palo Alto Development Impact Fee Nexus Study Update 39 Table 5.3: Planned Facilities
No. Description Total Cost
Less
Identified
Funding Net Cost
Allocation to
New
Development
Total Cost
Allocated to
New
Development
ST-24C Weeks at Pulgas Traffic Signal $ 660,000 $ - $ 660,000 100.0% $ 660,000 ST-24D Weeks at Clarke Traffic Signal 660,000 - 660,000 100.0% 660,000 ST-28 East Bayshore Improvements 2,940,000 1,045,000 1,895,000 36.0% 682,200 ST-29 University Avenue Grand Corridor 19,000,000 2,000,000 17,000,000 36.0% 6,120,000 Bay Road 1,255,203 - 1,255,203 36.0% 451,873
Total $ 24,515,203 $3,045,000 $ 21,470,203 $ 8,574,073
Source: City of East Palo Alto Ten Year Capital Improvement Program (CIP) Update FY 2024-2025 .; Table 5.2, Willdan Financial Services. 120
City of East Palo Alto Development Impact Fee Nexus Study Update 40 Fee per Trip Demand Unit
Every impact fee consists of a dollar amount, or the cost of projects that can be funded by a fee, divided by a measure of development. In this case, all fees are first calculated as a cost per trip demand unit. Then these amounts are translated into square feet (cost per residential square feet) and employment space (cost per 1,000 building square feet) by multiplying the cost per trip by the trip generation rate for each land use category. These amounts become the fee schedule.
Table 5.4 calculates the cost the cost per trip demand unit by dividing the total project costs attributable to new development by transportation fee category summarized in Table 5.3, by the total growth in trips calculated in Table 5.2.
The cost per trip in Table 5.4 can also be used to calculate a fee for land uses that have significantly different trip generation rates compared to the land uses included in the fee schedule.
Table 5.4: Cost per Trip to Accommodate Growth
Projected Fee Revenue
Table 5.5 shows the projected fee revenue. The difference between the net project cost and the projected fee revenue is existing development’s share of the planned facilities, often referred to as an existing deficiency. This existing deficiency cannot be funded through the impact fees. The City can use any funding source other than the impact fees to pay for the existing deficiency.
Table 5.5: Projected Fee Revenue
Fee Schedule
Table 5.6 shows the maximum justified Citywide transportation fee schedule. The maximum justified fees are based on the costs per trip shown in Table 5.4. The cost per trip is multiplied by the trip demand factors in Table 5.1 to determine a fee per unit of new development. The fee per average single family or multifamily dwelling unit is converted into a fee per square foot by dividing the fee per dwelling unit by the assumed average square footage of a dwelling unit from Table 2.3.
Development in RBD would pay this Citywide transportation impact fee, plus the RBD specific transportation impact fee presented in the following chapter.
Costs Allocated to New Development $ 8,574,073
Growth in Trip Demand (2023 to 2045) 5,171
Cost per Trip $ 1,658
Sources: Tables 5.2 and 5.3.
Net Project Cost $ 21,470,203
Projected Fee Revenue 8,574,073
Existing Deficiency $ 12,896,130
Source: Table 5.3.
121
City of East Palo Alto Development Impact Fee Nexus Study Update 41 Table 5.6: Citywide Transportation Facilities Impact Fee Schedule Mitigation Fee Act Findings
The five statutory findings required for adoption of the citywide transportation facilities fees documented in this chapter are presented below and supported in detail by the analysis above. All statutory references are to the Act.
Purpose of Fee
Identify the purpose of the fee (§66001(a)(1) of the Act).
The Citywide transportation facilities fee is designed to ensure that new development will not burden existing development with the cost of transportation facilities required to accommodate growth. The purpose of the fees documented in this chapter is to provide a funding source from new development for capital improvements to serve that development. The fees advance a legitimate City interest by enabling the City to provide Citywide transportation facilities to serve new development.
Use of Fee Revenues
Identify the use to which the fees will be put. If the use is financing facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in §65403 or §66002, may be made in applicable general or specific plan requirements, or may be made in other public documents that identify the facilities for which the fees are charged (§66001(a)(2) of the Act).
If enacted the Citywide transportation facilities fees would be used to fund capacity expanding transportation facilities to serve new development Citywide. Facilities funded by these fees are designated to be located within the City limits. A list of planned transportation facilities projects is included in Table 5.3.
Benefit Relationship
Determine the reasonable relationship between the fees' use and the type of A B C = A x B D = C / Average
Trip
Land Use
Cost per
Trip
Demand
Factor Total Fee1
Fee per Sq.
Ft.2
Residential Dwelling Unit
Single Family $ 1,658 0.59 $ 978 $ 0.58
Multifamily 1,658 0.34 564 0.64
Nonresidential - per 1,000 Sq. Ft.
Retail $ 1,658 1.62 $ 2,686 $ 2.69
Office and R&D 1,658 0.77 1,277 1.28
Industrial 1,658 0.48 796 0.80
1 Fee per average sized dw elling unit or per 1,000 square feet of nonresidential. 2 Assumes 1,700 square feet per single family unit and 875 square feet per multifamily unit.
Sources: Tables 5.1 and 5.4.
122
City of East Palo Alto Development Impact Fee Nexus Study Update 42 development project on which the fees are imposed (§66001(a)(3) of the Act).
The City will restrict fee revenue to the acquisition of land, construction of facilities and transportation infrastructure, and purchase of related equipment, used to serve new development.
Facilities funded by the fees are expected to provide a citywide network of facilities accessible to the residents and workers associated with new development. Using the planned facilities cost allocation methodology outlined in Chapter 1, and the cost per trip standard calculated in Table 5.4, the resulting fees ensure that new development will only fund its fair share of improvements, and impact fee revenue will not be used to correct existing deficiencies. A deficiency associated with existing development’s share of the planned facilities is identified in Table 5.5, which will not be funded by impact fee revenue. Thus, a reasonable relationship can be shown between the use of fee revenue and the new development that will pay the fees.
Burden Relationship
Determine the reasonable relationship between the need for the Citywide transportation facilities and the types of development on which the fees are imposed (§66001(a)(4) of the Act).
New residential and nonresidential development will generate additional population growth, which in turn will generate vehicle trips. An increase in vehicle trip generation will increase the demand for transportation facilities. Facilities need is based on a facility standard that represents the demand generated by new development for those facilities. For the Citywide transportation facilities fee, demand is measured by a single facility standard (cost per trip) that can be applied across land use types to ensure a reasonable relationship to the type of development. Project costs in Table
5.3 are allocated to new development as follows: Projects that are solely needed to accommodate increased demand from growth are allocated 100% to new development. Projects that are partially needed to accommodate demand from growth and partially needed to accommodate existing demand are allocated to new development based on new development’s share of total trip demand at the planning horizon, identified in Table 5.2. The cost per trip standard is calculated by dividing the net costs allocated to new development by the increase in trip demand associated with residential and nonresidential development. See the Trip Demand and Trip Growth sections above for a discussion of trip demand and an estimate of current and projected vehicle trips.
The standard used to allocate facilities costs to new trip demand is also used to determine if planned facilities will partially serve existing trip demand by correcting existing deficiencies. This approach ensures that new development will only be responsible for its fair share of planned facilities, and that the fees will not unfairly burden new development with the cost of facilities associated with serving existing vehicle trips.
Proportionality
Determine how there is a reasonable relationship between the fees amount and the cost of the facilities or portion of the facilities attributable to the development on which the fee is imposed (§66001(b) of the Act).
The reasonable relationship between each facilities fee for a specific new development project and the cost of the facilities attributable to that project is based on the estimated trip generation produced by each development project. Fees for a specific project are based on the project’s size.
Larger development projects can result in a higher trip generation resulting in higher fee revenue than smaller projects in the same land use classification. Thus, the fees ensure a reasonable relationship between a specific new development project and the cost of the facilities attributable to that project. See Table 5.1 for the trip generation assumptions that drive the proportionality of the fees between the land uses included in this study.
Development projects that build and dedicate transportation infrastructure to the City as part of the project are eligible to receive credit against their impact fee obligation. Development projects can 123
City of East Palo Alto Development Impact Fee Nexus Study Update 43 satisfy their obligations through a combination of fees and dedication/credits. Section 13.28.080 of the City’s municipal code details the City’s criteria for receiving credits. 124
44 6. RBD Transportation Facilities
This chapter summarizes an analysis of the need for transportation facilities to accommodate new development in RBD. The chapter documents a reasonable relationship between new development and the impact fee for funding of these facilities. The projects and allocation of responsibility to new development within RBD were identified by a traffic modeling analysis performed by Hexagon Transportation Consultants.
Trip Demand
The need for transportation facilities is based on the trip demand placed on the system by development. A reasonable measure of demand is the number of PM peak hour vehicle trips, adjusted for pass-by trips. Pass-by trips are intermediates stops between an origin and a final destination that require no diversion from the route, such as stopping to get gas on the way to work.
Vehicle trip generation rates are a reasonable measure of demand on the City’s system of transportation facilities across all modes because alternate modes (transit, bicycle, pedestrian) often substitute for vehicle trips. Pass-by trips are deducted from the trip generation rate. Table 6.1 shows the calculation of trip demand factors by land use category based on the pass-by trip adjustment described above. The trip generation rates for existing development do not assume that existing development will achieve a 40% trip rate reduction. Trip rates for future development do assume that new development will achieve a 40% trip reduction. This analysis assumes that part of the 40% trip reduction will be due in part to internal trip capture from mixed- use development characteristics.
Table 6.1: Trip Rate Adjustment Factors
ITE Category
Pass-by
Trips1
PM Peak
Hour Trips2
Adjusted Trip
Rate (Existing
Development)3
Adjusted Trip
Rate (New
Development)4
A B C = (1 - A) x B D = C x 0.6
Residential - per Dwelling Unit
Single Family Single Family Housing (210) 0% 0.99 0.99 0.59 Multifamily Multifamily Housing (Low-Rise) (220) 0% 0.57 0.57 0.34 Nonresidential - per 1,000 Sq. Ft.
Retail Shopping Center (820) 34% 4.09 2.70 1.62
Office and R&D
General Office (710) Research and
Development (760)5 0% 1.28 1.28 0.77
Industrial General Light Industrial (110) 0% 0.80 0.80 0.48 2 Trips per dw elling unit or per 1,000 building square feet. 3 Assumes that 40% trip reduction w ill not apply to existing development. 4 Assumes 40% trip
reduction.
Sources: Institute of Traffic Engineers, Trip Generation Manual, 11th Edition; Institute of Traffic Engineers, Trip Generation Handbook 3rd Edition; Willdan Financial Services.
1 Percent of total trips. A pass-by trip is made as an intermediate stop on the w ay from an origin to a primary trip destination w ithout a route diversion. Pass-by trips are not considered to add traffic to the road netw ork. Assumption based on ITE Trip Generation Handbook 5 PM Peak Hour Trip rate for office and research and development land uses w eighted by projected office and research and development square footage in RBD Specific Plan.
125
City of East Palo Alto Development Impact Fee Nexus Study Update 45 Trip Growth
The planning horizon for this analysis is 2045. Table 6.2 lists the 2023 and 2045 land use assumptions for RBD used in this study. The trip demand factors calculated in Table 6.1 are multiplied by the existing and future dwelling units and building square feet to determine the increase in trips caused by new development.
Table 6.2: Land Use Scenario and Total Trips
Project Costs
Cost estimates are summarized in Table 6.3 and were sourced from the RBD Update Transportation Analysis from Hexagon Transportation Consultants. That analysis provided the total project costs, other identified funding and allocation to new development within the RBD.
Trip Trip
Land Use
Demand
Factor
(Existing)
DU or
1,000 Sq.
Ft. Trips
Demand
Factor
(New)
DU or
1,000 Sq.
Ft. Trips
DU or
1,000 Sq.
Ft. Trips
Residential - per Dwelling Unit
Single Family 0.99 203 201 0.59 - - 203 201
Multifamily 0.57 147 84 0.34 1,600 544 1,747 628
Subtotal 350 285 1,600 544 1,950 829
Nonresidential - per 1,000 Sq. Ft.
Retail 2.70 125 338 1.62 112 182 237 520
Office and R&D 1.28 200 256 0.77 3,335 2,568 3,535 2,824 Industrial 0.80 125 100 0.48 325 156 450 256
Subtotal 450 694 3,772 2,906 4,222 3,600
Total 979 3,450 4,429
22.1% 77.9% 100%
Sources: Tables 2.1 and 6.1.
2023 Growth 2023 to 2045 2045
126
City of East Palo Alto Development Impact Fee Nexus Study Update 46 Table 6.3: Planned Facilities
Fee per Trip Demand Unit
Every impact fee consists of a dollar amount, or the cost of projects that can be funded by a fee, divided by a measure of development. In this case, all fees are first calculated as a cost per trip demand unit. Then these amounts are translated into housing unit (cost per dwelling unit) and employment space (cost per 1,000 building square feet) by multiplying the cost per trip by the trip generation rate for each land use category. These amounts become the fee schedule.
Table 6.4 calculates the cost the cost per trip demand unit by dividing the total project costs attributable to new RBD development by transportation fee category summarized in Table 6.3, by the total growth in trips calculated in Table 6.2.
Table 6.4: Cost per Trip to Accommodate Growth
Projected Fee Revenue
Table 6.5 shows the projected fee revenue. The difference between the net project cost and the projected fee revenue is existing development’s share of the planned facilities, often referred to as an existing deficiency. This existing deficiency cannot be funded through the impact fees. The City can use any funding source other than the impact fees to pay for the existing deficiency.
Project Total Other Net Total
No. Intersection Cost Funding Cost Allocation1 Cost Allocated 1 Willow Rd (SR 114) and Bayfront Expy (SR 84) $ 1,224,738 $ 208,205 $ 1,016,533 8.22% $ 83,556 3 University Ave (SR 109) and Bayfront Expy (SR 84) 329,565 56,026 273,539 6.25% 17,091 4 Newbridge Street and Bay Rd 1,000,000 - 1,000,000 100.00% 1,000,000 5 Euclid Ave and Donohoe St 1,505,823 597,061 908,762 63.31% 575,331 6 US 101 Northbound On Ramp and Donohoe St 2,133,250 845,837 1,287,413 63.31% 815,053 8 University Ave (SR 109) and Purdue Ave 1,000,000 - 1,000,000 100.00% 1,000,000 University Ave and Bay Rd 2,000,000 14,300 1,985,700 100.00% 1,985,700 14 University Ave and Donohoe St 5,925,693 507,708 5,417,985 100.00% 5,417,985 18 US 101 NB Off Ramp and Donohoe St 139,428 3,073 136,355 100.00% 136,355 19 Cooley Ave and Donohoe St 83,657 1,583 82,074 100.00% 82,074 1,225,000 62,469 1,162,531 100.00% 1,162,531
23 Clarke Ave and Runnymede St 1,000,000 - 1,000,000 100.00% 1,000,000 26 Demeter St and Bay Rd 1,000,000 - 1,000,000 100.00% 1,000,000 1,250,000 94,556 1,155,444 100.00% 1,155,444
28 Pulgas Ave and Weeks St 1,000,000 36,477 963,523 100.00% 963,523 1,225,000 31,908 1,193,092 100.00% 1,193,092
30 Pulgas Ave and O'Connor St 1,000,000 - 1,000,000 100.00% 1,000,000 35 Clarke Ave and Schembri Lane/Garden Street 1,000,000 - 1,000,000 100.00% 1,000,000 42 Pulgas Ave and Emmerson St (Future) 700,000 - 700,000 100.00% 700,000 45 Tara Rd and Bay Rd 1,000,000 - 1,000,000 100.00% 1,000,000 Total $ 31,049,427 $4,125,152 $ 26,924,274 $ 21,287,735 1 Allocation to new development w ithin RBD Specific Plan identified by Hexagon Transportation Consultants.
Source: Ravensw ood Specific Plan Update Transportation Analysis, Hexagon Transportation Consultants. 11 Clarke Ave and Bay Rd
Pulgas Ave and Bay Rd
Pulgas Ave and Runnymede St
21 27
29 Costs Allocated to New Development $ 21,287,735
Growth in Trip Demand (2023 to 2045) 3,450
Cost per Trip $ 6,170
Sources: Tables 6.2 and 6.3.
127
City of East Palo Alto Development Impact Fee Nexus Study Update 47 Table 6.5: Projected Fee Revenue
Fee Schedule
Table 6.6 shows the maximum justified transportation fee schedule excluding the Loop Road project. The maximum justified fees are based on the costs per trip shown in Table 6.4. The cost per trip is multiplied by the trip demand factors in Table 6.1 to determine a fee per unit of new RBD development. The fee per average single family or multifamily dwelling unit is converted into a fee per square foot by dividing the fee per dwelling unit by the assumed average square footage of a dwelling unit from Table 2.3.
Table 6.6: RBD Transportation Facilities Impact Fee Schedule Mitigation Fee Act Findings
The five statutory findings required for adoption of the RBD transportation facilities fees documented in this chapter are presented below and supported in detail by the analysis above. All statutory references are to the Act.
Purpose of Fee
Identify the purpose of the fee (§66001(a)(1) of the Act).
The RBD transportation facilities fee is designed to ensure that new development in RBD will not burden existing development in the City with the cost of transportation facilities required to Net Project Cost $ 29,149,274
Projected Fee Revenue 21,287,735
Existing Deficiency $ 7,861,539
Source: Table 6.3.
A B C = A x B D = C / Average
Trip
Land Use
Cost per
Trip
Demand
Factor Total Fee1
Fee per Sq.
Ft.2
Residential Dwelling Unit
Single Family $ 6,170 0.59 $ 3,640 $ 2.14
Multifamily 6,170 0.34 2,098 2.40
Nonresidential - per 1,000 Sq. Ft.
Retail $ 6,170 1.62 $ 9,995 $ 10.00
Office and R&D 6,170 0.77 4,751 4.75
Industrial 6,170 0.48 2,962 2.96
1 Fee per average sized dw elling unit or per 1,000 square feet of nonresidential. 2 Assumes 1,700 square feet per single family unit and 875 square feet per multifamily unit.
Sources: Tables 6.1 and 6.4.
128
City of East Palo Alto Development Impact Fee Nexus Study Update 48 accommodate growth. The purpose of the fees documented in this chapter is to provide a funding source from new development in RBD for capital improvements to serve that development. The fees advance a legitimate City interest by enabling the City to provide transportation facilities to serve new development in RBD.
Use of Fee Revenues
Identify the use to which the fees will be put. If the use is financing facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in §65403 or §66002, may be made in applicable general or specific plan requirements, or may be made in other public documents that identify the facilities for which the fees are charged (§66001(a)(2) of the Act).
If enacted by the City the RBD transportation facilities fee would be used to fund capacity expanding transportation facilities to serve new development in the RBD. Facilities funded by these fees are designated to be located within the RBD boundaries. A list of planned transportation facilities projects is included in Table 6.3.
Benefit Relationship
Determine the reasonable relationship between the fees' use and the type of development project on which the fees are imposed (§66001(a)(3) of the Act).
The City will restrict fee revenue to the acquisition of land, construction of facilities and transportation infrastructure, and purchase of related equipment, used to serve new development.
Facilities funded by the fees are expected to provide a network of facilities accessible to the residents and workers associated with new development. While the facilities will be publicly accessible, the City is only pursuing these improvements to facilitate development in the RBD, so it is appropriate to allocate costs to new development within this geography. Using the planned facilities cost allocation methodology outlined in Chapter 1, and the cost per trip calculated in Table
6.4, the resulting fees ensure that new development will only fund its fair share of improvements, and impact fee revenue will not be used to correct existing deficiencies. A deficiency associated with existing development’s share of the planned facilities is identified in Table 6.5, which will not be funded by impact fee revenue. Thus, a reasonable relationship can be shown between the use of fee revenue and the new development residential and non-residential use classifications that will pay the fees.
Burden Relationship
Determine the reasonable relationship between the need for the Citywide transportation facilities and the types of development on which the fees are imposed (§66001(a)(4) of the Act).
New residential and nonresidential development will generate additional population growth, which in turn will generate vehicle trips. An increase in vehicle trip generation will increase the demand for transportation facilities. Facilities need is based on a facility standard that represents the demand generated by new development for those facilities. For the RBD transportation facilities fee, demand is measured by a single facility standard (cost per trip) that can be applied across land use types to ensure a reasonable relationship to the type of development. Project costs in Table
6.3 are allocated to new development based on traffic modeling performed by Hexagon Transportation Consultants, which identified the share of each project attributable to new development. The cost per trip standard is calculated by dividing the net costs allocated to new development by the increase in trip demand associated with residential and nonresidential development. See the Trip Demand and Trip Growth sections above for a discussion of trip demand and an estimate of current and projected vehicle trips. 129
City of East Palo Alto Development Impact Fee Nexus Study Update 49 Proportionality
Determine how there is a reasonable relationship between the fees amount and the cost of the facilities or portion of the facilities attributable to the development on which the fee is imposed (§66001(b) of the Act).
The reasonable relationship between each facilities fee for a specific new development project and the cost of the facilities attributable to that project is based on the estimated trip generation produced by each development project. Fees for a specific project are based on the project’s size.
Larger development projects can result in a higher trip generation resulting in higher fee revenue than smaller projects in the same land use classification. Thus, the fees ensure a reasonable relationship between a specific new development project and the cost of the facilities attributable to that project. See Table 6.1 for the trip generation assumptions that drive the proportionality of the fees between the land uses included in this study.
130
50 7. Water Capacity
This chapter details an analysis of the need for water facilities to accommodate growth within the City of East Palo Alto. The projects and associated costs in this chapter were identified in the City’s Water System Master Plan. This chapter documents a reasonable relationship between new development and a water capacity impact fee to fund facilities that serve new development.
Water Demand
Estimates of new development and its consequent increased water demand provide the basis for calculating the water capacity fee. The need for water facilities improvements is based on the water demand placed on the system by development. A typical measure of demand is a flow generation rate, expressed as the number of gallons per day generated by a specific type of land use. Flow generation rates are a reasonable measure of demand for the City’s system of water improvements because they represent the average rate of demand that will be placed on the system per land use designation.
Table 7.1 shows the calculation of equivalent dwelling unit (EDU) demand factors based on flow generation by land use category. The flow generation factors are based on data from the City’s Water System Master Plan. EDU factors express water flow from each land use in terms of the flow generated by a single-family dwelling unit.
Table 7.1: Water Demand by Land Use
EDU Generation by New Development
Table 7.2 shows the estimated EDU generation from new development through 2045 for non-RBD areas and the RBD. The EDU factors from Table 7.1 are multiplied by the land use assumptions from Chapter 2 to estimate total EDUs in the base year, at the planning horizon and for new development.
Land Use Type
Average Flow
Generation per DU or
1,000 Sq. Ft.
Equivalent
Dwelling Unit
(EDU)
Residential Dwelling Unit
Single Family 260 1.00
Multifamily 160 0.62
Nonresidential - per 1,000 Sq. Ft.
Retail 160 0.62
Office and R&D1 243 0.93
Industrial 110 0.42
Sources: Table 4-5, East Palo Alto Water System Master Plan, 2023; Willdan Financial Services. 1 Average flow generation factor for office and R&D land uses. 131
City of East Palo Alto Development Impact Fee Nexus Study Update 51 Table 7.2: Water Facilities Equivalent Dwelling Units Current Water System Asset Valuation
The buy-in component of the water fee is based on new development “buying in” to the excess capacity of the existing water facilities. In this case, Replacement New Cost Less Depreciation (RCNLD) is the appropriate method to determine the current value of the existing systems. RCNLD is a commonly used method, and it is often preferred to alternative methods such as Original Cost Less Depreciation (OCLD), Original Cost (OC), and Replacement Cost (RC) because of its better reflection of the system’s value in today dollars. Unless the systems have depreciated significantly due to lack of replacement and repair, RCNLD is more defensible because the replacement cost is inflation-adjusted to recover the cost of replacing that capacity in current dollars. RCNLD also accounts for depreciation and consequently address the fact that the system reflects its current condition.
Table 7.3 presents the RCNLD of the City’s existing water system assets.
Land Use
EDU
Factor
DU or
1,000 Sq.
Ft. EDUs
DU or
1,000 Sq.
Ft. EDUs
DU or
1,000 Sq.
Ft. EDUs
Non-RBD
Residential - per Dwelling Unit
Single Family 1.00 4,529 4,529 993 993 5,522 5,522
Multifamily 0.62 3,262 2,022 691 429 3,953 2,451
Subtotal 7,791 6,551 1,684 1,422 9,475 7,973
Nonresidential - per 1,000 Sq. Ft.
Retail 0.62 425 264 221 137 646 401
Office and R&D 0.93 525 488 704 655 1,229 1,143
Industrial 0.42 75 32 - - 75 32
Subtotal 1,025 784 925 792 1,950 1,576
Subtotal - Non-RBD 7,335 2,214 9,549
Share of Total 76.8% 23.2%
RBD
Residential - per Dwelling Unit
Single Family 1.00 203 203 - - 203 203
Multifamily 0.62 147 91 1,600 992 1,747 1,083
Subtotal 350 294 1,600 992 1,950 1,286
Nonresidential - per 1,000 Sq. Ft.
Retail 0.62 125 78 112 69 237 147
Office and R&D 0.93 200 186 3,335 3,102 3,535 3,288
Industrial 0.42 125 53 325 136 450 189
Subtotal 450 317 3,772 3,307 4,222 3,624
Subtotal - RBD 611 4,299 4,910
Share of Total 12.4% 87.6%
Sources: Tables 2.1 and 7.1.
2023 Growth 2023 to 2045 2045
132
City of East Palo Alto Development Impact Fee Nexus Study Update 52 Table 7.3: Existing Water System Assets
Line Diameter
(inches)
Linear
Feet
Date
Installed
Line
Material
Repl. Cost
Per foot or
each
Expected
Lifespan
Years in
Service
Current
Replacement
Value
Percent
Depreciated Depreciation
Replacement
Cost New Less
Depreciation
Water Lines
< 4-inch 2,860 1953 CI $ 306 55 71 $ 875,160 100% $ 875,160 $ - 4-inch 15,920 1953 CI 306 55 71 4,871,520 100% 4,871,520 - 4-inch 6,080 1963 CI 306 55 61 1,860,480 100% 1,860,480 - 4-inch 4,050 1973 CI 306 55 51 1,239,300 93% 1,149,169 90,131 6-inch 39,680 1953 CI 321 55 71 12,737,280 100% 12,737,280 - 6-inch 5,490 1963 CI 321 55 61 1,762,290 100% 1,762,290 - 6-inch 13,410 1973 CI 321 55 51 4,304,610 93% 3,991,547 313,063 6-inch 1,260 1983 CI 321 55 41 404,460 75% 301,507 102,953 6-inch 420 1993 CI 321 55 31 134,820 56% 75,989 58,831
8-inch 3,475 1953 CI 401 55 71 1,393,475 100% 1,393,475 - 8-inch 7,290 1963 CI 401 55 61 2,923,290 100% 2,923,290 - 8-inch 23,175 1973 CI 401 55 51 9,293,175 93% 8,617,308 675,867 8-inch 430 1983 CI 401 55 41 172,430 75% 128,539 43,891 8-inch 3,390 1993 CI 401 55 31 1,359,390 56% 766,202 593,188 8-inch 4,400 2002 PVC 437 55 22 1,922,800 40% 769,120 1,153,680 10-inch 2,490 1953 CI 437 55 71 1,088,130 100% 1,088,130 - 10-inch 645 1963 CI 437 55 61 281,865 100% 281,865 -
10-inch 1,535 1973 CI 437 55 51 670,795 93% 622,010 48,785 10-inch 1,250 1983 CI 437 55 41 546,250 75% 407,205 139,045 10-inch 1,015 1993 CI 437 55 31 443,555 56% 250,004 193,551 10-inch 1,100 2002 PVC 481 55 22 529,100 40% 211,640 317,460 12-inch 2,760 1953 CI 481 55 71 1,327,560 100% 1,327,560 - 12-inch 1,300 1973 CI 481 55 51 625,300 93% 579,824 45,476 12-inch 1,985 1993 CI 481 55 31 954,785 56% 538,152 416,633 Gloria Well 2018-191 2018 CI 135 30 6 1,504,812 20% 300,962 1,203,849 O'Brian Turnout1 2021 135 30 3 205,615 10% 20,562 185,054 Veolia - O'Brian1 2021 135 30 3 17,169 10% 1,717 15,452 Bay Road1 2022 135 30 2 4,176,199 7% 278,413 3,897,786
Subtotal (Waterlines) 145,410 $ 57,625,615 $ 9,494,697
1 Current replacement value show n net of grant funding.
Source: City of East Palo Alto.
133
City of East Palo Alto Development Impact Fee Nexus Study Update 53 Table 7.3: Existing Water System Assets Continued
Line Diameter
(inches)
Linear
Feet
Date
Installed
Line
Material
Repl. Cost
Per foot or
each
Expected
Lifespan
Years in
Service
Current
Replacement
Value
Percent
Depreciated Depreciation
Replacement
Cost New Less
Depreciation
Gloria Well 1.00 1979 N/A $ 500,000 55 45 $ 500,000 82% $ 409,091 $ 90,909 Hydrants
Fire Hydrant - 1 - 2 1/2" 26 1953 N/A $ 2,500 55 71 $ 65,000 100% $ 65,000 $ - Fire Hydrant - 1 - 2 1/2" 8 1963 N/A 2,500 55 61 20,000 100% 20,000 - Fire Hydrant - 1 - 2 1/2" 32 1973 N/A 2,500 55 51 80,000 93% 74,182 5,818 Fire Hydrant - 1 - 2 1/2" 11 1983 N/A 2,500 55 41 27,500 75% 20,500 7,000 Fire Hydrant - 1 - 2 1/2" 8 1993 N/A 2,500 55 31 20,000 56% 11,273 8,727 Fire Hydrant - 2 - 2 1/2" 32 1953 N/A 2,500 55 71 80,000 100% 80,000 - Fire Hydrant - 2 - 2 1/2" - 1963 N/A 2,500 55 61 - 100% - - Fire Hydrant - 2 - 2 1/2" 7 1973 N/A 2,500 55 51 17,500 93% 16,227 1,273 Fire Hydrant - 2 - 2 1/2" 3 1983 N/A 2,500 55 41 7,500 75% 5,591 1,909 Fire Hydrant - 2 - 2 1/2" 2 1993 N/A 2,500 55 31 5,000 56% 2,818 2,182 Fire Hydrant - 2 - 2 1/2" & 1 - 4 1/2" 8 1953 N/A 3,000 55 71 24,000 100% 24,000 - Fire Hydrant - 2 - 2 1/2" & 1 - 4 1/2" 6 1963 N/A 3,000 55 61 18,000 100% 18,000 - Fire Hydrant - 2 - 2 1/2" & 1 - 4 1/2" 12 1973 N/A 3,000 55 51 36,000 93% 33,382 2,618 Fire Hydrant - 2 - 2 1/2" & 1 - 4 1/2" - 1983 N/A 3,000 55 41 - 75% - - Fire Hydrant - 2 - 2 1/2" & 1 - 4 1/2" 9 1993 N/A 3,000 55 31 27,000 56% 15,218 11,782 Subtotal (Hydrants) 164 $ 427,500 $ 41,309
Pressure Regulating Valves 5 1953 N/A 15,000 $ 75,000 100% $ 75,000 $ - Total $ 58,628,115 $ 9,626,915
Source: City of East Palo Alto.
134
City of East Palo Alto Development Impact Fee Nexus Study Update 54 Facility Needs and Costs
Table 7.4 identifies the planned water facilities to be funded by the fee. Projects were identified in the City’s water System Master Plan and have been programmed into the City’s CIP.
The allocation of project costs to new development were estimated as follows:
1. City staff identified those projects which were wholly needed because of new development, either in the existing City or within RBD.
2. For projects P-2, P-5, WA-03A and WS-05, the allocation to RBD was identified Table 9-3 of the Public Review Draft Ravenswood Business District / 4 Corners Specific Plan Update.
3. City staff identified projects that were needed to serve both existing and new development in non-RBD areas of the City, with no responsibility assigned to RBD. For these projects 23% of the project costs are allocated to new development, which corresponds with new development’s share of total water EDUs at the planning horizon for areas of the City excluding RBD.
4. City staff identified projects that were needed to serve both RBD and the existing City areas. For these projects 45% of the project costs are allocated to new development, which corresponds with new development’s share of total water EDUs at the planning horizon Citywide. Costs allocated to new development are then allocated to RBD and non-RBD areas based on each area’s proportional share of new EDUs (RBD will comprise 66% of new EDUs at the planning horizon).
135
City of East Palo Alto Development Impact Fee Nexus Study Update 55 Table 7.4: Water Facilities Costs to Serve New Development Project
No. Description Total
Allocation to
New
Development
Cost Allocated
to New
Development
Non-RBD
Allocation
RBD
Allocation Non-RBD Cost RBD Cost
WS-01B Emergency Water Connects - Palo Alto Park Mutual $ 545,000 23% $ 125,350 100% 0% $ 125,350 $ - WS-01C Emergency Water Connects - O'Connor Tract Co-OP 350,000 23% 80,500 100% 0% 80,500 - WS-01D Emergency Water Connects - O'Brien Kavanaugh 365,000 23% 83,950 100% 0% 83,950 - WS-04 Second Groundwater Well 3,100,000 23% 713,000 100% 0% 713,000 - WS-03A New Storage Tank ‐ East of Highway 101 6,000,000 45% 2,700,000 20% 80% 540,000 2,160,000 WS-03B New Storage Tank - West of Highway 101 6,000,000 23% 1,380,000 100% 0% 1,380,000 - WS-05 Water Tank Siting Study 100,000 45% 45,000 20% 80% 9,000 36,000 P-2 New pipeline, SFPUC Turnout 1,423,000 100% 1,423,000 20% 80% 284,600 1,138,400 Replace 4''Cl main on Jervis between Bay rd and Newbridge St with new 8'' PVC main 2,713,000 23% 623,990 100% 0% 623,990 -
Replace existing 10" CI main on Demeter St between 351 Demeter St and 255 Demeter St with new 16" PVC main. 7,850,000 100% 7,850,000 0% 100% - 7,850,000 P-8 Replace existing 4'' Cl main on Hunter Street bewteeb Purdue Ave and Georgetown St with new 8 PVV 760,000 23% 174,800 100% 0% 174,800 - P-9 Replace existing 4'' cl main on Baylor st between Notre Dame and Michigan 760,000 23% 174,800 100% 0% 174,800 - P-10 Replace existing 4"Cl main in Gonzaga st between Michigan Ave and Bay road with new 8" PVC 556,000 23% 127,880 100% 0% 127,880 -
p-11 Replace existing 4' Cl main on Farrington Way between Kavanagh Dr and Ursula way with New 8' PVC main 769,000 23% 176,870 100% 0% 176,870 - P-12 Replace existing 4' Cl main on Hazelwood Way between Kavanaugh Dr and Ursula Way 1,068,000 23% 245,640 100% 0% 245,640 -
P-13
Replace existing 8" CI, 10" AC, and 10" unknown mains from connection to the 1240 O'Brien turnout on O'Brien Drive through an existing easement to Ralmar Avenue with new 12" PVC main 845,000 45% 380,250 34% 66% 129,285 250,965 P-14 New Pressure Reducing Valve 2,529,000 45% 1,138,050 34% 66% 386,937 751,113 P-15 Pipelone Replacement(4) and Connection 3,968,000 23% 912,640 100% 0% 912,640 - P-16 X2 Pipeline replacements(Euclid)(Donahoe) 2,792,000 23% 642,160 100% 0% 642,160 - P-17 X2 Pipeline replacements(Sacramento st)(Weeks and Univ) 1,148,000 23% 264,040 100% 0% 264,040 - P-19 Pipeline Replacment (Runnymede and Donahoe) 1,852,000 23% 425,960 100% 0% 425,960 - P-20 Replace Pipeline 6' main on Euclid between Runnymeade and Donahoe 1,797,000 23% 413,310 100% 0% 413,310 - P-21 3 Pipeline replacements 2,910,000 23% 669,300 100% 0% 669,300 - Replace existing 4Cl main on Garden St between Clarke Ave 1004 Garden St with new 8'' PVC Main 3,690,000 23% 848,700 100% 0% 848,700 - P-4
P-5
P-22
Sources: City of East Palo Alto Water System Master Plan, 2023; Table 9-3, Public Review Draft Ravensw ood / 4 Corners TOD Specific Plan Update; City of East Palo Alto Ten Year Capital Improvement Program (CIP) Update FY 2024-2025; Willdan Financial Services.
136
City of East Palo Alto Development Impact Fee Nexus Study Update 56 Table 7.4: Water Facilities Projects and Allocation to New Development Continued Project
No. Description Total
Allocation to
New
Development
Cost Allocated
to New
Development
Non-RBD
Allocation
RBD
Allocation Non-RBD Cost RBD Cost
P-24
Pipeline Replacment - Existing 6 Cl main on O'Conner Rd between Larkspur dr and 1161 O'Conner st and O'Conner and the 6'' main from O'Conner St to 421 Daisy Ln with new 8'' PVC main 667,000 23% 153,410 100% 0% 153,410 - P-25 Connect the two hydrant within the shopping mall at 1721 E Bayshore Rd to the existing 12'' PVC at E.Bayshore rd with 12'' PVC main 160,000 23% 36,800 100% 0% 36,800 - P-27 Replace existing 4''CL main on Camelia Ct from Camelia Dr to the end of the circle with new 8'' PVC Main 353,000 23% 81,190 100% 0% 81,190 - P-28 Replace existing 4'' Cl main on Aster Way between Daphne Way and Wisteria Dr with 8'' PVC 770,000 23% 177,100 100% 0% 177,100 - Pipeline replacement e,Baysh between1805 E. Baysh and Pulgas 1,290,000 23% 296,700 100% 0% 296,700 - Pipeline Replacement on East Bayshore Road 23% - 100% 0% - - P-30 X2 Pipeline replacements(Woodland)(CLarke and Woodland) 2,949,000 23% 678,270 100% 0% 678,270 - P-31 New Pipeline Connection - Install 10'' PVC Main to connect mission dr to W bayshore Rd 73,000 23% 16,790 100% 0% 16,790 -
Pipeline Replacement - Replace existing 6'' CI on Capital Ave and W Bayshore Rd between the intersection of Scofield Ave and Capital Ave to the Intersection of W Bayshore Rd and Newell Rd with 12'' PVC main 2,840,000 23% 653,200 100% 0% 653,200 - P-33
Replace existing 8'' CI on Euclid Ave between O'Conner St and Woodland Ave and on Woodland Ave between Euclid Ave and University Ave with 12'' PVC main 1,752,000 23% 402,960 100% 0% 402,960 -
P-34
Replace existing 8'' Cl on O'Conner st between 222 O'Conner St and Euclid Ave and the 6" Cl main on between 222 O'Conner St and the German American Int. School with 12''' PVC 1,588,000 23% 365,240 100% 0% 365,240 - Total $ 66,332,000 $ 24,480,850 $ 12,294,372 $ 12,186,478 Sources: City of East Palo Alto Water System Master Plan, 2023; Table 9-3, Public Review Draft Ravensw ood / 4 Corners TOD Specific Plan Update; City of East Palo Alto Ten Year Capital Improvement Program (CIP) Update FY 2024-2025; Willdan Financial Services.
P-29
P-32
137
City of East Palo Alto Development Impact Fee Nexus Study Update 57 Buy In Component
Every capacity fee consists of a dollar amount, representing the value of facilities, divided by a measure of demand. In this case, buy-in fees are first calculated as the system value per gallon per day (GPD). Then these amounts are translated into fees per housing unit (fee per unit) and employment space (fee per 1,000 square feet) by multiplying the cost per GPD by the flow generation rate for each land use category. These amounts become the fee schedule.
The calculation of the buy-in fee per GPD for water capacity is shown in Table 7.5. The City provided the sewer system’s production capacity, which is six million gallons per day. The adjusted system value divided by the total capacity of the system yields the water capacity fee component per gallon per day of $2.78. This amount is multiplied by the assumption of 260 gallons per day per EDU to determine buy-in fee per EDU.
Table 7.5: Buy In Component
Water Supply Component
The City relies on wholesale water supplied by SFPUD for 100% of the community’s water supply needs under normal operating conditions. Table 7.6 shows the calculation of the cost per gallon per day (and consequently EDU) for the water supply component. The total acquisition cost is divided by the water supply available for new development, net of system loss. The resulting cost per GPD is multiplied by the GPD per EDU to determine the cost per EDU.
Existing System Value $ 9,626,915
Total System Capacity (MGD) 3.46
Cost per GPD $ 2.78
GPD per EDU 260
Buy In Cost per EDU $ 723
Sources: City of East Palo Alto Water System Master Plan, 2023; Table 9-1, Ravensw ood / 4 Corners TOD Specific Plan Update; Tables 7.1 and 7.3, Willdan Financial Services.
138
City of East Palo Alto Development Impact Fee Nexus Study Update 58 Table 7.6: Water Supply Component
Total Cost per EDU
Table 7.7 calculates a cost per EDU, which includes a buy-in component, a water supply component, and a water facilities component. The buy in and water supply components are the same regardless of where a project is located. The water facilities component varies by RBD and non-RBD areas.
The cost per EDU for water facilities is calculated by dividing the total cost of projects allocated to new development in each area of the City identified in by the growth in EDUs identified in Table
7.2. The resulting cost per EDU is added to the buy in and water supply costs per EDU to determine the total cost per EDU. The total cost per EDU is divided by 260 gallons per day to determine the cost per GPD which is used to calculate the nonresidential fees in a subsequent table.
Acquisition Cost of 1 mgd SFPUC Water Supply Assurance $5,000,000 SFPUC Water Supply Assurance Acquired (Gallons per Day) 1,000,000 % Available for Customer Supply (Net of System Loss)* 92% Net Water Supply Available for New Demand 920,000
Average Cost of New Water Supply per GPD $ 5.43
GPD per EDU 260
Cost per EDU $ 1,412
Source: City of East Palo Alto.
139
City of East Palo Alto Development Impact Fee Nexus Study Update 59 Table 7.7: Cost per EDU
Projected Fee Revenue
Table 7.8 shows the projected fee revenue. The difference between the net project cost and the projected fee revenue is existing development’s share of the planned facilities, often referred to as an existing deficiency. This existing deficiency cannot be funded through the impact fees. The City can use any funding source other than the impact fees to pay for the existing deficiency.
Table 7.8: Projected Fee Revenue
Buy in Cost per EDU $ 723
Water Supply Cost per EDU $ 1,412
Non-RBD
Growth Related Capital
Net Cost of Planned Facilities Allocated to Area $12,294,372 Growth in EDUs (2023 to 2040) 2,214
Cost per EDU $ 5,553
Total Cost per EDU $ 7,688
Total Cost per GPD $ 29.57
RBD
Growth Related Capital
Net Cost of Planned Facilities Allocated to Area $12,186,478 Growth in EDUs (2023 to 2040) 4,910
Cost per EDU $ 2,482
Total Cost per EDU $ 4,617
Total Cost per GPD $ 17.76
Note: One EDU is equal to 260 GPD.
Sources: Tables 7.2, 7.4, 7.5 and 7.6.
Net Project Cost $ 66,332,000
Projected Fee Revenue (RBD) 12,186,478
Projected Fee Revenue (Non RBD) 12,294,372
Existing Deficiency $ 41,851,150
Source: Table 7.4.
140
City of East Palo Alto Development Impact Fee Nexus Study Update 60 Fee Schedules
The maximum justified water capacity fees for residential development are shown in Table 7.9.
The total cost per EDU is converted to a fee per average residential unit of new development based on the EDU factors from Table 7.1. The resulting fees per average unit are divided by the average square feet per type of unit to determine the fee per square foot of living space.
Table 7.9: Residential Water Facilities Fee Schedule
Table 7.10 presents the nonresidential water capacity fees by water meter size. It is assumed that a ¾” meter is appropriate to accommodate flow of 380 GPD. The assumed flow for larger meters is scaled based on the capacity of other meter sizes relative to the ¾” meter. Using water meter size to drive the fee schedule is reasonable and directly proportional to the amount of water that can be accommodated by a connection.
A B C = A x B D = C / Average
Cost Per
EDU
EDU
Factor
Base
Fee1
Fee per
Sq. Ft.2
Non-RBD
Residential Dwelling Unit
Single Family $ 7,688 1.00 $ 7,688 $ 4.52
Multifamily 7,688 0.62 4,767 5.45
RBD
Residential Dwelling Unit
Single Family $ 4,617 1.00 $ 4,617 $ 2.72
Multifamily 4,617 0.62 2,863 3.27
1 Fee per average sized dw elling unit or per 1,000 square feet of nonresidential. 2 Assumes 1,700 square feet per single family unit and 875 square feet per multifamily unit.
Sources: Tables 7.2 and 7.7.
141
City of East Palo Alto Development Impact Fee Nexus Study Update 61 Table 7.10: Nonresidential Water Fee Schedule
Mitigation Fee Act Findings
The five statutory findings required for adoption of the water facilities fees documented in this chapter are presented below and supported in detail by the analysis above. All statutory references are to the Act.
Purpose of Fee
Identify the purpose of the fee (§66001(a)(1) of the Act).
The water facilities fee is designed to ensure that new development will not burden existing development in the City with the cost of water facilities required to accommodate growth. The purpose of the fees documented in this chapter is to provide a funding source from new development in the City for capital improvements to serve that development. The fees advance a legitimate City interest by enabling the City to provide water facilities to serve new development.
Use of Fee Revenues
Identify the use to which the fees will be put. If the use is financing facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in §65403 or §66002, may be made in applicable general or specific plan requirements, or may be made in other public documents that identify the facilities for which the fees are charged (§66001(a)(2) of the Act).
Meter Size
Capacity
Ratio
Water
Demand
(GPD)
Fee per
GPD
Impact Fee
per Meter
Non-RBD
3/4 inch 1.00 380 $ 29.57 $ 11,237
1 inch 1.67 633 29.57 18,718
1-1/2 inch 3.33 1,267 29.57 37,465
2 inch 5.33 2,027 29.57 59,938
3 inch 10.00 3,800 29.57 112,366
4 inch 16.67 6,333 29.57 187,267
RBD
3/4 inch 1.00 380 $ 17.76 $ 6,749
1 inch 1.67 633 17.76 11,242
1-1/2 inch 3.33 1,267 17.76 22,502
2 inch 5.33 2,027 17.76 36,000
3 inch 10.00 3,800 17.76 67,488
4 inch 16.67 6,333 17.76 112,474
1 Based on AWWA standard meter capacities for each meter size, divided by the meter capacity for a 3/4" meter. Assumes 380 GPD for 3/4" meter. 2 Demand per meter size increases based on the capacity ratio relative to a 3/4" meter.
Sources: Table 7.7, AWWA; Willdan Financial Services.
142
City of East Palo Alto Development Impact Fee Nexus Study Update 62 If enacted by the City the water facilities fee would be used to fund capacity expanding water facilities to serve new development both in the RBD and non-BRD areas of the City. Facilities funded by these fees are designated to be located within the City limits. A list of planned water facilities projects is included above in Table 7.4
Benefit Relationship
Determine the reasonable relationship between the fees' use and the type of development project on which the fees are imposed (§66001(a)(3) of the Act).
The City will restrict fee revenue to the acquisition of land, construction of facilities and water infrastructure, and purchase of related equipment, used to serve new development. Facilities funded by the fees are expected to provide a network of facilities needed to provide water service to the residents and workers associated with new development. Using the planned facilities cost allocation methodology outlined in Chapter 1, and the cost per gallon per day standard calculated in Table 7.7, the resulting fees ensure that new development will only fund its fair share of improvements, and impact fee revenue will not be used to correct existing deficiencies. A deficiency associated with existing development’s share of the planned facilities is identified in Table 7.8, which will not be funded by impact fee revenue. Thus, a reasonable relationship can be shown between the use of fee revenue and the new development residential and non-residential use classifications that will pay the fees.
Burden Relationship
Determine the reasonable relationship between the need for the Citywide transportation facilities and the types of development on which the fees are imposed (§66001(a)(4) of the Act).
New residential and nonresidential development will generate additional population growth, which in turn will generate water flow. An increase in water flow generation will increase the demand for water facilities. Facilities need is based on a facility standard that represents the demand generated by new development for those facilities. For the water facilities fee, demand is measured by a single facility standard (cost per gallon per day) that can be applied across land use types to ensure a reasonable relationship to the type of development. Project costs in Table 7.4 are allocated to new development, and then to new development within RBD and outside of RBD based on input from the City’s Public Works department. The cost per gallon per day standard is calculated by dividing the net costs allocated to new development in each geography by the increase in flow demand associated with residential and nonresidential development. See the Water Demand and EDU Generation by New Development sections above for a discussion of water demand and an estimate of current and projected flow.
Proportionality
Determine how there is a reasonable relationship between the fees amount and the cost of the facilities or portion of the facilities attributable to the development on which the fee is imposed (§66001(b) of the Act).
The reasonable relationship between each facilities fee for a specific new development project and the cost of the facilities attributable to that project is based on the estimated flow generation produced by each development project. Fees for a specific project are based on the project’s size.
Larger development projects can result in a higher flow generation resulting in higher fee revenue than smaller projects in the same land use classification. Thus, the fees ensure a reasonable relationship between a specific new development project and the cost of the facilities attributable to that project. See Table 7.1 for the flow generation assumptions that drive the proportionality of the fees between the land uses included in this study.
143
63 8. Storm Drain Facilities
This chapter summarizes an analysis of the need for storm drain facilities to accommodate growth within East Palo Alto. The projects and associated costs in this chapter were identified in the City’s CIP. This chapter documents a reasonable relationship between new development and an impact to fund storm drain facilities that serve new development.
Storm Drain Demand
Most new development generates storm water runoff that must be controlled through storm drain facilities by increasing the amount of land that is impervious to precipitation. Table 8.1 shows the estimates of imperious surface generation by the various land use categories included in this study.
The table uses estimates of development density from the General Plan, and average percent impervious from the City’s Storm Drain Master Plan to estimate the amount of impervious acres associated with each type of dwelling unit, and the square footage associated with the nonresidential land uses included in this study.
Table 8.1: Storm Drain Demand
Impervious Surface Generation by New Development
Table 8.2 shows the estimated impervious surface generation from new development through 2045 for the non-RBD and RBD areas of the City. New development will generate approximately 192.79 acres of impervious surface Citywide through 2045.
DU or
KSF per
acre1
Average
Percent
Impervious2
Impervious
Square Feet
per Unit
Impervious
Acres per
Unit
Residential
Single Family 12.00 60% 2,178 0.050
Multifamily 22.00 90% 1,782 0.041
Nonresidential
Retail 43.56 90% 900 0.021
Office and R&D 87.12 75% 375 0.009
Industrial 43.56 80% 800 0.018
2 From Table 2-2 in the 2014 East Palo Alto Storm Drain Master Plan. 1 Dw elling units for residential and thousand building square feet for non-residential. Density based on estimated development and acreage for each land use type in the General Plan .
Nonresidential densities are based on floor-area-ratios of 1.0 for retail, 2.0 for office, and 1.0 for industrial, derived from the ranges in Table 4-2 of the General Plan Land Use Element. 2 EDUs per dw elling unit for residential development and per thousand square feet for nonresidential development.
Sources: East Palo Alto General Plan Land Use Element, Table 4-2; 2014 East Palo Alto Storm Drain Master Plan. Table 2-2; Willdan Financial Services. 144
64 Table 8.2: Impervious Acres
Planned Facilities
Table 8.3 identifies the planned storm drain facilities to be funded by the fee. The new storm drain facilities were identified in the City’s CIP and the RBD Specific Plan Update. The allocation of project costs to new development were estimated as follows:
1. City staff identified those projects which were wholly needed as a result of new development, either in the existing City or within RBD. a. Projected needed solely to serve new development in RBD are allocated 100% to RBD.
b. Projects that are needed to serve both the existing City and RBD are allocated to each area based on each area’s proportional share of new impervious surface (RBD will comprise 54% of new impervious surface at the planning horizon) Impervious
Acres per
Unit or KSF
DU or
1,000 Sq.
Ft.
Impervious
Acres
DU or
1,000 Sq.
Ft.
Impervious
Acres
DU or
1,000 Sq.
Ft.
Impervious
Acres
Non RBD
Residential
Single Family 0.050 4,529 226.45 993 49.65 5,522 276.10 Multifamily 0.041 3,262 133.74 691 28.33 3,953 162.07
Subtotal 7,791 360.19 1,684 77.98 9,475 438.17
Nonresidential
Retail 0.021 425 8.93 221 4.64 646 13.57
Office and R&D 0.009 525 4.73 704 6.34 1,229 11.06
Industrial 0.018 75 1.35 - - 75 1.35
Subtotal 1,025 15.01 925 10.98 1,950 25.98
Total - Non RBD 375.20 88.96 464.15
RBD
Residential
Single Family 0.050 203 10.15 - - 203 10.15
Multifamily 0.041 147 6.03 1,600 65.60 1,747 71.63
Subtotal 350 16.18 1,600 65.60 1,950 81.78
Nonresidential
Retail 0.021 125 2.63 112 2.36 237 4.99
Office and R&D 0.009 200 1.80 3,335 30.02 3,535 31.82
Industrial 0.018 125 2.25 325 5.85 450 8.10
Subtotal 450 6.68 3,772 38.23 4,222 44.91
Total - RBD 22.86 103.83 126.69
Total - Citywide 398.06 192.79 590.84
Sources: Tables 2.1, 2.2 and 8.1.
2023 Growth 2023 to 2045 2045
145
65 2. City staff identified projects that were needed to serve both existing and new development, with no responsibility assigned to RBD. For these projects 19% of the project costs are allocated to new development, which corresponds with new development’s share of total impervious surface at the planning horizon for areas of the City excluding RBD.
3. City staff identified projects that were needed to serve both RBD and the existing City areas. For these projects 33% of the project costs are allocated to new development, which corresponds with new development’s share of total impervious surface at the planning horizon Citywide. Costs allocated to new development are then allocated to RBD and nonRBD areas based on each area’s proportional share of new impervious surface (RBD will comprise 54% of new impervious surface at the planning horizon). 146
City of East Palo Alto Development Impact Fee Nexus Study Update 66 Table 8.3: Storm Drain Projects and Allocation to New Development Project
No. Description Total Cost
Identified
Funding Net Cost
Allocation to
New
Development
Cost
Allocated to
New
Development
Non-RBD
Allocation
RBD
Allocation
Non-RBD
Cost RBD Cost
SD-06A/B O’Connor Pump Station - Phase I and II $14,800,000 $ 800,000 $14,000,000 33% $ 4,620,000 46% 54% $ 2,125,200 $ 2,494,800 SD-06C Runnymede Tide flex 300,000 - 300,000 19% 57,000 100% 0% 57,000 - SD-08 Full Trash Capture Device Installation 2,575,000 2,225,000 350,000 19% 66,500 100% 0% 66,500 - SD-10 Harvest Weeks Pipe 1,400,000 - 1,400,000 100% 1,400,000 0% 100% - 1,400,000 SD-11 Illinos-Purdue Pipe 2,100,000 - 2,100,000 100% 2,100,000 0% 100% - 2,100,000 SD-13 Purdue-Bay Pipe 3,100,000 - 3,100,000 100% 3,100,000 0% 100% - 3,100,000 SD-14 Bay Road Pump Station 8,225,000 - 8,225,000 100% 8,225,000 46% 54% 3,783,500 4,441,500 SD-16 Runnymede Pump Station 19,500,000 - 19,500,000 100% 19,500,000 0% 100% - 19,500,000 Bay Road to O'Connor 2,548,000 - 2,548,000 19% 484,120 100% 0% 484,120 - Channel Improvements 1,625,000 - 1,625,000 19% 308,750 100% 0% 308,750 - Newbridge 1,365,000 - 1,365,000 19% 259,350 100% 0% 259,350 - O'Connor &Euclid 949,000 - 949,000 19% 180,310 100% 0% 180,310 - O'Connor PS Improvement - Phase III 8,541,000 - 8,541,000 33% 2,818,530 46% 54% 1,296,524 1,522,006 Ralmar 897,000 - 897,000 19% 170,430 100% 0% 170,430 -
Willow Rd 6,240,000 - 6,240,000 19% 1,185,600 100% 0% 1,185,600 - Camellia Dr 598,000 - 598,000 19% 113,620 100% 0% 113,620 - Camelia to Azelia 715,000 - 715,000 19% 135,850 100% 0% 135,850 - Menalto and Green 650,000 - 650,000 19% 123,500 100% 0% 123,500 - Daphne to Jasmine 858,000 - 858,000 19% 163,020 100% 0% 163,020 - System Upgrades and Repairs 1,339,000 - 1,339,000 19% 254,410 100% 0% 254,410 - Bay Road 169,000 - 169,000 19% 32,110 100% 0% 32,110 -
Cooley 169,000 - 169,000 19% 32,110 100% 0% 32,110 -
Demter St 455,000 - 455,000 19% 86,450 100% 0% 86,450 - Donohoe 221,000 - 221,000 19% 41,990 100% 0% 41,990 -
Glen Way 351,000 - 351,000 19% 66,690 100% 0% 66,690 -
Kavanaugh 598,000 - 598,000 19% 113,620 100% 0% 113,620 - Manhattan 52,000 - 52,000 19% 9,880 100% 0% 9,880 -
Myrtle St 260,000 - 260,000 19% 49,400 100% 0% 49,400 - O'Brien 364,000 - 364,000 19% 69,160 100% 0% 69,160 -
University Ave 273,000 - 273,000 19% 51,870 100% 0% 51,870 - Weeks End 377,000 - 377,000 19% 71,630 100% 0% 71,630 - Total $81,614,000 $3,025,000 $78,589,000 $ 11,332,594 $34,558,306 Sources: Table 9-6, Ravensw ood / 4 Corners TOD Specific Plan Update; City of East Palo Alto Ten Year Capital Improvement Program (CIP) Update FY 2024-2025; Willdan Financial Services. 147
City of East Palo Alto Development Impact Fee Nexus Study Update 67 Projected Fee Revenue
Table 8.4 shows the projected fee revenue. The difference between the net project cost and the projected fee revenue is existing development’s share of the planned facilities, often referred to as an existing deficiency. This existing deficiency cannot be funded through the impact fees. The City can use any funding source other than the impact fees to pay for the existing deficiency.
Table 8.4: Projected Fee Revenue
Fee per Impervious Acre
This chapter uses the planned facilities approach to calculate the storm drain facilities cost standard. The cost of planned facilities allocated to new development is divided by the increase in impervious acres to determine a fee per impervious acre of development. Table 8.5 shows these costs.
Table 8.5: Fee per Impervious Acre
Existing Impervious Surface
Existing impervious paving and buildings that are removed do not receive credit under the City's existing impact fee ordinance. However, credit is available for projects that reduce site drainage beyond standard engineering calculations.
The rationale for not crediting existing buildings or paving that are demolished, is as follows:
Net Project Cost $78,589,000
Projected Fee Revenue (RBD) 34,558,306
Projected Fee Revenue (Non RBD) 11,332,594
Existing Deficiency $32,698,100
Source: Table 8.3.
Non RBD
Net Cost of Planned Facilities Allocated to Area $ 11,332,594 New Development Impervious Acres 88.96
Cost per Impervious Acre $ 127,390
RBD
Net Cost of Planned Facilities Allocated to Area $ 34,558,306 New Development Impervious Acres 103.83
Cost per Impervious Acre $ 332,835
Sources: Tables 8.1 and 8.2.
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City of East Palo Alto Development Impact Fee Nexus Study Update 68 1. Giving credit to large properties with existing impervious areas unfairly offloads and increases the impact fee for vacant unimproved properties.
2. Site drainage for many properties does not meet current City and NPDES standards and flows onto adjacent properties or to the Bay.
3. NPDES permits do not give credit to existing impervious surface.
4. When redeveloped, these properties must be engineered to drain to the City's storm drainage system.
5. Per City and RBD studies, the existing system is deficient to serve development sites and significant upgrades are necessary to meet current requirements (e.g., new pump stations to serve the RBD and a significant upgrade to the O'Conner pump station.).
Mitigation Fee Act Findings
The five statutory findings required for adoption of the storm drain facilities fees documented in this chapter are presented below and supported in detail by the analysis above. All statutory references are to the Act.
Purpose of Fee
Identify the purpose of the fee (§66001(a)(1) of the Act).
The storm drain facilities fee is designed to ensure that new development will not burden existing development in the City with the cost of storm drain facilities required to accommodate growth. The purpose of the fees documented in this chapter is to provide a funding source from new development in the City for capital improvements to serve that development. The fees advance a legitimate City interest by enabling the City to provide storm drain facilities to serve new development.
Use of Fee Revenues
Identify the use to which the fees will be put. If the use is financing facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in §65403 or §66002, may be made in applicable general or specific plan requirements, or may be made in other public documents that identify the facilities for which the fees are charged (§66001(a)(2) of the Act).
If enacted by the City the storm drain facilities fee would be used to fund capacity expanding storm drain facilities to serve new development both in the RBD and non-BRD areas of the City. Facilities funded by these fees are designated to be located within the City limits. A list of planned storm drain facilities projects is included above in Table 8.4.
Benefit Relationship
Determine the reasonable relationship between the fees' use and the type of development project on which the fees are imposed (§66001(a)(3) of the Act).
The City will restrict fee revenue to the acquisition of land, construction of facilities and storm drain infrastructure, and purchase of related equipment used to serve new development. Facilities funded by the fees are expected to provide a network of facilities needed to mitigate the storm water runoff generated by new development. Using the planned facilities cost allocation methodology outlined in Chapter 1, and the cost per impervious acre calculated in Table 8.5, the resulting fees ensure that new development will only fund its fair share of improvements, and impact fee revenue will not be used to correct existing deficiencies. Thus, a reasonable relationship can be shown between 149
City of East Palo Alto Development Impact Fee Nexus Study Update 69 the use of fee revenue and the new development residential and non-residential use classifications that will pay the fees.
Burden Relationship
Determine the reasonable relationship between the need for the Citywide transportation facilities and the types of development on which the fees are imposed (§66001(a)(4) of the Act).
New residential and nonresidential development will generate impervious surface, which in turn will generate storm water runoff. An increase in storm water runoff will increase the demand for storm drain facilities. Facilities need is based on a facility standard that represents the demand generated by new development for those facilities. For the storm drain facilities fee, demand is measured by a single facility standard (cost per acre of impervious surface) that can be applied across land use types to ensure a reasonable relationship to the type of development. Project costs in Table 8.3 are allocated to new development, and then to new development within RBD and outside of RBD based on input from the City’s Public Works department. The cost per acre of impervious surface standard is calculated by dividing the net costs allocated to new development in each geography by the increase in impervious surface associated with residential and nonresidential development.
See the Storm Drain Demand and Imperious Surface Generation by New Development sections above for a discussion of storm drain demand and an estimate of current and projected impervious surface.
Proportionality
Determine how there is a reasonable relationship between the fees amount and the cost of the facilities or portion of the facilities attributable to the development on which the fee is imposed (§66001(b) of the Act).
The reasonable relationship between each facilities fee for a specific new development project and the cost of the facilities attributable to that project is based on the impervious surface generation produced by each development project. Fees for a specific project are based on the project’s size.
Larger development projects can result in a higher impervious surface generation resulting in higher fee revenue than smaller projects in the same land use classification. Thus, the fees ensure a reasonable relationship between a specific new development project and the cost of the facilities attributable to that project. See Table 8.1 for the impervious surface assumptions that were used to estimate current and projected impervious surface.
Development projects that build and dedicate storm drainage infrastructure to the City as part of the project are eligible to receive credit against their impact fee obligation. Development projects can satisfy their obligations through a combination of fees and dedication/credits. Section
13.28.080 of the City’s municipal code details the City’s criteria for receiving credits. 150
70 9. AB 602 Requirements
On January 1, 2022, new requirements went into effect for California jurisdictions implementing impact fees. Among other changes, AB 602 added Section 66016.5 to the Government Code, which set guidelines for impact fee nexus studies. Four key requirements from that section which concern the nexus study are reproduced here:
66016.5. (a) (2) When applicable, the nexus study shall identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is appropriate.
66016.5. (a) (4) If a nexus study supports the increase of an existing fee, the local agency shall review the assumptions of the nexus study supporting the original fee and evaluate the amount of fees collected under the original fee.
66016.5. (a) (5) A nexus study adopted after July 1, 2022, shall calculate a fee imposed on a housing development project proportionately to the square footage of proposed units of the development. A local agency that imposes a fee proportionately to the square footage of the proposed units of the development shall be deemed to have used a valid method to establish a reasonable relationship between the fee charged and the burden posed by the development. 66016.5. (a) (6) Large jurisdictions shall adopt a capital improvement plan as a part of the nexus study. [The City of East Palo Alto is considered a “large jurisdiction” within the meaning of Section 66016.5(a)(6), and the definition in Health and Safety Code Section 53559.1 Subdivision (h) because it is in a County with more than 250,000 residents] Compliance with AB 602
The following sections describe this study’s compliance with the new requirements of AB 602. 66016.5. (a) (2) - Level of Service
1. For the fees calculated under the system standard methodology, the maximum justified fees represent an increase in the facility level of service. The fees calculated under this methodology are the parks and trail, and public facility fees. The increased level of service is required to fund new development’s fair share of facilities identified in the City’s most recent CIP, which is informed by the City’s RBD/4 Corners Specific Plan Update and the Parks, Recreation, and Open Space Master Plan. New development will not fund the entirety of the increase in level of service, rather, it will fund a share of the increased level of service represented by the planned facilities. The City will have to fund existing development’s share of the increased level of service through any other funding source.
Each chapter for facility fee categories that are increasing the level of service include a table that shows the existing level of service and future level of service in terms of facility investment per capita.
2. For fees calculated under the planned facilities methodology, the fees are calculated to ensure that the level of service does not fall to unacceptable levels. The fees calculated under this approach are the transportation-related, water facilities and storm drainage facility fees. The LOS analysis for RBD projects is based on the RBD Transportation Impact Analysis, prepared by Hexagon Transportation Consultants. The water facilities were identified in the City’s Water System Master Plan and Utilities Infrastructure Study for the RBD/4 Corners Specific Plan Update. The needed storm drainage facilities were identified in the Utilities Infrastructure Study for the RBD/4 Corners Specific Plan Update and the City’s CIP.
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City of East Palo Alto Development Impact Fee Nexus Study Update 66016.5. (a) (4) – Review of Original Fee Assumptions
Willdan extensively reviewed the City’s prior impact fee studies while conducting this fee analysis.
Notable this study differs from the 2019 study in several ways:
1. Potential development in the RBD has increased significantly. Refer to Chapter 2, Growth Forecasts for estimates of potential development in the City.
2. Cost assumptions have been updated to current dollars. The costs in the 2019 study were considerably lower than current market costs for construction of new facilities and the acquisition of land. Further, the 2019 study only included a limited list of projects. Since that time the City has completed significant facility planning, reflected in the Parks and Trails Master Plan and CIP.
3. This study made use of the most current project lists and inventories of existing facilities where relevant.
4. For the public facilities and parks and trail facilities this study used a different methodology for calculating impact fees Rather than only allocating future facility costs to existing and new development, this updated study uses the system plan method to calculate fees for public facilities and parks and trail facilities. The system plan approach is used because it takes into account the sizable investment that the City has already made in existing facilities in order to evaluate the achieved level of service at the planning horizon. Excluding the value of the existing facilities from the calculation would underrepresent the investment that existing development has made in facilities and overstate the existing deficiencies.
Table 9.1 displays an accounting of annual revenue collected over the last five fiscal years for the impact fees included in this analysis.
Table 9.1: Annual Collected Impact Fee Revenue
66016.5. (a) (5) – Residential Fees per Square Foot
Impact fees for residential land uses are calculated per square foot for all fee categories except for storm drainage. The storm drainage fees are based on the impervious surface generated by each development project and are directly proportional to the demand for storm drainage from new development.
66016.5. (a) (6) – Capital Improvement Plan
The Capital Improvement Plan for this nexus study is comprised of the identified planned facilities within each facility fee chapter. Planned facilities identified in this document are sourced from the City’s current adopted CIP, master plans and other relevant documents, including the Ravenswood Specific Plan Update Transportation Analysis which discusses the Bay Road improvements.
Fee Category FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 Total Parks and Trails - 11,389 21,113 9,110 - 41,612
Public Facilities - 19,973 44,336 16,048 - 80,357
Transportation - 6,498 189,339 6,806 - 202,643
Water - 8,147 473,142 25,913 - 507,202
Storm Drainage - 21,088 261,823 14,617 - 297,528
Total - 67,095 989,753 72,494 - 1,129,342
Source: City of East Palo Alto.
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City of East Palo Alto Development Impact Fee Nexus Study Update Adoption of this nexus study would approve the planned facilities identified herein as the Capital Improvement Plan for this nexus study.
Housing and Community Development Nexus Study
Template
As part of AB 602 the California Department of Housing and Community Development produced a “nexus study template” that provides a framework that jurisdictions can utilize to adopt or update an impact fee program affecting residential development in accordance with the requirements of relevant sections of the Government Code. The template provides eight key steps to be undertaken as part of the nexus study preparation and the process to adopt or update a development impact fee that will be applicable to residential development.
This study followed the nexus study template as described below:
Step 1: Reasoning Behind Impact Fee Program
Refer to the “Purpose of the Fee” section within the Mitigation Fee Act findings section of each fee chapter for the reasoning behind each impact fee calculated in this study.
Step 2: Existing and Future Development Projections
Refer to Tables 2.1 and 2.2 for the existing and future development projections used in this study.
Step 3: Determination of Facility Standards
Each chapter identifies facility standards, expressed as a cost per capita, cost per trip, cost per gallon per day of water flow, or cost per acre of impervious surface.
Step 4: Cost of Facilities to Serve New Development
Each chapter identifies the cost of facilities needed to serve new development. Refer to Tables Step 5: Fair Share Allocation of Facility Costs to New Development Each chapter describes the facility costs are allocated to new development.
Step 6: Maximum Fee Based on Nexus Analysis
Refer to the “Fee Schedule” section of each chapter for the maximum justified impact fee schedule for each impact fee category.
Step 7: Financial Impact of Fees
While not included in this nexus study, Willdan Financial Services is providing a comparison of impact fees and a financial feasibility analysis to accompany the nexus study.
Step 8: Fee Adoption and Program Implementation
The City Council will consider implementing the fee schedules included in this study. The Council will consider the policy options outlined in the nexus study template during the public hearing for fee adoption.
153
73 10. Implementation
Impact Fee Program Adoption Process
Impact fee program adoption procedures are found in the California Government Code section 66016. Adoption of an impact fee program requires the City Council to follow certain procedures including holding a public hearing. The impact fee nexus study must first be adopted at a public hearing to comply with AB 602. That public hearing must be noticed at least 30 days in advance.
Data, such as an impact fee report, must be made available at least 10 days prior to the public hearing. The City’s legal counsel should be consulted for any other procedural requirements as well as advice regarding adoption of an enabling ordinance and/or a resolution. After adoption there is a mandatory 60-day waiting period before the fees go into effect.
Inflation Adjustment
The City can keep its impact fee program up to date by periodically adjusting the fees for inflation.
Such adjustments should be completed regularly to ensure that new development will fully fund its share of needed facilities. We recommend that the Engineering News Record’s Construction Cost Index (CCI) be used for adjusting fees for inflation.
While fee updates using inflation indices are appropriate for periodic updates to ensure that fee revenues keep up with increases in the costs of public facilities, the City will also need to conduct more extensive updates of the fee documentation and calculation (such as this study) when significant new data on growth forecasts and/or facility plans become available.
Reporting Requirements
The City complies with the annual and five-year reporting requirements of the Mitigation Fee Act.
For facilities to be funded by a combination of public fees and other revenues, identification of the source and amount of these non-fee revenues is essential. Identification of the timing of receipt of other revenues to fund the facilities is also important. Table 10.1 summarizes the annual and fiveyear Mitigation Fee Act reporting requirements.
CEQA
The approval of the Nexus Study and the proposed Development Impact Fee Schedule would not have a significant impact on the environment and would be exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15061(b)(3) of the State CEQA Guidelines because these actions would involve only the adoption of a study and fee schedule, and no specific development would be authorized. No physical activity would occur until all required environmental review is conducted at the time the physical improvements are undertaken at a future date.
Therefore, the approval and adoption of the Nexus Study and proposed Development Impact Fee Schedule does not have the potential for causing a significant effect on the environment. In addition, the adoption of a resolution approving and setting forth a procedure for determining fees for the purpose of obtaining funds for capital projects and equipment necessary to maintain service within existing service areas and is statutorily exempt from CEQA pursuant to State CEQA Guidelines 15273(a)(4).
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City of East Palo Alto Development Impact Fee Nexus Study Update 74 Table 10.1: Annual and Five-year Mitigation Fee Act Administrative Requirements CA Gov't Code
Section Timing Reporting Requirements1
Recommended
Fee Adjustment
66001.(d)
The fifth fiscal year following the
first deposit into the account or
fund, and every five years
thereafter
(A) Identify the purpose to which the fee is to be put. (B) Demonstrate a reasonable relationship between the fee and the purpose for which it is charged.
(C) Identify all sources and amounts of funding anticipated to complete financing in incomplete improvements.
(D) Designate the approximate dates on which supplemental funding is expected to be deposited into the appropriate account or fund.
Comprehensive
Update
66006. (b) Within 180 days after the last
day of each fiscal year
(A) A brief description of the type of fee in the account or fund. (B) The amount of the fee.
(C) The beginning and ending balance of the account or fund. (D) The amount of the fees collected and the interest earned. (E) An identification of each public improvement on which fees were expended including share funded by fees.
(F) (i) An identification of an approximate date by which the construction of the public improvement will commence if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement and the public improvement remains incomplete.
(ii) An identification of each public improvement identified in a previous report pursuant to clause (i) and whether construction began on the approximate date noted in the previous report.
(iii) For a project identified pursuant to clause (ii) for which construction did not commence by the approximate date provided in the previous report, the reason for the delay and a revised approximate date that the local agency will commence construction.
(G) A description of any potential interfund transfers. (H) The amount of refunds made (if any).
Inflationary
Adjustment
1 Edited for brevity. Refer to the government code for full description.
Sources: California Government Code §66001 and §66006.
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Programming Revenues and Projects with the CIP
The City maintains a Capital Improvement Program (CIP) to plan for future infrastructure needs. The CIP identifies costs and phasing for specific capital projects. The use of the CIP in this manner documents a reasonable relationship between new development and the use of those revenues.
The City may decide to alter the scope of the planned projects or to substitute new projects as long as those new projects continue to represent an expansion of the City’s facilities. If the total cost of facilities varies from the total cost used as a basis for the fees, the City should consider revising the fees accordingly. 156
EXHIBIT B
CITY OF EAST PALO ALTO
DEVELOPMENT IMPACT FEE SCHEDULE
(Effective May 4, 2025)
1. PARKS AND TRAILS IMPACT FEE
a. FEE SCHEDULE:
Land Use Category Unit Impact Fee
Accessory Dwelling Unit
(applies to livable space exceeding
750 square feet only)
Square Foot $10.57
Single-family/Townhouse (1) Square Foot $10.57
Multi-family Housing (1) Square Foot $14.89
Office/Research & Development Square Foot $2.25
Industrial Square Foot $0.90
Retail Square Foot $1.50
(1) Applies to rental housing projects ONLY; existing adopted Quimby Act fees apply to single-family/townhouse subdivisions and multi-family condominiums. b. For other non-residential projects that are not included in the above land use categories, the impact fee shall be calculated as follows:
Peak Service Population x $901/person = Parks and Trails Impact Fee c. Subject to City Council approval, a reduction in the parks and trails impact fee can be considered when a project will include parkland dedication, public recreational facilities or improvements, or related long-term community benefits that exceed city requirements in effect at the time a complete planning application is filed. The allowable credit can be based on the estimated value of the land dedication or park/recreational amenity or another methodology acceptable to the City.
2. PUBLIC FACILITIES IMPACT FEE
a. FEE SCHEDULE:
Land Use Category Unit Impact Fee
Accessory Dwelling Unit
(applies to livable space exceeding
750 square feet only)
Dwelling Unit $8.49
Single-family/Townhouse Dwelling Unit $8.49
Multi-family Housing Dwelling Unit $11.80
Office/Research & Development Square Foot $1.81
Industrial Square Foot $0.72
Retail Square Foot $1.21
157
b. For other non-residential projects that are not included in the above land use categories, the impact fee shall be calculated as follows:
Peak Service Population x $724 per person = Public Facilities Impact Fee c. Subject to City Council approval, a reduction in the public facilities impact fee can be considered when a project will include land dedication, public facilities or improvements, or related long-term community benefits that exceed city requirements in effect at the time a complete planning application is filed. The allowable credit can be based on the established value of the land dedication or public amenity or another methodology acceptable to the City.
3. TRANSPORTATION IMPACT FEE
a. FEE SCHEDULE
Land Use Category Unit Impact Fee
City-wide (1) RBD (2)
Accessory Dwelling Unit
(applies to livable space
exceeding 750 square feet only)
Square Foot $0.58 $2.14
Single-family/Townhouse Square Foot $0.58 $2.14
Multi-family Housing Square Foot $0.64 $2.40
Office/R&D Square Foot $1.28 $4.75
Industrial Square Foot $0.80 $2.96
Retail Square Foot $1.28 $4.75
(1) Developments located outside the Ravenswood Business District/4 Corners Specific Plan (RBD) are assessed the City-wide fee only.
(2) Developments located within the RBD are assessed both the City-wide and RBD fees.
b. For other non-residential projects that are not included in the above land use categories, the impact fee shall be calculated by a City-approved traffic engineer as follows:
PM Peak-hour Vehicle Trips x $1,658/trip (outside RBD) or $7,828/trip (within RBD) = Transportation Impact Fee
c. Subject to City Council approval, a reduction in the transportation impact fee can be considered when a project:
i. Will fund or construct public transportation improvements that exceed city requirements in effect at the time a complete planning application is filed.
The allowable credit can be based on the estimated value of the improvements or another methodology acceptable to the City. ii. Will further reduce PM peak-hour vehicle trips beyond the projected trips for the development based on Institute of Transportation Engineers (ITE) trip 158
generation rates, such as through a Transportation Demand Management (TDM) program that exceeds City requirements or alternative transportation facility or improvements. An adjustment to the impact fee can also be considered for affordable housing and senior housing projects based on projected PM peak-hour trips.
4. STORM DRAINAGE IMPACT FEE
a. FEE SCHEDULE:
Land Use Category Unit Impact Fee
Outside RBD (1) Within RBD (2)
All Residential and NonResidential Projects
o Include but not limited to
expansion or new
construction of residential,
office/R&D, industrial, and
retail uses.
o For ADUs, fees apply to
impervious paving exceeding
750 square feet only.
Impervious
Acre
$127,390 $332,835
(1) Outside RBD applies to developments located outside the boundary of the Ravenswood Business District/4 Corners Specific Plan (RBD) area. (2) Within RBD applies to developments located within the boundary of the RBD area. b. Subject to City Council approval, a reduction in the storm drainage impact fee can be considered when a project will include improvements to reduce stormwater impacts and discharge rates that exceed City requirements in effect at the time a complete planning application is filed. Qualifying improvements can include but are not limited to on-site stormwater capture and reuse above the existing C-3 low impact development requirements; expanded green infrastructure in the public right-of way with a long-term operations and maintenance agreement; or full trash capture for off-site stormwater treatment of the public right-of-way through private facilities.
c. No fee adjustment or credit are available for existing buildings or impervious surfaces that are removed on a project site unless an entitled development had previously paid storm drainage impact fees for these improvements pursuant to Section 13.28 of the Municipal Code.
d. Staff may develop guidelines that incorporate drainage factors for partialimpervious surfaces to calculate the storm drainage impact fee. 159
5. WATER CAPACITY IMPACT FEE
a. FEE SCHEDULE
Land Use Category Unit Impact Fee
Outside RBD (1) Within RBD (2)
Accessory Dwelling Unit
(applies to livable space
exceeding 750 square feet only)
Square Foot $4.52 $2.72
Single-family/Townhouse Square Foot $4.52 $2.72
Multi-family Housing Square Foot $5.45 $3.27
Non-Residential:
3/4” meter Meter Size $11,237 $6,749
1” meter Meter Size $18,718 $11,242
1-1/2” meter Meter Size $37,465 $22,502
2” meter Meter Size $59,938 $36,000
3” meter Meter Size $112,366 $67,488
4” meter Meter Size $187,267 $112,474
Over 4” meter Gallons per
Day
$29.57 $17.76
(1) Outside RBD applies to developments located outside the boundary of the Ravenswood Business District/4 Corners Specific Plan (RBD) area. (2) Within RBD applies to developments located within the boundary of the RBD area. a. For non-residential projects that require a water meter exceeding 4-inch in size, the water capacity impact fee shall be calculated based on the estimated water demand for each new or expanded project. Water demand from some projects may substantially exceed or differ substantially from an estimate using standard water demand rates. To ensure that fees reasonably reflect water demand for future connections, the City retains the authority to calculate the fee for a project based on an assessment of water demand for the specific use. A project developer may be required to either pay for an independent analysis of the project’s water demand or fund the City’s costs to conduct this analysis. b. Subject to City Council approval, a reduction in the water capacity impact fee can be considered when a project will fund or construct public water capacity improvements that exceed city requirements in effect at the time a complete planning application is filed. The allowable credit can be based on the estimated value of the improvements or another methodology acceptable to the City.
6. CHANGE OR CONVERSION OF EXISTING USE
When an existing building is proposed for conversion to a different use that requires a planning approval or building permit (e.g. from an industrial warehouse to an office use), and/or an existing structure is proposed for expansion with a change of use, the development impact fees shall be calculated based on the above fee schedules as described in Sections 1 - 5 above.
160
The total amount of impact fees shall be calculated as follows:
Fees for Proposed Use – Fees for Existing Use = Total Impact Fees
7. ADMINISTRATIVE CHARGE
An administrative charge of 1.0 percent shall be added to the impact fees calculated in Sections 1-5 to cover: a) legal, accounting, and other administrative support, and b) impact fee program administrative costs including revenue collection, revenue and cost accounting, mandated public reporting, and fee justification analysis.
8. PAYMENT OF FEES
Impact fees for development projects shall be calculated and paid at building permit issuance. However, impact fees for “designated residential development projects,” as defined by Government Code Section 66007, and accessory dwelling units shall be calculated at building permit issuance and shall be paid prior to final inspection or issuance of a temporary or final certificate of occupancy, whichever occurs first.
The City Council may also approve or authorized the City Manager to approve alternative payment terms.
9. OTHER FEE CREDITS, ADJUSTMENTS, OR REDUCTIONS
a. Credit is available for permitted or legally conforming land uses that are/were on the project site during the three-year period (36 months) prior to filing a complete planning or building permit application, whichever date is earlier. Credit shall be calculated based on the existing use(s) and the fee schedules in Section 1-5. b. In addition to the potential fee adjustments mentioned in Sections 1-5, the City Council may authorize other fee adjustments or reductions for development projects when substantial community benefits will be provided to the City to address infrastructure, facility, or other community needs. c. Fees for an accessory dwelling unit (ADU) shall not exceed the fee that would otherwise be calculated by state law based on the proportional square footage of the ADU to the square footage of the primary dwelling unit. 161
ATTACHMENT 2
CITY OF EAST PALO ALTO
DEVELOPMENT IMPACT FEE NEXUS STUDY UPDATE
Prepared by Willdan Financial Services
Revised: January 31, 2025
Attached to Development Impact Fee Resolution as Exhibit A Also available at:
https://www.cityofepa.org/publicworks/page/city-wide-development-impact-feeprogram 162
CITY OF EAST PALO ALTO
FINANCIAL FEASIBILITY ANALYSIS
FOR DEVELOPMENT IMPACT
UPDATE
PUBLIC REVIEW DRAFT
JANUARY 30, 2025
Oakland Office Corporate Office Other Regional Offices
66 Franklin Street 27368 Via Industria Aurora, CO
Suite 300 Suite 200 Orlando, FL
Oakland, CA 94607 Temecula, CA 92590 Phoenix, AZ
Tel: (510) 832-0899 Tel: (800) 755-6864 Plano, TX
Fax: (888) 326-6864 Seattle, WA
Washington, DC
www.willdan.com
ATTACHMENT 3
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164
i
TABLE OF CONTENTS
EXECUTIVE SUMMARY............................................................................2 Methodology Overview 3
1. INTRODUCTION .............................................................................5 Purpose 5
Assumptions 5
2. FEASIBILITY ANALYSIS...................................................................6 Feasibility Analysis Methods 6
Land Residual Analysis 6
Structure and Inputs 7
Development Prototype Maximum Impact Fees 9
3. IMPACT ON LAND VALUE..............................................................12 Factors Affecting Feasibility 12
Feasibility Results 13
4. APPENDIX ..................................................................................14 Appendix A: Impact Fees 14
Appendix B: Development Prototype Pro Formas 16
165
2 Executive Summary
The primary purpose of this report is to estimate the impact on development financial feasibility of the imposition of impact fees by the City of East Palo Alto. The City is updating the following impact fees: Parks and Trail Facilities, Public Facilities, Transportation Facilities, RBD Transportation Facilities, Water Capacity, and Storm Drainage Facilities. The analysis examines the economics of nine prototypes:
In a separate nexus study Willdan has calculated the maximum justified amount of each of the impact fees and included them in the pro forma analysis contained in this report.
These fees are detailed in the tables below. The table is broken down into two sets of fees, one for development outside the Ravenswood Business District/4 Corners Specific Plan Area (RBD) and one for development inside the RBD. This distinction is drawn because there are certain facilities and improvements specific to the RBD that primarily benefit development within the RBD and therefore are allocated solely or primarily to development there. Table E.2, below, summarizes the maximum justified new fees and existing unchanged fees for each development prototype, per square foot. For the purposes of this analysis Willdan has assumed that development pays the affordable housing in lieu fee rather than providing units on site. The general preference of the City is that residential projects provide onsite affordable housing, but this is difficult to model in a general pro forma.
Table E.1
Development Prototypes
East Palo Also DIF Feasibility Analysis
R1 R2 R3 M1 M2 OL1 OL2 Flex I1
Ownership
Townhomes
Medium
Density
Residential
High
Density
Residential
Mixed Use
(medium
density)
Mixed Use
(high density)
Office/Life
Science
Office/Life
Science
Office/LS/
R&D
Industrial/
Warehouse
Density (FAR) 0.76 0.76 1.49 0.99 1.49 1.00 1.50 0.7 0.4 Density (Units/Acre) 22 33 74 Varies Varies
Parking Type Surface Surface Podium Pod/Str Pod/Str Pod/Str Pod/Str Surface Surface Form Factor 3 stories 3-5 stories <= 8 stories 3-5 stories <= 8 stories <= 4 stories <= 6 stories 2 stories 1 story Residential Units 22 33 74 80 165
Unit Size 1,500 1,000 875 1000 875
Residential SF 33,000 33,000 64,750 80,000 144,375
Commercial SF 50,000 50,000 87,120 130,680 60,984 34,848 parcel size (acres) 1 1 1 3 3 2 2 2 2
Willdan Financial Services, 2024
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City of East Palo Alto Development Impact Fee Financial Feasibility Analysis 3 Methodology Overview
The financial feasibility analysis uses a pro forma approach to calculate the projected return that the nine development prototypes are likely to generate. Each prototype’s pro forma estimates the residual land value, a method of estimating the value of land for a project that calculates the total revenue generated by a project (either in the form of sales price or the present value of projected lease income) and subtracts the costs of developer and operations (as applicable) to arrive at a net amount that is attributable to the land under the project. The analysis assumes that all development prototypes are rental or lease property, with the exception of the R1 prototype (for-sale townhomes).
The analysis assumes that if a residual land value is negative, the project is not feasible.
A low land value means a project is challenging to develop and may not be feasible.
Willdan estimates that a value below $50 per square foot (psf), or $2.2 million per acre, indicates a low feasibility and low probability of completion for the prototype development in question. This estimate of $50 per square foot is based on historical land sale data and is meant to be a broad assessment of feasibility rather than the threshold for any particular projects. Willdan has estimated this number from an examination of historical transaction data; individual land transaction prices vary widely.
As shown in Table E.3 below, the analysis finds that most of the prototypes are infeasible and that the maximum justified fees make little difference to this overall conclusion. The prototypes that are feasible remain feasible (although less so), and the prototypes that are infeasible become more infeasible. The possible exception to this is the industrial category, which at approximately $534,000 per acre is below the general threshold and improves to $942,000 without impact fees. Industrial land typically has lower value than commercial or residential land so may be feasible at these levels.
It is important to note that the nexus study increases the fees by a relatively small proportion of their total value, while the analysis in Table E.3 examines the effect of removing impact fees in toto.
Table E.2
Total Impact Fees for Development prototypes (per building square foot) EPA DIF Feasibility Analysis
Fee Category R1 R2 R3 M1 M2 OL1 OL2 Flex I1
Outside RBD
Existing Impact Fees $57 $88 $101 $65 $79 $14 $14 $14 $14 Proposed Impact Fees $16 $37 $35 $27 $29 $15 $14 $16 $12 Total $73 $125 $135 $92 $108 $28 $28 $29 $25
Inside RBD
Existing Impact Fees $57 $88 $101 $65 $79 $14 $14 $14 $14 Proposed Impact Fees $21 $42 $40 $34 $36 $24 $23 $25 $16 Total $78 $130 $141 $99 $115 $37 $37 $38 $30
Willdan, 2024
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City of East Palo Alto Development Impact Fee Nexus Study Update 4 The residual land values are affected by each of the inputs and assumptions contained in the pro formas and are particularly sensitive to capitalization rates, parking requirements, construction costs, and lease rates. The analysis and stakeholder process identified reasonable ranges for these factors, given current market conditions, and tested the sensitivity to the factors to financial feasibility for each of the prototypes. The analysis concludes that the City’s impact fees do not significantly burden the financial feasibility of the nine representative prototypes.
Willdan believes it is important to consider that the impact fees are a cost recovery mechanism, not an assessment or tax. The impact fees are a calculation of the costs incurred by the City in connection with development. At the full calculated fee, the City “breaks even” on the revenue received versus the costs of new or expanded facilities needed to serve development (not including any funding required to address existing deficiencies). Any reduction of the fees results in the need to outside revenues to make up the difference or a reduction in level of service for the fee category in question. For this reason, Willdan looked at pro forma assumptions that reached beyond current market conditions to more typical rates over time. Willdan’s assessment of current market conditions generally is that construction costs have increased at historically high rates and that lease rates have not adjusted to current conditions. Willdan also believes that inflation and interest rates have increased cap rates above historical trends. Willdan has adjusted the assumptions in the pro forma to reflect this judgment.
Table E.3
Residual Value Summary
EPA DIF Feasibility Analysis
Item R1 R2 R3 M1 M2 OL1 OL2 Flex I1
Residual Land Value Per Acre 2,319,913 (7,075,936) (13,630,478) (19,444,976) (36,756,665) (27,805,522) (60,301,452) (4,564,971) 550,580 Residual Land Value Per land SF $53 ($162) ($313) ($446) ($844) ($638) ($1,384) ($105) $13 Residual Land Value Per Acre (no impact fees) 4,728,312 (3,583,311) (6,179,386) (16,474,181) (30,869,349) (26,756,988) (58,769,256) (3,806,634) 944,057 Residual Land Value Per land SF (no impact fees) $109 ($82) ($142) ($378) ($709) ($614) ($1,349) ($87) $22 Willdan, 2024
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City of East Palo Alto Development Impact Fee Nexus Study Update 5 1. Introduction
Purpose
The primary purpose of this report is to analyze the effect on financial feasibility of the maximum justified updated impact fees on nine residential and commercial prototypes.
These prototypes are summarized in Table 1, below:
• R1: For-Sale Townhomes/Single-Family Attached
• R2: Medium Density Residential/3-5 Story Building
• R3: High Density Residential/8 Story Building
• M1: Medium Density Mixed Commercial/Residential/3-5 Story Building • M2: High Density Mixed Commercial/Residential/8 Story Building • OL1: Medium Density Office/Life Science/3-5 Story Building • OL2: High Density Office/Life Science/8 Story Building • Flex: Low Density Flex Space/2 Story Building
• I1: Industrial (warehouse)/Single Story Building
The impact fees that the City East Palo Alto is currently in the process of updating are based on five categories of facilities: Of the five categories, transportation, storm drainage and water have fees for two zones, one for the RBD and one for the rest of the City. The existing impact fees included in this study are the Quimby fee, the Commercial Linkage Fee, and the Housing Impact Fee.
A separate nexus study calculates the maximum justified fee that will be considered by the City Council. The nexus study documents the necessary data and calculations to establish nexus and proportionality.
Assumptions
The financial feasibility analysis assumes all development prototypes are rentals or leases, except for R1 (for-sale townhomes). The analysis includes other assumptions about the development prototypes which are documented in Table 2-2 and individual pro formas in the Appendices. It is important to note that these assumptions reflect a rough assessment of conditions over the next 5 years, the time span of the current fee update, rather than current market conditions. Broadly, they assume a moderate improvement in market conditions. Willdan has received input from the development community on these assumptions and has made adjustments to the initial draft assumptions in some cases. 169
6 2. Feasibility Analysis
The feasibility analysis of East Palo Alto’s maximum justified development impact fees uses a pro forma approach to calculate the projected financial return that nine development prototypes are likely to generate for developers. The analysis assumes a standard set of assumptions and then estimate potential revenues, costs and a net financial return for the real estate developer.
.
Feasibility Analysis Methods
In classical real estate economics, development value is created when existing land or buildings can be improved by the investment of financial capital. Two main types of financial calculations are used by developers and policy makers to understand the financial feasibility of a particular development concept or project. The first and simplest type of financial feasibility analysis can be expressed by this basic equation:
Development Value – (Development Costs + Land) = Profit In this case profit can be expressed as total dollars or more typically as a percent return on money invested or costs. Assuming a positive return, this percent return is then compared to typical returns in the marketplace to assess the viability of a particular development versus other potential investment and development opportunities.
The second type of financial feasibility analysis is called a “land residual method” and can be expressed by the following simple equation:
Development Value – (Development Costs + Profit) = Land Residual This type of analysis is often preferred by urban economists as a means of clarifying the value generated by a proposed project under different planning and development scenarios and with validated cost and revenue assumptions. Assuming that the land residual is positive, the land value created by a development is compared to recent land sales for comparable parcels of land to further evaluate the relative feasibility of the development concept compared to other opportunities in the marketplace. Effectively, the land residual is the amount the developer can afford to pay for the land. If this amount is above prevailing land costs, the project is generally feasible.
This analysis uses the land residual method for determining financial feasibility. .
Land Residual Analysis
As a policy tool for helping to understand the potential for value capture related to new zoning and/or planning approvals in a given area, a land residual methodology is often a 170
City of East Palo Alto Development Impact Fee Nexus Study Update 7 preferable approach for illustrating the potential increase in underlying land values associated with different policy interventions. This report uses a land residual analysis to estimate the value of land for each of the nine development prototypes that relies on the net operating income and value of improvements.
Structure and Inputs
Table 2.1 details the key assumptions used as inputs into the pro forma model, as well as a summary of calculated residual land values.
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8 Table 2.1
Feasibility Model Assumptions
EPA DIF Feasibility Analysis
R1 For Sale
Townhomes
R2 Medium
Residential
R3 High
Residential M1 Mixed Use M2 Mixed Use OL1 Office/Life Science OL2 Office/Life
Science
Flex
Office/LS/R&D
I1
Industrial/WH
Development/Construction Costs
Residential Construction Costs 300 450 500 450 500
Commercial Construction Costs 400 450 650 750 350 125
Commercial Tenant Improvements (PSF) Landlord Allowance 150 150 250 250 125 20 Residential Parking Standard (per unit) 2 1.5 1.25 1.5 1.25 Commercial Parking Standard (per 1,000 sf) 3.0 3.0 3.0 3.0 3.0 1.0 Surface Parking Space $22,500 $22,500 $22,500 $22,500 $22,500 $22,500 $22,500 $22,500 $22,500 Podium/Structured Parking Space $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000 Subsurface Parking $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 Fees and Taxes
Proposed Impact Fee - not in RBD (psf) 28.54 37.83 37.83 varies varies 8.2 8.2 8.2 3.54 Proposed Impact Fee - within RBD (psf) 26.11 34.58 34.58 varies varies 17.7 17.7 17.7 8.83 Existing Impact Fee - not in RBD
Existing Impact Fee - within RBD
TDM/TMA NA 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28
Measure HH (per building sf) 2.5 2.5 2.5 2.5 2.5
Measure LL (% gross receipts) 2.50% 2.50% 2.50% 2.50%
Soft Costs
Soft Costs (% of hard costs) 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% Developer Profit 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% Vacancy Rate
Residential Vacancy NA 5.00% 5.00% 5.00% 5.00%
Commercial Vacancy 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Operating Expenses
Residential Operating Expenses 25.00% 25.00% 25.00% 25.00% 25.00% Commercial Operating Expenses (rates are NNN) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Financing
% of Construction Cost 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Revenue
Residential Lease Rate (psf) $4.00 $4.25 $4.00 $4.25
Commercial Lease Rate (psf) $4.00 $4.00 $6.00 $6.00 $3.75 $1.75 For Sale Market Rate Residential Price Per Unit $1,050,000 Commercial Cap Rate 6.50% 6.50% 6.50% 6.50% 6.50% 6.00% Residential Cap Rate 4.50% 4.50% 4.50% 4.50%
Results: Residual Land Values (per acre)
Residual Land Values (not in RBD) $2,319,913 ($7,075,936) ($13,630,478) ($19,444,976) ($36,756,665) ($27,805,522) ($60,301,452) ($4,564,971) $550,580 Residual Land Values (in RBD) $3,036,138 ($6,211,302) ($11,739,424) ($18,713,281) ($35,252,137) ($26,906,237) ($58,979,447) ($3,919,317) $805,712 Residual Land Value (not in rbd) without Fees $4,728,312 ($3,583,311) ($6,179,386) ($16,474,181) ($30,869,349) ($26,756,988) ($58,769,256) ($3,806,634) $944,057 Willdan, 2024
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9 .
Development Prototype Maximum Impact Fees
Table 2.2 contains the draft maximum justified impact fees as calculated in the Nexus Study applied to the development prototypes. Of the fee categories, transportation, storm drainage and water have fees for two zones, within and not within the RBD.
Table 2.3 contains the existing development impact fees calculated by applying the existing City fees to the development prototypes. These are fees currently in place that are not part of the current nexus study update. This analysis assumes that prototypes R2 and R3, and the residential portions of M1 and M2, are rental, as opposed to for-sale.
Table 2.2
Maximum Potential Impact Fees for Development prototypes EPA DIF Feasibility Analysis
Fee Category R1 R2 R3 M1 M2 OL1 OL2 Flex I1
Parks and Trails (3) $0 $412,055 $808,501 $969,680 $1,898,363 $166,617 $249,926 $116,632 $28,227 Public Facilties $280,170 $330,990 $649,443 $779,025 $1,525,006 $134,034 $201,051 $93,824 $22,582 Citywide Transportation $19,140 $17,952 $35,224 $92,480 $132,940 $94,787 $142,180 $66,351 $25,091 RBD Transportation $70,620 $67,320 $132,090 $344,675 $496,400 $351,747 $527,621 $246,223 $92,835 Water (1) $149,160 $156,519 $307,109 $637,394 $990,155 $532,101 $798,152 $372,471 $102,015 RBD Water (1) $89,760 $91,724 $179,973 $377,981 $584,707 $319,585 $479,377 $223,709 $61,271 Storm Drain (2) $76,434 $97,453 $97,453 $251,130 $279,826 $162,422 $162,422 $162,422 $183,442 `
Admin $7,920 $9,257 $18,162 $21,760 $42,622 $3,703 $5,554 $2,592 $627 Total outside RBD $532,824 $1,024,225 $1,915,892 $2,751,469 $4,868,913 $1,093,664 $1,559,285 $814,291 $361,983 Total within RBD $693,204 $1,183,269 $2,227,955 $3,474,125 $5,950,019 $1,764,996 $2,566,282 $1,284,224 $516,089 (1) Commercial water fees estimated based on GPD from nexus study. (2) Storm drain fees based on impervious surface estimates for prototype projects from storm drain master plan and prototype FAR. (3) R1 assumed to pay Quimby Fees as a subdivision.
Willdan, 2024
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City of East Palo Alto Development Impact Fee Nexus Study Update 10 Table 2.4 contains a summary of the total new and existing impact fees by development prototype.
In addition to impact fees, the pro forma analysis includes Measures L and HH. Measure HH imposes an annual parcel tax of $2.50 per building square foot on office developments of over 25,000 square feet. Measure L imposes tax of 2.5 percent of gross receipts on all residential rental units in the City.
The pro forma analyses for the development prototypes do not include estimates for TDM compliance, TMA membership, and a potential maintenance assessment district, which are not currently available. Additionally, the analyses do not include a potential Ravenswood Business Table 2.3
Existing Impact Fees for Development prototypes
EPA DIF Feasibility Analysis
Fee Category R1 R2 R3 M1 M2 OL1 OL2 Flex I1
Quimby $371,875 NA NA NA NA NA NA NA NA
School Fees $170,610 $170,610 $334,758 $403,900 $788,419 $73,181 $109,771 $51,227 $29,272 Aff Hsg $1,503,700 $2,468,400 $5,535,200 $5,984,000 $12,342,000 NA NA NA NA Aff Hsg In Lieu NA NA NA $677,500 $677,500 $1,003,405 $1,505,107 $702,383 $424,971 Total outside RBD $1,875,575 $2,468,400 $5,535,200 $6,661,500 $13,019,500 $1,003,405 $1,505,107 $702,383 $424,971 Total within RBD $1,875,575 $2,468,400 $5,535,200 $6,661,500 $13,019,500 $1,003,405 $1,505,107 $702,383 $424,971 Willdan, 2024
Table 2.4
Total Impact Fees for Development prototypes
EPA DIF Feasibility Analysis
Fee Category R1 R2 R3 M1 M2 OL1 OL2 Flex I1
Outside RBD
Existing Impact Fees $1,875,575 $2,468,400 $5,535,200 $6,661,500 $13,019,500 $1,003,405 $1,505,107 $702,383 $424,971 Proposed Impact Fees $532,824 $1,024,225 $1,915,892 $2,751,469 $4,868,913 $1,093,664 $1,559,285 $814,291 $361,983 Total $2,408,399 $3,492,625 $7,451,092 $9,412,969 $17,888,413 $2,097,069 $3,064,392 $1,516,675 $786,954 Inside RBD
Existing Impact Fees $1,875,575 $2,468,400 $5,535,200 $6,661,500 $13,019,500 $1,003,405 $1,505,107 $702,383 $424,971 Proposed Impact Fees $693,204 $1,183,269 $2,227,955 $3,474,125 $5,950,019 $1,764,996 $2,566,282 $1,284,224 $516,089 Total $2,568,779 $3,651,669 $7,763,155 $10,135,625 $18,969,519 $2,768,400 $4,071,389 $1,986,607 $941,060 Willdan, 2024
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City of East Palo Alto Development Impact Fee Nexus Study Update 11 District/4 Corners Specific Plan fee or a citywide sanitary sewer development impact fee, which have not been determined yet and is subject to a pending nexus study. 175
-12
3. Impact on Land Value
The residual land values are affected by each of the inputs and assumptions contained in the pro formas, and are particularly sensitive to capitalization rates, parking requirements, construction costs, and lease rates. However, in all cases the impact fees charged by the City do not have a major effect on project feasibility, and in no case do they transform a prototype project from feasible to infeasible.
Factors Affecting Feasibility
If a residual land value is negative, the project is not feasible. Alternatively, low land values indicate a low feasibility for a project. The analysis estimates that land values below $50 per square foot indicate a low feasibility and low probability of completion for the prototype developments.
In consideration of the potential consequences of the various fees on development, the City may consider lowering certain fees below their maximum justifiable level. This will increase the City’s responsibility to find additional resources for capital facilities.
A developer’s selection of real estate product type and location depends on various factors. The past, current, and projected future demand for a certain prototype in the area are weighed against the existing and projected future supply of these development types in the local and surrounding areas. East Palo Alto is currently in an unusual position of experiencing high regional demand for real estate but offering few local, recent development market comparisons to appraise assessed values of land.
Potential factors affecting financial feasibility include the following:
• Capitalization rate – lower capitalization rates increase financial feasibility. Based on current and anticipated market conditions and assessment of relative market risk associated East Paol Alto, this analysis assumes capitalization rates of 6.5 percent for office developments, 6.0 percent for industrial development, and 4.5 percent for residential developments.
• Construction costs – lower construction costs increase financial feasibility. Based on current market conditions, this analysis assumes base construction costs between $350 and $750 per square foot for office developments, $300 to $500 per square foot for residential developments, and $125 per square foot for industrial developments. • Operating expenses – operating costs include utilities, common area maintenance, security, and property taxes. The financial feasibility analysis uses 25 percent for all residential prototypes and includes these costs for commercial prototypes which are calculated on a NNN (triple net) basis. NNN rents assumes that all operating expenses are paid by the tenant, with a small 2% allowance for expenses during vacancy. • Parking construction – surface parking requires more land but costs one third as much as structuring parking, increasing financial feasibility (assuming similar land costs). A significant factor affecting the financial feasibility is the amount of parking required and the significant cost difference of surface parking versus structured parking. For commercial prototypes Willdan has assumed that all have some portion of surface parking, based on a review of similar projects in other jurisdictions. • Lease rates – higher lease rates and dependent on building features and market conditions but increase financial feasibility. Based on current and expected market conditions, this analysis assumes a lease rate of between $4.00 and $4.25 per square foot for residential development, $3.75 and $6.00 per square foot for office development, and $1.75 per square foot for industrial development. The study uses NNN lease rates for commercial development.
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City of East Palo Alto Development Impact Fee Feasibility Study 13 • Tenant improvement costs – passing improvement costs to tenants or amortizing costs increase financial feasibility. This analysis assumes a commercial tenant improvement landlord allowance of between $150 and $250 psf for office and $20 psf for industrial developments.
• Profit margin – lower profit margins return less to developers but increase apparent financial feasibility of a project. This analysis assumes a developer profit of 12 percent (of costs) on each development project.
• Density – the floor area ratio (FAR) of a development project affords financial feasibility because it allows for a higher number of square feet of development on a given parcel.
There is a tradeoff, however, in that a higher FAR can result in a change in construction type which can lead to higher costs per square foot. The analysis assumes varying FARs to explore this dynamic.
Refer to Table 2.1 for a master list of pro forma inputs and assumptions.
Feasibility Results
Based on the inputs and assumptions in Table 2.2, initial results indicate that most of the development types are not feasible under current market conditions, with or without the impact fees. The development cost proportions and residual land values for the existing inputs and assumptions are shown below. Most impact fees are proportional to development costs.
The residual land values are affected by each of the inputs and assumptions contained in the pro forma and are particularly sensitive to capitalization rates, parking requirements, construction costs, and lease rates. The analysis identified reasonable ranges for these factors, given current and likely market conditions, and tested the sensitivity of the factors to financial feasibility for each of the nine development prototypes. The analysis concludes that, given current market conditions, the combination of existing and potential impact fees do not materially affect the financial feasibility of the nine prototype projects, except perhaps for Industrial. 177
City of East Palo Alto Development Impact Fee Feasibility Study 14 4. Appendix
The appendix provides detailed and supporting tables for the summary analysis described above.
Appendix A: Impact Fees
The following tables detail the maximum justified fees for the City calculated in the recent Nexus Study.
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Table A.2 details the fees charged by the City for new development that are not being updated and therefore are not included in the current nexus study. These fees include a Quimby Fee, which is charged to resdiential subdivisions to fund new parks, and affordable housing fees applicable to residential and commercial development, respectively.
Table A.1
Maximum Justified Development Impact Fees
East Palo Alto DIF Feasibility Analysis
Item Parks and Trails Public Facilities Citywide Transp RBD Transp Water (1) Storm (2) Admin Total Non-RBD
Single Family Residential 10.57 8.49 0.58 4.52 1.75 0.24 26.15 Multifamily Residential 14.69 11.8 0.64 5.58 2.63 0.33 35.67 Retail 1.5 1.21 2.69 4.73 2.63 0.05 12.81
Office/R&D 2.25 1.81 1.28 7.19 2.19 0.05 14.77
Industrial 0.9 0.72 0.8 3.25 2.34 0.02 8.03
RBD
Single Family Residential 10.57 8.49 0.58 2.14 2.72 4.58 0.25 29.33 Multifamily Residential 14.69 11.8 0.64 2.40 3.27 6.88 0.33 40.01 Retail 1.50 1.21 2.69 10.00 2.84 6.88 0.15 25.27
Office/R&D 2.25 1.81 1.28 4.75 4.32 5.73 0.10 20.24
Industrial 0.90 0.72 0.8 2.96 1.95 6.11 0.05 13.50
Willdan, 2024
(1) commercial water calculated based on average GPD/1000sf (2) fees are per square foot of building space, except storm fee is cost per impervious sf 178
City of East Palo Alto Development Impact Fee Feasibility Study 15 Table A.2
Existing Development Impact Fees
East Palo Alto DIF Feasibility Analysis
Item Quimby Schools Linkage Fee AH Fee (1)
Non-RBD
Single Family Residential (per unit) Varies 5.17 NA 273,400 Multifamily Residential (per unit) NA 5.17 NA 299,200
Retail NA 0.84 13.55 NA
Office/R&D NA 0.84 13.55 NA
Industrial NA 0.84 13.55 NA
RBD
Single Family Residential Varies 5.17 NA 273,400
Multifamily Residential NA 5.17 NA 299,200
Retail NA 0.84 13.55 NA
Office/R&D NA 0.84 13.55 NA
Industrial NA 0.84 13.55 NA
Fees are per building sf except where noted
(1) Cost per unit to be provided offsite
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City of East Palo Alto Development Impact Fee Feasibility Study 16 Appendix B: Development Prototype Pro Formas
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City of East Palo Alto Development Impact Fee Feasibility Study 17 Residential Townhomes (R1)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (Square Feet) 1 Acres 43,560
Dwelling Units 22 DU/Acre 22
Gross Building Area (Square Feet) 1,500 GBA/DU 33,000
Net Habitable Square Feet 100% 33,000
Total Parking Spaces 2 Space/DU 44
Surface Parking Spaces 100% of total parking 44
Stuctured Parking Spaces 0% of total parking 0
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL Gross Potential Rent $0.00 per SF/Month $0 $0
Gross Potential Parking Income 0 per Space/Month
Losses to Vacancy 0% of Gross Income $0 $0
Gross Residential Revenue $0
Basic Operating Expenses 0% of Gross Potential Rent $0 $0 Additional Operating Expenses (TDM) 0 Per Year 0 0
Total Operating Expenses $0
Net Operating Income (NOI) $0 $0
Project Market Value $1,050,000 per DU $700 $23,100,000 Project Sale Cost 7.0% Value 49 1,617,000
Net Project Value $651 $21,483,000
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $300 Cost/SF (GBA) $300 $9,900,000 Surface Parking Direct Cost $22,500 per Space $30 $990,000 Structured Parking Direct Cost $65,000 per Space $0 $0
Total Construction Cost $330 $10,890,000
Soft Costs
Existing Impact Fees $57 per habitable sf $57 $1,875,575 Proposed Impact Fees (non RBD) $16 per habitable sf $16 $532,824 Financing 10% of Construction Costs $33 $1,089,000
Other Soft Costs 25% of Construction Costs $83 $2,722,500 Total Soft Costs $188 $6,219,899
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $2,053,188 Residual Land Value Model Output/Supportable Land Cost $2,319,913 Total Other Costs $4,373,101
Total Project Cost (including land) $21,483,000
Residual Land Value $2,319,913
Proposed non-RBD Impact Fee Increase ($6) per square foot ($6) ($183,400) % of Project Value -0.85%
Willdan, 2024
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City of East Palo Alto Development Impact Fee Feasibility Study 18 Residential Medium Density (R2)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (Square Feet) 1 Acres 43,560
Dwelling Units 33 DU/Acre 33
Gross Building Area (Square Feet) 1,000 GBA/DU 33,000
Net Rentable Square Feet 85% 28,050
Total Parking Spaces 1.5 Space/DU 50
Surface Parking Spaces 25% of total parking 12
Stuctured Parking Spaces 75% of total parking 37
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL Gross Potential Rent $4.00 per SF/Month $41 1,346,400
Gross Potential Parking Income 0 per Space/Month
Losses to Vacancy 5% of Gross Income ($2) (67,320)
Gross Residential Revenue 1,279,080
Basic Operating Expenses 25% of Gross Potential Rent ($10) (336,600) Measure L 2.50% of Gross Potential Rent ($1) (28,611)
Additional Operating Expenses (TDM) $9,240 Per Year ($0.28) (9,240) Total Operating Expenses (374,451)
Net Operating Income (NOI) $27 $899,580
Project Market Value 4.50% Cap Rate $0 $19,990,667
Project Leasing Cost (included in operating costs) 0.0% Value $0 $0.0 Net Project Value $0 $19,990,667
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $450 Cost/SF (leaseable area) $383 $12,622,500 Surface Parking Direct Cost $22,500 per Space $8 $278,438 Structured Parking Direct Cost $65,000 per Space $73 $2,413,125 Total Construction Cost $464 $15,314,063
Soft Costs
Existing Impact Fees $88 per habitable sf $88 $2,468,400 Proposed Impact Fees (non RBD) $37 per habitable sf $37 $1,024,225 Financing 10% of Construction Costs $46 $1,531,406
Other Soft Costs 25% of Construction Costs $116 $3,828,516 Total Soft Costs $287 $8,852,547
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $2,899,993 Residual Land Value Model Output/Supportable Land Cost ($7,075,936) Total Other Costs ($4,175,943)
Total Project Cost (including land) $19,990,667
Residual Land Value ($7,075,936)
Proposed non-RBD Impact Fee Increase $6 per rentable sf $159,591 % of Project Value 0.80%
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City of East Palo Alto Development Impact Fee Feasibility Study 19 Residential High Density (R3)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (Square Feet) 1 Acres 43,560
Dwelling Units 74 DU/Acre 74
Gross Building Area (Square Feet) 875 GBA/DU 64,750
Net Rentable Square Feet 85% 55,038
Total Parking Spaces 1.25 Space/DU 93
Surface Parking Spaces 10% of total parking 9
Stuctured Parking Spaces 90% of total parking 83
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL Gross Potential Rent $4.25 per SF/Month $43 $2,806,913
Gross Potential Parking Income 0 per Space/Month
Losses to Vacancy 5% of Gross Income ($2) (140,346)
Gross Residential Revenue 2,666,567
Basic Operating Expenses 25% of Gross Potential Rent ($11) (701,728) Measure L 2.5% of Gross Potential Rent $1 (70,173)
Additional Operating Expenses (TDM) $18,130 Per Year ($0.28) (18,130) Total Operating Expenses (790,031)
Net Operating Income (NOI) $31 $2,016,882
Project Market Value 4.50% Cap Rate $0 $44,819,590
Project Leasing Cost (included in operating costs) 0.0% Value $0 $0 Net Project Value $0 $44,819,590
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $500 Cost/SF (GBA) $425 $27,518,750 Surface Parking Direct Cost $22,500 per Space $3 $208,125 Structured Parking Direct Cost $65,000 per Space $84 $5,411,250 Total Construction Cost $512 $33,138,125
Soft Costs
Existing Impact Fees $101 per habitable sf $101 $5,535,200 Proposed Impact Fees (non RBD) $35 per habitable sf $35 $1,915,892 Financing 10% of Construction Costs $51 $3,313,813
Other Soft Costs 25% of Construction Costs $128 $8,284,531 Total Soft Costs $315 $19,049,436
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $6,262,507 Residual Land Value Model Output/Supportable Land Cost ($13,630,478) Total Other Costs ($7,367,971)
Total Project Cost (including land) $44,819,590
Residual Land Value ($13,630,478)
Proposed non-RBD Impact Fee Increase $0 per rentable sf $24,838 % of Project Value 0.06%
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City of East Palo Alto Development Impact Fee Feasibility Study 20 Mixed (M1)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (square feet) 3 Acres 130,680
Dwelling Units 80 DU 80
Gross Residential Building Area (Square Feet) 875 GBA/DU 70,000 Net Leaseable Square Feet 85% 59,500
Total Residential Parking Spaces 1.5 Space/DU 120
Surface Parking Spaces 15% of total parking 18
Stuctured Parking Spaces 85% of total parking 102
Gross Commercial Building Area (square feet) 50,000 50,000 Net Leaseable Square Feet 85% 42,500
Total Parking Spaces 3 /1000 leaseable sf 128
Surface Parking Spaces 50% of total parking 64
Stuctured Parking Spaces 50% of total parking 64
Total Gross Building Area 120,000
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL Gross Residential Potential Rent $4.00 per SF/Month $41 $2,856,000 Gross Potential Parking Income 0 per Space/Month
Losses to Vacancy 5% of Gross Income ($2) ($142,800)
Gross Residential Revenue $2,713,200
Basic Residential Operating Expenses 25% of Gross Potential Rent ($10) ($714,000) Measure L (residential only) 2.5% of Gross Potential Rent ($1) ($71,400) Additional Operating Expenses (TDM) $19,600 Per Year ($0.28) ($19,600) Total Operating Expenses ($805,000)
NNN Potential Commercial Rent $4.00 per SF/Month $41 $2,040,000 Gross Potential Parking Income 0 per Space/Month
Losses to Vacancy 5% of Gross Income ($2) (102,000)
NNN Commercial Revenue 1,938,000
Basic Operating Expenses 2% of Gross Potential Rent ($1) (57,120) Measure HH (commercial only) $2.50 per leaseable sf ($2) (106,250) Additional Operating Expenses (TDM) $14,000 Per Year ($0.28) (14,000) Total Operating Expenses (177,370)
Net Operating Income (NOI) $3,668,830
Project Market Value 5.50% Cap Rate $0 $66,706,000
Project Leasing Cost 4.0% Value 0 2,668,240
Net Project Value $0 $64,037,760
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $450 Cost/SF (GBA) $771 $54,000,000 Tenant Improvements (commercial only) $150 Cost/SF (GBA) $150 $7,500,000 Surface Parking Direct Cost $22,500 per Space $15 $1,839,375 Structured Parking Direct Cost $65,000 per Space $90 $10,773,750 Total Construction Cost $1,027 $74,113,125
Soft Costs
Existing Impact Fees $65 per leaseable sf $65 $6,661,500 Impact Fees - Residential (non RBD) $38 per leasable residential sf $32 $2,250,885 Impact Fees - Commercial (non RBD) $8 per leasable comercial sf $7 $296,225 Financing 10% of Construction Costs $106 $7,411,313
Other Soft Costs 25% of Construction Costs $265 $18,528,281 Total Soft Costs $475 $35,148,204
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $13,111,359 Residual Land Value Model Output/Supportable Land Cost ($58,334,928) Total Other Costs ($45,223,569)
Total Project Cost (including land) $64,037,760
Residual Land Value ($58,334,928)
Proposed non-RBD Impact Fee Increase $18 per leaseable sf $352,024 % of Project Value 0.55%
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City of East Palo Alto Development Impact Fee Feasibility Study 21 Mixed (M2)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (square feet) 3 Acres 130,680
Dwelling Units 165 DU 165
Gross Residential Building Area (Square Feet) 875 GBA/DU 144,375 Net Leaseable Square Feet 85% 122,719
Total Residential Parking Spaces 1.5 Space/DU 248
Surface Parking Spaces 10% of total parking 25
Stuctured Parking Spaces 90% of total parking 223
Gross Commercial Building Area (square feet) 50,000 50,000 Net Leaseable Square Feet 85% 42,500
Total Parking Spaces 3 /1000 leaseable sf 128
Surface Parking Spaces 10% of total parking 13
Stuctured Parking Spaces 90% of total parking 115
Total Gross Building SF 194,375
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL Gross Residential Potential Rent $4.25 per SF/Month $43 $6,258,656 Gross Potential Parking Income 0 per Space/Month
Losses to Vacancy 5% of Gross Income ($2) ($312,933)
Gross Residential Revenue $5,945,723
Basic Residential Operating Expenses 25% of Gross Potential Rent ($11) ($1,564,664) Measure L (residential only) 2.5% of Gross Potential Rent ($1) ($156,466) Additional Operating Expenses (TDM) $40,425 Per Year ($0.28) ($40,425) Total Operating Expenses ($1,761,555)
NNN Potential Commercial Rent $4.00 per SF/Month $41 $2,040,000 Gross Potential Parking Income 0 per Space/Month
Losses to Vacancy 5% of Gross Income ($2) (102,000)
NNN Commercial Revenue 1,938,000
Basic Operating Expenses 2% of Gross Potential Rent ($1) (125,173) Measure HH (commercial only) $2.50 per leaseable sf ($2) (106,250) Additional Operating Expenses (TDM) $14,000 Per Year ($0.28) (14,000) Total Operating Expenses (245,423)
Net Operating Income (NOI) $5,876,745
Project Market Value 5.50% Cap Rate $0 $106,849,906
Project Leasing Cost 4.0% Value $0 4,273,996
Net Project Value $0 $102,575,910
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $500 Cost/SF (GBA) $500 $97,187,500 Tenant Improvements (commercial only) $150 Cost/SF (GBA) $150 $7,500,000 Surface Parking Direct Cost $22,500 per Space $4 $843,750 Structured Parking Direct Cost $65,000 per Space $113 $21,937,500 Total Construction Cost $767 $127,468,750
Soft Costs
Existing Impact Fees $79 per leaseable sf $79 $13,019,500 Impact Fees - Residential (non RBD) $38 per leasable residential sf $32 $4,642,450 Impact Fees - Commercial (non RBD) $8 per leasable comercial sf $7 $296,225 Financing 10% of Construction Costs $88 $12,746,875
Other Soft Costs 25% of Construction Costs $221 $31,867,188 Total Soft Costs $427 $62,572,238
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $22,804,919 Residual Land Value Model Output/Supportable Land Cost ($110,269,996) Total Other Costs ($87,465,078)
Total Project Cost (including land) $102,575,910
Residual Land Value ($110,269,996)
Proposed non-RBD Impact Fee Increase $18 per leaseable sf $425,090 % of Project Value 0.41%
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City of East Palo Alto Development Impact Fee Feasibility Study 22 Office/Life Science (OL1)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (Square Feet) 2 Acres 87,120
FAR 1
Gross Building Area (Square Feet) 43,560 GBA/Acre 87,120 Net Leaseable Square Feet 85% 74,052
Total Parking Spaces 3 /1000 leaseable sf 222
Surface Parking Spaces 20% of total parking 44
Stuctured Parking Spaces 80% of total parking 178
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL NNN Potential Rent $6.00 per SF/Month $61 $5,331,744
Losses to Vacancy 5% of Gross Income ($3) ($266,587)
NNN Commercial Revenue $5,065,157
Basic Operating Expenses 2% of Gross Potential Rent ($1) ($106,635) Measure HH $2.50 per leaseable sf ($2) ($185,130)
Additional Operating Expenses (TDM) 24,394 Per Year (0.28) ($24,394) Total Operating Expenses ($316,158)
Net Operating Income (NOI) $55 $4,748,998
Project Market Value 6.50% Cap Rate $0 $73,061,513
Project Leasing Cost 9.0% Value $0.0 $6,575,536.1
Net Project Value $0 $66,485,976
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $650 Cost/SF (net leaseable) $553 $48,133,800 Tenant Improvements $250 cost/sf (leaseable sf) $213 $18,513,000 Surface Parking Direct Cost $22,500 per Space $0 $999,702 Structured Parking Direct Cost $65,000 per Space $4 $11,552,112 Total Construction Cost $769 $79,198,614
Soft Costs
Existing Impact Fees $14 per leaseable SF $14 $1,003,405 Proposed Impact Fees (non RBD) $15 per leaseable SF $15 $1,093,664 Financing 10% of Construction Costs $91 $7,919,861
Other Soft Costs 25% of Construction Costs $227 $19,799,654 Total Soft Costs $346 $29,816,583
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $13,081,824 Residual Land Value Model Output/Supportable Land Cost ($55,611,045) Total Other Costs ($42,529,221)
Total Project Cost (including land) $66,485,976
Residual Land Value ($55,611,045)
Proposed non-RBD Impact Fee Increase ($10) per leaseable sf ($704,908) % of Project Value -1.06%
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City of East Palo Alto Development Impact Fee Feasibility Study 23 Office/Life Science (OL2)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (Square Feet) 2.00 Acres 87,120
FAR 1.50
Gross Building Area (Square Feet) 65,340 GBA/Acre 130,680 Net Leaseable Square Feet 85% 111,078
Total Parking Spaces 3 /1000 leaseable sf 333
Surface Parking Spaces 10% of total parking 33
Stuctured Parking Spaces 90% of total parking 300
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL NNN Potential Rent $6.00 per SF/Month $61 $7,997,616
Losses to Vacancy 5% of Gross Income ($3) ($399,881)
NNN Commercial Revenue $7,597,735
Basic Operating Expenses 2% of Gross Potential Rent (1) (159,952) Additional Operating Expenses (TDM) 36,590 Per Year (0.28) (36,590) Total Operating Expenses ($196,543)
Net Operating Income (NOI) $57 $7,401,192
Project Market Value 6.50% Cap Rate $0 $113,864,500
Project Leasing Cost 9.0% Value $0.0 $10,247,805
Net Project Value $0 $103,616,695
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $750 Cost/SF (leaseable) $750 $98,010,000 Tenant Improvements $250 cost/sf (leaseable sf) $213 $27,769,500 Surface Parking Direct Cost $22,500 per Space $0 $749,777 Structured Parking Direct Cost $65,000 per Space $3 $19,494,189 Total Construction Cost $965 $146,023,466
Soft Costs
Existing Impact Fees $14 per leaseable sf $14 $1,505,107 Proposed Impact Fees (non RBD) $14 per leaseable sf $14 $1,559,285 Financing 10% of Construction Costs $112 $14,602,347
Other Soft Costs 25% of Construction Costs $279 $36,505,866 Total Soft Costs $419 $54,172,605
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $24,023,528 Residual Land Value Model Output/Supportable Land Cost ($120,602,904) Total Other Costs (96,579,375)
Total Project Cost (including land) 103,616,695
Residual Land Value (120,602,904)
Proposed non-RBD Impact Fee Increase ($10) per leaseable sf ($1,084,725) % of Project Value -1.05%
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City of East Palo Alto Development Impact Fee Feasibility Study 24 Flex (F)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (Square Feet) 2 Acres 87,120
FAR 0.7
Gross Building Area (Square Feet) 30,492 GBA/Acre 60,984 Net Leaseable Square Feet 85% 51,836
Total Parking Spaces 3 /1000 leaseable sf 156
Surface Parking Spaces 100% of total parking 156
Stuctured Parking Spaces 0% of total parking 0
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL NNN Potential Rent $3.75 per SF/Month $38 $2,332,638
Gross Potential Parking Income 0 per Space/Month
Losses to Vacancy 5% of Gross Income ($2) ($116,632)
NNN Residential Revenue $2,216,006
Basic Operating Expenses 2% of Gross Potential Rent (0.77) ($46,653) Additional Operating Expenses (TDM) 17,076 Per Year (0.28) (17,076) Total Operating Expenses -$63,728
Net Operating Income (NOI) $35 $2,152,278
Project Market Value 6.50% Cap Rate $0 $33,111,966
Project Leasing Cost 9.0% Value $0.0 $2,980,077
Net Project Value $0 $30,131,889
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $350 Cost/SF (GBA) $350 $21,344,400 Tenant Improvements $125
Surface Parking Direct Cost $22,500 per Space $2 $3,498,957 Structured Parking Direct Cost $65,000 per Space $0 $0
Total Construction Cost $352 $24,843,357
Soft Costs
Existing Impact Fees $14 per leaseable sf $14 $702,383
Proposed Impact Fees (non RBD) $16 per leaseable sf $16 $814,291 Financing 10% of Construction Costs $41 $2,484,336
Other Soft Costs 25% of Construction Costs $102 $6,210,839 Total Soft Costs $172 $10,211,850
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $4,206,625 Residual Land Value Model Output/Supportable Land Cost ($9,129,942) Total Other Costs ($4,923,317)
Total Project Cost (including land) $30,131,889
Residual Land Value ($9,129,942)
Proposed non-RBD Impact Fee Increase ($9) per leaseable sf ($477,017) % of Project Value -1.58%
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City of East Palo Alto Development Impact Fee Feasibility Study 25 Industrial (I)
DEVELOPMENT PROGRAM ASSUMPTIONS ASSUMPTION/FACTOR TOTAL Development Site (Square Feet) 2 Acres 87,120
FAR 0.4
Gross Building Area (Square Feet) 17,424 GBA/Acre 34,848 Net Leaseable Square Feet 90% 31,363
Total Parking Spaces 1 /1000 leaseable sf 31
Surface Parking Spaces 100% of total parking 31
Stuctured Parking Spaces 0% of total parking 0
BUILDING INCOME AND VALUE ASSUMPTION/FACTOR PER GBA TOTAL Gross Potential Rent $1.75 per SF/Month $19 $658,627
Losses to Vacancy 5% of Gross Income ($1) ($32,931)
Gross Residential Revenue $625,696
Basic Operating Expenses 0% of Gross Potential Rent $0 $0 Additional Operating Expenses (TDM) 9,757 Per Year (0.28) ($9,757) Total Operating Expenses ($9,757)
Net Operating Income (NOI) $18 $615,938
Project Market Value 6.00% Cap Rate $0 $10,265,640
Project Sale Cost 0.0% Value $0.0 $0.0
Net Project Value $0 $10,265,640
PROJECT DEVELOPMENT COSTS ASSUMPTION/FACTOR PER GBA TOTAL Construction Cost
Building Direct Cost (includes site development) $125 Cost/SF (leaseable area) $113 $4,356,000 Tenant Improvements $20 cost/sf (leaseable sf) $18 $627,264 Surface Parking Direct Cost $22,500 per Space $1 $705,672 Structured Parking Direct Cost $65,000 per Space $0 $0
Total Construction Cost $132 $5,688,936
Soft Costs
Existing Impact Fees $14 per leaseable sf $14 $424,971
Proposed Impact Fees (non RBD) $12 per leaseable sf $12 $361,983 Financing 5% of Construction Costs (incl. site) $8 $284,447 Other Soft Costs 25% of Construction Costs (excl. site) $41 $1,422,234 Total Soft Costs $74 $2,493,635
Other Project Costs
Developer Return on Investment 12% of Construction & Soft Costs $981,909 Residual Land Value Model Output/Supportable Land Cost $1,101,160 Total Other Costs $2,083,069
Total Project Cost (including land) $10,265,640
Residual Land Value $1,101,160
Proposed non-RBD Impact Fee Increase ($5) per leaseable sf ($148,281) % of Project Value -1.44%
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January 31, 2025