Development Impact Fee Comparison Survey
Methodology
Willdan collected development impact fee schedules for six comparison cities. These comparison jurisdictions are:
• Arroyo Grande
• Atascadero
• Morro Bay
• Paso Robles
• Pismo Beach
• City of San Luis Obispo
Willdan collected data regarding all one-time fees and charges used to fund infrastructure and facilities related to new development. Impact fees are not standardized and are assessed by various units of development by different jurisdictions. To create a meaningful comparison of impact fees, Willdan calculated the fees for three prototype projects. Table 1 presents the project prototype assumptions used in this analysis.
Results
Tables 2, 3 and 4 display the fee companions for each prototype, respectively. Some jurisdictions charge impact fees that vary by project location. In these cases, the tables show the range of potential impact fees.
Table 1: Prototype Assumptions
Prototype
Unit
Count
Unit
Sq. Ft.
Lot Size
(Sq. Ft.)
Water
Meter Size
(per unit)
Single Family Unit 1 2,500 5,000 1″
Multifamily Unit 1 1,100 2,200 1″
Retail/Commercial N/A 10,000 20,000 1"
Attachment 4
May 17, 2024
Draft – For Discussion Only
Table 2: Single Family Unit - 2,500 Square Feet
Fee Category
CURRENT
Grover
Beach
DRAFT
Grover
Beach1
Arroyo
Grande Atascadero Morro Bay
Paso
Robles
(Low)2
Paso
Robles
(High)2
Pismo
Beach
City of San
Luis Obispo
(Low)3
City of San
Luis Obispo
(High)3
Development Impact Fees $ - $ - $ - $ - $ 14,350 $ - $ - $ - $ - $ - Administrative Facilities 128 3,225 - 1,036 4,275 4,199 4,199 3,426 - - Fire Facilities 230 750 600 954 1,550 1,449 1,449 3,688 854 854 Libraries - - - 532 - 1,354 1,354 - - -
Parks 6,024 8,857 8,075 6,435 4,450 4,105 4,105 15,908 8,870 10,161 Police Facilities 103 3,375 425 574 1,425 106 106 2,430 1,003 1,003 Recreation Facilities 585 2,275 425 1,084 - - - 9,555 - - Storm Drain 675 - 97 777 175 - - - - -
Transportation/Traffic 1,586 - 3,425 5,597 6,875 3,659 12,555 8,115 11,848 36,209 Wastewater/Sewer 2,683 2,796 1,837 - 9,737 13,515 13,515 13,698 16,141 16,141 Water 2,896 4,575 6,469 - 9,701 31,840 31,840 17,182 17,379 17,379 Total - per Prototype $ 14,910 $ 25,853 $ 21,353 $ 16,989 $ 52,538 $ 60,227 $ 69,123 $ 74,002 $ 56,095 $ 81,748 1 Park fee assumes infill development.
2 Paso Robles Transportation Fee varies by project location. 3 San Luis Obispo Transportation Fee varies by project location.
May 17, 2024
Draft – For Discussion Only
Table 3: Multifamily Unit - 1,100 Square Feet
Fee Category
CURRENT
Grover
Beach
DRAFT
Grover
Beach
Arroyo
Grande Atascadero Morro Bay
Paso
Robles
(Low) 1
Paso
Robles
(High) 1
Pismo
Beach
City of
San Luis
Obispo
(Low)2
City of
San Luis
Obispo
(High)2
Development Impact Fees $ - $ - $ - $ - $ 10,131 $ - $ - $ - $ - $ - Administrative Facilities 106 1,419 - 1,036 3,091 4,199 4,199 2,413 - - Fire Facilities 115 330 264 760 1,155 1,449 1,449 2,595 616 616 Libraries - - - 418 - 1,354 1,354 - - -
Parks 5,449 3,897 3,553 5,059 3,267 4,105 4,105 11,194 - - Police Facilities 128 1,485 187 334 1,023 125 125 1,709 722 722 Recreation Facilities 482 1,001 187 852 - - - 6,723 - - Storm Drain 297 - 36 499 99 - - - - -
Transportation/Traffic 974 - 1,507 5,597 4,719 2,522 8,652 4,981 9,205 28,626 Wastewater/Sewer 2,683 3,062 1,525 - 9,737 13,515 13,515 7,936 12,988 12,988 Water 2,896 4,392 6,469 - 9,701 31,840 31,840 8,627 13,903 13,903 Total - per Prototype $ 13,129 $ 15,586 $ 13,728 $ 14,555 $ 42,923 $ 59,109 $ 65,239 $ 46,178 $ 37,435 $ 56,856 1 Park fee assumes infill development.
2 Paso Robles Transportation Fee varies by project location. 3 San Luis Obispo Transportation Fee varies by project location.
May 17, 2024
Draft – For Discussion Only
Table 4: Retail/Commercial - 10,000 Square Feet
Fee Category
CURRENT
Grover
Beach
DRAFT
Grover
Beach
Arroyo
Grande Atascadero Morro Bay
Paso
Robles
(Low)1
Paso
Robles
(High)1
Pismo
Beach
City of
San Luis
Obispo
(Low)2
City of
San Luis
Obispo
(High)2
Development Impact Fees $ - $ - $ - $ - $ 58,300 $ - $ - $ - $ - $ - Administrative Facilities 3,008 6,200 - 800 3,700 15,200 15,200 17,060 - - Fire Facilities 317 1,430 2,050 7,850 3,300 5,300 5,300 40,840 3,100 3,100 Libraries - - - 2,620 - - - - - -
Parks - - - 1,890 200 - - - - -
Police Facilities 3,233 6,530 1,470 5,230 900 1,600 1,600 12,070 3,600 3,600 Recreation Facilities - - - - - - - - - -
Storm Drain 270 - 120 3,750 500 - - - - -
Transportation/Traffic 58,902 69,380 69,380 93,710 49,000 106,200 146,300 110,690 157,400 540,100 Wastewater/Sewer 2,683 14,220 2,570 - 9,737 13,515 13,515 77,300 27,439 27,439 Water 2,896 18,300 6,469 - 9,701 31,840 31,840 101,570 29,717 29,717 Total - per Prototype $ 71,309 $ 116,060 $ 82,059 $ 115,850 $ 135,338 $ 173,655 $ 213,755 $ 359,530 $ 221,256 $ 603,956 1 Paso Robles Transportation Fee varies w ith project location 2 San Luis Obispo Transportation Fee varies by project location.
Development Impact Fee Nexus Study Update
City of Grover Beach
May 20, 2024
Attachment 5
What is a Development Impact Fee?
One-time charge 1
Imposed at building permit stage
Imposed on all development projects
within a defined geographic area
Funds facilities to serve new development
Mitigation Fee Act Findings (Govt. Code §66001)
• Key findings
– Need: Development Need for facilities
– Benefit: Development Use of revenue
– Rough proportionality: Fee amount development’s share of facility costs
• Other findings
– Purpose of fee
– Use of fee revenue
▪ Requires local jurisdictions to make certain
information available on website
▪ Changes to impact fee adoption process:
▪ Prior to adoption of development fees,
an impact fee nexus study needs to be
adopted with 30 days notice
▪ Technical changes:
▪ Residential fees should be charged
per square foot, unless findings are
supported that justify another
metric
▪ Large jurisdictions shall adopt a
capital improvement plan as a part
of the nexus study
▪ Nexus study should identify level of
service
▪ If fees are increasing, review the
assumptions of the original nexus
study and evaluate the amount of
fees collected under the original fee
AB 602
Impact Fees – Basic Methodology
ESTIMATE
EXISTING
DEVELOPMENT
AND FUTURE
GROWTH
IDENTIFY FACILITY
STANDARDS
DETERMINE NEW
FACILITY NEEDS
AND COSTS
ALLOCATE SHARE
TO
ACCOMMODATE
GROWTH
IDENTIFY
ALTERNATIVE
FUNDING NEEDS
CALCULATE FEE BY
ALLOCATING
COSTS PER UNIT
OF NEW
DEVELOPMENT
Impact Fee Categories
▪Administrative Facilities
▪Law Enforcement Facilities
▪Fire Protection Facilities
▪Parks
▪Recreation
▪Water
▪Sewer
Growth Projections
2023 2050 Increase
Residents 12,270 15,091 2,821
Dwelling Units 5,923 6,728 805
Employment 2,574 3,604 1,030
Sources: California Department of Finance, Table E-5, 2023; http://onthemap.ces.census.gov; SLOCOG 2050 Regional Growth Forecast for San Luis Obispo County; Willdan Financial Services.
Cost Allocation Methods:
WHAT Facilities Serve WHO
PLANNED FACILITIES
Planned Facilities
New Demand
SYSTEM PLAN
Existing + Planned Facilities
Existing + New Demand
EXISTING INVENTORY
Existing Facilities
Existing Demand
Fee Program Methodologies
Fire Protection Facilities
Parks
Existing
Standard
Water
Sewer
Planned
Facilities
9 Administrative Facilities
Law Enforcement
Facilities
Recreation Facilities
System
Standard
Projected Impact Fee Revenue
Fee Category Total Project Cost
Development Fee
Revenue
Additional Funding
Required
Administrative Facilities $ 10,030,000 $ 2,910,780 $ 7,119,220 Law Enforcement Facilities 10,670,000 3,055,220 7,614,780 Fire Protection 671,960 671,960 -
Parks1 7,192,000 7,192,000 -
Recreation 3,500,000 1,850,576 1,649,424
Water 4,578,885 4,578,885 -
Sewer 3,066,967 3,066,967 -
Total $ 39,709,812 $ 23,326,388 $ 16,383,424
1 Fee revenue shown for Mitigation Fee Act Fees. Refer to Table 6.5 for estimate of potential Quimby Act Fee revenue.
Maximum Justified Impact Fee Schedule
Land Use
Administrative
Facilities
Law
Enforcement
Fire
Protection Parks1 Recreation Water Sewer Total
Residential - per
Sq. Ft. $ 1.29 $ 1.35 $ 0.30 $ 3.54 $ 0.91 $ 2.90 $ 1.84 $ 12.13 Nonresidential - per Sq. Ft.
Commercial $ 0.62 $ 0.65 $ 0.14 $ - $ - $ 1.83 $ 1.42 $ 4.66 Office 0.96 1.01 0.22 - - 1.83 1.42 5.44
Industrial 0.34 0.36 0.08 - - 1.83 1.50 4.11
Restaurant 0.62 0.65 0.14 - - 11.76 9.25 22.42
1 Mitigation Fee Act fee for infill development shown. Refer to Table 6.7 for Quimby Act Fee in-lieu of land dedication for development occurring in subdivisions Fee Comparison – Single Family Unit, 2,500 Sq. Ft.
Fee Category
CURRENT
Grover
Beach
DRAFT
Grover
Beach1
Arroyo
Grande Atascadero Morro Bay
Paso Robles
(Low)2
Paso
Robles
(High)2
Pismo
Beach
City of San
Luis Obispo
(Low)3
City of San
Luis Obispo
(High)3
Development Impact Fees $ - $ - $ - $ - $ 14,350 $ - $ - $ - $ - $ - Administrative Facilities 128 3,225 - 1,036 4,275 4,199 4,199 3,426 - - Fire Facilities 230 750 600 954 1,550 1,449 1,449 3,688 854 854 Libraries - - - 532 - 1,354 1,354 - - -
Parks 6,024 8,857 8,075 6,435 4,450 4,105 4,105 15,908 8,870 10,161 Police Facilities 103 3,375 425 574 1,425 106 106 2,430 1,003 1,003 Recreation Facilities 585 2,275 425 1,084 - - - 9,555 - - Storm Drain 675 - 97 777 175 - - - - -
Transportation/Traffic 1,586 - 3,425 5,597 6,875 3,659 12,555 8,115 11,848 36,209 Wastewater/Sewer 2,683 2,796 1,837 - 9,737 13,515 13,515 13,698 16,141 16,141 Water 2,896 4,575 6,469 - 9,701 31,840 31,840 17,182 17,379 17,379 Total - per Prototype $ 14,910 $ 25,853 $ 21,353 $ 16,989 $ 52,538 $ 60,227 $ 69,123 $ 74,002 $ 56,095 $ 81,748 1 Park fee assumes infill development.
2 Paso Robles Transportation Fee varies by project location. 3 San Luis Obispo Transportation Fee varies by project location.
Fee Comparison – Multifamily Unit, 1,100 Sq. Ft.
Fee Category
CURRENT
Grover
Beach
DRAFT
Grover
Beach
Arroyo
Grande Atascadero Morro Bay
Paso
Robles
(Low) 1
Paso
Robles
(High) 1
Pismo
Beach
City of San
Luis
Obispo
(Low)2
City of San
Luis
Obispo
(High)2
Development Impact Fees $ - $ - $ - $ - $ 10,131 $ - $ - $ - $ - $ - Administrative Facilities 106 1,419 - 1,036 3,091 4,199 4,199 2,413 - - Fire Facilities 115 330 264 760 1,155 1,449 1,449 2,595 616 616 Libraries - - - 418 - 1,354 1,354 - - -
Parks 5,449 3,897 3,553 5,059 3,267 4,105 4,105 11,194 - - Police Facilities 128 1,485 187 334 1,023 125 125 1,709 722 722 Recreation Facilities 482 1,001 187 852 - - - 6,723 - - Storm Drain 297 - 36 499 99 - - - - -
Transportation/Traffic 974 - 1,507 5,597 4,719 2,522 8,652 4,981 9,205 28,626 Wastewater/Sewer 2,683 3,062 1,525 - 9,737 13,515 13,515 7,936 12,988 12,988 Water 2,896 4,392 6,469 - 9,701 31,840 31,840 8,627 13,903 13,903 Total - per Prototype $ 13,129 $ 15,586 $ 13,728 $ 14,555 $ 42,923 $ 59,109 $ 65,239 $ 46,178 $ 37,435 $ 56,856 1 Park fee assumes infill development.
2 Paso Robles Transportation Fee varies by project location. 3 San Luis Obispo Transportation Fee varies by project location.
Fee Comparison: 10,000 Sq. Ft. of Retail / Commercial
Fee Category
CURRENT
Grover
Beach
DRAFT
Grover
Beach
Arroyo
Grande Atascadero Morro Bay
Paso
Robles
(Low)1
Paso
Robles
(High)1
Pismo
Beach
City of San
Luis Obispo
(Low)2
City of San
Luis Obispo
(High)2
Development Impact Fees $ - $ - $ - $ - $ 58,300 $ - $ - $ - $ - $ - Administrative Facilities 3,008 6,200 - 800 3,700 15,200 15,200 17,060 - - Fire Facilities 317 1,430 2,050 7,850 3,300 5,300 5,300 40,840 3,100 3,100 Libraries - - - 2,620 - - - - - -
Parks - - - 1,890 200 - - - - -
Police Facilities 3,233 6,530 1,470 5,230 900 1,600 1,600 12,070 3,600 3,600 Recreation Facilities - - - - - - - - - -
Storm Drain 270 - 120 3,750 500 - - - - -
Transportation/Traffic 58,902 69,380 69,380 93,710 49,000 106,200 146,300 110,690 157,400 540,100 Wastewater/Sewer 2,683 14,220 2,570 - 9,737 13,515 13,515 77,300 27,439 27,439 Water 2,896 18,300 6,469 - 9,701 31,840 31,840 101,570 29,717 29,717 Total - per Prototype $ 71,309 $ 116,060 $ 82,059 $ 115,850 $ 135,338 $ 173,655 $ 213,755 $ 359,530 $ 221,256 $ 603,956 1 Paso Robles Transportation Fee varies with project location 2 San Luis Obispo Transportation Fee varies by project location.
Policy Options
▪ Implement less than maximum justified fee amounts
▪ Phase in fee increases over time
▪ Exempt or reduce fees for certain land uses, such as
affordable housing
Questions
Legal Framework and Influential Exaction Cases
Impact fees (formerly known as exactions) were first adopted in the 1920s by cities seeking alternatives to finance new infrastructure. In 1949, the California courts adopted the “reasonable relationship” test between a project’s conditions of approval and development impacts (Ayers v.
City of Los Angeles, 207 P.2d 1 (1949)). The concept of these fees was expanded in the 1960s with the enactment of the Quimby Act, which authorized either the dedication of land or payment of in-lieu fees for the development of parks (Government Code Section 66477).
In 1987, the U.S. Supreme Court (Supreme Court) decided Nollan v. California Coastal Commission, 483 U.S. 825 (1987). The Nollan’s proposed construction of a two-story home within the same footprint as their existing one-story beachfront house. As a condition of issuing a coastal development permit, the Coastal Commission required the Nollans grant a public access easement across the beach in front of their home. The Supreme Court held that the exaction (grant of public easement) was not related to the impact created by the development (increased building height). Proof of such an “essential nexus” was required if the exaction was to be lawful.
After the passing of Proposition 13 in 1978, local government increasingly relied on DIFs to mitigate impacts created by new development. In response, the Legislature, lobbied by developers, passed AB 1600 requirements, which codified many of the principles in Nollan and established a statewide procedure for exacting certain fees from development projects.
The Supreme Court revised the question of exactions in Dolan v. City of Tigard, 512 U.S. 319 (1994). Tigard sought to condition expansion of an existing hardware store with the dedication of a city bike path and greenway along a stream that bounded the property. The Supreme Court ruled that for the government to require project-specific exactions, the government must demonstrate that (1) an essential nexus exists between the legitimate interest and the exaction imposed by the city (Nollan), and (2) the nature of the exaction must be “roughly proportional” to the impact the project is creating. While the city had demonstrated the essential nexus, the fees involved were not roughly proportional to the project’s impacts. In other words, the cost to dedicate and improve the portion of the property along the stream was far greater than the expansion of the existing hardware store.
A later Supreme Court case, Ehrlich v. City of Culver City (12 Cal.App.4th 854 (1996)), held that the imposition of fees, applied in an ad hoc manner rather than legislation, is subject to the Nollan/Dolan “essential nexus” and “rough proportionality” standards. Project-specific fees must be supported by individualized findings demonstrating a relationship between the impact created and the fee collected and that the amount of the fee is roughly proportional to the impact created.
On January 1, 2022, Assembly Bill (AB) 602 introduced new requirements 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. Three 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.
Attachment 6
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.
Ultimately, whether ad hoc or legislatively-enacted, development impact fees require findings demonstrating the proper relationship between the impact created and the fee exacted. Findings, which are prepared using a defensible nexus study, are an opportunity for an agency to explain why a fee is necessary, what impact is created by development, how new development impacts the community, and how the collection of a fee will alleviate all or a portion of the impact.