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Draft Memorandum November 30, 2017 Tri-Valley Fee Comparison and Page 6 Pleasanton's Competitiveness Assessment and Economic Implications public facilities, and parks and recreation facilities fees would significantly affect Pleasanton's competitiveness for future residential development. While these fees are shown to increase modestly in aggregate, the subcomponents of the fee actually decrease in some categories (e.g., parks and recreational facilities) while increasing in others (e.g., traffic improvements). Retail Retail development is generally closely linked to residential development and as such is highly "place" or location dependent. Consequently, small differences in fee levels among jurisdictions are unlikely to affect the location of retail development. However, the maximum retail impact fees are substantially higher than those charged in any other jurisdiction surveyed except Livermore, and could potentially affect Pleasanton's regional competitiveness for future retail development. However, a modest increase is likely to be supported as Pleasanton's existing retail development impact fees are roughly on par with the average of jurisdictions surveyed. To the extent that the City has remained a competitive retail location under this fee structure, this may offer a useful indication of how the proposed fees might be received by retail developers. Office and Industrial In contrast to residential and retail development, office and industrial development (defined as a combination of industrial, light industrial, and R&D for the purpose of this analysis) is tied more to the economic characteristics of a location, such as the cost of land, taxes, and the cost of new development. Consequently, development impact fees may have a greater effect on the type and amount of industrial, and to a lesser extent office, development in the City than on residential development. If the total cost of development is much higher in one jurisdiction than other competitive areas, the imposition of higher fees can cause demand to shift to those other lower-cost locations. Existing development impact fee in Pleasanton is on par with the regional average for industrial and slightly below regional average for office uses. This suggests that a moderate increase is likely to be supported with minimal adverse impact on these uses. However, the maximum office and light industrial impact fees are substantially higher than averages of those in other Tri-Valley jurisdictions and would put Pleasanton as the second highest fee burden only to Livermore for both office and light industrial land uses. Policy Options The City may consider a variety of implementation options to mitigate real or perceived economic implications of the fees. If the City chooses to adopt the proposed fees, the Pleasanton City Council maintains the discretion to waive all or a portion of the adopted fee for any given project. If the City is at risk of losing a particularly desirable future project as a result of the adopted fee level, the Council may exempt that project from the fee for economic development reasons. Alternatively, the City could decide to reduce the overall fee either by removing individual projects or by imposing a fixed-percent reduction to the fee. The decision of how to set the ultimate fee level should be made following discussions with key stakeholders including developers, real estate brokers, and knowledgeable City staff. This decision can also be informed by focused studies of current conditions and trends by development type. In any case, the City will have to make a "judgment call" based on as comprehensive an assessment as possible of local and regional market conditions, recognizing that no standard "formula" exists. P:\151000s\151111 Pleasa n tonFee\Corres\151111 Pleasa n ton DIFMemo3.docx