Over the next 20 years, the City’s General Plan forecasts more than 12,000 new housing units, 2.7 million square feet of commercial uses and 4.6 million square feet of industrial uses to be built. With the expected growth, construction of new roadways, drainage facilities, water and sewer systems, public safety facilities, parks, trails, and other improvements will be required. The City relies on various outside sources to fund this infrastructure (i.e. federal and state grants); however a large portion of it is funded through development impact fees. The City’s development impact fees require new development projects to “pay their own way” and ensure they do not result in a financial burden to existing development or services within the community.

In accordance with the provisions of the Mitigation Fee Act (Government Code Section 66000 et. Seq.), development impact fees can be used to defray all or a portion of the cost of public facilities related to new development projects. Public facilities include public improvements, public services and community amenities. These fees cannot include costs attributable to existing deficiencies in public facilities, but may include the costs attributable to the increased demand for public facilities reasonably related to the development project in order to achieve the adopted levels of service that are consistent with the General Plan.

Two of the City’s largest development impact fee programs are the Citywide AB1600 and Northeast fees:

• The City’s current Citywide AB1600 Fee Program includes six (6) distinct fee categories, including the transportation fee program (last updated in 2013), the parks fee program (last updated in 2013), as well as the general government, police, fire, and urban design fees (last updated in 2006).
• The current Northeast development impact fee program was developed in 2013 and includes a number of components. This program funds infrastructure and related items specific to the largely undeveloped area east of Clay Bank Road. There are three components to the fee that apply to all new development in the Northeast Area, including a transportation fee, a Linear Park Trail fee, and a greenbelt preservation fee. There are also four additional fee components that are addressed, including a sewer fee and a drainage fee that both only apply to specified subareas in the Northeast area, as well as two fees that apply only in the Train Station Specific Plan (TSSP) area; one that covers additional TSSP capital improvements and another that covers the TSSP preparation costs.

In August 2019, the City contracted with Economic & Planning Services, Inc. (EPS) and Coastland Civil Engineering (Coastland), Inc. to conduct a preliminary analysis of the adopted AB1600 and Northeast fees. Based on EPS and Coastland’s findings, there are several factors contributing to the need for the City to initiate a fee update. First, developers in the northeast area have informed the City that they expect reduced residential densities in their development projects. Lowering the intensity of residential units potentially impacts the amount of revenue generated to facilitate infrastructure improvements. Reduced densities can also reduce the infrastructure capacity needed to support growth. Secondly, since 2013, cost assumptions for infrastructure have changed and many of the identified public facilities have been built. Therefore, it is necessary to update the infrastructure project list based on actual construction costs. Finally, it is an appropriate time to explore the issues surrounding the Heart of Fairfield and other infill development projects to make sure that fee levels are appropriate, and that infrastructure needed to support infill development is identified and funded.

Economic & Planning Services, Inc.

Staff is recommending EPS and their consulting team, Fehr & Peers (F&P) and Carlson, Barbee & Gibson (CBG), be hired to assist the City in completing the comprehensive technical studies required as part of the AB1600 and Northeast fee update. EPS has worked with the City on different components of the development impact fees since the mid-1990’s. This same team conducted the last fee update, completed in 2013, that included updates to the citywide transportation and parks development impact fees, as well as the adoption of the Northeast development impact fee.

The update to the AB1600 and Northeast fee programs will have several interconnected components. EPS, with support from F&P and CBG, will forecast residential and nonresidential development capacity for the next 20 years, revalidate and update the travel demand model for 2040 conditions, update improvement cost estimates and appropriate fee program costs, and complete the nexus study to determine the appropriate fee level to adopt. EPS will complete the proposed services for a not-to-exceed amount of $264,555. In order to remain responsive and flexible as the work proceeds, and allow for minor adjustments in the project scope, staff is recommending a 10% management reserve for a total authorization amount of $291,010.50. The work is anticipated to be completed within a twelve-month period.

Coastland Civil Engineering

The City typically performs project management services in-house. However, due to current staffing levels and an accelerated timeframe to complete the work, staff recommends retaining services from Coastland to be used as a temporary augmentation of City staff. Coastland will provide project management services and facilitate the work in a timely and successful manner. This hybrid model is currently being utilized with great success on the West Texas Complete Street Project.

On April 16, 2019, City Council approved Resolution No. 2019-77 approving a professional services agreement with Coastland for on-call engineering services with a not-to-exceed amount of $500,000 per year. The on-call agreement is for a three-year period, through April 16, 2022, with the understanding that task orders in excess of $25,000 be presented to City Council for approval. Approving the proposed resolution will authorize a task order for a not to exceed amount of $52,090 for Coastland to provide technical support and project management services related to the 2020 AB1600 and Northeast fee program update.