April 21, 2026, Item #4
DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
AG EN DA REPORT City of Poway
April 21, 2026
Honorable Mayor and Members of the City Council
Julie Procopio, Director of Development Services(f
Tracy Beach, City Engineer
858-668-4652 or [email protected]
CITY COUNCIL
Resolution Approving a 2% Increase in the Regional Transportation Congestion Improvement Program Traffic Mitigation Fee for Fiscal Year 2026-27, as Required by the TransNet Ordinance
On April 1, 2008, the City Council adopted the Regional Transportation Congestion Improvement Program (RTCIP) Traffic Mitigation Fee pursuant to 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 the increase in the RTCIP fee for Fiscal Year (FY) 2026-27 is set at 2%. This will increase the City's RTCIP Traffic Mitigation Fee from $3,047.57 to $3,109.88 per new residential unit starting on July 1, 2026.
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, 2026.
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 21, 2026, Item #4
construction cost index, but requires a minimum 2% annual increase. The fee 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, 4.9% in 2024 and 6% in 2025. It is currently set at $3,047.57 per residential dwelling unit. SAN DAG has informed all the cities and the County of San Diego (Attachment B) the percentage increase for FY 2026-27 is set at 2%. The proposed increase is a return to the 2% minimum allowed by the Ordinance. Per SANDAG, this increase accounts for recent years' inflation and the Construction Cost Index. The recommended increase allows the RTCIP fee to continue to close the gap between rising construction costs and the purchasing power of the RTCIP fee. This will increase the City's RTCIP Traffic Mitigation Fee from $3,047.57 to $3,109.88 per residential unit starting July 1, 2026, FY 2026-27. 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. There is no activity that would result in a potentially significant physical impact on the environment, therefore this update to an existing City fee is exempt from CEQA.
Fiscal Impact:
Using the new fee of $3,109.88 per new residential dwelling unit and the anticipated development for next fiscal year, estimated revenue of $74,637.12 is projected for FY 2026-27. The anticipated development is a reduction in the number of dwelling units compared to the previous year.
Public Notification:
None.
Attachments:
A. Resolution
B. SAN DAG Agenda Item No. 3.8 dated February 27, 2026
Reviewed/Approved By:
Assistant City Manager
2 of 9
Reviewed By:
Alan Fenstermacher
City Attorney
Approved By:
Ch~ ns aze tine
City Manager
April 21, 2026, Item #4
RESOLUTION NO. 26-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
POWAY, CALIFORNIA, APPROVING A 2% INCREASE IN THE
REGIONAL TRANSPORTATION CONGESTION IMPROVEMENT
PROGRAM TRAFFIC MITIGATION FEE FOR THE FISCAL YEAR
2026-27, 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 $3,047.57 per residential dwelling unit, pursuant to Section 9A of the TransNet Ordinance;
WHEREAS, the San Diego Association of Governments (SAN DAG) has informed the City that the percentage increase in the RTCIP Traffic Mitigation Fee for Fiscal Year (FY) 2026-27 is set at 2%; and
WHEREAS, the City Council intends by this Resolution to increase the City's RTCIP Traffic Mitigation Fee from $3,047.57 to $3,109.88 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). There is no activity that would result in a potentially significant physical impact on the environment, therefore this update to an existing City fee is exempt from CEQA.
SECTION 2: The City Council, starting July 1, 2026, hereby increases the RTCIP Traffic Mitigation Fee from $3,047.57 to $3,109.88 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 of 9 ATTACHMENT A
April 21, 2026, Item #4
Resolution
No
. 26-
Page
2 PASSED,
APPROVED
AND
ADOPTED
at
a
Regular
Meeting
of
the
City
Council
of
the
City
of
Poway,
California
on
the
21st
day
of
April,
2026
by
the
following
vote,
to
wit:
AYES: NOES: ABSTAINED: ABSENT: DISQUALIFIED:
Steve
Vaus,
Mayor
ATTEST: Carrie
Gallagher,
CMC,
City
Clerk
4 of
9 April 21, 2026, Item #4
SA Item: 3.8
Board of Directors February 27, 2026
TransNet Regional Transportation Congestion Improvement Program Proposed Fee Adjustment
Overview
The TransNet Extension Ordinance requires the
18 cities and the County of San Diego to collect a
Regional Transportation Congestion Improvement
Program (RTCIP) fee from developers for each new
housing unit constructed in their 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
The Ordinance requires SANDAG to adjust the
minimum RTCIP fee amount on July 1 of each year,
Action: Approve
The Board of Directors is asked to approve a
2% adjustment to the Regional
Transportation Congestion Improvement
Program, raising the fee from $3,047.57 to
$3,109.88 beginning July 1, 2026.
Fiscal Impact:
The Regional Transportation Congestion
Improvement Program (RTCIP) fee would
increase from $3,047.57 to $3,109.88
beginning July 1, 2026.
Schedule/Scope Impact:
Pending SANDAG Board of Directors
approval, the adjusted RTCIP fee would
become effective July 1, 2026.
based on an analysis of construction cost indices. This annual adjustment is intended to preserve the program's purchasing power and ensure sufficient funding to address future inflation and continue improvements on the Regional Arterial System. The minimum annual adjustment required by the Ordinance is 2%.
Based on an analysis of construction cost trends and relevant indices, staff recommended a 2% fee adjustment to the RTCIP, raising the minimum RTCIP fee from $3,047.57 to $3,109.88 beginning July 1, 2026 (Attachment 1 ). This increase accounts for recent years' inflation and the Construction Cost Index, which has accelerated from its previous low pace. The Independent Taxpayer Oversight Committee was presented with the item at its February 11, 2026, meeting (Item 3.3).
Next Steps
In accordance with Ordinance provisions, each jurisdiction's RTCIP funding program must be submitted for review by the 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 April 8, 2026, ITOC meeting.
Susan Huntington, Director of Financial Planning, Budgets, and Grants Attachment: 1. Discussion Memo
5 of 9 ATTACHMENT B Agenda Packet 93 of 186
April 21, 2026, Item #4
Attachment 1
Discussion Memo
Background
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 SANDAG website. Relevant policy excerpts can be referenced in the TransNet Ordinance and SANDAG Board Policy No. 031: TransNet Ordinance and Expenditure Plan Rules.
Construction Cost Increases
SANDAG staff evaluated changes recorded in the ENR Construction Cost Index for Los Angeles (ENR CCI-LA}. 1 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 FY 2009. For over a decade (from FY 201 0 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 and FY 2026 show an abrupt drop in cost growth. Construction costs averaged 2.62% in FY 2025. Data for the first four months of FY 2026 (July to October 2025) shows a 3.9% increase over the same four months in the preceding fiscal year. The slower growth is a welcome change. It suggests that construction costs continue to feel upward pressure but are rising at a slower rate than general inflation.
10%
8%
Q)
Ol
C 6.1% cu
.J:: 6% (.)
cii
::i
C
4% C
<t:
2%
0%
Chart 1. Engineering New-Record Construction Cost Index - Los Angeles: Average Fiscal Year Change
*FY 2026 reflect a partial year from July-October
10.0%
7.9%
4.9%
3.8% 3.9%
2.6%2.9%
2. 2% 1.8%
2.6%
3.9%
1 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 Agenda Packet 94 of 186
April 21, 2026, Item #4
RTCIP Fee Increase Recommendation
Each year, SAN DAG recommends an increase in the RTCIP fee as required by the Ordinance. 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 compares the annual increases for the RTCIP fee to CCI. Between FY 2009 and FY 2025, 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 four times since FY 2009:
• 2.5% in FY 2016,
• 3.3% in FY 2019,
• 4.9% in FY 2025, and
• 6% in FY 2026.
Note, CCI data for FY 2026 is not complete. However, the first four months are tracking around 3.9% higher than in the same four months of the previous year. 10%
8%
6%
4%
2%
0%
Chart 2. Annual Increases: RTCIP Fee and CCI
*CCI for FY26 reflects a partial year from July-October
3.3%
2.5%
■ RTCIP Fee Increase -■ CCI
6.0%
4.9%
Chart 3 shows RTCIP fees and annual increases since FY 2009. FY 2025 and FY 2026 represent the largest annual adjustments to date, responding to several consecutive years of sizable construction cost increases. Between FY 2021 and FY 2024, construction costs rose by 25%, while the RTCIP fee grew by only 6%, creating a noticeable gap. The FY 2025 and FY 2026 fee increases helped to close this gap. 7 of 9 Agenda Packet 95 of 186
April 21, 2026, Item #4
Chart 3. RTCIP Fee and Annual Increases
RTCIP Incremental RTCIP¾ CCI
Fee Increase ($) increase Increase
FY 2009 $2,000.00 $-0.0% 6.1%
FY 2010 $2,040.00 $ 40.00 2.0% 1.0%
FY 2011 $2,081.00 $ 41.00 2.0% 2.2%
FY 2012 $2,123.00 $ 42.00 2.0% 1.4%
FY 2013 $2,165.00 $ 42.00 2.0% 1.3%
FY 2014 $2,209.00 $ 44.00 2.0% 3.8%
FY 2015 $2,254.00 $ 45.00 2.0% 1.8%
FY 2016 $2,310.00 $ 56.00 2.5% 2.6%
FY 2017 $2,357.00 • $ 47.00 2.0% 2.9%
FY 2018 $2,404.14 $47.14 2.0% 3.9%
FY 2019 $2,483.48 $ 79.34 3.3% 1.0%
FY 2020 $2,533.15 $ 49.67 2.0% 0.2%
FY 2021 $2,583.82 $ 50.67 2.0% 1.5%
FY 2022 $2,635.50 $ 51.68 2.0% 7.9%
FY 2023 $2,688.21 $ 52.71 2.0% 4.9%
FY 2024 $2,741.97 $ 53.76 2.0% 10.0%
FY 2025 $2,875.06 $ 133.09 4.9% 2.6%
FY 2026 $3,047.57 $ 230.01 6.0% 3.9%*
FY 2027 (recommended) $3109.88 $60.98 2.0%
*CCI increase for FY26 reflects only July through October data.
Staff Recommendation
In light of the economic uncertainty -particularly given the rapidly evolving trade policy that is impacting the supply chain for construction materials -staff recommend a 2% increase (equivalent to $60.98) to the RTCIP fee for FY 2027. This proposed increase is a return to the 2% minimum allowed by the Ordinance.
Chart 4 illustrates that the recommended increase allows the RTCIP fee to continue to close the gap between rising construction costs and the purchasing power of the RTCIP fee. At the same time, it is striking a balance between two objectives -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. 8 of 9 Agenda Packet 96 of 186
April 21, 2026, Item #4
-r-
II
Cl)
0 0
~
.c
3 0 I...
C)
"O
Q)
X
Q)
"O
C
9 of 9
1.7 1.6
1.5 1.4
1.3 1.2
1.1 1
Chart 4. CCI and RTCIP Growth Since FY 2009
*Based on four six months of FY 2026
**Based on recommendation for FY 2027
FY27
Recommended
Fee Increase:
2%
~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ {
~0000000000000000~~
-RTCIP -CCI
Agenda Packet 97 of 186