2024
Development
Impact Fee
Nexus Study
GROVERBEACH.ORG
Megan Martin, Community
Development Director
What is a Development Impact Fee?
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Mitigation Fee Act Legal Requirements
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• Legal Requirements set forth in Government Code § 66000-66025 (aka “Mitigation Fee Act”)
• To establish Impact Fees, a local agency must make 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
Developing an Impact Fee Program
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• Project the future growth to be served
• Establish current and projected level of
service
• Assess existing facility capacity &
project future demand
• Determine facility needs and costs
• Allocate costs to new development
Grover Beach Impact Fee Program
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• First adopted in 1995
• GBMC Article X, Chapter 13
• Updated in 2005/2006
• Increase in development
• Nexus Study (Tuckfield &
Associates) used to analyze fees
relating to transportation, Law
Enforcement Administration,
Parks and Recreation
Development Impact Fee Nexus Study
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• State law requires Nexus Studies to be updated routinely • City engaged with Willdan, a financial consulting firm • Five-Year Capital Improvement Program (CIP) & Facility Conditions & Needs Assessment (FCNA) Report used to inform the Study
• Using the study’s results, the City plans to fund public facilities and support growth through 2050 as outlined in the General Plan.
2024 Impact Fee Nexus Study
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Assembly Bill 602 (AB 602)
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Basic Methodology
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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
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Grover Beach Growth Projections
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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
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Fee Program Methodologies
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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 1.51 4.12
Restaurant 0.62 0.65 0.14 - - 11.76 9.24 22.41
Commercial Lodging (per
Room) $ 164 $ 172 $ 38 $ - $ -
$
1,830
$
1,424 $3,628
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
Maximum
Justified
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.
Stakeholder Engagement
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• Virtual meeting held May 20, 2024
• Questions & Staff Responses
• Will the City consider phasing?
• Staff Recommendation: No.
• Will annual increases reflect rates from Consumer Price Index or California Construction Cost Index?
• Staff Recommendation: Use CCCI
• Will a project under review and in process be subject to new fees? • Staff Recommendation: No, pursuant to Senate Bill 330 (SB 330) • Will the City offer exceptions or exemptions from fees? Council Direction – Exemptions
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• Exemptions from Impact Fees
• Council direction Investigate Affordable Housing exemption option • Nexus Study demonstrates $16.4 million in additional funding needed to fully fund all improvements.
• Affording exemptions would exacerbate this funding gap.
Council Direction Continued
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• Alternative Option Impact Fee Deferral Program
• Supported by Housing Authority of San Luis Obispo and People’s Self-Help Housing
• Implements the City’s Housing Element Program 6.1: Establish fee deferral program for affordable housing projects
• Provide deferrals for any DIFs excluding Water & Wastewater/Sewer for qualified projects
• Staff recommends 17-year term with a simple interest of no less than 3% (Intent to not overlap with typical 15 year construction loan) Qualifying Projects –Fee Deferral Program
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• Housing projects with 10 or fewer units that provide at least (1) of the total units to be sold or rented to lower or moderate-income households.
• Housing projects with more than 10 units that provide at least 20 percent of the total units to be sold or rented to lower or moderate- income households. • Housing projects that are built, owned and managed by a government agency or a nonprofit housing organization.
• Affordable housing, Transitional housing, Supportive housing, Homeless Shelters and Low-Barrier Navigation Centers.
Impact Fees – Policy Options
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• Implement less than maximum justified fee amounts
• Phase in fee increases over time
• Utilize CCCI for annual increases
• Exempt or reduce fees for certain land uses, such as affordable housing
1. Adopt the 2024 Development Impact Fee Nexus Study; and,
2. Direct staff to prepare a Resolution to update the City’s Master Fee Schedule; and,
3. Direct staff to prepare an Ordinance amending the Grover Beach Municipal Code Article X, Chapter 13 – Development Impact Fees.
Staff Recommendation
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Want More Information?
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Visit the City’s Development
Impact Fee Page
https://www.grover.org/623/Development-Impact-Fees
Fee Comparison – Multifamily Unit, 1,100 Sq. Ft.
Fee Category
CURRENT
Grover
Beach
Maximum
Justified
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
Maximum
Justified
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.