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DATE: December 15, 2025
TO:
Mayor and Members of the City Council
President and Members of the Estero Municipal Improvement District (EMID) Board of Directors
VIA: Stefan Chatwin, City/District Manager
FROM: Nate Cruz, Finance Director
SUBJECT: ANNUAL DEVELOPMENT IMPACT FEE AND CAPACITY FEE REPORT FOR FISCAL YEAR 2024-2025
RECOMMENDATION
It is recommended that the City Council/EMID Board of Directors adopt the attached resolutions approving the annual development impact fee and capacity fee report (“Report”) for Fiscal Year 2024-2025.
EXECUTIVE SUMMARY
California Government Code Section 66000-66013 requires public agencies who assess development impact fees and capacity fees to provide an annual report at a public meeting. City staff prepared the Report for Fiscal Year 2024-2025.
BACKGROUND/ANALYSIS
Local agencies often charge a fee as a condition of approval for development projects to fund public improvements to compensate for the demands that the developments have on public resources. This fee is known as a development impact fee. In 1989, the State Legislature passed Assembly Bill 1600 (AB 1600), which added Sections 66000 et seq. to the California Government Code known as the Mitigation Fee Act (MFA). The MFA applies to fees imposed on development projects to fund public facilities.
The City/District assesses two enterprise capacity fees – one for water and one for
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sewer. The purpose of the capacity fees is to ensure that development pays its fair share of the costs associated with expanding system capacity. The fee is charged at the time the building permit is issued. The fees collected enable the City/District to fund infrastructure construction costs that ratepayers have incurred to provide capacity for future connections.
The City/District also assesses the following development impact fees.
A) Affordable Housing Commercial Linkage Fee – This fee is paid by developers of commercial development projects to mitigate the impacts that such developments have on the demand for affordable housing in the City/District.
B) Park Facilities Impact Fee – This fee is paid by developers for their share of the development of park and recreational facilities related to new development.
C) Public Safety Impact Fee – The purpose of the fee is to fund public safety facilities by providing adequate levels of police and fire facility improvements, vehicles, and other equipment necessary for adequate police and fire service provided to new development.
D) Transportation Impact Fee – The purpose of the fee is to fund the planning, design, development, and construction of transportation facilities related to new development and ensure that new development pays for its fair share of transportation facilities.
Pursuant to Government Code Section 66006(b)(1), the MFA requires local agencies to report the annual impact fees collected and their use within 180 days after the last day of the fiscal year. The report must contain:
1. A brief description of the type of fee.
2. The amount of the fee.
3. The fee beginning and ending balances for the fiscal year.
4. The amount of fee collected, and interest earned.
5. An identification of each expenditure from the account, including a brief description of the expenditure and the percentage of the total cost of the expenditure funded by the fee.
6. An approximate date when construction will begin if the agency determines it has sufficient funds to complete a public improvement project.
7. Identification of each public improvement identified in a previous report and whether construction began on the approximate date noted in the previous report.
For a project identified in 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 City will commence construction.
8. A description of any interfund transfer or loan made from the account.
9. The amount of any refunds made from the account.
Further, Government Code §66001 requires the following findings to be made every five years:
1. The purpose of the fee.
2. The reasonable relationship between the fee and the purpose. 1 0
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3. The anticipated sources and amount of funding for planned projects.
4. The approximate date the funds will be spent on the planned project.
Failure to make the required findings subjects the City to a refunding procedure.
Government Code §66013 requires the following findings to be made annually within 180 days after the end of each fiscal year for Capacity fees:
1. A brief description of the fee.
2. The associated fund’s beginning and ending balances for the fiscal year.
3. The total amount of fees collected.
4. Identification of each public improvement on which capacity fees were expended and the amount of expenditure on each improvement, including the total percentage of the cost of the public improvement that was funded with capacity fees.
5. Identification of each public improvement funded by capacity fees that was completed during the fiscal year.
6. Identification of each public improvement that is anticipated to be funded by capacity fees.
7. A description of each interfund transfer and loan. In case of an interfund transfer, identify the public improvements the transferred money will finance. In case of an interfund loan, identify the repayment date and interest rate of the loan.
The attached report contains details to satisfy the requirements of Government Code sections 66006, 66001, & 66013 and is available to the public on the Financial Services page of the City’s website.
FISCAL IMPACT
There is no fiscal impact for the acceptance of this report.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
City Council Operations and Improved Community Engagement ATTACHMENTS:
Attachment 1 – City Resolution
Attachment 2 – EMID Resolution
Attachment 3 – Development Impact Fees and Capacity Fee Report for Fiscal Year 2024-2025