CITY COUNCIL STAFF REPORT
Meeting Date: February 23, 2026
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
TITLE: ADOPT RESOLUTION ADOPTING THE TRAFFIC IMPACT FEE
NEXUS STUDY AND INTRODUCE THE REVISED TRAFFIC IMPACT
FEE ORDINANCE
SYNOPSIS
The Traffic Impact Fee (“TIF”) is a development impact fee authorized under the Mitigation Fee Act (AB 1600) to fund transportation improvements required to accommodate growth from new development. The City’s current TIF program has not been updated since it was established in 2003. To ensure continued compliance with State law and that fees reflect current conditions, the City recently completed a Traffic Impact Fee Nexus Study (see Attachment “B”) in order to update the City’s ordinance to reflect current TIF methodology and related fees.
Adoption of the Resolution will adopt the Traffic Impact Fee Nexus Study (“Nexus Study”), establishing a clear and legally defensible framework for the City’s TIF. Introduction of the new TIF Ordinance is the first reading of the revised Ordinance to implement the Nexus Study.
The adoption or second reading of the Ordinance will be presented on April 6 along with the resolution updating the Master Fee Schedule. The Council Budget Committee considered this item on November 5, 2025, and recommended a phased approach over three years for the fee structure. A public hearing and additional resolution will be presented at the April 6 Council meeting to enact the phased fee structure.
Staff recommends Council conduct a public hearing to review the Nexus Study and then adopt the Resolution authorizing adoption of the Nexus Study and introduce the first reading of the revised Ordinance.
DISCUSSION
Background
The City established a TIF pursuant to the Traffic Mitigation Fee Act of 1989 (AB 1600), now codified in the Government Code at sections 66000-66025, governing development impact fees.
The TIF is intended to fund street and transportation improvement projects necessary to serve new development.
The City’s current citywide TIF program was adopted in 2003 and is based on a “System Equity Approach”, which allocates transportation infrastructure costs on a cost-per-trip basis using the City’s current citywide built infrastructure as the cost foundation. The initial TIF rate was established by a Nexus Study performed by MuniFinancial. As required by State Law, the TIF is reported annually in the City’s financial reports and is adjusted annually pursuant to Pleasant Hill Municipal Code Section 5.55.050 based on a construction cost index.
With the adoption of the City’s 2040 General Plan, and approval of the Master Bicycle and Pedestrian Plan, the City Council needs to update the TIF nexus analysis to be consistent with these new plans.
The Government Code requires that Traffic Impact Fees be supported by a “nexus analysis”, which demonstrates a reasonable relationship between:
1. The impacts of new development
2. The need for public facilities resulting from that development; and
3. The amount charged per net daily trip.
To meet these requirements and reflect current and projected conditions, the City executed an Agreement for Professional Services with Fehr & Peers to prepare an updated Traffic Impact Fee Nexus Study. The new TIF program includes a list of capital improvement projects, reflecting the most recent projections of population and employment growth in the City, and changes the approach used to calculate fees from the existing “system equity” approach to one in which the fee is calculated based on the costs of a specific list of capital improvement projects.
Analysis
Nexus Study Summary
Fehr & Peers prepared a Traffic Impact Fee Nexus Study dated September 25, 2025. The study evaluates existing and future transportation conditions citywide and identifies the transportation improvements needed to accommodate anticipated growth, as identified in the City’s Capital Improvement Program (“CIP”).
The study estimated that the total eligible transportation improvement costs of approximately $33.96 million, and approximately 4,589 additional adjusted daily trips will be accounted for between 2025 and 2035.
Based on these assumptions, the study calculates the cost per adjusted daily trip is $7,401 and recommends updated TIF rates by land use category. The recommended fees are designed to ensure that new development contributes proportionately to the cost of transportation improvements necessitated by growth.
Proposed Ordinance Update
In keeping with the new TIF Nexus Study, the existing TIF Ordinance was completely revised.
This updated TIF Ordinance is attached and ready to be introduced (first reading). The adoption (second reading) of the TIF Ordinance is scheduled for March 2, 2026, and should it be adopted, will take effect 30 days later, on April 1, 2026. At the time of adoption (second reading) of the new TIF Ordinance, the Master Fee Schedule will be presented with new charges for a phased in approach to the new TIF fees, as recommended by the Budget Committee in November
FISCAL IMPACT
Information regarding the phased approach for the new fees will be presented with the revised Master Fee Schedule at the April 6 Council meeting.
PUBLIC CONTACT
Public Contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center, and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page. The TIF Study was posted on the City’s website on October 20th, 2025.
RECOMMENDED CITY COUNCIL ACTION
Adopt the Resolution adopting the TIF Nexus Study and introduce the revised TIF Ordinance.
ALTERNATIVES TO RECOMMENDED ACTION
None recommended.
Should the Council not authorize the increased fee, the City Attorney’s Office is recommending the City not continue to charge the existing fee due to the risk of legal challenge. In that case, the Council could elect to subsidize future projects using General Fund resources; otherwise, future Capital Improvement Projects may face insufficient funding.
ATTACHMENT(S)
Attachment A Traffic Impact Fee Ordinance
Attachment B Pleasant Hill Traffic Impact Fee Update, Prepared by Fehr and Peers, dated September 25, 2025
Attachment C Pleasant Hill TIF Comparison Memo, prepared by Fehr and Peers, dated August 25, 2025
Prepared by: Laetitia Galeazzi, Senior Civil Engineer
Approved by: Ann James, Public Works Director