Development Impact Fee Update Study
City of Richmond
March 5, 2024
About Willdan Financial Services
2 Cost Allocation and
User Fee Studies
Development
Impact Fees
Utility Rates
Financial and Economic
Impact and Feasibility
Special District Formation
and Administration
(CFD, AD)
Bond Compliance
(IRS and SEC)
What is a Development Impact Fee?
1One-time charge
Imposed at building permit stage
Imposed on all development projects
within a defined geographic area
Funds facilities to serve new development
3 Mitigation Fee Act Findings (Govt. Code §66001)
Key findings
Need: Development creates need for facilities
Benefit: Development use of revenue
Rough Proportionality: Fee amount development’s
share of facility costs (i.e. proportional to demand)
Other findings
Purpose of fee
Use of fee revenue
4 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
6 Impact Fee Categories
Sewer Facilities
Parks
Community / Aquatic Center
Police Facilities
Fire Protection Facilities
Library Facilities
Storm Drains
**Note that Richmond Traffic Impact Fees are not being updated at this time.
Changes to Report Since Last Version
Revised library fee and methodology to incorporate latest costs and grant funding
Revised Community/Aquatic Center fee methodology to
existing standard approach
Incorporated latest impact fee fund balances, where
appropriate
Updated project costs to match City’s latest CIP
Growth Projections
2023 2040 Increase
Residents 111,924 164,220 52,296
Dwelling Units 40,871 59,968 19,097
Employment 27,587 61,815 34,228
Sources: CA DOF; ABAG; US Census’ OnTheMap Application
9 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
Planned Facilities Method
11 Fee Program Methodologies
Parks
Community / Aquatic
Centers
Fire Protection Facilities
Existing Standard
Police Facilities
Libraries
System Plan
Sewer
Storm Drain
Planned Facilities
12 Planned Facilities
13 Cost Estimate Cost Estimate
Community Centers Storm Drain Facilities
Martin Luther King Jr. Community Center $ 14,000,000 Central Avenue - West end of Van Fleet Avenue $ 676,000 32nd Street - End of Spring Street south of Freeway and railroad tracks 182,000
Police Facilities 8th-9th Street and Harbor Way 332,000 New Police Station $ 80,000,000 Plumas Ave and San Benito St. 950,000 Carlson Blvd & Tehama Ave 105,000
Fire Facilities Carlson Blvd & Tehama Ave 226,000
Gender Specific Restrooms Fire Station 66 $ 475,000 Carlson Blvd & Tehama Ave 560,000 Fire Department Regional Training Center 2,000,000 Green infrastructure along Carlson Boulevard. 2,215,000 Total Fire Facilities $ 2,475,000 Green infrastructure along Plumas Avenue. 701,000 Total Storm Drain Facilities $ 5,947,000
Library Facilities
New Library $ 29,933,657 Sewer Facilities
1.5 Dewatering Facility $ 12,135,200
Parks 2.1 Level 1 Nutrient Removal Improvements 1,712,200 Acquisition and Improvement of 150.61 Parkland Acres $ 303,328,000 2.10 Site Protection from Rock Slides 2,140,200
2.11 Low-Lift Effluent Pump Station 7,847,500
3.1 Level 2 Nutrient Removal Improvements 195,760,500
3.2 Level 3 Nutrient Removal Improvements 120,281,400
3.3 Wet Weather Improvements 193,049,500
3.4 Digested Sludge Storage (to support dewatering) 8,703,600
3.5 Biosolids Post-Processing (Dryer Facility) 42,519,400 Total Sewer Facilities $ 584,149,500
Projected Impact Fee Revenue
14 Fee Category Fee Calculation Methodology Net Project Cost Projected Impact
Fee Revenue
Additional
Funding
Required
Sewer Facilities Planned Facility Standard $ 584,149,500 $ 228,986,604 $355,162,896 Parks1 Existing Facility Standard 303,328,000 303,328,000 - Community / Aquatic Center Existing Facility Standard 33,783,200 33,783,200 - Police Facilities System Standard 80,000,000 32,771,000 47,229,000 Fire Protection Facilities Existing Facility Standard 17,641,200 17,641,200 - Library Facilities2 System Standard 29,933,657 14,747,472 15,186,185 Storm Drains Planned Facility Standard 5,947,000 2,586,945 3,360,055 Total $1,054,782,557 $ 633,844,421 $420,938,136
Note: For facility categories calculated using the existing facility standard, the projected fee revenue is equal to the costof planned facilities needed to serve new development.
1 Fee revenue shown if all development is infill development. Refer to Table 4.5 for projections of Quimby in-lieu fee revenue. 2 The City has secured $13.9 million in grants to fund the planned facilities. The remainder will be funded through the City's General Capital Fund. See Table 8.7 for more detail.
Maximum Justified Impact Fee Schedule
15 Maximum Justified Impact Fee Summary
Land Use
Sewer
Facilities1
Pa rks -
Quimby
(Subdivisions)2
Pa rks
(Infill)2
Community /
Aquatic
Center
Police
Facilities
Fire
Protection
Facilities
Library
Facilities
Storm
Drains
Total -
Subdivisions
Total -
Infill
Residential - per Sq. Ft. 7.98$ 11.32$ 11.03$ 1.23$ 0.99$ 0.46$ 0.54$ 0.03$ 22.55$ 22.26$ Nonresidential - per Sq. Ft.
Commercial 3.55$ -$ -$ -$ 0.35$ 0.32$ -$ 0.05$ 4.27$ 4.27$ Office 4.43 - - - 0.54 0.49 - 0.07 5.53 5.53 Industrial 7.09 - - - 0.19 0.17 - 0.10 7.55 7.55 Warehousing 7.09 - - - 0.06 0.05 - 0.10 7.30 7.30 2 Only charged w ithin Richmond Municipal Sew er District Boundaries.
Sources: Tables 3.5, 4.7, 5.7, 6.6, 7.9, 8.9 and 9.5.
1 A development project either pays the Quimby fee of the park infill fee, not both. Development not occurring in subdivisions is subject to the infill fee. Development in subdivisions is subject to the Quimby fee.
Staff Recommendation: Residential – Phase In Increases Over Four Years 16 Residential - Four Year Phase In
Current Year 1 Year 2 Year 3 Year 4
Parks - Quimby (Subdivisions) 4.39$ 6.12$ 7.86$ 9.59$ 11.32$ Parks (Infill) 4.39 6.05 7.71 9.37 11.03 Community / Aquatic Center 1.05 1.10 1.14 1.19 1.23 Police Facilities 0.25 0.43 0.62 0.80 0.99 Fire Protection Facilities 0.30 0.34 0.38 0.42 0.46 Library Facilities 1.19 0.54 0.54 0.54 0.54 Storm Drains 0.45 0.03 0.03 0.03 0.03 Sewer Facilities 2.29 3.71 5.14 6.56 7.98 Total (Subdivisions) 9.92$ 13.08$ 16.24$ 19.39$ 22.55$ Total (Infill) 9.92$ 13.01$ 16.09$ 19.18$ 22.26$ Staff Recommendation: Nonresidential – Phase In Increases Over Two Years 17 Nonresidential - Two Year Phase In
Current Year 1 Year 2
Office
Police Facilities 0.30$ 0.42$ 0.54$
Fire Facilities 0.26 0.38 0.49
Library 0.42 - -
Storm Drainage 0.74 0.07 0.07
Sewer 2.32 3.37 4.43
Total 4.04$ 4.24$ 5.53$
Industrial
Police Facilities 0.11$ 0.15$ 0.19$
Fire Facilities 0.19 0.17 0.17
Library 0.18 - -
Storm Drainage 0.79 0.10 0.10
Sewer 1.14 4.12 7.09
Total 2.41$ 4.54$ 7.55$
Warehousing
Police Facilities 0.11$ 0.06$ 0.06$
Fire Facilities 0.19 0.05 0.05
Library 0.05 - -
Storm Drainage 0.79 0.10 0.10
Sewer 1.14 4.12 7.09
Total 2.29$ 4.33$ 7.30$
Comparison: Single Family Residential – 1,600 Sq. Ft.
18 $-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Oakland
(Low)
Berkeley Oakland
(High)
Concord
(Low)
Richmond
(Current)
Concord
(High)
San
Leandro
(Low)
Hayward Richmond
(Maximum
Justified)
San
Leandro
(High)
Comparison: Multifamily – 20 Units
19 $-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Oakland
(Low)
Berkeley
(Low)
Oakland
(High)
San Leandro
(Low)
San Leandro
(High)
Concord
(Low)
Hayward Richmond
(Current)
Concord
(High)
Richmond
(Draft)
Comparison: Commercial – 15,000 Sq. Ft. Retail
20 $-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Hayward Oakland San Leandro
(Low)
Concord Berkeley Richmond
(Current)
San Leandro
(High)
Richmond
(Maximum
Justified)
Comparison: Industrial – 100,000 Sq. Ft.
21 $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
San Leandro
(Low)
Oakland Concord Berkeley Richmond
(Current)
Hayward San Leandro
(High)
Richmond
(Maximum
Justified)
Credit Policy
• A public facility or improvement must be included on the current adopted list of public improvements and facilities for the applicable to be considered eligible for credits toward future Impact Fees.
• Fee Credits will apply only to the “cost of the improvements,” not the related financing costs.
• Costs incurred for work not directly related to improvement of a thoroughfare will not be eligible for credit. Specifically excluded from credit calculations are costs of contaminated soils removal or remediation. • Credits shall be awarded only upon receipt of satisfactory documentation that
(i) the improvement is completed; or
(ii) land has been conveyed to and accepted by the City; or (iii) that funds for the improvement are in escrow; or
(iv) that a construction contract for the improvement has been executed; or (v) that a performance bond approved by the City Attorney has been posted to ensure completion.
22 Credit Policy
• A public facility or improvement must be included on the current adopted list of public improvements and facilities for the applicable to be considered eligible for credits toward future Impact Fees.
• Fee Credits will apply only to the “cost of the improvements,” not the related financing costs.
• Costs incurred for work not directly related to improvement of a thoroughfare will not be eligible for credit. Specifically excluded from credit calculations are costs of contaminated soils removal or remediation. • Credits shall be awarded only upon receipt of satisfactory documentation that
(i) the improvement is completed; or
(ii) land has been conveyed to and accepted by the City; or (iii) that funds for the improvement are in escrow; or
(iv) that a construction contract for the improvement has been executed; or (v) that a performance bond approved by the City Attorney has been posted to ensure completion.
23 Questions from City Council
Question: The warehouse fees are proposed to go down
for certain fee categories. I think these fees should be higher because warehouses don't provide much benefit
(few jobs, not meeting a service gap, and make areas less safe). Also, the warehouse industry is booming.
Response:
• While warehouse land uses may not provide the desired benefits cited above, that is not justification to charge them higher fees.
• The fees must be proportional to demand created for
facilities.
• These fees are lower than other land uses because
warehouses have relatively low employment density per
1,000 square feet of building space.
• Employment density for warehouse uses has been
decreasing over time as warehousing and distribution
facilities become increasingly automated.
24 Table 2.2: Occupant Density
Residential 2.72 Residents per Dwelling Unit
Nonresidential
Commercial 2.12 Employees per 1,000 square feet
Office 3.26 Employees per 1,000 square feet
Industrial 1.16 Employees per 1,000 square feet
Warehousing 0.34 Employees per 1,000 square feet Sources: U.S. Census Bureau, 2021 American Community Survey 1-Year Estimates, Tables B25024 and B25033; ITE Trip Generation Manual, 11th Edition; Willdan Financial Services.
Questions from City Council
Question: The residential fee is already in the medium range compared to similar cities and if it was raised to the maximum allowable it would be really high. The cost of building housing is already high in the region, so keeping residential development fees low is one way to make it more feasible for new housing to be built. Also, new housing raises revenue in other ways (transfer fee, property taxes). What can be a more fair rate for this fee? Response:
• The City Council can always adopt a fee lower than the maximum justified.
Some cities chose to implement a fraction of the max fees to incentivize certain kinds of development.
• If the City adopts a fee that is lower than the maximum justified then other City funding must be used to expand facilities, or the level of service will decline.
• Other funding sources would have to be allocated to fund capital facilities to serve new development
25 The chart lists the various
proposed projects as listed in
Richmond Parks Assessment of
Soccer Fields.
Park Impact Fee revenue can be
used in these types of projects that
expand the capacity of current
parks and new parks.
Parks Master Plan Projects
26 Questions from City Council
Question: The Industrial and Commercial fees are hard to know how to judge.
Are the maximum allowable increases so high they would discourage businesses trying to move/expand here?
Response:
• The majority of recent nonresidential development has been mixed-use buildings and new light industrial/warehouse/logistic uses.
• There are not many entitled/anticipated nonresidential projects in the near term. • There is one hotel project in the Hilltop area under review and an entitled boat repair facility.
• The recent activity around warehousing has significantly slowed down. • Staff thinks the biggest factor for feasibility of nonresidential projects is the interest rates and will continue to monitor the issue during the first year and report back to Council before the year two fees go into effect. 27 Next Steps
• Revise fee study (if needed)
• Hold public hearing to adopt nexus study and fee schedules (April 16) • Transportation impact fee study
• Completion of Long Range Transportation Infrastructure Planning Study by end of calendar year
• Updated Transportation impact fee study to City Council in Spring of 2025
28 Questions
29