CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 2 of 17 fees are substantially lower than neighboring agencies’ due to the length of time since the last fee updates, and it was staff’s recommendation, supported by the City Council, to accept the maximum rate increase identified in the draft study. At the August 20 meeting, the City Council provided direction on several aspects of the IZO, including the inclusionary rate, which the City Council supported setting at 15% for all project types (single-family and multi-family), with recommended target affordability levels for each project type. These recommendations are reflected in the Draft Inclusionary Zoning Ordinance, which the City Council reviewed on October 15, and is presented to the City Council for adoption at this November 19 meeting as a separate agenda item. DISCUSSION Regulatory Requirements State law, specifically Government Code 66000 et. seq. (also known as AB 1600 or the Mitigation Fee Act) and the more recently adopted AB 602, includes various requirements with respect to the development and implementation of fee programs. Note that AB 1600 and AB 602 relate specifically to development impact fees, (i.e., in Pleasanton, the Capital Facilities Fee (CFF) and Transportation Impact Fee (TIF), as well as the Commercial Linkage Fee (fee charged to commercial development to mitigate housing impacts)). The nexus studies have been completed in accordance with all statutory requirements. Among the requirements of AB 602 is for impact fees to be charged on a per square foot basis, unless analysis can otherwise show that a different methodology is appropriate. Under AB 602 (Government Code Section 66019.A), water, wastewater and similar utility-related fees are not required to be calculated on a per square foot basis. The City’s affordable housing fees are a separate category of fee, related to the City’s inclusionary zoning requirements. As such, they are not “mitigation fees” subject to the requirements of AB1600/AB 602; rather, they are authorized under the general police powers given to local agencies to regulate the development and use of property. However, it is best practice for such in-lieu fees to be calculated based on a clear and defensible methodology, and for the inclusionary rate to be considered in the context of development feasibility to ensure it does not present an impediment to residential development. Calculation of Maximum Fee Amounts The largest part of the fee study is dedicated to outlining the methodology and calculation of various fees. It is noted the studies provide a calculation of the maximum allowable fee that the City can charge based on the nexus requirements of AB1600, or for the commercial linkage and affordable housing fee, that is otherwise supported based on the analysis. As described later in this report, as a policy matter, the City can elect to set the fee levels at, or below, the maximum amount justified by the study. Development Impact Fees and Affordable Housing Fee Study EPS has prepared the Draft Fee Update and Nexus Study – City of Pleasanton Development Impact, Commercial Linkage and Housing In-Lieu Fee, which includes the necessary background, analysis, and documentation to support the adoption of updated fees. (Attachment 1) The study addresses three main categories of fees: Page 208 of 893