CITY OF SAN MATEO
CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 6 Section Name: CONSENT CALENDAR Account Number: 10-2011 File ID: 25-10595 TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Finance Department
MEETING DATE: November 17, 2025
SUBJECT:
Development Impact, In-Lieu, Linkage Fees and Wastewater Capacity Charges – Annual Report RECOMMENDATION:
Adopt a Resolution to make findings and accept the annual report on receipt and use of development impact fees, in-lieu fees, linkage fees and wastewater capacity charges for the year ended June 30, 2025.
BACKGROUND:
The Finance Department prepares the annual report on the receipt and use of development impact fees, in-lieu fees, linkage fees and wastewater capacity charges each year within 180 days of the end of the fiscal year. The proposed resolution with required findings is included as Attachment 1, and the annual report for the fiscal year ending June 30, 2025, is included as Attachment 2. The report discusses the status and use of four main types of fee revenues.
Development Impact Fees
The City of San Mateo assesses the following development impact fees – Wastewater Treatment Plant Phase II Expansion Fee, Transportation Improvement Fee, and Park Impact Fee.
Local governments often charge fees as a condition of approval for development projects to fund public improvements in order to compensate for the demands that the developments have on public resources. These fees are commonly known as development impact fees. In 1989, the State Legislature passed Assembly Bill 1600 (AB 1600), which added Sections 66000 et seq. to the California Government Code, commonly known as the Mitigation Fee Act. Government Code Section 66006 requires that the City make available to the public the following information regarding development impact fees within 180 days after the end of each fiscal year:
1. A brief description of the type of fee.
2. The amount of the fee.
3. The fee’s beginning and ending balances for the fiscal year.
4. Total fees collected and the interest earned, if applicable.
5. Identification of each public improvement on which impact fees were expended and the amount of expenditure on each improvement, including the total percentage of the cost of the public improvement that was funded with impact fees.
6. Identification and timeline of public improvements any unexpended fees will be used for. a. This information is listed in Exhibit A to the Resolution. Exhibit A shows the five-year plan for public improvement projects and their anticipated expenditures related to the Mitigation Fee Act and Quimby Act. Specific details on each of the projects listed in Exhibit A can be found in the five-year capital improvement program section in the City’s 2025-26 budget, which was adopted by City Council on June 16, 2025.
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7. Description and uses for transfers or loans of fees, if applicable.
8. Amounts of any refunds and allocations.
Further, the Mitigation Fee Act requires that findings describing the continuing need for impact fees be made every five years specifying the intended use of any unexpended impact fees, regardless of whether the fees are committed or uncommitted. If findings are not presented as scheduled, the City may be obligated to go through a refunding procedure. The City is opting to make such findings every year.
The Council is asked to make the following findings regarding development impact fees collected but not expended:
1. Development impact fees are collected to mitigate direct and indirect impacts from development.
2. These funds are expended in a timely manner to fund continued improvements to public facilities related to the increased demand on the facilities resulting from development.
3. There is a reasonable relationship between these impact fees and their purpose.
4. These impact fees continue to be required to fund applicable improvements, and as such, these fees will continue to be collected for utilization solely for their intended purpose.
These findings are detailed in the proposed resolution included as Attachment 1.
In-Lieu Fees
In-lieu fees are fees that are collected by the City instead of requiring developers to provide or construct specified improvements or amenities with their projects. The City of San Mateo assesses five in-lieu fees – Parking In-Lieu Fee, Art in Public Places Fee, Tree Replacement Fee, Below Market Rate Housing Fee, and Park In-Lieu Fee.
Park In-Lieu Fees are assessed pursuant to the Quimby Act under Government Code Section 66477. The other in-lieu fees do not have statutory reporting requirements but are included in this report for informational purposes. In an abundance of caution, and based on recent caselaw, this report and resolution include the same reporting requirements and findings for in-lieu fees that apply to impact fees. Under the Quimby Act, local governments may require the dedication of land for parks or the payment of fees in-lieu of land dedication as a condition of subdivision map approval.
While park in-lieu fees are exempt from the reporting requirements included in the Mitigation Fee Act, these fees have separate Quimby Act reporting requirements, specifically:
1. The City must develop a schedule specifying the use of land or fees to develop park or recreational facilities to serve the residents of the subdivision.
2. Any Quimby fees collected must be committed within five years after the payment of the fees or the issuance of building permits on one-half of the lots created by the subdivision, whichever occurs later.
3. If not committed, the fees shall be distributed and paid to the record owners of the subdivision in the same proportion that the size of the lot bears to the total area of lots within the subdivision (Gov. Code section 66477(a)(6)).
Linkage Fees
Linkage fees are exactions for social needs indirectly related to development projects. The City of San Mateo assesses two linkage fees – Child Care Development Fee and Affordable Housing Commercial Linkage Fee. While these are linkage fees, they are included in this report with reporting requirements under the Mitigation Fee Act for informational purposes and to make sure that information is available in the event that a court rules in the future that linkage fees are subject to the reporting requirements of the Mitigation Fee Act.
Wastewater Capacity Charges
Under the Mitigation Fee Act, water or wastewater capacity charges must be deposited in a separate capital facilities fund and not comingled with other funds, and the City can only spend the funds for the purpose for which the charge was collected. Government Code Section 66013(d) requires that the City make available to the public the following information regarding wastewater capacity charges within 180 days after the end of each fiscal year:
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1. A description of the charges.
2. The charges’ beginning and ending balances for the fiscal year.
3. Total charges collected and the interest earned, if applicable, during the fiscal year.
4. Identification of all the following:
a. Each public improvement on which charges were expended and the amount of the expenditure for each improvement, including the percentage of the total cost of the public improvement that was funded with those charges if more than one source of funding was used. b. Each public improvement on which charges were expended that was completed during that fiscal year. c. Each public improvement that is anticipated to be undertaken in the following fiscal year.
5. A description of each interfund transfer or loan made from the capital facilities fund. The information provided, in the case of an interfund transfer, shall identify the public improvements on which the transferred moneys are, or will be, expended. The information, in the case of an interfund loan, shall include the date on which the loan will be repaid, and the rate of interest that the fund will receive on the loan.
The annual report complies with requirements of the Mitigation Fee Act and the Quimby Act outlined above.
BUDGET IMPACT:
There is no budget impact resulting from this report.
ENVIRONMENTAL DETERMINATION:
The acceptance of the annual report on the receipt and use of development impact fees, in-lieu fees, linkage fees and wastewater capacity charges is not a project subject to CEQA, because it is an administrative activity that will not impact the environment and is therefore exempt from CEQA review in accordance with CEQA Guidelines section 15378(b)(5).) NOTICE PROVIDED:
In accordance with Government Code Section 66006, all meeting noticing requirements were met. This information was made available to the public at least 15 days before the meeting.
ATTACHMENTS
Att 1 – Proposed Resolution
Exhibit A – Public Improvement Project Expenditures Related to the Mitigation Fee Act and Quimby Act Five-Year Plan
Att 2 – Annual Report: Receipt and Use of Development Impact Fees, In-lieu Fees, Linkage Fees and Wastewater Capacity Charges
STAFF CONTACT
Abby Veeser, Finance Director
[email protected]
(650) 522-7102