11/4/2025 Item # 6
City Council
Action to Amend Section 17.35.080 of the
Santa Clara City Code to temporarily
authorize a deferral for the payment of park-
in lieu fees for residential developments
rom building permit to certificate o
cupany or final building inspectior
subject to certain conditions and to bring the
code into compliance with state law.
1852
THE MISSION CIT
Reena Brilliot, Economic Development Director
Agenda Item #6, (RTC # 25-1555)
November 4, 2025
1 Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Canter of Which Possible
2025 Unit Openings
• To date in 2025: 2,361 new residential
units have opened.
- 10 high density projects
• Two 100% affordable projects
2 POST MEETING MATERIAL
1 11/4/2025 Item #6
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Center of Whats Possible:
Urban Land Institute Special Meeting
• Special Council Meeting presented by ULI i Saa Francisco on Feb 13, 2025 presented challenging State of Santa Clara Real Estate economic conditions shaping project and Development Market feasibility for new construction (Special City Council Session) multifamily housing:
- Rising labor costs
- Rising material costs due to inflation
- Rising material costs due to tariffs
- High interest rates for financing 3
3 Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Center of Whats Possible
Housing Production Process
Building Certificate
Permit of
Issued Occupancy
Issued
Entitlement / Building Construction
Predevelopment Plan Review
Planning
Project Obtains Typically 1-3 years
Construction Financing
4 11/4/2025 Item # 6
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Conterp! Whats Possible
Slowdown of Housing Pipeline
• In comparison to prior years since 2018, YIELD
when building permits were issued for
approximately 1,000 units annually,
permit issuance has declined significantly
in 2024 and 2025:
- 114 units in 2024
- 511 units in 2025
5 Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Centeruf Whith Positi
SB 937 Deferral of Impact Fees
"designater
• Local gove events must delay collection of certain impact fees for - Fees typically collected at Building Permit Issuance
- SB 937 delays impact fee collection to Certificate of Occupancy • Purpose of Fee Deferral to Certificate of Occupancy
- Minimizes the impact of market fluctuations and high interest rates - Impact fees can be excluded from construction loans, which have higher interest rates than subsequent permanent financing
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3 11/4/2025 Item #6
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Caster of Weird Possible
SB 937 Qualified Projects
• SB 937 defines "designated residential development" as any residential development that meets
- (1) dedicates 100% of units to lower income households; - (2) Low Barrier Navigation Centers;
- (3) is approved through streamlined ministerial review as authorized by AB 2011; - (4) is approved through streamlined ministerial approval and meets the requirements of Government Code section 65913.4(a);
- (5) SB 4 projects that allow for affordable housing on the lands of faith-based uses or public universities;
- (6) is entitled to a density bonus pursuant to state density bonus law, or - (7) that include 10 or fewer units.
7 Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
Limitations of SB 937
• Not all projects will be eligible for SB 937's fee deferral - Likely not to qualify are Projects entitled before State's most recent version of Density bonus law took effect on Jan 1, 2023 - Projects that provide their affordable housing unit contribution in an off- site arrangement
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11/4/2025 Item # 6
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Center of Whut, Possible
Expansion of Deferral for Parks In-Lieu Fees
• Proposal to offer fee deferral for Parks in-lieu fees for all housing projects to allow collection at Certificate of Occupancy or Final Inspection instead of prior to Building Permit issuance. 9 Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Center of shoot Polida
Parks In-Lieu Fees
• The City charges, in compliance with the State's Mitigation Fee Act, parks impact fees for all housing projects.
• There are also Quimby fees to support parkland that apply to for any projects including subdivision.
• The City uses the fee schedule before a project is deemed complete and before hearing of the their planning application to determine the amount owed in-lieu park fees to the City.
• In-lieu park fees are reduced if parkland is being dedicated and/or for private recreational amenities.
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11/4/2025 Item # 6
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Conter of Whot Peasible
Why a Deferral of In-Lieu Parks Fee?
• Parks in-lieu fee is often the largest fee collected by the City for residential development projects.
• The parks in-lieu fee is associated with park improvements off-site from the project site.
• Need more time to analyze broader deferral opportunities for other impact fees.
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Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Centered Wilsons Possible
Time Sensitive Opportunity
СмоН 2025. CALIFORNIA 2025 EVEN 2025
• State 2025 Building Standards Code
takes effect January 1, 2026.
го 2025 mORNT 202 2025
KOTICE C
Projects reviewed under earlier codes
now required to be issued building
permit under previous code reviewed
under or need to resubmit new plans смону 2025 саговна 2025 a code
and pay fees for new 2025 Code.
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6 11/4/2025 Item # 6
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Geater of What Possible
Alignment with State Law
• Proposed ordinance change brings the City's Code into compliance with state law by clarifying that, when required by law, payment of the parks impact fee will be deferred.
• Parks In-Lieu Fee Deferral Agreement: State law allows cities to enter into an agreement for deferral. Included is the form agreement for all in-lieu park fee deferral requests.
• The deferral agreement is to be executed prior to the issuance of the Building Permit and runs with the land.
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Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Center of that Possible
Safeguards
• Staff analysis of each fee deferral proposal that does not qualify under SB 937.
• City Manager to have discretion to deny deferral proposals that will negatively affect the City's park expansion efforts.
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Item #6
11/4/2025
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Conterol What? Popsitin
Fee Deferral Process
• SB 937 Projects: • All Other Housing Projects:
1. Parks In-Lieu Fee 1. All impact fees, except parks in-lieu fee, Deferral agreement paid prior to Building Permit issuance executed 2. For Parks in-lieu fee, analysis to confirm
2. Building Permit issued that specific project's deferral will not
3. All Impact Fees paid negatively impact parks expansion efforts
3. Fee deferral agreement executed
Doria Certicate of
4. Building Permit issued
Inspection 5. Parks in-lieu fees paid at Certificate of Occupancy
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Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Cantee of What Postitey
Temporary Modifications
• Iwo-year period for expanded deferral of parks in-lieu fee.
Applies to projects that receive a building permit prior December 31, 2027
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8 11/4/2025 Item #6
City of
Santa Clara
Ton Carmin You Posit
Recommendation
1. Waive first reading and introduce an ordinance amending Chapter 17.35 (Park and Recreational Land) Section 17.35.080 (Procedure) of the Santa Clara City Code to temporarily authorize a deferral of the payment of park-in lieu fees of residential developments to certificate of occupancy or final building inspection, subject to certain conditions and to bring the code into compliance with state law.
2. Approve a standard form Park In-Lieu Fee Deferral Agreement and Notice of Lien with Power of Sale, on the terms and in substantially the form presented, authorize City Manager to modify the agreement as needed for individual projects, and execute the finalized agreement subject to approval as to form by the City Attorney.
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City Council
Item #6 Action to Amend Section
17.35.080 of the Santa Clara City Code to
AT CLARA CARO emporarily authorize a deferral for th
ayment of park-in lieu fees for
residential developments from building
CITY OF permit to certificate of occupancy or final
building inspection, subject to certain
conditions and to bring the code into
1852 compliance with state law.
THE MISSION CITY
Reena Brilliot, Economic Development Director
Agenda Item #6, (25-1555)
November 4, 2025
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9 Item # 6
11/4/2025
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Center of What Peesible
Trade-offs
• With this change, Parks In-Lieu Fees will be collected prior to issuance of Certificate of Occupancy/Final Inspection, which is one to three years after the current practice of collecting fees prior to the issuance of the Building Permit.
• The deferral of fees may delay the use of the funding and result in less buying power for those fees.
• City Manager's discretion to deny deferral proposals can mitigate/prevent unanticipated consequences to parks expansion efforts.
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Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The: Cariter al What) Possible
SB 937's Greatest Applicability to Santa Clara
Projects
• SB 937 defines "designated residential development" as any residential development is entitled to a density bonus pursuant to state density bonus law • A project qualifies for density bonus if it meets specified affordability requirements, including projects that have 10% of units affordable to households earning at or below 80% Area Median Income (AMI). The City of Santa Clara has an affordable housing ordinance that specifies that housing projects must have a minimum of 15% of units affordable to households earning 100% AMI.
• To comply with the City's affordable housing ordinance, many projects spread their required units across affordability brackets, placing some of the 15% of units below 100% AMI and some units above 100% AMI to provide an average of 100% AMI for the required units. This affordability spread is often strategically done to have projects meet the City's Affordable Housing Ordinance and be eligible for state density bonus law. 20 20
10 11/4/2025 Item # 6
Parks In-Lieu Fee Deferral to Facilitate Housing Construction City of Santa Clara
The Ceriter of Whot Poositie
Fee Deferral Process
• SB 937 projects - → Fee deferral agreement executed → Building Permit issued * impact fees paid at Certificate of Occupancy
• All other housing development projects :
- All impact fees, except parks in-lieu fee, paid prior to Building Permit issuance - For Parks in-lieu fee - → analysis to confirm that specific project's deferral will not negatively impact parks expansion efforts → Fee deferral agreement executed → Building Permit issued— → impact fees paid at Certificate of Occupancy 21 21
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