HomeMy WebLinkAboutCC 2026-01-27_09c Dev Impact Fees incl SewerItem 9.c.
MEMORANDUM
TO: City Council
FROM: Nicole Valentine, Director of Administrative Services
BY: Megan Schotborgh, Finance Manager
SUBJECT: Annual Adjustment of Development Impact Fees Including the Sewer
Connection Fee
DATE: January 27, 2026
RECOMMENDATION:
1) Adopt a Resolution adjusting Development Impact Fees; including the Sewer
Connection Fee to increase by 2.43%, consistent with the Engineering News Record
Construction Cost Index; and
2) Find that establishing development impact fees, including sewer connection fees, are
not a project subject to the California Environmental Quality Act (“CEQA”) because the
action has no potential to result in either a direct , or reasonably foreseeable indirect,
physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3),
15378.).
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
Adoption of the Resolution will increase the Development Impact Fees cha rged for new
development projects, and Sewer Connection Fees charged for new sewer connections,
effective March 2, 2026. The revenue generated from this increase is dependent on the
amount of new development and new sewer connections in the community during the
coming year.
BACKGROUND:
Section 3.36.040 of the Arroyo Grande Municipal Code states that Development Impact
Fees shall be adopted by resolution and shall be adjusted each year in accordance with
the percentage increase based on changes in the annual average Engineering News
Record (ENR) Construction Cost Index (CCI).
The following is a list of the Development Impact Fees that are included in the annual
adjustment:
1. Fire Protection Fund (Fund 210)
2. Police Protection Fund (Fund 212)
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Item 9.c.
City Council
Annual Adjustment of Development Impact Fees Including the Sewer Connection
Fee
January 27, 2026
Page 2
3. Park Facilities Fund (Fund 213) and Park Improvement Fund (Fund 214)
4. Recreation Facilities Fund (Fund 215)
5. Traffic Signalization Fund (Fund 222) and Transportation Facility Impact Fund
(Fund 224)
6. Storm Drain Facility Fund (Fund 231)
7. Water Neutralization Impact Fund (Fund 226) and Water Availability Fund (Fund
241)
The Development Impact Fee Nexus Study was updated on January 29, 2024, and
presented to the City Council on February 13, 2024. The fees associated with the study
went into effect on April 15, 2024. The first ENR CCI increase was presented to the City
Council on January 28, 20251, with the fees increase going into effect on February 18,
2025.
There are two capacity fees subject to the annual reporting requirements for capacity
fees:
1. Sewer Facility Fund (Fund 634)
2. Water Facility Fund (Fund 642)
Ordinance 528 C.S. amended Section 13.12.190 of the Arroyo Grande Municipal Code
to provide that, for each connection of a building to a public sewer, a connection fee will
be charged and that the amount of the fee shall be set by resolution. Resolution No. 3567
and 4507 authorized that the sewer connection fees be adjusted each year in accordance
with the percentage increase in the annual average ENR CCI.
The previous rate increase of 1.6% was approved by the City Council on January 2 8,
2025, and became effective on February 18, 2025.
ANALYSIS OF ISSUES:
The calculation shown below provides documentation that the ENR CCI wa rrants a 2.43%
increase in the City’s Development Impact Fees, and the Sewer Connection Fees.
The calculation adjusts the fees as follows:
1 + Current Index – Base Index for Date of Adoption = Factor
Base Index for Date of Adoption
For the current year, the calculation is as follows:
1 + 13,901 – 13,571 = 1.0243 = 2.43%
13,571
1 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=13490
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Item 9.c.
City Council
Annual Adjustment of Development Impact Fees Including the Sewer Connection
Fee
January 27, 2026
Page 3
The existing and proposed fees implementing a 2.43% ENR CCI increase are set forth in
Exhibit A to the attached Resolution. If approved, the effective date of the new fees will
be March 2, 2026.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Approve staff’s recommendation;
2. Do not adopt the Resolution and request further information; or
3. Provide other direction to staff.
ADVANTAGES:
By implementing the previously authorized adjustments, the City will be able to recover
the estimated cost of providing infrastructure and services to new development and sewer
connections.
DISADVANTAGES:
Implementing the recommended fees will result in an increased cost to new development
and sewer connections.
ENVIRONMENTAL REVIEW:
Adopting the Resolution establishing development impact fees , including sewer
connection fees, is not a project subject to the California Environmental Quality Act
(“CEQA”) because the action has no potential to result in either a direct, or reasonably
foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§
15060, subd. (c)(2)-(3), 15378.).
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
ATTACHMENTS:
1. Resolution
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ATTACHMENT 1
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF ARROYO GRANDE ADJUSTING DEVELOPMENT
IMPACT FEES; INCLUDING THE SEWER CONNECTION
FEE TO INCREASE BY 2.43%, CONSISTENT WITH
ENGINEERING NEWS RECORD CONSTRUCTION COST
INDEX
WHEREAS, the City Council adopted Ordinance No. 528 C.S. amending Section
13.12.190 of the Municipal Code regarding sewer connection fees; and
WHEREAS, pursuant to Section 13.12.190, the City Council may by Resolution
establish the amount of the sewer connection fees; and
WHEREAS, pursuant to Section 3.36.040 of the Municipal Code, Development Impact
Fees are to be adjusted annually by modifying the adopted value up or down in
conformance with the Engineering News Record (ENR) Construction Cost Index (CCI);
and
WHEREAS, Resolution No. 5346 authorizes an annual adjustment in the development
impact fees based on the changes in the annual average ENR CCI.
WHEREAS, Resolution Nos. 3567 and 4507 authorizes an annual adjustment in the
sewer connection fees based on the changes in the annual average ENR CCI.
WHEREAS, it is determined that an increase of 2.43% of the ENR CCI has been
calculated to warrant an adjustment to the Development Impact Fees; including sewer
connection fees, effective March 2, 2026.
NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Arroyo
Grande resolves, finds, and determines as follows:
1. Recitals. All recitals above are true, correct, and incorporated herein by
reference.
2. CEQA. This resolution establishing development impact fees, including sewer
connection fees, are not a project subject to the California Environmental Quality
Act (“CEQA”) because the action has no potential to result in either a direct, or
reasonably foreseeable indirect, physical change in the environment. (State
CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378.).
3. Development Impact Fee Adjustment Approval. The City Council hereby
implements the CCI increase, authorized by Resolution No. 5346, to the
development impact fees set forth in Exhibit “A” attached hereto and incorporated
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RESOLUTION NO.
PAGE 2
herein by this reference as though set forth in full. The adjusted development
impact fees shall take effect on March 2, 2026.
4. Sewer Connection Fee Adjustment Approval. The City Council hereby
implements the CCI increase, authorized by Ordinance No. 528, and Resolution
Nos. 3567 and 4507, to the sewer connection fees set forth in Exhibit “B”
attached hereto and incorporated herein by this reference as though set forth in
full. The adjusted sewer connection fees shall take effect on March 2, 2026.
On motion of Council Member __________________ seconded by Council Member
__________________ and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
The foregoing Resolution was passed and adopted this 27th day of January, 2026.
Page 32 of 175
RESOLUTION NO.
PAGE 3
_____________________________________
CAREN RAY RUSSOM, MAYOR
ATTEST:
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
_____________________________________
MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
_____________________________________
ISAAC ROSEN, CITY ATTORNEY
Page 33 of 175
RESOLUTION NO.
PAGE 4
Fire
Protection Police Parks Recreation Transportation Storm Drain Wastewater Total
Residential - per Sq. Ft.0.25$ 0.18$ 3.35$ 0.18$ 1.43$ 0.03$ 0.61$ 6.03$
Nonresidential - per Sq. Ft.
Commercial 0.22$ 0.16$ -$ -$ 7.22$ 0.01$ 0.27$ 7.88$
Office 0.33 0.24 - - 7.57 0.01 0.30 8.45
Meter Size
Water Impact
Fee per Meter
5/8 inch 2,693$
3/4 inch 4,039
1 inch 6,732
1-1/2 inch 13,464
2 inch 21,543
3 inch 40,393
4 inch 67,322
6 inch 134,644
EXHIBIT A
DEVELOPMENT IMPACT FEES
EFFECTIVE 3/02/2026
Land Use
Page 34 of 175
RESOLUTION NO.
PAGE 5
EXHIBIT B
2022 2023 2024 2025 2026
ENR Index 12133 13007 13358 13571 13901
Residential - per dwelling unit
Single Family 1,530$ 1,640$ 1,685$ 1,693$ 1,735$
Multifamily (a)1,135 1,216 1,249 1,256 1,286
Trailer Park/Mobile Home 1,255 1,346 1,382 1,389 1,423
Non-Residential - per water meter size (b)
5/8 inch 1,530$ 1,640$ 1,685$ 1,693$ 1,735$
3/4 inch 2,295 2,460 2,526 2,539 2,601
1 inch 3,829 4,105 4,216 4,238 4,341
1 1/2 inch 7,659 8,210 8,432 8,475 8,681
2 inch 12,254 13,137 13,491 13,560 13,890
3 inch 22,978 24,633 25,298 25,427 26,045
4 inch 38,298 41,055 42,164 42,379 43,409
6 inch 76,594 82,108 84,325 84,757 86,817
8 inch 153,189 164,219 168,652 169,516 173,635
10 inch 229,783 246,327 252,978 254,272 260,451
12 inch 337,014 361,278 371,033 372,932 381,994
(a) Multifamily includes duplex, triplex, apartments, and condominiums
SEWER CONNECTION FEES
EFFECTIVE 3/02/2026
For each connection of a building sewer to a public sewer, a connection fee shall be collected by the City
before the permit for the connection work is issued. The amount of the fee collected is as follows:
(b) For meter sizes larger than shown, connection fee determined based on the ratio of the maximum safe
operating capacity of the meter to that of a 5/8 inch meter.
The connection fees shall be increased each year with the annual percentage increase of the annual average
ENR Construction Cost Index as established in the Engineering News Record publication.
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