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The nexus is based on the premise that new development should pay for its pro rata share of public improvement costs, and that new residents, businesses, and their employees will create the need for and benefit from the availability of public services and infrastructure improvements. Accordingly, related to the LIHF, new residential development is required to provide 15 to 20 percent of the units at affordable levels or provide payment of in -lieu fees at the City's discretion. The LIHF is also charged to residential projects that are not subject to the IZO — i.e., projects with fewer than 15 units are not subject to the IZO. And, new commercial development is required to contribute LIHF, generally on a per square foot basis, assigned to different land use types (industrial, office, retail, etc.) based on their employee generation and associated housing needs. The maximum amount that the City can charge for the LIHF was identified in a Nexus Study completed by Economic & Planning Systems (EPS) and presented to City Council for action in September 2018.1 At its September 18, 2018, meeting, City Council voted to increase the LIHF from the previously established levels, based on an analysis comparing Pleasanton's fees with those of other Tri -Valley cities. It should be noted that the City Council made a policy decision to establish the fees at level somewhat below the maximum amount justified in the Nexus Study, in part to ensure that Pleasanton would remain competitive and attractive for new businesses seeking to locate within the region. The amounts shown in Table 1 are based on fees for calendar year 2022; Chapter 17.40 of the Pleasanton Municipal Code (PMC) indicates that the fee is subject to an annual inflation adjustment on January 1 of each year, based on the Consumer Price Index (CPI) for the San Francisco/Oakland region. The modified LIHF at that time reflected a significant change from the prior fee rates, particularly for residential projects, and the office and industrial categories of non- residential projects. The complete September 18, 2018 Agenda Report, including the Nexus Studies, is available on-line at http://webli n k.cityofpleasantonca. gov/weblink/O/doc/280943/Page 1. aspx Housing Element Update, P21-0751 Planning Commission 3 of 13