TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Ashley Lopez, Accounting Supervisor
SUBJECT:
title
Public Hearing for Fiscal Year 2025/26 Public Facilities Development Impact Fee Update
end
RECOMMENDATION
recommendation
Conduct a Public Hearing to update the City of Murrieta’s Public Facilities Development Impact Fees; and
Adopt Resolution No. 25-4827 entitled: A Resolution of the City Council of the City of Murrieta, California, Approving an Update of Public Facilities Development Impact Fee Schedule and Amending the City’s Fee Schedule For Fiscal Year 2025/26.
body
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).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
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 between jurisdictions because of 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 first established its DIF program to fund new public facilities and purchase equipment required to provide essential services required 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. Examples of facilities and capital projects to be funded identified in the study include the Police Station expansion, regional public safety training facility, Fire Station 6, library expansion, Fire Department apparatus equipment (i.e., Pierce Type 1, Brush Type 3), new roadway segments, traffic signals, storm drainage, Public Works building and maintenance yard, and various park additions (i.e., Pioneer Park), and recreation facilities additions (i.e., Community room, youth center expansion, aquatic center).
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. 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. One public hearing was held on April 16, 2024, where the City Council adopted Resolution No. 24-4733. It established a new Development Impact Fee Schedule and implemented 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 the industrial and office land use category. 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 cost index increased from 9680 in January 2024, to 9911 in January 2025, resulting in a percentage increase of 2.4%. The data presented by DGS is included in Attachment 3.
Proposed Action
Staff recommends that the City Council approve the updated Public Facilities Development Impact Fee, which incorporates the California Construction Cost Index for each of the five land use categories: residential (single-family and multifamily) and nonresidential (commercial, office, and industrial). The proposed Development Impact Fee update also includes the phased-in component for the industrial and office land use categories, in accordance with Resolution No. 24-4733.
California Environmental Quality Act (CEQA)
Adopting a fee schedule does not constitute a “project” under CEQA pursuant to State CEQA Guidelines Section 15378(b)(4) because these actions involve the creation of a government funding mechanism that does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
Public Notice
A public notice was published in the Press-Enterprise, Daily Bulletin, and San Bernardino Sun newspaper on April 4, 2025, and made available for public review on April 4, 2025. The City Clerk's Department notified interested parties with an active notice on file.
FISCAL IMPACT
As currently drafted, the anticipated cumulative revenue impact of the proposed changes is approximately $31,886, for Fiscal Year 2025/26, 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 in order to help raise the necessary funding to complete the necessary projects, with the amount dependent on the level of development impact and type of project.
ATTACHMENTS
1. Resolution No. 25-4827 and FY 2025/26 DIF Fee Schedule Page
2. FY 2025/26 Fee Changes
3. DGS California Construction Cost Index CCCI