CITY COUNCIL STAFF REPORT
Meeting Date: June 1, 2026
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
TITLE: ADOPT RESOLUTION NO.__-26 AUTHORIZING UPDATED TRAFFIC IMPACT FEES AND DIRECTING STAFF TO IMPLEMENT A THREEYEAR PHASED INCREASE
SYNOPSIS
The Traffic Impact Fee (TIF) is a development impact fee authorized under the Traffic Mitigation Fee Act (AB 1600) to fund transportation improvements required to accommodate growth from new development. The City’s current TIF 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 adopted a Traffic Impact Fee Nexus Study and Fee Calculation Guidelines consistent with the 2040 General Plan.
The purpose of this item is to update the City’s TIF rate in accordance with the Nexus Study and Fee Calculation Guidelines.
The Budget Committee reviewed the recommended fee increase on November 5, 2025, and recommended the City Council approve the proposed resolution.
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.
On May 18, 2026, the City Council adopted the Nexus Study and Fee Calculation Guidelines and introduced a new TIF ordinance.
On June 1, the City Council will adopt the new ordinance amending Chapter 5.55 of the Pleasant Hill Municipal Code (PHMC) to incorporate the Nexus Study and the Fee Calculation Guidelines.
With the adoption of the new Nexus Study and the Fee Calculation Guidelines it is recommended that the City Council approve implementation of the fees identified in the Nexus Study and Fee Implementation Guidelines through a phased increase over a three-year period, as recommended by the Budget Committee at its November 5, 2025 meeting.
Analysis
The previous Traffic Impact Fee was based on a Nexus Study completed in 2003, which used a different methodology known as the “System Equity Approach.” Since then, the fees have been adjusted annually using the Engineering News-Record (ENR) 20-City Construction Cost Index.
The Traffic Impact Fee currently shown in the FY 2025/26 Master Fee Schedule is provided below.
Current Traffic Impact Fee
Single-Family Residential: $3,879 per unit
Multi-Family Residential: $3,110 per unit
Commercial: $10.03 per square foot
Office: $8.53 per square foot
Industrial: $3.15 per square foot
Other Uses: $325 per trip
Now that the ordinance has replaced the methodology for calculating the TIF, the fee listed above is no longer supported by current legal standards.
The current 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 to one in which the fee is calculated based on the costs of a specific list of capital improvement projects.
The Nexus Study suggests the following fee be implemented:
Traffic Impact Fee Recommended by the TIF Nexus Study
Single-Family Residential: $7,549 per unit
Multi-Family Residential: $5,396 per unit
Commercial: $18.05 per square foot
Office: $12.37 per square foot
Industrial: $5.62 per square foot
Other Uses: $936 per trip
Following review of the Nexus Study, the Budget Committee recommended implementing the updated TIF through a phased approach, using an annual step increase over three years to reduce potential impacts on development.
The Budget Committee also recommended that the TIF continue to be automatically adjusted with the Master Fee Schedule on an annual basis using the Engineering News Record (ENR) 20-City Construction Cost Index, with an annual adjustment cap of four percent (4%).
Initial Fee Recommended by the Budget Committee (Adopted with the new Master Fee Schedule on June 15 and Effective on September 1)
Single-Family Residential: $5,102 per unit
Multi-Family Residential: $3,872 per unit
Commercial: $12.70 per square foot
Office: $9.81 per square foot
Industrial: $3.97 per square foot
Other Uses: $529 per trip
Should the Council move forward with the approach recommended by the Budget Committee, the second step increase would be reflected within the new Master Fee Schedule, as adopted in June 2027, and would take effect September 1, 2027. The final rate increase recommended by the TIF Nexus Study would be implemented one year later, with adoption in June 2028 and effective date of September 1, 2028. Each step increase would also include the Construction Cost Index capped at 4%
Once the phasing is complete, the TIF will then continue to be adjusted annually based on the Construction Cost Index upon adoption each year of the Master Fee Schedule in June.
As part of the process to update the City of Pleasant Hill Traffic Impact Fee (TIF) program, staff requested a summary of transportation impact fees collected by other jurisdictions in the general vicinity. The summary (See “Attachment D”) presents the data collected and compares it to the existing and potential future Pleasant Hill TIF amounts. Information on fees in other jurisdictions was gathered from the current fee schedules available on each jurisdiction’s website. The analysis found that the City of Pleasant Hill’s proposed TIF increase would more closely align the City with the majority of surrounding jurisdictions and areas, including Lamorinda, Martinez, and Pacheco.
FISCAL IMPACT
The implementation of the updated Traffic Impact Fee will generate sufficient revenue to fund the future Capital Improvement Projects listed in the Nexus Study.
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 and Fee Calculation Guidelines were posted on the City’s website on April 18th, 2026.
RECOMMENDED CITY COUNCIL ACTION
Move to adopt Resolution No. _26 Authorizing Updated Traffic Impact Fees and directing staff to Implement a Three-Year Phased Increase.
ALTERNATIVES TO RECOMMENDED ACTION
The Council should provide further direction to staff if it elects not to implement the proposed three-year phased increase.
Should the Council not authorize the increased fee, the existing fee will not be charged due to the changed Nexus Study. 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)
Proposed Resolution - 2026 TIF Increase
Attachment A Pleasant Hill Traffic Impact Fee Update, Prepared by Fehr and Peers, dated April 16, 2026
Attachment B Pleasant Hill TIF Fee Calculation Guidelines Attachment C Pleasant Hill TIF Comparison Memo, prepared by Fehr and Peers, dated August 25, 2025
Attachment D Proposed Master Fee Schedule (Redlined)
Attachment E Proposed Master Fee Schedule (Clean)
Prepared by: Laetitia Porta, Senior Civil Engineer
Reviewed by: Ann James, Public Works Director
Reviewed by: Erick Cheung, Chief Financial Officer
Approved by: Ethan Bindernagel, City Manager