April 15, 2025, Item #8
DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
AGENDA REPORT CityofPoway
April 15, 2025
Honorable Mayor and Members of the City Council
Julie Procopio, Director of Development Services q
Tracy Beach, City Engineer
858-668-4652 or [email protected]
CITY COUNCIL
Resolution Approving a 6% Increase in the Regional Transportation Congestion Improvement Program Traffic Mitigation Fee for Fiscal Year (FY) 2025-26, as required by the TransNet Ordinance
On April 1, 2008, the City Council adopted the Regional Transportation Congestion Improvement Program (RTCIP) Traffic Mitigation Fee pursuanuo the TransNet Ordinance. The Ordinance calls for the fee to be adjusted annually on July 1 of each year to reflect increases in construction costs. The San Diego Association of Governments (SAN DAG) has informed all cities and the County of San Diego that the increase in the RTCIP fee for FY 2025-26 is set at 6%. This will increase the City's RTCIP Traffic Mitigation Fee from $2,875.06 to $3,047.57 per new residential unit starting on July 1, 2025.
Recommended Action:
It is recommended the City Council adopt the attached Resolution (Attachment A) ordering the increase to the City's RTCIP Traffic Mitigation Fee for new residential units starting on July 1, 2025.
Discussion:
In November 2004, voters in San Diego County approved a 40-year extension to the existing TransNet program, which was first initiated in 1987. The Trans Net program was designed to fund improvements to the region's transportation system through a half-cent sales tax. In addition to the sales tax extension, the TransNet Ordinance mandates implementation of a local traffic mitigation fee to fund missing improvements on the Regional Arterial System. The local traffic mitigation fee, also known as the RTCIP Traffic Mitigation Fee, was set at $2,000 per residential dwelling unit starting on July 1, 2008.
Funds collected from this fee will be used for roadway and traffic signal improvements on Espola Road, Poway Road, Pomerado Road, Twin Peaks Road, Community Road, Ted Williams Parkway, Camino Del Norte and Scripps Poway Parkway.
On April 1, 2008, the City Council adopted the RTCIP Traffic Mitigation Fee pursuant to the TransNet Ordinance. The TransNet Ordinance mandates the adopted RTCIP Traffic Mitigation Fee for new residential dwelling units be adjusted annually for construction cost inflation, based on the 1 of 9
April 15, 2025, Item #8
construction
cost
index,
but
requires
a minimum
2%
annual
increase.
The
fee
was
increased
by
2%
on
July
1 of
each
year
from
2009
through
2014,
2.5%
in
2015,
2%
in
2016
and
2017,
3.3%
in
2018,
2%
each
year
from
2019
through
2023,
and
4.9%
in
2024.
It
is
currently
set
at
$2,875
.06
per
residential
dwelling
unit.
SAN
DAG
has
informed
all
the
cities
and
the
County
of
San
Diego
(Attachment
B)
the
percentage
increase
for
FY
2025-26
is
set
at
6%.
Per
SAN
DAG,
this
increase
is
based
on
an
analysis
of
construction
cost
trends
and
relevant
indices
and
matches
the
rise
in
the
Construction
Cost
Index
observed
in
the
last
complete
fiscal
year
(FY
2024)
and
the
first
half
of
FY
2025.
This
will
increase
the
City's
RTCIP
Traffic
Mitigation
Fee
from
$2,875
.06
to
$3,047.57
per
residential
unit
starting
July
1,
2025,
FY
2025-26.
The
estimated
annual
revenue
fluctuates based
on
the
number
of
new
residential
building
permits
issued
.
Environmental
Review:
Based
on
the
California
Environmental
Quality
Act
(CEQA)
Guidelines
Section
15378(b)(4),
the
proposed
request
is
a fiscal
activity
that
is
not
considered
a
project.
Therefore,
there
is
no
activity
that
would
result
in
a
potentially
significant
physical
impact
on
the
environment,
exempting
this
update
to
a
current
City
fee
from
the
requirements
of
CEQA.
Fiscal
Impact:
Using
the
new
fee
of
$3,047.57
per
new
residential
dwelling
unit
and
the
anticipated
development
for
next
fiscal
year,
estimated
revenue
of
$313,899
.71
is
projected
for
FY
2025-26.
The
anticipated
development
is
a
slight
reduction
in
the
number
of
dwelling
units
compared
to
the
previous
year.
Public
Notification:
None. Attachments: A
Resolution
B.
SANDAG
Agenda
Item
No.
6 dated
February
28,
2025
Reviewed/Approved
By:
Assistant
City
Manager
2 of9
Reviewed
By:
Alan
Fenstermacher
City
Attorney
Approved
By:
Ch
~
City
Manager
April 15, 2025, Item #8
RESOLUTION NO. 25-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
POWAY, CALIFORNIA, APPROVING A 6% INCREASE IN THE
REGIONAL TRANSPORTATION CONGESTION IMPROVEMENT
PROGRAM (RTCIP) TRAFFIC MITIGATION FEE FOR THE
FISCAL YEAR (FY) 2025-26, AS REQUIRED BY THE TRANSNET
ORDINANCE
WHEREAS, in November 2004, voters in San Diego County approved a 40-year extension to the existing TransNet program to fund improvements to the region's transportation system; WHEREAS, the extension Ordinance requires local agencies to collect traffic mitigation fees, starting July 1, 2008, from residential dwelling units to fund the Regional Transportation Congestion Improvement Program (RTCIP) to ensure that new development directly invests in the region's transportation system to offset the negative impact of growth on congestion and mobility;
WHEREAS, on April 1, 2008, the City Council adopted the RTCIP Traffic Mitigation Fee of $2,000 per residential dwelling unit pursuant to Section 9A of the TransNet Ordinance; WHEREAS, Section 9A of the TransNet Ordinance also mandates that the RTCIP Traffic Mitigation Fee shall be increased annually, in an amount not to exceed the percentage increase set forth in the Engineering Construction Cost Index published by the Engineering News Record or similar cost of construction index with a minimum increase of 2%; WHEREAS, the City Council has adopted annual increases to the RTCIP Traffic Mitigation Fee and the current fee is $2,875.06 per residential dwelling unit, pursuant to Section 9A of the TransNet Ordinance;
WHEREAS, the San Diego Association of Governments (SANDAG) has informed the City that the percentage increase in the RTCIP Traffic Mitigation Fee for FY 2025-26 is set at 6%; and WHEREAS, the City Council intends by this Resolution to increase the City's RTCIP Traffic Mitigation Fee from $2,875.06 to $3,047.57 per residential dwelling unit to meet the requirement of Section 9A of the TransNet Ordinance.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows:
SECTION 1: The City Council finds that the adoption of this Resolution is a fiscal activity that is not considered a project based on California Environmental Quality Act (CEQA) Guidelines Section 15378(b)(4). Therefore, there is no activity that would result in a potentially significant physical impact on the environment, exempting this update to a current City fee from the requirements of CEQA.
SECTION 2: The City Council, starting July 1, 2025, hereby increases the RTCIP Traffic Mitigation Fee from $2,875.06 to $3,047.57 per residential dwelling unit, regardless of type, to fund roadway and traffic signal improvements on Espola Road, Poway Road, Pomerado Road, Twin Peaks Road, Community Road, Ted Williams Parkway, Camino Del Norte and Scripps Poway Parkway considered part of the Regional Arterial System. 3 of9 ATTACHMENT A
April 15, 2025, Item #8
Resolution No. 25-
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Poway, California on the 15th day of April, 2025 by the following vote, to wit:
AYES:
NOES:
ABSTAINED:
ABSENT:
DI SQUALi Fl ED:
Steve Vaus, Mayor
ATTEST:
Carrie Gallagher, CMC, City Clerk
4 of 9
April 15, 2025, Item #8
SA ltem:6
Board of Directors February28,2025
TransNet Regional Transportation Congestion Improvement Program Proposed Fee Adjustment
Overview
The TransNet Extension Ordinance requires the 18
cities in the San Diego region and the County of
San Diego to collect a Regional Transportation
Congestion Improvement Program (RTCIP) fee from
the private sector for each new housing unit
constructed in its jurisdiction, with certain exceptions, including low income residential units and accessory
dwelling units.
The fee's purpose is to help ensure that future
development contributes its proportional share of the
funding needed to pay for the impact of new growth on
the Regional Arterial System and related regional
transportation facility improvements as defined in the
most recent Regional Transportation Plan adopted by
SANDAG.
Key Considerations
Action: Approve
The Board of Directors is asked to approve a
6% adjustment to the Regional
Transportation Congestion Improvement
Program, raising the fee from $2,875.06 to
$3,047.57 beginning July 1, 2025.
Fiscal Impact:
The Regional Transportation Congestion
Improvement Program (RTCIP) fee would
increase from $2,875.06 to $3,047.57
beginning July 1, 2025.
Schedule/Scope Impact:
Pending SANDAG Board approval, the
adjusted RTCIP fee would become effective
July 1, 2025.
SAN DAG is required to adjust the minimum RTCIP fee amount on July 1 of each year based on an analysis of construction cost indices, but never less than 2%. The purpose of this annual adjustment is to ensure that the RTCIP retains its purchasing power to improve the Regional Arterial System.
Based on an analysis of construction cost trends and relevant indices, staff recommends a 6% fee adjustment to the RTCIP, raising the minimum RTCIP fee from $2,875.06 to $3,047.57 beginning July 1, 2025 (Attachment 1 ). This increase accounts for recent years' inflation and the Construction Cost Index, which has accelerated from its previous low pace. It helps to ensure that the RTCIP fee maintains its purchasing power to complete necessary transportation improvements.
Next Steps
In accordance with TransNet Extension Ordinance provisions 1, each jurisdiction's RTCIP funding program must be submitted for review by the Independent Taxpayer Oversight Committee (ITOC) by April 1 of each year to remain eligible for TransNet Local Street and Road funding. The annual submittal of RTCIP funding programs by local jurisdictions is scheduled for review at the ITOC meeting on April 9, 2025.
Susan Huntington, Director of Financial Planning, Budgets, and Grants Attachment: 1. Discussion Memo
1 Section 9 of the Trans Net Extension Ordinance requires that local jurisdictions establish a program or mechanism for funding the Regional Arterial System. For purposes of the RTCIP, the Regional Arterial System is defined in the most recent Regional Transportation Plan adopted by SANDAG.
5 of9 ATTACHMENT B
April 15, 2025, Item #8
Background
FY 2026 Recommended RTCIP Fee Increase
Discussion Memo
Attachment 1
The TransNet Extension Ordinance requires the 18 cities and the County of San Diego to collect a fee from the private sector for each new housing unit constructed in that jurisdiction for contribution to the Regional Transportation Congestion Improvement Program (RTCIP).1 RTCIP revenue is required to be used to construct improvements on the Regional Arterial System, such as new or widened arterials, traffic signal coordination and other traffic improvements, freeway interchange and related freeway improvements, railroad grade separations, and improvements required for express bus and rail transit.
The Ordinance further requires SAN DAG to adjust the RTCIP fee each year and states that in no event shall the adjustment be less than 2% per year or more than the percentage increase set forth in the Engineering Construction Cost Index (CCI) published by the Engineering News-Record (ENR), or a similar CCI. The purpose of this annual adjustment is to ensure that the RTCIP retains its purchasing power to improve the Regional Arterial System and ensures future development contributes its proportional share of the funding to offset the impact of new growth on the regional transportation infrastructure, as defined in the most recent Regional Transportation Plan adopted by SANDAG.
The RTCI P funding programs fall under the responsibility of the 19 local jurisdictions, which must maintain their RTCIP funding programs and comply with specific administrative requirements to remain eligible for TransNet local street and road funding.
The RTCIP has been implemented in the San Diego region since July 1, 2008. Annual RTCIP fee adjustments, funding program reports, and related audits can be found on the RTCIP page of the SAN DAG Website. Relevant excerpts can be referenced in the TransNet Extension Ordinance and SAN DAG Board Policy No. 031: TransNet Ordinance and Expenditure Plan Rules.
Construction Cost Increases
SAN DAG staff evaluated changes recorded in the ENR Construction Cost Index for Los Angeles (ENR CCI-LA). 2 The index is based on monthly price changes in four areas: lumber, cement, structural steel, and labor. It helps track construction cost fluctuations over time.
Chart 1 shows annual increases in the ENR CCI-LA since Fiscal Year 2009. For over a decade (from FY 2010 through FY 2021 ), construction costs rose by less than 4% per year. FY 2022 marked the first sharp rise in costs (7.9%) and was followed by two more years of strong cost increase (4.9% in FY 2023 and 10% in FY 2024). The data available for FY 2025 show an abrupt drop in cost growth. Construction costs are averaging 1.4% (in the first six months of FY 2025 from July to December 2024). The slower growth is a welcome change and suggests that construction costs are rising at a much slower rate than general inflation.
1 Some types of new construction can be exempted, such as low to moderate-income housing. 2 ENR produces construction cost indices for 20 US cities. SANDAG uses the Los Angeles index as the closest approximation of construction cost trends for the San Diego region. 6 of 9
April 15, 2025, Item #8
10%
8%
6%
4%
2%
0%
Chart 1. Engineering News-Record Construction Cost Index - Los Angeles: Average Fiscal Year Change
*FY25 reflects the first 6 months of data
10.0%
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25* RTCIP Fee Increase Recommendation
Each year, SAN DAG recommends an increase in the RTCIP fee. Staff typically bring this recommendation to the Independent Taxpayer Oversight Committee (ITOC) in February. The approved fee increase takes effect at the start of the new fiscal year (July 1 ).
Fee increases are intended to preserve purchasing power. Chart 2 illustrates how annual construction cost growth has compared to the 2% minimum increase specified in the Ordinance. Between FY 2009 and FY 2024, construction costs rose by more than 2% in nine years and by less than 2% in seven years.
However, the RTCIP fee itself has exceeded the 2% minimum only three times since FY 2009:
• 2.5% in FY 2016,
• 3.3% in FY 2019, and
• 4.9% in FY 2025.
8%
6%
4%
2%
0%
-2%
Chart 2. Difference between CCI ENR-LA and the 2% Minimum Fee Increase *FY25 reflects the first six months.
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25* 3 7 of9
April 15, 2025, Item #8
Chart
3 shows
RTCIP
fees
and
annual
increases
since
FY
2009.
The
FY
2025
increase
was
the
largest
annual
adjustment
to-date,
responding
to
three
consecutive
years
of
sizable
construction
cost
increases.
Between
FY
2021
and
FY
2023,
construction
costs
rose
by
13%
, while
the
RTCIP
fee
grew
by
only
4%,
creating
a
noticeable
gap
. The
FY
2025
fee
increase
helped
to
close
this
gap
.
However,
FY
2024
recorded
another
significant
jump
in
construction
costs,
rising
10%
over
the
fiscal
year
and
further
eroding
the
purchasing
power
of
RTCIP
funds
. Encouragingly,
FY
2025
is
seeing
a
notable
slowdown
in
cost
increases.
Over
the
first
half
of
the
fiscal
year
(July
through
November),
construction
costs
have
increased
by
an
average
of
1.4%
.
Chart
3. RTCIP
Fee
and
Annual
Increases
RTCIP
Incremental
RTCIP%
CCI
Fee
Increase
($)
increase
Increase
FY09
$2,000.00
$-
0.0%
6.1%
FY10
$2,040.00
$
40.00 2.0%
1.0%
FY11
$2,081.00
$
41.00 2.0%
2.2%
FY12
$2,123.00
$
42.00 2.0%
1.4%
FY13
$2,165.00
$
42.00 2.0%
1.3%
FY14
$2,209.00
$
44.00 2.0%
3.8%
FY15
$2,254.00
$
45.00 2.0%
1.8%
FY16
$2,310.00
$
56.00 2.5%
2.6%
FY17
$2,357.00
$
47.00 2.0%
2.9%
FY18
$
2,404.14
$
47.14 2.0%
3.9%
FY19
$2,483.48
$
79 .34
3.3%
1.0%
FY20
$
2,533
.15
$
49.67 2.0%
0.2%
FY21
$2,583
.82
$
50.67 2.0%
1.5%
FY22
$2,635.50
$
51.68 2.0%
7.9%
FY23
$2,688.21
$
52.71 2.0%
4.9%
FY24
$
2,741.97
$
53.76 2.0%
10.0%
FY25
$2,875.06
$
133.09
4.9%
1.4%*
FY26
(Recommended)
$3,047.57
$
230
.01
6.0%
*CCI
increase
for
FY25
reflects
only
July
throuqh
December
data
.
Staff
Recommendation
In
light
of
the
trends observed
in
FY
2024
and
the
first
half
of
FY
2025,
staff
recommend
a
6%
increase
(equivalent
to
$172.50)
to
the
RTCIP
fee
for
FY
2026
. This
proposed
increase
marks
the
first
time
an
adjustment
above
the
2%
minimum
has
been
recommended
for
two
consecutive
years
. Chart
4 illustrates
that
the
recommended
increase
allows
the
RTCIP
fee
to
better
align
with
recent
construction
cost
trends
while
recognizing
the
current
significant
slowdown
in
cost
growth.
This
recommendation
is
less
than
the
10%
increase
observed
in
the
construction
cost
index
. It
strikes
a
balance
between
two
objectives
-
that
is,
reducing
the
risk
of
further
erosion
in
the
RTCIP's
purchasing
power
and
ensuring
continued
investment
in
critical
transportation
infrastructure,
while
simultaneously
recognizing
the
challenges
of
housing
affordability
in
the
region.
4 8
of
9 April 15, 2025, Item #8
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1.5 0 2:. .r:::.
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1.3 C) u Q)
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Chart
4. CCI
and
RTCIP
Growth
Since
FY
2009
*Based
on
first
six
months
of
FY25
**Based
on
recommendation
for
FY26
Fee
Increase
:
-
RTCIP
-
CCI
Recommended Fee
Increase
:
6% 0
,, 4.9%
5