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City Council approves development impact fee increases

New rate schedule takes effect Jan. 1; cumulative fees go up 18%-49%

The city of Pleasanton will be instituting a series of increases to its development impact fees as of the new year, the first overhaul of the city's fee schedule in two decades.

The City Council last week unanimously approved increases almost across the board for the list of fees the city charges to developers to help offset the impacts that new housing and commercial projects have in the areas of affordable housing, transportation and public facilities.

The new cumulative fee totals will go up between 18% and 49% for residential and commercial developments -- based on standard project sizes -- and the city has established guidelines to ensure the developer fees are reviewed more frequently in the future to avoid another 20-year gap between updates.

"These are significant changes. But that's what we need to fund our infrastructure so the city can have the money to expand the roads, because people are concerned about traffic problems, and so forth," Councilwoman Karla Brown said in support of the new fee schedule before the council vote Sept. 18.

City officials have been working since fall 2015 to update the developer fees, which aim to generate revenue for public projects to help mitigate the impacts new developments have on the community. The efforts included a consultant's nexus study to determine maximum fee amounts and meetings with residents and stakeholders.

The new fee schedule identifies increases in almost all categories, in many cases the maximum allowable fee, and overall, the cumulative fees for Pleasanton are now in line with the average of comparable fees charged by neighboring Dublin and Livermore.

City officials said they found Pleasanton's previous cumulative development impact fees were between 67% and 85% of the average of Dublin and Livermore fees.

For capital facility and transportation fees, all development categories saw increases to the maximum fee amount -- the exception being the transportation fee for retail for which city staff recommended the Dublin-Livermore average. The project categories are single-family and multi-family for residential, and retail, office, hotel/motel and industrial for commercial.

At the council's urging, the affordable housing fees were increased above the city staff recommendation to bring Pleasanton's cumulative fee total in line with the neighbors' average -- since capital facility and transportation fees were mainly recommended to increase to the maximum amount, the only wiggle room existed in the affordable fee.

The city fees are only a portion of those cumulative impact fees charged to new development in Pleasanton, which also include fees from other agencies such as Zone 7 Water Agency, Dublin San Ramon Services District and Pleasanton Unified School District.

After the city increases, the cumulative fees for a new single-family home in Pleasanton (at 3,000 square feet) will go up 18% to $143,781. Less than half of that amount ($69,389) are city fees; the rest are paid to other agencies.

For multi-family housing, the overall fee will increase by 37% to $111,628 per 1,200-square-foot unit.

For retail (per 13,070 square feet), the cumulative fee will rise 22% to $490,170. For office (for 15,250 square feet), the fee will go up 48% to $614,451, and per 15,680 square feet of industrial the fee will be $627,029, representing a 49% increase.

The new fees would take effect on Jan. 1, although projects with development applications already submitted (substantially completed) for city review would be grandfathered into the existing fee structure.

"I think it's very generous that the city is looking to people who already have projects partway through and saying we'll extend it, so that nobody is hit suddenly with a big change. Because these are significant changes," Brown said.

For the future, the city will review the fee schedule every five years for possible adjustment, or after major General Plan or Regional Housing Needs Assessment (RHNA) changes. The council could also call for a review if Dublin or Livermore update their fees.

There will also annual inflationary adjustment based on Engineering News Record construction cost index.

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