CITY COUNCIL AGENDA PACKET WORKSHOP

ATTACHMENT 1 MEMORANDUM Date: May 7, 2024 To: Mayor and City Council From: Ellen Clark, Director of Community Development Jason Moody, Principal, Economic and Planning Systems Subject: Background Memo: Development Impact Fees, Inclusionary Zoning Ordinance and Affordable Housing Fees, and Feasibility Analysis Background On December 5, 2023, the City Council authorized a professional services agreement with Economic & Planning Systems, Inc. to assist with a project to comprehensively update the City’s Development Impact Fees, Lower Income Housing Fee (LIHF), and to update the existing Inclusionary Zoning Ordinance (IZO). Separately, on February 6, 2024, the City Council authorized the fifth amendment with Raftelis to assist with the update of the water and sewer connection fees and complete the necessary connection fee study. This memo provides a summary of background information and analysis developed to date in support of the studies, as supporting information for the May 7, 2024, City Council study session. Development Impact Fees Regulatory Requirements State law, specifically AB 1600 (California Government Code Section 66000 et. seq.), regulates how impact fees are to be calculated and levied, and specifies reporting and other requirements. AB 1600 requires cities to justify and account for development fees that they enact as a condition of approval on new development. The justification, or nexus requirement, requires cities to: 1. Identify the purpose of the fee; 2. Identify the use or specific project to which the fee will be applied; 3. Determine how there is a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed; and 4. Determine how there is a reasonable relationship between the need for public improvement and the type of development project on which the fee is imposed.