CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 1 of 17 Item #17 CITY COUNCIL AGENDA REPORT November 19, 2024 Community Development TITLE: RECEIVE PRESENTATION ON DRAFT IMPACT FEE NEXUS STUDIES AND PROVIDE INPUT ON RECOMMENDED CAPITAL FACILITIES FEE, TRANSPORTATION IMPACT FEE, COMMERCIAL LINKAGE FEE, AFFORDABLE HOUSING FEE, AND SEWER AND WATER CONNECTION FEE AMOUNTS SUMMARY This study session presents drafts of two separate nexus/fee update studies that support: Update of the City’s existing Capital Facilities Fee, Traffic Impact Fee, Commercial Linkage Fee (for housing), and Affordable Housing Fee, and Update of the Sewer and Water Connection Fees. Staff is seeking City Council input and direction on the studies, including the levels at which the various fees should be set. RECOMMENDATION Receive presentation on Draft Impact Fee Nexus Studies and provide input on recommended Capital Facilities Fee, Transportation Impact Fee, Commercial Linkage Fee, Affordable Housing Fee, and Sewer and Water Connection Fee amounts. BACKGROUND Since early 2024, City staff and a professional services team lead by Economic & Planning Systems (EPS) have been undertaking work to update the City’s Development Impact Fees and Affordable Housing Fees, and to update the existing Inclusionary Zoning Ordinance (IZO). Related to the IZO update, amendments are also proposed to PMC Chapter 17.40 - Affordable Housing Fee, Chapter 18.38 – Housing Opportunity Zone District, and the Objective Design Standards for Housing Element Sites to align with the amendments to the IZO and other clarifying changes. As a separate effort, the City, working with Raftelis, is also completing a study to update the local water and wastewater (sewer) Connection fees. The City Council held two workshops (May 7 and August 20, 2024) as part of the study process, with the latter focused on the update of the IZO. At the May 7 meeting, the City Council reviewed and discussed the results of the initial analysis completed by EPS and Raftelis, including an evaluation of potential changes to the affordable housing inclusionary rate, along with other initial findings and recommendations with respect to impact fees more generally. The analysis found that new growth and the cost of infrastructure and facilities to serve it could justify significantly higher impact fees. However, the report notes there are trade-offs to be considered – in particular, setting fees at a very high level could have the negative consequence of discouraging, or making infeasible, new development or investment in the city – which could have longer-term fiscal impacts. Regarding the water and wastewater connection fees, the initial analysis found that the City’s ATTACHMENT 3 Page 207 of 893