TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Ashley Lopez, Accounting Manager
SUBJECT:
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Public Hearing for Fiscal Year 2026/27 Public Facilities Development Impact Fee Update
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ABSTRACT
This report provides an overview of the City’s Development Impact Fee (DIF) program, which is used to fund infrastructure, facilities, and equipment needed to support new development. Authorized under the Mitigation Fee Act, DIFs allow local governments to recover costs associated with growth and increased service demands. This report recommends a Public Hearing to update the DIFs by 2.5%, based on the Construction Cost Index (CCCI) published by the California Department of General Services (DGS) in accordance with Resolution No. 24-4733, and to amend the City’s fee schedule accordingly.
RECOMMENDATION
recommendation
Conduct a Public Hearing related to updating the City’s Public Facilities Development Impact Fees; and
Adopt Resolution No. 26-4923 entitled: A Resolution of the City Council of the City of Murrieta, California, Approving an Update of the Fiscal Year 2026/27 Public Facilities Development Impact Fee Schedule and Amending the City’s Fee Schedule.
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PRIOR ACTION/VOTE
On July 19, 2016, the City Council adopted Resolution No. 16-3602, replacing Resolution No. 98-612, establishing a new Development Impact Fee Schedule, and imposing a phased-in approach for some residential and office development for projects with entitlements no later than December 31, 2016 (Vote: 5-0).
On May 17, 2023, the City Council approved an Agreement with Willdan Financial Services to conduct a Development Impact Fee Nexus Study in the amount of $86,520 (Vote: 5-0).
On April 16, 2024, the City Council adopted Resolution No. 24-4733, Approving the Fiscal Year 2024/25 Public Facilities Development Impact Fee Schedule and an Annual Update of Fees at the Lesser of the Change in the January-to-January California Construction Cost Index or 4% (Vote: 3-2).
On April 17, 2025, the City Council adopted Resolution No. 25-4827, Approving an Update of the Public Facilities Development Impact Fee Schedule and Amending the City’s Fee Schedule for Fiscal Year 2025/26 (Vote 5-0).
STRATEGIC ALIGNMENT
The City Council’s goal of maintaining a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency is associated with this administrative priority.
DISCUSSION
History
A development impact fee (DIF) is a monetary exaction charged by a local government to a developer in connection with the implementation of an approved development project. DIFs can vary widely across jurisdictions due to differing facility needs. With the passage of Assembly Bill 1600, known as the 1987 Mitigation Fee Act (Government Code Section 66000 and following), the State of California recognized the burden on local governments from the rising costs associated with needed infrastructure and population increases associated with new development. The Mitigation Fee Act secured a system for identifying and collecting specific fees, dedications, reservations, and other exactions that local jurisdictions could regularly impose when properties are developed.
In October 1998, the City of Murrieta (City) first established its DIF program to fund new public facilities and purchase equipment required to provide essential services to service new growth and development. As a part of this process, the City prepared a Master Facility Plan to identify the equipment and infrastructure needs required to meet the service demand of the increased residential population and business community (service population).
In 2013, the City Council approved an Agreement with Willdan Financial Services (Willdan) to prepare an updated Master Facility Plan and an updated Development Impact Fee study. The Master Facility Plan reflects the combination of equipment, infrastructure, and facilities needed to support the build-out of the General Plan and Parks Master Plan.
In 2015, the City Council approved an Agreement with Willdan to conduct a Master Facilities Plan Update and Development Impact Fee Calculation Study. Staff presented a status update on Development Impact Fees to the City Council in a Workshop in April 2016. Two public hearings were held, one in June and one in July 2026. On July 19, 2016, the City Council adopted Resolution No. 16-3602, which replaced Resolution No. 98-612 and established a new Development Impact Fee Schedule. A phased-in approach was used for residential and office development for those issued entitlements no later than December 31, 2016.
In 2023, the City Council approved an Agreement with Willdan to conduct a Development Impact Fee Nexus Study. On January 25, 2024, the Director of Finance delivered a presentation to the Development Advisory Group (DAG) on the DIF Study. Staff conducted a workshop on February 20, 2024, to present the new Development Impact Fee Nexus Study to the City Council. At a public hearing held on April 16, 2024, the City Council adopted Resolution No. 24-4733, establishing a new Development Impact Fee Schedule and implementing an annual update of fees at the lesser of the change in the January-to-January California Construction Cost Index (CCCI) or 4%. A three-year phased plan was established for industrial and office fee types. This plan increases the fees annually until the full fee, as outlined in the 2024 DIF Nexus Study and adjusted by the annual CCCI update, is charged in fiscal year 2026/27.
California Construction Cost Index
The CCCI is released by the California Department of General Services (DGS). The data is updated in the second half of the month for the current month, which means the January-to-January change in CCCI was released in the middle of January. The CCCI increased from 9911 in January 2025 to 10159 in January 2026, resulting in a percentage increase of 2.5%. The data presented by DGS is included in Attachment 4 of this report.
Other Programs
On June 5, 2018, the City Council approved and adopted a Downtown Development Impact Fee Reduction Program to incentivize development in downtown Murrieta. On July 15, 2025, the City Council also approved a tiered Development Impact Fee for commercial lodging, which may result in reduced Commercial Use Development Impact Fees for certain projects, with the goal of encouraging higher-quality commercial lodging. Both programs shall remain in full force and effect.
PUBLIC NOTICING
A public notice was published in the Press-Enterprise, Daily Bulletin, and San Bernardino Sun newspaper on March 23, 2026, and made available for public review on March 23, 2026. The City Clerk's Department notified interested parties with an active notice on file.
CEQA AND REGULATORY OVERVIEW
This action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly.
FISCAL IMPACT
As currently drafted, the anticipated cumulative revenue impact of the proposed changes is approximately $305,122 for Fiscal Year 2026/27, which is dependent on the level of development activity. Adjusting the Development Impact Fees toward full cost recovery will positively impact the City’s Capital Improvement Budget revenue to have funding to complete the necessary projects, with the amount dependent on the level of development impact and type of project.
ATTACHMENTS
ATT 1 - Resolution No. 26-4923
ATT 2 - FY 2026/27 DIF Fee Schedule Page
ATT 3 - FY 2026/27 Fee Changes
ATT 4 - DGS California Construction Cost Index CCCI