Property tax limitations imposed by Proposition 13, resulting in the decline in property taxes available for public projects, has led local governments to adopt alternative revenue sources to accommodate public facility and infrastructure demands resulting from growth. Development impact fees are one of those sources. AB 1600 (Cortese), which became effective on January 1, 1989, regulates the way that impact fees are imposed on development projects. Impact fees are one-time charges applied to offset the additional public facility provision costs from new development. This may include provision of additional services, such as water and sewer systems, roads, schools, libraries, and parks and recreation facilities. Impact fees cannot be used for operation, maintenance, alteration, or replacement of existing capital facilities and cannot be channeled to the local government’s discretionary general funds. An impact fee cannot be an arbitrary amount and must be explicitly linked to the added cost of providing the facility towards which it is collected.

The City already has a range of impact fees that are updated periodically. It is important, however, to realize that there are two primary aspects of capital costs (based on which impacts fees are collected) – land costs and building costs. Though the latter can be estimated at a City-wide level and adjusted periodically using appropriate inflation factors, land cost estimation is more complicated, especially when one considers significant variations in land values within the City and the necessity to provide land intensive public facilities, such as parks. As a result, the land acquisition component of a standardized impact fee may not be consistent with the true costs involved. (Ord. 3352 § 2, 2015; Ord. 3238 § 2 (Exh. B), 2012. Formerly 19.87.004).