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How not to calculate Development Impact Fees - How AB 602 may affect you

2022 brought into law a new effort to standardize Development Impact Fees with the passage of AB 602, which, among other things, requires that:

on and after January 1, 2022, a local agency that conducts an impact fee nexus study to follow specific standards and practices, including, but not limited to, (1) that prior to the adoption of an associated development fee, an impact fee nexus study be adopted,

OK, check. The calculation and nexus report is a good idea, but it is already required via the Mitigation Fee Act.

(2) that the study identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is necessary, and

Again, check. Full disclosure is still a good idea, but again, it is already required via the Mitigation Fee Act.

(3) if the study is adopted after July 1, 2022, either calculate a fee levied or imposed on a housing development project proportionately to the square footage of the proposed units, or make specified findings explaining why square footage is not an appropriate metric to calculate the fees.

Check… wait, what? So the State of California wants everyone to proceed with the calculation of impact fees, which is supposed to be as empirical as possible, based upon AB 602’s presumption[1] that a smaller home somehow creates lesser local government demands than a larger home? This is probably based upon a false assumption that larger homes have more residents than smaller homes and thus cause more demand. This flies in the face of the Mitigation Fee Act in many ways, where equity is valued and empirical data required.

Stated most generously, there is no identified empirical data to indicate this presumption to be true. Given the nexus data that RCS has collected over the last 33 years, no such observed proof exists. The premise of AB 602 is simple unproven. How do you argue against a presumption in law that is unproven?

Police and Fire Calls-for-Service (CFS) - For the calculation of Police and Fire impacts, RCS uses locally sourced GIS based calls-for-service matched up with the City’s Land-Use GIS database. Is it possible to determine how many of these CFS’s were to smaller homes versus larger homes? Simply, no, but AB 602 presumes it to be so.

Circulation Needs - According to volume of empirical data collected by the highly respected Institute of Traffic Engineering (ITE), an average single-family dwelling generates approximately 9.5 trip-ends per day, but the ITE does not offer a distinction between small and large homes simply because they can’t because such data does not exist. But AB 602, again, presumes there is a distinction.

Storm Drainage - The storm runoff from a 1,800 square foot single-floor residence is the same as the storm runoff from a 3,600 square foot two-story building. Both have a 1,800 square foot pad, yet the fee for the 1,800 square foot home would be 50% of that of the 3,600 square foot home. Where is the equity here? No, it’s just a financial break for smaller homes.

Quality of Life Infrastructure (parks, aquatic facilities, libraries and community centers) - These fees are generally based upon census data that identifies average persons per unit. Let’s take 3.0 persons per detached dwelling unit (AKA “Single family residence”). Are we to calculate a fee that is based upon the ratio of the size of the residence? So, a 3,600 square foot residence has twice the number of residents as does an 1,800 square foot residence?

My problem with AB 602 is the presumption that a per square foot model is “best,” and if you calculate your fees on a per unit basis, you have to justify that. Why not have to justify either, because per square foot fees are rife with unfairness.

And by the way, this is the scariest part of the legislation:

SEC. 4. Section 50466.5 is added to the Health and Safety Code, to read: 50466.5.

(a) On or before January 1, 2024, the department shall create an impact fee nexus study template that may be used by local jurisdictions. The template shall include a method of calculating the feasibility of housing being built with a given fee level.

(b) The department may contract with nonprofit or academic institutions to complete the template.

Yeah, that’s going to work well because all cities are the same (33 years of calculating impact fees says they are not at all). My money says it will be the UC Berkeley academics that create the template, does anybody wish to wager against me?

[1] (noun: presumption; plural noun: presumptions - an idea that is taken to be true, and often used as the basis for other ideas, although it is not known for certain.)

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