Final Report
ADU Impact Fee Study
May 13, 2022
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Executive Summary.................................................................................................. S-1 Organization of This Report ......................................................................................... S-1 Existing and Proposed ADU Impact Fees ..................................................................... S-2 The Proportionality Requirement ................................................................................ S-3 Conclusion .................................................................................................................... S-4 Chapter 1. Introduction ............................................................................................ 1-7 Purpose......................................................................................................................... 1-7 Definitions .................................................................................................................... 1-7 Impact Fees Limitations for ADUs ................................................................................ 1-7 How The Mitigation Fee Act Applies to ADU Impact Fees ........................................... 1-9 Legal Framework for Impact Fees ................................................................................ 1-9 Impact Fee Calculation Methodology ........................................................................ 1-13 Facilities Addressed in this Study ............................................................................... 1-13 Chapter 2. Impact Fee Analysis ................................................................................. 2-1 Demand Variables for ADU Impact Fees ...................................................................... 2-1 Population-Based Impact Fees ..................................................................................... 2-2 Police and Fire Protection Impact Fees ........................................................................ 2-3 Transportation Impact Fees ......................................................................................... 2-4 Sewer Main and Treatment Plant Connection Fees .................................................... 2-5 Other Impact/Mitigation Fees...................................................................................... 2-6 Proposed Schedule of ADU Impact Fees ...................................................................... 2-7 Chapter 3. Proportional Impact Fees for ADUs .......................................................... 3-1 Square Footage Proportionality for ADU Impact Fees ................................................. 3-1 Applying Proportional ADU Impact Fees ...................................................................... 3-1 Mitigating Unfairness in Proportional ADU Impact Fees ............................................. 3-2 Chapter 4. ADU Impact Fee Policy Comparison ......................................................... 4-1
City of Visalia Page S-1
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California law governing accessory dwelling units (ADUs) and the imposition of impact fees on ADUs has been evolving rapidly over the past two years. The City of Visalia has engaged NBS to study its impact fees for ADUs and to recommend ways of structuring ADU impact fees that meet the requirements of recent legislation.
We can start by quoting from some key provisions of Government Code Section 65852.2, as amended by AB 3182.
Paragraph 65852.2 (f) (1) refers to relevant portions of the Mitigation Fee Act and makes it clear that impact fees imposed on ADUs are subject to the requirements of that Act:
“Fees charged for the construction of accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000) and Chapter 7 (commencing with Section 66012).”
Paragraph 65852.2 (f) (3) (A) reads as follows.
“A local agency, special district, or water corporation shall not impose any impact fee upon the development of an accessory dwelling unit less than 750 square feet. Any imp act fees charged for an accessory dwelling unit of 750 square feet or more shall be charged proportionately in relation to the square footage of the primary dwelling unit.”
The first sentence of Paragraph 65852.2 (f) ( 3) (A), above, clearly states that no impact fees may be imposed on an ADU of less than 750 square feet. Because it mentions special districts and water corporations, we believe that restriction also applies to water and sewer capacity charges.
It is the second sentence of Paragraph 65852.2 (f) (3) (A), that makes impact fees for ADUs complicated under the new law. That paragraph requires impact fees for ADUs of 750 square feet or larger to be based on the proportional relationship between the square footage of the ADU and the square footage of the primary unit. Because that relationship will differ from case-to-case, there is no way to avoid calculating impact fees for ADUs of 750 square feet or larger on a case-by-case basis.
Organization of This Report
Chapter 1 of this report includes relevant definitions and discusses both the limitations imposed on ADU impact fees by recent legislation and the requirements of the Mitigation Fee Act as it applies to all impact fees, including those for ADUs.
Chapter 2 calculates impact fees for accessory dwelling units based on the requirements of the Mitigation Fee Act, without applying the proportionality requirement of Paragraph 65852.2 (f) (3) (A). Those fees would apply only in circumstances where the proportional relationship between the square footage of the ADU and the square footage of the primary unit is such that it does not require those fees to be reduced.
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Chapter 3 addresses the proportionality requirement and how it interacts with the impact fees that would otherwise apply to ADUs. It also discusses the potential inequities that may result from the application of the proportionality requirement, which has the effect of increasing impact fees for ADUs associated with smaller primary units and reducing the impact fees for ADUs associated with larger primary units. The formula for the proportionality calculation is:
Primary unit impact fee X (ADU square feet / Primary unit square feet) Chapter 4 compares the policies adopted by a number of California cities and one county with respect to the imposition of impact fees on ADUs. More on that below.
Existing and Proposed ADU Impact Fees
Table ES.1 summarizes the City’s existing impact fees for ADUs. The impact fees shown in Table ES.1, which became effective in 2 021, are lower than the impact fees the City was charging under a schedule adopted in 2019. The 2019 ADU impact fees totaled $9,114.00.
For comparison, Table ES.2 summarizes proposed ADU impact fees calculated by NBS in Chapter 2, based on the estimated impacts of ADUs relative to the impacts of a single - family dwelling unit. In other words, those fees are intended to meet the reasonable relationship standard spelled out in the Mitigation Fee Act.
Table ES.1: 2021 ADU Impact Fees
Impact Fee Impact Fee
Type per ADU
Park Acquisition 1
1,127.00$
Park Development 1
1,522.00$
Civic Center 1
322.00$
Corporation Yard 1
52.00$
Library 1
43.00$
Fire Facilities No Fee
Police Facilities No Fee
Transportation 2
2,269.00$
Subtotal w/o Sewer 5,335.00$
Sewer Main Connection 3 78.00$
Treatment Plant Connection 4
446.00$
Total 5,859.00$
1 Based on Mobile Home fee
2 Based on Senior/Assisted Living fee
3 Based on Hotel/Motel fee
4 Based on Hotel with Dining Facility fee
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As discussed in Chapter 2, an impact fee for Police facilities was calculated in this study and is shown in Table ES.2 to provide the City Council with the option to charge that fee in the future should it choose to do so. The City does not currently charge an impact fee to ADUs for Police facilities, and City staff take the position that fee may not be justified because construction of ADUs in single -family zoning districts may not increase the density above that allowed by the zoning ordinance.
Also, a s indicated in the footnote to T able ES.2, NBS was unable to find a basis for calculating either sewer main or treatment plant connection fees based on the impacts of an ADU. Consequently, the two sets of fees in Table ES.1 and Table ES.2 can be compared only by excluding the sewer main and treatment plant connection fees.
Excluding those fees, the impact fees in Table ES.2 are 19% higher than the existing fees shown in Table ES.1.
The Proportionality Requirement
Even if the City were to adopt the schedule of impact fees for ADUs shown in Table ES.2, those fees would have to be tested against the proportionality requirement of Government Code Section 65852.2 every time they are applied. And it is likely that the proportionality test would require that the proposed fees be reduced for a substantial number of new ADUs.
Table ES.2: Proposed ADU Impact Fees from Chapter 2
Impact Fee Impact Fee
Type per ADU
Park Acquisition 1,061.11$
Park Development 1,432.99$
Civic Center 302.84$
Corporation Yard 49.27$
Library 39.12$
Fire Facilities No Fee
Police Facilities 1 264.74$
Transportation 3,830.73$
Sewer Main Connection 2 See Note
Treatment Plant Connection 2 See Note
Total 6,980.81$
1 The City does not currently charge a police facilities impact for ADUs; a police facilities impact fee was calculated in this report to provide the City Council with the option to charge that fee in the future if it chooses to do so
2 NBS was unable to find a basis to calculate sewer
main connectionimpact fees or treatment plant connection impact fees for ADUs
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So, the City is faced with a choice as to whether it should adopt a standard schedule of impact fees for ADUs and then check those fees against the proportionality standard each time they are applied to an ADU, or simp ly to calculate proportional impact fees for the ADU in each case based on the impact fees that apply to the primary unit. As discussed in Chapter 4, most California cities we surveyed set impact fees for ADUs over 750 square feet by applying the proportio nality requirement contained in the Government Code .
That appears to be the simplest alternative available to Visalia.
The other issue the City may want to consider with respect to the ADU impact fees is that the proportionality requirement has the potential to create some inequities, resulting in lower fees for ADUs associated with larger primary units and higher fees for ADUs associ- ated with smaller primary units. Chapter 3 of this report discusses possible ways of miti- gating those inequities.
The only example we found of an agency attempting to address those potential inequities was Sacramento County. That county has adopted ordinances that provide for propor- tional impact fees, with an option to choose an alternative impact fee if that fee is lower than the proportional fee. But we did not find opportunities in Visalia’s impact fee sched- ule to use a similar approach and any alternative would likely make administration of the City’s ADU impact fees quite cumbersome.
Conclusion
On balance, given the constraints of State law pertaining to the imposition of impact fees on ADUs larger than 750 square feet, we recommend that the City calculate those impact fees on a case-by-case basis using the proportionality formula derived from Government Code Section 65852.2.
The proportionality calculation would have to be made for each of the following impact or connection fees:
• Park Acquisition
• Park Development
• Civic Center
• Corporation Yard
• Library
• Transportation
• Sewer
• Sewer Main
• Treatment Plant
The Police and Fire facilities impact fees are not included here because the City does not currently charge those fees to ADUs.
To simplify calculation of ADU impact fees case-by-case, NBS has developed a matrix that allows City staff and applicants to quickly and easily determine the decimal factor that
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can be applied to a standard impact fee to determine the amount of the proportional ADU impact fee. That matrix is shown on the next page . The appropriate factor can be determined by selecting the row corresponding to the square footage of the primary unit and the column corresponding to the square footage of the ADU. The cell where the row and column intersect shows the appropriate decimal factor.
For example, where the primary unit is close to 1,800 square feet and the ADU is close to 800 square feet, the decimal factor is 0.444. To determine the proportional impact fee for a particular ADU, all that’s necessary is to multiply that factor by the amount of the impact fee for a single-family unit.
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750 800 850 900 950 1000 1050 1100 1150 1200
1500 0.500 0.533 0.567 0.600 0.633 0.667 0.700 0.733 0.767 0.800 1550 0.484 0.516 0.548 0.581 0.613 0.645 0.677 0.710 0.742 0.774 1600 0.469 0.500 0.531 0.563 0.594 0.625 0.656 0.688 0.719 0.750 1650 0.455 0.485 0.515 0.545 0.576 0.606 0.636 0.667 0.697 0.727 1700 0.441 0.471 0.500 0.529 0.559 0.588 0.618 0.647 0.676 0.706 1750 0.429 0.457 0.486 0.514 0.543 0.571 0.600 0.629 0.657 0.686 1800 0.417 0.444 0.472 0.500 0.528 0.556 0.583 0.611 0.639 0.667 1850 0.405 0.432 0.459 0.486 0.514 0.541 0.568 0.595 0.622 0.649 1900 0.395 0.421 0.447 0.474 0.500 0.526 0.553 0.579 0.605 0.632 1950 0.385 0.410 0.436 0.462 0.487 0.513 0.538 0.564 0.590 0.615 2000 0.375 0.400 0.425 0.450 0.475 0.500 0.525 0.550 0.575 0.600 2050 0.366 0.390 0.415 0.439 0.463 0.488 0.512 0.537 0.561 0.585 2100 0.357 0.381 0.405 0.429 0.452 0.476 0.500 0.524 0.548 0.571 2150 0.349 0.372 0.395 0.419 0.442 0.465 0.488 0.512 0.535 0.558 2200 0.341 0.364 0.386 0.409 0.432 0.455 0.477 0.500 0.523 0.545 2250 0.333 0.356 0.378 0.400 0.422 0.444 0.467 0.489 0.511 0.533 2300 0.326 0.348 0.370 0.391 0.413 0.435 0.457 0.478 0.500 0.522 2350 0.319 0.340 0.362 0.383 0.404 0.426 0.447 0.468 0.489 0.511 2400 0.313 0.333 0.354 0.375 0.396 0.417 0.438 0.458 0.479 0.500 2450 0.306 0.327 0.347 0.367 0.388 0.408 0.429 0.449 0.469 0.490 2500 0.300 0.320 0.340 0.360 0.380 0.400 0.420 0.440 0.460 0.480 2550 0.294 0.314 0.333 0.353 0.373 0.392 0.412 0.431 0.451 0.471 2600 0.288 0.308 0.327 0.346 0.365 0.385 0.404 0.423 0.442 0.462 2650 0.283 0.302 0.321 0.340 0.358 0.377 0.396 0.415 0.434 0.453 2700 0.278 0.296 0.315 0.333 0.352 0.370 0.389 0.407 0.426 0.444 2750 0.273 0.291 0.309 0.327 0.345 0.364 0.382 0.400 0.418 0.436 2800 0.268 0.286 0.304 0.321 0.339 0.357 0.375 0.393 0.411 0.429 2850 0.263 0.281 0.298 0.316 0.333 0.351 0.368 0.386 0.404 0.421 2900 0.259 0.276 0.293 0.310 0.328 0.345 0.362 0.379 0.397 0.414 2950 0.254 0.271 0.288 0.305 0.322 0.339 0.356 0.373 0.390 0.407 3000 0.250 0.267 0.283 0.300 0.317 0.333 0.350 0.367 0.383 0.400 3050 0.246 0.262 0.279 0.295 0.311 0.328 0.344 0.361 0.377 0.393 3100 0.242 0.258 0.274 0.290 0.306 0.323 0.339 0.355 0.371 0.387 3150 0.238 0.254 0.270 0.286 0.302 0.317 0.333 0.349 0.365 0.381 3200 0.234 0.250 0.266 0.281 0.297 0.313 0.328 0.344 0.359 0.375 3250 0.231 0.246 0.262 0.277 0.292 0.308 0.323 0.338 0.354 0.369 3300 0.227 0.242 0.258 0.273 0.288 0.303 0.318 0.333 0.348 0.364 3350 0.224 0.239 0.254 0.269 0.284 0.299 0.313 0.328 0.343 0.358 3400 0.221 0.235 0.250 0.265 0.279 0.294 0.309 0.324 0.338 0.353 3450 0.217 0.232 0.246 0.261 0.275 0.290 0.304 0.319 0.333 0.348 3500 0.214 0.229 0.243 0.257 0.271 0.286 0.300 0.314 0.329 0.343
ADU SQUARE FEET
PRIMARY UNIT SQUARE FEET
City of Visalia Page 1-7
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Purpose
The purpose of this study is to develop a schedule of impact fees for accessory dwelling units (ADUs) in Visalia. Over the past few years, the State of California has enacted several laws intended to promote construction of ADUs as a way of alleviating a critical housing shortage that is making housing unaffordable for many families. Among other things, those law s restrict the imposition of impact fees on ADUs. Some recent legislation on ADUs addresses other issues, such as the process for approving applications for ADUs and eliminating owner-occupancy requirements for ADUs, but those matters are beyond the scope of this report.
Definitions
To understand the legal restrictions on impact fees for ADUs, it is important to define some of the terms used in the laws governing those fees. “Accessory Dwelling Unit” or “ADU” is a secondary dwelling unit on a lot occupied b y a primary dwelling unit. ADU’s may be attached to or detached from the primary unit or may consist of converted space within an existing primary unit. The primary unit may be either a single-family unit or a multi-family unit.
For jurisdictions without a local ordinance limiting the size of ADUs, the maximum size for a detached ADU under State law is 1,200 square feet. For attached ADUs the square footage may be up to 50% of the floor area of the existing primary unit, but not less than 800 square feet. Local agencies may limit the size of detached ADUs to 850 square feet, or 1,000 square feet if the unit has more than one bedroom. Local agencies also have the option of increasing the maximum size for ADUs.
“Junior Accessory Dwelling Unit” or “JADU” is a unit converted from existing space in a single-family unit. A JADU may not exceed 500 square feet. A single lot may have both an ADU and a JADU.
Impact Fees Limitations for ADUs
Recent legislation has limited the imposition of impact fees on ADUs in sever al ways. No impact fees may be charged to JADUs or ADUs smaller than 750 square feet. For those ADUs that are subject to impact fees, those fees must be proportional to the fees that would be charged to a primary unit, based on the square footage of the AD U and the square footage of the primary unit. Paragraph 65852.2 (f) (3) (A) of the Government Code, as amended by AB 3182 reads, in part:
“Any impact fees charged for an accessory dwelling unit of 750 square feet or more shall be charged proportionately in relation to the square footage of the primary dwelling unit.”
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For example, if the primary unit is 2,000 square feet and the ADU is 1,000 square feet, the impact fees charged for the ADU would be limited to 50% of the fees that would apply to the primary unit. That rule can create inequities, because the larger the primary unit the smaller the fees for the ADU. That limitation applies to both impact fees and fees in lieu of park land dedication under the Quimby Act.
With respect to impact fees for water or sewer service, Government Code Section 65855.2 seems to contain conflicting provisions. Paragraph 65852.2 (f) (2) reads:
“An accessory dwelling unit shall not be considered by a local agency, special district, or water corporation to be a new residential use for purposes of calculating connection fees or capacity charges for utilities, including water and sewer service, unless the accessory dwelling unit was constructed with a new single -family dwelling.”
That language appears to mean that agencies may not charge water or sewer impact fees to ADUs except when they are constructed with a new single -family dwelling. However, paragraph 65852.2 (f) (5), below, states that proportionate water and sewer impact fees may be charged to ADUs, except for JADUs or ADUs within the space of a single -family dwelling as described in subparagraph (A) of paragraph (1) of subdivision (e). “For an accessory dwelling unit that is not described in subparagraph (A) of paragraph (1) of subdivision (e), a local agency, special district, or water corporation may require a new or separate utility connection directly between the accessory dwelling unit and the utility. Consistent with Section 66013, the connection may be subject to a connection fee or capacity charge t hat shall be proportionate to the burden of the proposed accessory dwelling unit, based upon either its square feet or the number of its drainage fixture unit (DFU) values, as defined in the Uniform Plumbing Code adopted and published by the International Association of Plumbing and Mechanical Officials, upon the water or sewer system. This fee or charge shall not exceed the reasonable cost of providing this service.” The ADU Handbook 2020 published by the Department of Housing and Community Development (HCD) contains the following language.
“ADUs converted from existing space and JADUs shall not be considered by a local agency, special district or water corporation to be a new residential use for purposes of calculating connection fees or capacity charges f or utilities, unless constructed with a new single -family dwelling. The connection fee or capacity charge shall be proportionate to the burden of the proposed ADU, based on its square footage or plumbing fixtures as compared to the primary dwelling. State ADU law does not cover monthly charge fees.”
So, clearly, HCD interprets the law to allow proportionate sewer connection fees for detached ADUs and this report will rely on that interpretation.
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How The Mitigation Fee Act Applies to ADU Impact Fees
Beyond the specific rules that apply to impact fees for ADUs, those impact fees still must satisfy the reasonable relationship requirements required for all impact fees by the Mitigation Fee Act. Paragraph 65852.2 (f) (1) of the Government Code makes that clear by referring to relevant sections of the Mitigation Fee Act:
“Fees charged for the construction of accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000) and Chapter 7 (commencing with Section 66012).”
So, this report looks at ADU impact fees in two ways. Firstly, with respect to the nexus or reasonable relationship requirement, and secondly, with respect to the specific restrictions on impact fees for ADUs. The next section looks at legal requirements for impact fees, generally.
Legal Framework for Impact Fees
This brief summary of the legal framework for development fees is intended as a general overview. It was not prepared by an attorney and should not be treated as legal advice.
U. S. Constitution. Like all land use regulations, development exactions, including impact fees, are subject to the 5th Amendment prohibition on taking of private property for public use without just compensation. Both state and federal courts have recognized the imposition of impact fees on development as a legitimate form of land use regulation, provided the fees meet standards intended to protect against “regulatory takings.” A regulatory taking occurs when regulations unreasonably deprive landowners of property rights protected by the Constitution.
In two landmark cases dealing with exactions, the U. S. Supreme Court has held that when a government agency requires the dedication of land or an interest in land as a condition of development approval or imposes ad hoc exactio ns as a condition of approval on a single development project that do not apply to development generally, a higher standard of judicial scrutiny applies. To meet that standard, the agency must demonstrate an "essential nexus" between such exactions and the interest being protected ( Nollan v.
California Coastal Commission, 1987) and make an” individualized determination” that the exaction imposed is "roughly proportional" to the burden created by development (Dolan v. City of Tigard, 1994).
Until recently, it was widely accepted that legislatively enacted impact fees that apply to all development in a jurisdiction are not subject to the higher standard of judicial scrutiny flowing from the Nollan and Dolan decisions. But after the U. S. Supreme Court decisio n in Koontz v. St. Johns Water Management District (2013), state courts have reached conflicting conclusions on that issue.
In light of that uncertainty, we recommend that any agency establishing or imposing impact fees should demonstrate that those fees satisfy the nexus and proportionality requirements required by constitutional case law.
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Defining the “Nexus.” While courts have not been entirely consistent in defining the nexus required to justify exactions and impact fees, that term can be thought of as having the three elements discussed below. We think proportionality is logically included as one element of that nexus, e ven though it was discussed separately in Dolan v. Tigard. The elements of the nexus discussed below mirror the three “reasonable relationship” findings required by the Mitigation Fee Act for establishment and imposition of impact fees.
Need or Impact. Development must create a need for the facilities to be funded by impact fees. All new development in a community creates additional demands on some or all public facilities provided by local government. If the capacity of facilities is not increased to satisfy the additional demand, the quality or availability of public services for the entire community will deteriorate. Impact fees may be used to recover the cost of development-related facilities, but only to the extent that the need for facilities is related to the development project subject to the fees.
The Nollan decision reinforced the principle that development exactions may be used only to mitigate impacts created by the development projects upon which they are imposed. In this study, the impact of development on facility needs is analyzed in terms of quantifiable relationships between various types of development and the demand for public facilities based on applicable level-of-service standards. This report contains all of the information needed to demonstrate compliance with this element of the nexus.
Benefit. Development must benefit from facilities funded by impact fees. With respect to the benefit relationship, the most basic requirement is that facilities funded by impact fees be availab le to serve the development paying the fees. A sufficient benefit relationship also requires that impact fee revenues be segregated from other funds and expended in a timely manner on the facilities for which the fees were charged. Nothing in the U.S. Con stitution or California law requires that facilities paid for with impact fee revenues be available exclusively to development projects paying the fees.
Procedures for earmarking and expenditure of fee revenues are mandated by the Mitigation Fee Act, as are procedures to ensure that the fees are either expended expeditiously or refunded. Those requirements are intended to ensure that developments benefit from the impact fees they are required to pay. Thus, over time, procedural issues as well as substant ive issues can come into play with respect to the benefit element of the nexus.
Proportionality. Impact fees must be proportional to the impact created by a particular development project. Proportionality in impact fees depends on properly identifying development-related facility costs and calculating the fees in such a way that those costs are allocated in proportion to the facility needs created by different types and amounts of development. The section on impact fee methodology, below, describes methods used to allocate facility costs and calculate impact fees that meet the proportionality standard.
California Constitution. The California Constitution grants broad police power to local governments, including the authority to regulate land use and development. That police
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power is the source of authority for local governments in California to impose impact fees on development. Some impact fees have been challenged on grounds that they are special taxes imposed without voter approval in violation of Ar ticle XIIIA. However, that objection is valid only if the fees charged to a project exceed the cost of providing facilities needed to serve the project. In that case, the fees would also run afoul of the U. S.
Constitution and the Mitigation Fee Act.
Articles XIIIC and XIIID, added to the California Constitution by Proposition 218 in 1996, require voter approval for some “property -related fees,” but exempt “the imposition of fees or charges as a condition of property development.” The Mitigation Fee Act. California’s impact fee statute originated in Assembly Bill 1600 during the 1987 session of the Legislature, and took effect in January, 1989. AB 1600 added several sections to the Government Code, beginning with Section 66000. Since that time, the impact fee statute has been amended from time to time, and in 1997 was officially titled the “Mitigation Fee Act.” Unless otherwise noted, code sections referenced in this report are from the Government Code.
The Mitigation Fee Act does not limit the types of capital improvements for which impact fees may be charged. It defines public facilities very broadly to include "public improvements, public services and community amenities." Although the issue is not specifically addressed in the Mitigation Fee Act , it is clear both in case law and statute (see Government Code Section 65913.8) that impact fees may not be used to pay for maintenance or operating costs. Consequently, the fees calculated in this report are based on the cost of capital assets only.
The Mitigation Fee Act does not use the term “mitigation fee” except in its official title.
Nor does it use the more common term “impact fee.” The Act simply uses the word “fee,” which is defined as “a monetary exaction, other than a tax or special assessment…that is charged by a local agency to the applicant in connection with approval of a development project for the purpose of defraying all or a portion of the cost of public facilities related to the development project ….”
To avoid confusion with othe r types of fees, this report uses the widely accepted terms “impact fee” and “development impact fee” which both should be understood to mean “fee” as defined in the Mitigation Fee Act.
The Mitigation Fee Act contains requirements for establishing, incre asing and imposing impact fees. They are summarized below. It also contains provisions that govern the collection and expenditure of fees and requires annual reports and periodic re-evaluation of impact fee programs. Those administrative requirements ar e discussed in the implementation chapter of this report.
Required Findings . Section 66001 requires that an agency establishing, increasing or imposing impact fees, must make findings to:
1. Identify the purpose of the fee;
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2. Identify the use of the fee; and,
3. Determine that there is a reasonable relationship between:
a. The use of the fee and the development type on which it is imposed; b. The need for the facility and the type of development on which the fee is imposed; and
c. The amount of the fee and the facility cost attributable to the development project. (Applies when fees are imposed on a specific project.) Each of those requirements is discussed in more detail below.
Identifying the Purpose of the Fees. The broad purpose of impact fees is to protect public health, safety and general welfare by providing for adequate public facilities. The specific purpose of the fees calculated in this study is to fund construction of certain capital improvements that will be needed to mitigate the impacts of p lanned new development on City facilities, and to maintain an acceptable level of public services as the City grows.
This report recommends that findings regarding the purpose of an impact fee should define the purpose broadly, as providing for the fundi ng of adequate public facilities to serve additional development.
Identifying the Use of the Fees. According to Section 66001, if a fee is used to finance public facilities, those facilities must be identified. A capital improvement plan may be used for that purpose but is not mandatory if the facilities are identified in a General Plan, a Specific Plan, or in other public documents.
Reasonable Relationship Requirement. As discussed above, Section 66001 requires that, for fees subject to its provision s, a "reasonable relationship" must be demonstrated between:
1. the use of the fee and the type of development on which it is imposed;
2. the need for a public facility and the type of development on which a fee is imposed; and,
3. the amount of the fee and the facility cost attributable to the development on which the fee is imposed.
These three reasonable relationship requirements, as defined in the statute, mirror the nexus and proportionality requirements often cited in court decisions as the standard for defensible impact fees. The term “dual rational nexus” is often used to characterize the standard used by courts in evaluating the legitimacy of impact fees. The “duality” of the nexus refers to (1) an impact or need created by a development project subject to impact fees, and (2) a benefit to the project from the expenditure of the fees.
Although proportionality is reasonably implied in the dual rational nexus formulation, it was explicitly required by the Supreme Court in the Dolan case, and we prefer to list it as the third element of a complete nexus.
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Impact Fees for Existing Facilities. Impact fees may be used to recover costs for existing facilities to the extent that those facilities are needed to serve additional development and have the capacity to do so. In other words, it must be possible to show that fees used to pay for existing facilities meet the need and benefit elements of the nexus.
Impact Fee Calculation Methodology
Any one of several legitimate methods may be used to calculate impact fees. The choice of a particular method depends primarily on the service characteristics of, and planning requirements for, the facility type being addressed. Each method has advantages and disadvantages in a particular situation. To some extent they are interchangeable, because they all allocate facility costs in proportion to the needs created by development.
Allocating facility costs to various types and amounts of development is central to all methods of impact fee calculation. Costs are allocated by means of formulas that quantify the relationship between development and the need for facilities. In a cost allocation formula, the impact of development is represented by some measurable attribute of development such as added population or added vehicle trips that represent the impacts created by different types and amounts of development.
This study does not calculate ADU impact fees from scratch. Rather it calculates new ADU impact fees based on Visalia’s existing schedule of impact fees by adjusting those fees to reflect the impacts of ADUs. All of the City’s existing impact fees are based on impact fee nexus studies, some of them dating back more than ten years. The impact fees originally calculated in those studies have been adjusted periodically to keep pace with changes in facility costs.
This study looks at how the impacts of residential development were quantified in those studies, and how the impacts of ADUs are different from the impacts of other types of residential development for which impact fees were calculated. For example, in cases where population per unit was used as the b asis for an impact fee, this study uses an estimated population per unit for ADUs to determine what the impact fee for an ADU should be, relative to the impact fee for other types of residential development.
Facilities Addressed in this Study
Impact or in-lieu fees for the following types of facilities are addressed in this report:
▪ Park Land Acquisition
▪ Park and Recreation Improvements
▪ Civic Center
▪ Corporation Yard
▪ Libraries
▪ Fire Protection Facilities
▪ Police Facilities
▪ Transportation
▪ Sewer System Improvements
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Demand Variables for ADU Impact Fees
Demand variables are attributes of development that are used in impact fee calculations to represent service demand. Population is one of the most commonly used demand variables in impact fee analysis and was used as the basis for many of the City’s existing impact fees. Another demand variable used in this analysis is vehicle trips generated by development.
As discussed in Chapter 1, ADUs smaller than 750 square feet are not subject to impact fees. That is approximately the average size of one-bedroom apartment units constructed in the U. S. in 2018 based on a survey by Yardi Matrix. So, it is reasonable to assume that ADUs larger than 750 square feet have at least two bedrooms. That information is useful in estimating the average population per unit for ADUs subject to impact fees, given that there are no available data on population per unit specifically for ADUs. To date, there are no data available on population per unit specific to ADUs.
For additional perspective on population per unit, Table 2.1 shows data from the C ensus Bureau’s American Community Survey (ACS) for population in occupied units by tenure and units in structure. The column titled “All Units Pop/DU” in Table 2.1 shows the average population per unit for all occupied units, by units in structure. The two columns at the right end of the table show average population per unit for owner -occupied and renter-occupied units.
Table 2.1 shows that the overall average population per unit for single -family dwelling units, including both detached and attached unit s, is 3.09. Single -family attached units are individually owned dwellings such as townhouses and condominium units.
For attached units with 2-4 units in a structure, the average population per unit is 2.2, and for attached units with 5 or more units in a structure, the average is 2.14. The average population per unit for all attached units (not shown in the table) is 2.18.
Table 2.1 Population per Unit by Tenure and Units in Structure Units Owner Renter Total Occ Owner Renter Total All Units Owner Occ Renter Occ in Structure Occ Units 1 Occ Units 1 Units 1 Occ Pop 2 Occ Pop 2 Pop 2 Pop/DU 3 Pop/DU 4 Pop/DU 5 1, detached/att 25,339 10,579 35,918 74,430 36,610 111,040 3.09 2.94 3.46 2 to 4 77 4,778 4,855 77 10,609 10,686 2.20 1.00 2.22
5 or more 159 3,070 3,229 406 6,509 6,915 2.14 2.55 2.12 Mobile home 625 1,251 1,876 1,022 3,487 4,509 2.40 1.64 2.79 Total/Average 26,200 19,678 45,878 75,935 57,215 133,150 2.90 2.90 2.91 1 Occupied units by tenure; data from American Community Survey, Table 25032, 2019 1-Year Estimates 2 Population in occupied units by tenure; data from American Community Survey, Table 25033, 2019 1-Year Estimates 3 Average population per unit by units in structure for all units 4 Average population per unit by units in structure for owner-occupied units 5 Average population per unit by units in structure for renter-occupied units
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All of the City’s existing population-based impact fees for multi-family units are based on a factor of 2.74 persons per unit from a 2004 nexus study. In Table 2.1, with the exception of owner-occupied units with 2-4 units in a structure, the population per unit factors for multi-family units ranges from 2.12 to 2.55.
Considering all of the available information on population per unit, this study proposes to use a factor of 2.0 persons per ADU as the basis for population -based impact fees per unit. Considering that ADU impact fees apply only to units larger than 750 square feet, most of which are likely to have at least two bedrooms, we believe that number is both reasonable and conservative.
Population-Based Impact Fees
Several of Visalia’s existing impact fees are calculated based on population per unit. In order to calculate an impact fee for ADUs based on population per unit, we need to determine both the population per unit for ADUs and the cost per capita underlying the City’s existing population -based impact fees. All of those impact fees date back to the 2004 nexus study and those fees have been escalated repeatedly over time to keep pace with increasing costs. Consequently, the current cost per capita is not the same as the cost per capita used to calculate those fees originally.
Table 2.2 shows the City’s current population -based impact fees for single -family units, multi-family units and mobile home units. That table also shows the population per unit that was used to calculate the impact fees for each type of residential development in the original 2004 impact fee study.
In addition, Table 2.2 calculates the current impact fee per capita for each type of residential development by dividing the impact fee per unit by the corresponding population per unit.
When the fees were orig inally calculated, the impact fee per capita was the same for all types of residential units. However, because those fees have been adjusted repeatedly over time, the effects of rounding have accumulated so that the impact fee per capita for single-family units is no longer exactly the same as the impact fee per capita for the other types of residential development.
The purpose of this calculation is to estimate the impact fee per capita underlying the current impact fees. And since that number differs sli ghtly among residential development types, we will use the average of those numbers as the fee per capita to establish impact fees per unit for ADUs in this study.
The average impact fee per capita for each of the population-based impact fees is shown in the right-hand column of Table 2.2.
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Police and Fire Protection Impact Fees
Visalia’s police and fire protection impact fees were originally calculated on a per -acre basis and are still charged on that basis. Although these two fees are similar in some ways, there are reasons to treat them differently when it comes to ADUs. The fire protection impact fees do not vary by development type. The per -acre fee is the same for all types of development in the City, both residential and non-residential. The logic underlying that approach to the fees is that the total cost of fire protection facilities, apparatus and vehicles needed to serve the City is dictated primarily by the Fire Department’s emergency response time standard. As a result, that cost depends to a l arge extent on the size of the area to be served, which can be stated as acres. The initial response time standard doesn’t vary by development type, so the cost per acre is the same for all types of development. Constructing a new ADU does not add to the a creage to be served, so we recommend that the fire protection impact fee not be applied to ADUs.
The situation is somewhat different for police services. The police impact fees are also charged on a per-acre basis, but those fees vary by development type because they were based on the average number of calls for service per acre for various types of development. In this case, it is a question of whether constructing a new ADU is likely to increase the population of an area and thereby increase the number of calls for service generated within the area. City staff has indicated that adding ADU s in single -family zoning districts is not likely to increase densities above what is allowed by the zoning ordinance, so it may not be appropriate to charge police impac t fees to ADUs. However, because that is a decision for the City Council, we will calculate a police impact fee for ADUs so that fee can be imposed if the City chooses to do so.
Since there is no way to establish an acreage basis for charging police impact fees to ADUs, it is necessary to convert those fees to per -unit fees and then to calculate a per -capita amount for each fee.
Table 2.3 shows the calculation of average impact fees per capita for police facilities. As indicated in the footnotes to that table, impact fees per acre from the current impact fee schedule are divided by the estimated average number of units per acre for single-family Table 2.2: Population-Based Impact Fees per Capita
Impact Fee Single- Multi Mobile Pop/DU Pop/DU Pop/DU Fee/Capita Fee/Capita Fee/Capita Avg Fee Type Family 1 Family 1 Home 1 SFDU 2 MFDU 2 MHDU 2 SFDU 3 MFDU 3 MHDU 3 per Capita 4 Park Acquisition 1,645.00$ 1,448.00$ 1,127.00$ 3.08 2.74 2.13 534.09$ 528.47$ 529.11$ 530.56$ Park Development 2,222.00$ 1,955.00$ 1,522.00$ 3.08 2.74 2.13 721.43$ 713.50$ 714.55$ 716.50$ Civic Center 467.00$ 415.00$ 322.00$ 3.08 2.74 2.13 151.62$ 151.46$ 151.17$ 151.42$ Corporation Yard 76.00$ 68.00$ 52.00$ 3.08 2.74 2.13 24.68$ 24.82$ 24.41$ 24.64$ Library 59.00$ 53.00$ 43.00$ 3.08 2.74 2.13 19.16$ 19.34$ 20.19$ 19.56$ 1 Current impact fees by unit type (effective date August 21, 2021) 2 Population per unit by unit type from the 2004 General Facilities and Library Impact Fee Study by Maximus and Tischler & Assoc. 3 Impact fee per capita = impact fee per unit / population per unit by unit type; SFDU = single-family dwelling unit; MFDU = multi-family dwelling unit; MHDU = mobile home dwelling unit 4 Average of impact fees per capita for SFDU, MFDU, and MHDU
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and multi-family residential development to arrive at impact fees per unit. (There are no existing police or fire impact fees for mobile homes.)
Then, impact fees per unit are divided by population per unit to calculate a fee per capita.
It should be noted that, since population per unit was not used in the original impact fee calculations for police impact fees, the population per unit factors shown in Table 2.3 are based on recent data shown in Table 2.1. The population per unit for single -family units is almost identical to the number shown in Table 2.2 from the 2004 impact fee study.
However, the population per unit factor used in Table 2.3 for multi -family units (the average of the factors for the two multi -family categories in Table 2.1) is substantially lower than the corresponding number in Table 2.2. The far right-hand column in Table 2.3 shows the average of the per capita fees for single-family and multi-family dwelling units.
Transportation Impact Fees
Visalia’s transportation impact fees were originally calculated in the 2015 Transportation Impact Fee Update Nexus Study by TJKM. One factor used to calculate those impact fees is a trip demand factors (TDF) per unit for each type of development. Trip demand factors are based on average daily trips (ADT) adjusted for pass -by trips and multiplied by a trip length factor.
Table 2.4 calculates the current impact fee s per TDF for each type of residential development for which the City has existing transportation impact fees. Similar to the other impact fees discussed above, the purpose of this analysis is to establish a current impact fee per TDF that can be applied to ADUs.
Probably because the transportation impact fees date back only to 2015, there is little variance between the impact fee per TDF numbers for single -family and multi -family development in Table 2.4. There is no existing transportation imp act fee for mobile homes. The average impact fee per TDF for the single-family and multi-family residential categories is shown in the right-hand column of Table 2.4.
Table 2.3: Police Impact Fees per Capita
Impact Fee Single- Multi Mobile Pop/DU Pop/DU Pop/DU Fee/Capita Fee/Capita Fee/Capita Avg Fee Type Family 1 Family 1 Home 1 SFDU 2 MFDU 2 MHDU 2 SFDU 3 MFDU 3 MHDU 3 per Capita 4 Police Facilities 381.67$ 307.87$ No Fee 3.09 2.18 N/A 123.52$ 141.22$ N/A 132.37$ 1 Current impact fees by unit type; fees have been converted from fees per acre to fees per unit based on typical densities from Table 1-37 in the Housing Element of the Visalia General Plan; 4.8 units per acre (low-density) was used for single-family residential development and 15 units per acre (in the range between medium-density and high-density) was used for multi-family residential 2 Population per unit by unit type based on data from Table 2.1 3 Fee per capita = fee per unit / population per unit by unit type; SFDU = single-family dwelling unit; MFDU = multi-family dwelling unit; MHDU = mobile home dwelling unit
4 Average of impact fees per capita for SFDU and MFDU; there are no existing Police impact fees for MHDU
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In addition to the average fee per Trip Demand Factor (TDF) from Table 2.4, we need to determine the appropriate TDF for ADUs before we can calculate a transportation impact fee for ADUs. The Institute of Transportation Engineers (ITE) manual, Trip Generation, lists more than 20 types of residential uses with their trip generation rates. The TJKM study calculated transportation impact fees for three types of residential development, single - family, multi-family and senior adult housing, using the 7th Edition of that publication. The Trip Demand Factors for those three development types are bas ed on average daily trip generation (ADT) rates of 9.57 (ITE 210: single -family detached), 6.72 (ITE 220: formerly “apartment” now “multi -family low-rise”) and 3.48 (ITE 252: elderly housing -attached), respectively. There is no information available regarding specific trip generation rates for ADUs.
As discussed previously, this analysis assumes that ADUs paying impact fees are likely to have at least two bedrooms, which is similar to many multi-family rental units. So, it would not be unreasonable to appl y the multi -family transportation impact fee to ADUs.
However, to be conservative, we recommend that the transportation impact fees for ADUs be based on the trip generation rate for residential condominium/townhouse (ITE:230), which was 5.86 in the 7 th edition. (Some of the categories and trip generation rates have changed in subsequent editions). After applying the residential adjustment factor of 1.11 from the TJKM study, the trip demand factor for ADUs would be 6.5. That factor will be used in Table 2.5 to calculate the recommended transportation impact fee for ADUs.
Sewer Main and Treatment Plant Connection Fees
Based on the way in which Visalia’s sewer main and treatment plant connection fees were calculated in 1994, we see no way to calculate sewer fe es for ADUs other than as a percentage of the standard fees. As noted on page 1 -2 in Chapter 1, Paragraph 65852.2 (5) (f) of the Government Code reads, “Consistent with Section 66013, the connection (to a sewer or water system of an ADU that is not within the space of an existing residence or accessory building) may be subject to a connection fee or capacity charge that shall be proportionate to the burden of the proposed accessory dwelling unit, based upon either its square feet or the number of its drainage fixture unit (DFU) values…) “ Table 2.4: Transportation Impact Fees per Trip Demand Factor Impact Fee Single- Multi Mobile TDF / DU TDF / DU TDF / DU Fee / TDF Fee / TDF Fee / TDF Avg Fee Type Family 1 Family 1 Home 1 SFDU 2 MFDU 2 MHDU 2 SFDU 3 MFDU 3 MHDU 3 per TDF 4 Transportation 6,235.00$ 4,379.00$ No Fee 10.58 7.43 N/A 589.32$ 589.37$ N/A 589.34$ 1 Current impact fees by unit type
2 Trip demand factor (TDF) per dwelling unit from the 2015 Traffic Impact Fee Update Nexus Study by TJKM; Trip demand factor = average daily trips (ADT) adjusted for pass-by trips X trip length factor 3 Impact fee per TDF = impact fee per unit / trip demand factor; SFDU = single-family dwelling unit; MFDU = multi-family dwelling unit; MHDU = mobile home dwelling unit
4 Average of the impact fees per TDF for SFDU and MFDU; there is no existing transportation impact fee for MHDU
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The City of Visalia does not use drainage fixture units in assessing sewer connection fees and the language above is not specific about how the proportionality should be determined. However, as noted on page 1 -1 of Chapter 1, Paragraph 65852.2 (f) (3) (A) of the Government Code, as amended by AB 3182, states that “Any impact fees charged for an accessory dwelling unit of 750 square feet or more shall be charged proportionately in relation to the square footage of the primary dwelling unit.” That language provides a basis for calculating sewer impact fees for ADUs based on the relative size of the ADU and the primary unit . Indeed, that proportionality requirement applies to all of the ADU impact fees discussed in this repor t, so in a subsequent chapter we will address potential conflicts between the proportionality mandate and the requirement that ADU impact fees must satisfy the requirements of the Mitigation Fee Act, including the reasonable relationship requirements.
Other Impact/Mitigation Fees
Groundwater Overdraft Mitigation Fee. This fee is intended to pay for measures needed to mitigate the net negative effect on groundwater recharge of converting agricultural land uses to urban/industrial land uses. The amount of the fee is based on a 2004 analysis by Provost and Pritchard Engineering of the net negative recharge effect of converting agricultural uses to urban/industrial uses and the cost of mitigating that effect by providing for additional direct recharge of surface water by way of recharge basins.
Provost and Pritchard analyzed the need for additional groundwater recharge resulting from conversion of agricultural land uses to urban/industrial land uses on a per-acre basis rather than as an impact of specific type s of development projects. To the extent that ADUs are constructed on land that has already been converted to residential use, there does not appear to be any additional impact of a new ADU that would justify applying this fee to the ADU. That is reinforced by the fact that if an ADU were constructed concurrently with a new dwelling on an undeveloped lot, inclusion of the ADU would not increase the amount of the groundwater overdraft mitigation Fee that would otherwise apply to the new dwelling. Consequently, we recommend that the City not apply this fee to ADUs.
Storm Drainage Impact Fee. The storm drainage impact fees are based on a Storm Water Master Plan prepared by Boyle Engineering Corporation in 1994. The storm drainage impact fees were enacted by resolution the same year. Since that time, the impact fees have been updated periodica lly to keep pace with cost inflation and have increased by approximately 96% since they were originally adopted. The storm drainage impact fees were adopted in two parts: an acquisition fee, and a development fee, and are still charged that way. The acquis ition fee is charged prior to approval of a final subdivision map, if any, or prior to commencement of work on the development project. The development fee is charged prior to commencement of work on the development project.
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In the Master Plan, costs for planned drainage improvements were allocated to various types of development based on the estimated percentage of impervious surface area associated with each type of development. For residential development there were four density categories: rural (20%), low-density (43%), medium density (70%) and high - density (80%). Those percentages are still shown in the schedule of storm water impact fees.
The question to be considered here is whether either or both of those fees should be charged to ADUs, and if so, what amount should be charged to an ADU. These fees are charged on the basis of gross acreage, and construction of an ADU on a lot obviously has no effect on the acreage of the lot. Of course, construction of a new ADU may well increase the total amount o f impervious surface area on a lot, but that increase would not necessarily push the overall percentage of impervious surface area on the lot substantially above the percentage used in the original impact fee calculations.
Also, as with the groundwater ov erdraft mitigation fee, the storm drainage impact fee would not increase if an ADU were constructed concurrently with a new dwelling on an undeveloped lot. Consequently, we recommend that the City not apply this fee to ADUs.
Waterway Acquisition Fee. We have not been able to find any documentation regarding the calculation or adoption of the waterway acquisition fee. That fee appears on the same schedule as the storm drainage impact fees and appears to be an additional component of the storm drainage impact fees. Consequently, our recommendation regarding the application of this fee to ADUs is the same as for the storm drainage impact fees.
Proposed Schedule of ADU Impact Fees
Based on the foregoing analysis, NBS is proposing the following schedule of ADU impact fees where impact fees can be applied directly to an ADU without considering the size of the ADU relative to the size of the primary unit on the property.
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As noted in the previous discussion, we are recommending that the City not apply the following impact fees to accessory dwelling units:
▪ Fire impact fee
▪ Groundwater overdraft mitigation fee
▪ Storm drainage impact fee
▪ Waterway acquisition fee
In addition, as noted earlier, City staff believe the Police impact fee shown in Table 2.5 should not be applied to ADUs because the addition of ADUs is not likely to increase densities in single -family residential zoning districts above what is allowed by City ordinance. W e are also recommending that the sewer main and treatment plant connection fees be applied proportiona tely to ADUs based on the square footage of the ADU relative to the square footage of the primary unit as provided in Paragraph 65852.2 (5) (f) of the Government Code.
The next chapter discusses the proportionality requirement and potential issues in applying it.
Table 2.5: Proposed ADU Impact Fees
Impact Fee Demand per Demand Avg Fee per Impact Fee
Type Unit Basis per ADU 1 Demand Unit 2 per ADU 3
Park Acquisition Population 2.0 530.56$ 1,061.11$ Park Development Population 2.0 716.50$ 1,432.99$ Civic Center Population 2.0 151.42$ 302.84$
Corporation Yard Population 2.0 24.64$ 49.27$ Library Population 2.0 19.56$ 39.12$
Police Population 2.0 132.37$ 264.74$
Transportation Trip Demand Factor 6.5 589.34$ 3,830.73$ 1 Assumed population per unit for ADUs = 2.0 - see discussion in text; trip demand factor for ADUs = 6.5 - see discussion in text
2 Average fee per capita for population-based fees from Table 2.2; average fee per trip demand factor (TDF) for transportation impact fee from Table 2.4 3 Impact fee per ADU = demand per ADU X average fee per demand unit
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Square Footage Proportionality for ADU Impact Fees
As noted in previous chapters, Section 65852.2 of the Government Code, as amended by AB 3182, contains the following requirement:
“Any impact fees charged for an accessory dwelling unit of 750 square feet or more shall be charged proportionately in relati on to the square footage of the primary dwelling unit.”
That section of the Government Code also requires that fees imposed on accessory dwelling units be determined in accordance with the Mitigation Fee Act including the reasonable relationship requirements of Section 66001.
To some extent, those two requirements are in conflict. In Chapter 2 of this report, we calculated ADU impact fees that are intended to satisfy the requirements of the Mitigation Fee Act for several types of facilities. For reasons explained in that chapter, we were unable to calculate sewer main and treatment plant connection fees in a similar manner. However, as we noted in Chapter 2, Section 65852.2 specifically addresses requirements for establishing water and sewer connection fees on a proportional basis.
Those fees may be based either on the number of plumbing fixture units in the primary unit vs. the ADU or the relative square footage of the two units. Based on review and discussion with City staff and legal counsel, we expect that the City will choose the latter option.
Applying Proportional ADU Impact Fees
In this chapter, we address the square footage proportionality requirement and how fees calculated on that basis relate to the fees calculated in Chapter 2. Although it is not spelled out in Section 65852.2, we think it is obvious that when calculating ADU impact fees in cases where the primary unit is a single -family detached unit, the starting point for the proportionality calculation is the fee that app lies to the single -family unit. The law also allows for ADUs on lots or parcels where the primary unit is a multi -family unit. In that situation, it seems logical that the ADU impact fee should be proportional to the impact fee that applies to the multi -family unit, but we think ADUs within multi -family developments are likely to be rare, and for that reason, we don’t address them further in this report.
The formula for calculating proportional ADU impact fees would be:
Primary unit impact fee X (ADU square feet / Primary unit square feet) One thing that becomes obvious in that formula is that, for an ADU of a particular size, a larger primary unit results in lower impact fees for the ADU.
For example, if the ADU is 1,000 square feet and the primary unit is 2,000 square feet, the proportional impact fee for the ADU would be 50% of the impact fee that would apply to
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the primary unit. But if the primary unit is 1,200 square feet, the impact fee for the same- sized ADU would be 83.33% of the primary unit fee.
Mitigating Unfairness in Proportional ADU Impact Fees
It seems likely that discrepancy is an unintended consequence of language in Section 65852.2 that was not thoroughly considered before adoption. It is also worth noting that for impact fee studies adopted after July 1, 2022, AB 602 requires that impact fees for all types of residential units must be proportionate to the square footage of a unit unless a different approach can be justified. Impact fees based on square footage will tend to reduce the inequity created by the proportionality language of Section 65852.2 because the fees that apply to a smaller primary unit would be less than the fees that apply to a larger primary unit. However, that standard applies only when impact fees are updated, so it may be a number of years before Visalia, and many other cities in California, adopt residential impact fees based on square footage. Therefore, we want to consider ways in which the City might minimize the inequities created by the ADU impact fee proportionality requirement in Section 65852.2.
The first step in that process is to compare the ADU impact fees calculated in Chapter 2 with the City’s current single -family dwelling unit impact fees. Table 3.1 shows the ADU impact fees calculated in Table 2.5 in Chapter 2 as a percentage of the current impact fees per unit for single -family detached or low -density residential development, whichever designation is used in the impact fee schedule. Note that since police impact fees are charged on a per-acre basis, they must be converted to per-unit fees for this comparison.
The ADU fees in Table 3.1 range from 61.4% to 69.4% of the single-family unit impact fees.
For ADU impact fees in that range, it is clear that the proportionality requirement would Table 3.1: ADU Impact Fees as % of Single-Family Unit Impact Fees Impact Fee Single-Family ADU ADU Impact
Type Impact Fee 1 Impact Fee 2 Fee % 3
Park Acquisition 1,645.00$ 1,061.11$ 64.5% Park Development 2,222.00$ 1,432.99$ 64.5% Civic Center 467.00$ 302.84$ 64.8% Corporation Yard 76.00$ 49.27$ 64.8% Library 59.00$ 39.12$ 66.3% Police 381.67$ 264.74$ 69.4%
Transportation 6,235.00$ 3,830.73$ 61.4% 1 Impact fee per unit for single-family detached or low-density residential from the City of Visalia 2021 fee schedule; police impact fee converted from per-acre fee to per-unit fee using a density of 4.8 units per acre; see Table I-37 in the City's Housing Element
2 ADU impact fee from Table 2.5, Chapter 2
3 ADU impact fee as a percentage of the single-family impact fee per unit
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come into pla y for many combinations of primary unit square footage and ADU square footage. Table 3.2 on the next page shows the critical sizes of primary units for three different sizes of ADUs: 800 square feet, 1,000 square feet and 1,200 square feet. The critical size is the primary unit square footage above which the ADU impact fees calculated in Chapter 2 would have to be reduced to satisfy the proportionality requirement.
For example, in the case of an 800 square foot ADU, primary units larger than the numbers shown in the third column of Table 3.2 would require that the ADU impact fees be reduced below the amounts calculated in Chapter 2. The larger the primary unit, the greater the required reduction.
The City could consider adopting a policy the mitigate th e apparent unfairness in the proportionality requirement which requires lower fees for ADUs associated with larger primary units. The only way to do that would be to set a lower limit on the size of the primary unit square footage that would be used to cal culate proportionality. So, for example, if the lower limit were set at 1,800 square feet, the City would use that figure to calculate proportional ADU impact fees, even if the actual size of a primary unit is smaller.
The effect would be to reduce the ADU impact fees that would otherwise be charged to ADUs with a primary unit smaller than 1,800 square feet.
Another possibility would be to set the lower limit as a multiple of the size of the ADU.
So, for example, if a factor of 2.0 is chosen, the minimum p rimary unit size used to calculate impact fees for an 800 square foot ADU would be 1,600 square feet.
Obviously, such adjustments increase the administrative complexity involved in administering impact fees for ADUs. That will certainly be a consideration when the City chooses policies related to the application of ADU impact fees.
Table 3.2: ADU Impact Fees - Critical Size of Primary Unit Impact Fee ADU Impact For 800 For 1,000 For 1,200
Type Fee % 1 Sq Ft ADU 2 Sq Ft ADU 2 Sq Ft ADU 2
Park Acquisition 64.5% 1,240 1,550 1,860 Park Development 64.5% 1,240 1,551 1,861 Civic Center 64.8% 1,234 1,542 1,850 Corporation Yard 64.8% 1,234 1,543 1,851 Library 66.3% 1,206 1,508 1,810
Police 69.4% 1,153 1,442 1,730
Transportation 61.4% 1,302 1,628 1,953 1 ADU impact fee as a percentage of the 2021 single-family residential impact fee per unit from Table 3.1
2 Primary unit square footage above which the proportionality requirement controls; critical square footage = ADU square feet / ADU impact fee %
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Part of the scope of work for this study was to compare the policy approaches adopted by other California cities regarding impact fees for accessory dwelling units (ADUs).
Legislation establishing limits on impact fees for ADUs dates back only about two ye ars, so there is not lot of standardization in the approaches used by cities and counties with respect to these fees. In addition, since Government Code Section 65852.2 establishes the “proportionality” rule for charging impact fees for ADUs, it appears th at many cities have not found it necessary to adopt their own policies.
Our initial focus in comparing approaches was on other cities in the San Joaquin Valley.
Visalia identified five cities that were of primary interest:
▪ Modesto
▪ Fresno
▪ Clovis
▪ Tulare
▪ Bakersfield
Of those five cities, we found only two that have adopted specific policies regarding ADU impact fees. Both Modesto and Clovis have explicitly adopted the approach defined in Section 65852.2, which requires that impact fees for ADUs of 750 square feet or more be charged proportionately in relation to the square footage of the primary unit. The following links may be used to find the web pages stating those policies, for Clovis (https://cityofclovis.com/planning-and-development/planning/adu/), and for Modesto (https://www.modestogov.com/DocumentCenter/View/18289/Capital-Facilities-Fees- Annual-Report-Fiscal-Year-2020-21-PDF?bidId=)
Because that small sample did not yield many useful examples, we widened the search to include a number of other cities across California, including:
▪ Anaheim
▪ Berkeley
▪ Burbank
▪ Fullerton
▪ Glendale
▪ Pasadena
▪ Sacramento
▪ San Clemente
▪ San Diego
▪ San Jose
▪ San Luis Obispo
▪ Santa Ana
▪ Santa Monica
▪ Walnut Creek
City of Visalia Page 4-2
ADU Impact Fee Study
April 4, 2022
Among that group, we found that several have not explicitly adopted policies regarding ADU impact fees. Of th ose that have, San Diego exempts all ADUs from impact fees.
Berkeley, Pasadena and San Clemente have adopted the proportionality rule stated in Section 65852.2. And Sacramento and San Jose have adopted specific fees for ADUs, but it appears those fees pre-date enactment of Section 65852.2.
Of interest is the fact that San Clemente provides a worksheet for applicants to calculate proportional impact fees based on the square footages of the ADU and primary unit. It is linked here: https://www.san-clemente.org/home/showpublisheddocument/64984.
The only example we found of an agency that appeared to address the potential inequities that can result from the application of proportional impact fees as required by Section 65852.2 was Sacramento County.1 The Sacramento County Code exempts any ADU of 850 square feet or less and multi-bedroom ADUs of 1,000 square feet or less from impact fees entirely. For ADUs that are subject to impact fees, Sacramento County bases most of those fees on the lesser of the fee based on proportionality, or the fee that would apply to an RD -20 Unit with one occupant. A different alternative applies to the County’s Transportation Development Fees and Transit Impact Fees. For those fees the alternative to the impact fee based on proportionality is a fee calculated using one of several formulas that apply to specific types of development.
We considered the possibility that Visalia might adopt a policy similar to that used by Sacramento County but found that the proposed ADU fees shown in Table 2.5 are, with two possible exceptions, already lower than any of the existing impact fees charged by the City to any category of residential development, even before the proportionality rule is applied. The exceptions are the Senior/Assisted category for transportation impact fees and the Mobile Home category for park acquisition and development impact fees.
Consequently, we concluded that the Sacramento County app roach would be of very limited benefit to Visalia.
We did not find any examples of agencies that apply a policy similar to the option proposed in Chapter 3, that would set either a certain square footage, or a multiple of the ADU square footage, to be used as the minimum size of the primary unit in calculating proportional impact fees.
1 The inequity referenced here results from the fact that, as proportionality is defined in Section 65852.2, ADUs associated with smaller primary units pay a higher fee than those associated with larger primary units.