Development Impact Fee Nexus Study
& Fee Update Public Hearing
April 16, 2024, City Council - Public Hearing
Presented by
Javier Carcamo, Finance Director
David Chantarangsu, Development Services Director
Paige Hartman, Management Analyst
Willdan Financial Consultants:
James Edison – Managing Principal
Carlos Villarreal – Project Manager
Received After Agenda Printed
04/16/2024 - Regular Meeting
Item 7 - Staff Presentation
2 • Kick-off Meeting – June 23, 2023
Citywide representation
• Evaluated each department’s facilities needs
• Created planned project lists based on priority
• Draft Nexus Study Published – February 17, 2024
• Workshop – February 20, 2024
• Nexus Study & Fee Update Adoption – April 16, 2024
Project Timeline
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:
• Current impact fee schedule
• Nexus studies
• Annual AB1600 reports
• Five-Year AB1600 reports
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
Law Enforcement
Fire Protection
Streets, Minor Bridges &
Culverts
Traffic Signals
Storm Drainage
General Facilities
Park Facilities
Community Centers
Public Library
Growth Projections
2023 2035 Increase
Residents 109,998 135,774 25,776
Dwelling Units 37,205 47,993 10,788
Employment 26,240 111,280 85,040
Sources: CA DOF; OnTheMap; American Community Survey; Murrieta General Plan. 9 Fire Department
• Regional Training Center
• Police Station Expansion
Police Department
• Regional Training Center
• Fire Station 5
• Fire Station 6 and garage bay
- S6 Engine & upfitting
- S6 Rescue Truck & upfitting
- S6 Polaris & upfitting
- S6 Brush Truck & upfitting
Community Services Department
• New parks and increased services at
existing parks
• Library expansion, book lockers, and
mobile library
• CSD Offices
Planned Projects
Response to DVBA Comments
Provided analysis of actual administrative costs. Revised administrative charge to 1%
Addressed multifamily park impact fee calculation
Addressed traffic signals fee calculation
Comments requiring no changes:
$500 per square foot is a reasonable estimate of future Public Works Maintenance yard
Tenant improvements listed in appendix tables are
duplicative of replacement cost per square foot
Changes Since Draft Report
Corrected an issue with the traffic signals fee,
which resulted in a lower fee schedule
Corrected issue in multifamily park impact fee
calculation
Reduced administrative charge from 2% to 1%
Current vs Proposed Fees
Table 1: Current Fee Schedule - Adopted 2016
Land Use
Law
Enforce
ment
Fire
Protection
Streets,
Minor
Bridges &
Culverts
Traffic
Signals
Storm
Drainage
General
Facilities
Parkland
Facilities
Community
Centers
Public
Library
Grand
Total
Residential - Fee Per Dwelling Unit 1
Single Family Unit $ 597 $ 634 $ 5,481 $ 1,051 $ 334 $ 241 $ 4,363 $ 764 $ 388 $ 13,853 Multi-family Unit 417 444 3,809 730 304 168 3,049 533 270 9,724 Residential - Equivalent Fee per Square Foot
Single Family Unit2 $ 0.23 $ 0.25 $ 2.15 $ 0.41 $ 0.13 $ 0.09 $ 1.71 $ 0.30 $ 0.15 $ 5.42 Multi-family Unit3 0.35 0.37 3.18 0.61 0.25 0.14 2.55 0.44 0.23 8.12 Nonresidential - Fee per 1,000 Square Feet
Commercial $ 130 $ 307 $ 9,089 $ 1,742 $ 173 $ 51 $ - $ - $ - $ 11,492 Office 168 401 6,932 1,329 90 67 - - - 8,987
Industrial 62 149 991 190 217 24 - - - 1,633
Nonresidential - Fee per Square Foot
Commercial $ 0.13 $ 0.31 $ 9.09 $ 1.74 $ 0.17 $ 0.05 $ - $ - $ - $ 11.49 Office 0.17 0.40 6.93 1.33 0.09 0.07 - - - 8.99
Industrial 0.06 0.15 0.99 0.19 0.22 0.02 - - - 1.63
1 These are the currently adopted fees, charged per dw elling unit regardless of size of unit. 2 Equivalent fees per square foot assume 2,555 square feet per average sized single family unit. 3 Equivalent fees per square foot assume 1,198 square feet per average sized multifamily unit.
Current vs Proposed Fees
Table 2: Maximum Justified Impact Facilities Fee Summary Land Use
Law
Enforce
ment
Fire
Protection
Streets,
Minor
Bridges &
Culverts
Traffic
Signals
Storm
Drainage
General
Facilities Parks
Community
Centers
Public
Library Total
Residential - Fee per Square Foot
Single Family $ 0.39 $ 0.28 $ 2.36 $ 0.21 $ 0.15 $ 0.45 $ 4.85 $ 0.11 $ 0.17 $ 8.97 Multifamily 0.53 0.38 3.60 0.33 0.29 0.61 6.58 0.16 0.23 12.71 Nonresidential - Fee per Square Foot
Commercial $ 1.19 $ 1.83 $ 8.73 $ 0.80 $ 0.20 $ 0.21 $ - $ - $ - $ 12.96 Office 1.91 2.95 7.61 0.69 0.10 0.34 - - - 13.60
Industrial 0.63 0.98 2.48 0.23 0.25 0.11 - - - 4.68
Table 3: Difference
Land Use
Law
Enforce
ment
Fire
Protection
Streets,
Minor
Bridges &
Culverts
Traffic
Signals
Storm
Drainage
General
Facilities Parks
Community
Centers
Public
Library Total
Residential - Fee per Square Foot
Single Family $ 0.16 $ 0.03 $ 0.21 $ (0.20) $ 0.02 $ 0.36 $ 3.14 $ (0.19) $ 0.02 $ 3.55 Multifamily 0.18 0.01 0.42 (0.28) 0.04 0.47 4.03 (0.28) - 4.59 Nonresidential - Fee per Square Foot
Commercial $ 1.06 $ 1.52 $ (0.36) $ (0.94) $ 0.03 $ 0.16 $ - $ - $ - $ 1.47 Office 1.74 2.55 0.68 (0.64) 0.01 0.27 - - - 4.62
Industrial 0.57 0.83 1.49 0.04 0.03 0.09 - - - 3.04
DIF Administrative Policy
• Grandfathering/Phasing Schedule
Phasing only applies to Industrial and Office permit types Grandfathering applies to all permit types
• Inflation Adjustment
Inflation adjustment will apply to all permit types including those being phased-in
California Construction Cost Index (CCCI) or 4%, whichever is lower
Grandfathering
Criteria for all Project Types:
• Projects in plan check review phase, on or before 06/30/2024 • Pre-pay their DIF fees until 06/30/2025, or upon the issuance of a building permit (whichever occurs first.
Current Impacted Projects:
• Total Projects currently affected - 15 Commercial, 4 SF Residential, and 2 MF Residential Projects (~679 units)
• Revenue reduction ~ $6,794,115
Industrial and Office:
These project types will follow the same grandfathering guidelines as other project types but will also include the phasing-in schedule.
SB 330:
Projects that follow the provisions of SB330 relative to fees for residential projects, that have filed a zoning application that was determined to be complete, have their development fees frozen for 30 months from the date of final approval.
16 Phase-In
3-Year Phasing
Fee Type
Current DIF
Fees (per sq ft)
Proposed Fee
(per sqft)
3-year plan
Per year
increase
plan
Per year
increase
Industrial $ 1.63 $ 4.68 $ 1.017 $ 0.76
Office $ 8.99 $ 13.60 $ 1.537 $ 1.15
Fee Type
Current DIF
Fees (per sq ft)
Effective
7/1/24
Effective
7/1/25
Effective
7/1/26
Industrial 1.63 2.64 3.66 4.68
Office 8.99 10.53 12.06 13.60
Proposed Phasing Plan
Annual Adjustment
• Update the City’s fee schedule on an annual basis based on the California Construction Cost Index (CCCI).
• The change in the cost index will be evaluated on a January-toJanuary calendar year • Annual inflation adjustment be capped at a four (4) percent increase
*CCCI has increased 47.7% since 2016*
18 Staff Recommendations
• Adopt Resolution No. 24-4733 entitled: A Resolution of the City Council of the City of Murrieta, California, Approving an Update of the Public Facilities Development Impact Fee Schedule and Amending the City’s Fee Schedule; and
• Adopt Resolution No. 24-4734 entitled: A Resolution of the City Council of the City of Murrieta, California, Adopting a Development Impact Fee Nexus Study, which Includes the Five-Year Fee Report (AB1600) for the Fiscal Year 2022/23 and Making Findings Required by the Mitigation Fee Act.
• Policy Considerations:
Grandfathering/Phase-in Schedule
Inflation Adjustment
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
Cost Allocation Methodologies
0 10
20 30
40 50
60 70
80 90
100
Facility Demand Facility Needs
Existing
Demand
Future
Demand
Existing Inventory Method
New
Facilities
Existing
Facilities
Fee $
System Plan Method
(Increase Service Level)
0 10
20 30
40 50
60 70
80 90
100
110
120
130
140
150
Future
Demand
Growth
Share
Existing
Deficiency
Existing
Demand
Existing
Facilities
Facility Needs
New
Facilities
Facility Demand
0 10
20 30
40 50
60 70
80 90
100
110
120
130
140
150
Future
Demand
New
Facilities
Demand Facility Needs
Allocated to New
Development
Planned Facilities
Fee Program Methodologies
Law Enforcement
Fire Protection
Open Space
Parks
Community Centers
General Facilities
Existing Standard
Library Facilities
System Plan
Streets, Minor Bridges &
Culverts
Traffic Signals
Storm Drain
Planned Facilities
Projected Impact Fee Revenue
Fee Category Total Project Cost
Projected Impact
Fee Revenue
Additional Funding
Required
Law Enforcement $ 59,670,000 $ 59,670,000 $ -
Fire Protection 85,521,000 85,521,000 -
Streets, Minor Bridges & Culverts 355,740,973 286,035,438 69,705,535 Traffic Signals 43,751,507 25,870,312 17,881,195
Storm Drainage 12,983,598 7,850,999 5,132,599
General Facilities 18,131,000 18,131,000 -
Parkland Facilities 97,204,000 97,204,000 -
Community Centers 2,288,000 2,288,000 -
Public Library 7,100,000 3,325,104 3,774,896
Total $ 682,390,078 $ 585,895,853 $ 96,494,225
Fee Comparison: Single Family Unit, 2,555
Square Feet
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Murrieta (Current) Maximum Justified
Murrieta
Lake Elsinore (Low) Lake Elsinore (High) Menifee (Low) Menifee (High) Moreno Valley Temecula (Low) Temecula (High) Fee Comparison: Multifamily Unit, 1,198
Square Feet
$-
$5,000
$10,000
$15,000
$20,000
$25,000
Murrieta (Current) Maximum Justified
Murrieta
Lake Elsinore (Low) Lake Elsinore (High) Menifee (Low) Menifee (High) Moreno Valley Temecula (Low) Temecula (High) Fee Comparison: Commercial – 1,000
Square Feet
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Murrieta (Current) Maximum Justified
Murrieta
Lake Elsinore (Low) Lake Elsinore (High) Menifee (Low) Menifee (High) Moreno Valley (General)
Moreno Valley
(Regional)
Temecula (Low) Temecula (High)
Fee Comparison: Office, 1,000 Square Feet
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Murrieta (Current) Maximum Justified
Murrieta
Lake Elsinore (Low) Lake Elsinore (High) Menifee (Low) Menifee (High) Moreno Valley Temecula (Low) Temecula (High) Fee Comparison: Industrial – 1,000 Square
Feet
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Murrieta (Current) Maximum Justified
Murrieta
Lake Elsinore (Low) Lake Elsinore (High) Menifee (Low) Menifee (High) Moreno Valley Temecula (Low) Temecula (High)