2022 Impact Fee Update

About Impact Fees

Development Impact Fees (DIF) are one-time fees paid by new development to fund the cost of providing municipal facilities to serve that development. This authorization exists through the enactment of California Government Code sections 66001 through 66025 (also known as the “Mitigation Fee Act” and sometimes referred to as “AB1600”).

The Mitigation Fee Act is premised on the concept that new development pays its own way, or, put another way, new development has to mitigate its own impacts on the system. The Mitigation Fee Act requires a rational nexus and rough proportionality between the type and scale of development and the fee imposed. This is what makes a DIF a “fee” and not a tax; DIF cannot be used for general purposes, such as maintenance.

In Citrus Heights there are four existing Impact Fees:

  1. Fire Facilities Impact Fee
  2. Park Impact Fees 
  3. Affordable Housing Impact Fee
  4. Roadway/Transit Impact Fee

Proposed Fee Updates

On June 23, 2022, at 7:00 p.m., or as soon thereafter as the matter may be heard, the City Council of the City of Citrus Heights will hold a Public Hearing at the Citrus Heights Council Chambers located at 6360 Fountain Square Drive, Citrus Heights, CA, will conduct a Public Hearing(s) to consider adopting a number of Impact Fee Nexus Studies and updating the Impact fees for the following:

  • Fire Facilities Impact Fee
  • Park Impact Fee
  • Affordable Housing Impact Fee
  • Roadway/Transit Impact Fee (Multimodal Impact Fee)

Outside Agency Fee Updates

Citrus Heights is unique in that Fire Services and Park Services are provided by partnering Special Districts (Sacramento Metropolitan Fire District and Sunrise Recreation and Park District). Under state law, these Districts are unable to impose a fee to offset the impacts of new development. However, the City has a longstanding partnership and currently collects fees on behalf of these agencies and allocates the funding to each partner accordingly.

Fire Facilities Impact Fee

The Sacramento Metropolitan Fire District (District) retained NBS Government Finance Group to prepare this Fire Facilities Impact Study  to analyze the impacts of new development on the District’s facility and equipment needs and to calculate impact fees based on that analysis. 

The Study is intended identify development impact fees associated with new development in Citrus Heights to offset the impacts of new development on Fire Facilities and equipment. Although the Study indicates a Total Cost Basis of nearly $600M, the proposed fee is anticipated to result in $90M in revenue by 2040. Costs not covered by the Impact Fee would be covered by other funding sources such as grant funding. 

 Proposed Fire Facilities Impact Fee

fire

The City will review annually and adjust fees as needed to keep pace with percentage changes in construction and equipment costs. Use of Engineering News Record (ENR) Building Cost Index or the California Construction Cost Index (CCI) published by the California Department of General Services are considered industry standard inflationary factors applicable to impact fees.

Park Impact Fee

The City of Citrus Heights, on behalf of the Sunrise Recreation and Park District (“District”), has imposed a park impact fee on new residential and nonresidential development. The purpose of the park impact fee is to fund the one-time cost of expanding the District’s park and recreational facilities in order to meet the impact of new development within the District’s Citrus Heights service area.

Earlier this year, District retained SCI Consulting Group to prepare a Park Impact Fee Nexus Study  to analyze the impacts of new development on the District’s Park Facilities needs and to calculate impact fees based on that analysis.

Proposed Park Impact Fee

Park 

The City will review annually and adjust fees as needed to keep pace with percentage changes in construction and equipment costs. Use of Engineering News Record (ENR) Building Cost Index or the California Construction Cost Index (CCI) published by the California Department of General Services are considered industry standard inflationary factors applicable to  impact fees.

 City Impact Fee Updates

Shortly after incorporation the City Council adopted various regulations, fees, and associated actions from Sacramento County. Both the Housing Linkage Fee (Affordable Housing Fee) and the Roadway Transit Fee were adopted in the 1990s and have never been updated or increased. Although development in the city is relatively limited, these fees are an important tool for the city to offset the impacts of development by provide affordable housing and roadway improvements. 

Since neither fee was indexed to inflation, the relative buying power of these fees has diminished considerably since incorporation. In order to ensure the impact fees are providing resources to offset development impacts, the city commissioned a Nexus Study for both the Affordable Housing Impact Fee and the Roadway and Transit Fee, rebranded as the Multi-Modal Impact Fee.

Affordable Housing Impact Fee

The Affordable Housing Impact fee is an existing fee assessed on new commercial development to offset the impact of this development on the supply of affordable housing. New commercial buildings create new jobs, a share of which are lower paying, resulting in new lower income households which in turn create additional demand for affordable housing. The Housing Impact Fee (often referred to as the Housing Linkage Fee) specifically provides funding to help address the affordability gap or the difference between the cost of developing affordable units and the rent charged based on the income of the tenant for those in the workforce.

The fee amounts have not been updated since 1992 and are not indexed to inflation. Currently, the fees are assessed at the point of building permit issuance with fees ranging from $0.26 per square foot to $0.97 per square foot depending on the use.

As detailed in the Nexus Study , the analysis links the development of six types of workplace buildings to the estimated number of lower income housing units required in each of three income categories. Then, the cost of providing affordable housing to the worker households is determined and expressed per square foot of building area. Findings represent the full mitigation cost for the affordable housing impacts of new development and the ceiling for any affordable housing fee that may be imposed. 

Table 1: Maximum Impact Fee Identified by Affordable Housing Nexus Study

The Nexus Study also points out that many of the assumptions made err on the conservative side and may be considerably understated. The subsequent recommendations then reflect a contribution towards the local gap amount rather than the full mitigation cost recognizing that the full mitigation cost could be a barrier to development and that affordable housing projects obtain a variety of subsidies in order to be built and remain affordable over time.

Table 2: Proposed Affordable Housing Impact Fee Agency Comparison

* Office includes Medical Services and Assisted living

** Industrial includes Flex and Research & Development

The proposed Affordable Housing Impact Fee is proposed to be consistent with the fees recently updated by Sacramento County. This approach increases regional consistency for these fees and supports similar outcomes. Also similar to Sacramento County, the City proposes to review and adjust the fees as needed to keep pace with percentage changes in construction costs. Use of Engineering News Record (ENR) Building Cost Index or the California Construction Cost Index (CCI) published by the California Department of General Services are considered industry standard inflationary factors applicable to impact fees

 Roadway/Transit Impact Fee (Multi-Modal Fee)

The Roadway/Transit Impact Fee is an existing fee assessed on new development to offset the impact of this development on the City’s Transportation Network. The City is proposing to rebrand the Roadway/Transit Fee into a multi-modal impact fee to better reflect the City’s Complete Streets approach to the transportation Network. 

The initial Roadway/Transit Impact Fees were adopted by Sacramento County in 1988 required as a condition for receiving Measure A funds. The adopted fees were not indexed to inflation. The fees were adopted by Citrus Heights as part of the incorporation but the fee amounts have not been updated since 1988 and are not indexed to inflation. 

Currently, the fees are assessed at the point of building permit issuance with fees up to $1,434 per unit or $4.45 per square foot depending on the use.

As detailed in the Nexus Study, the analysis links the impact of development of four types of land uses to impacts to the Transportation Network. The Nexus Study also points out that many of the assumptions made err on the conservative side and may be considerably understated. 

 Table 1: Maximum Roadway/Transit Fee identified by Nexus Study

Max

The subsequent recommendations reflect a contribution towards the local gap amount rather than the full mitigation cost recognizing that the full mitigation cost could be a barrier to development and that other funding sources such as grants are anticipated to fill the gap.

 Table 2: Proposed Roadway/Transit Fee Agency Comparison

PROPOSED ROADWAY IMPACT FEES COMPARED TO ADJACENT JURISDICTIONS

Land Use Category

CITY OF 

WEST SAC

CITY OF ROSEVILLE

CITY OF RANCHO CORDOVA

CITY OF FOLSOM


 SAC COUNTY

 CITRUS HEIGHTS (existing)

CITRUS HEIGHTS (proposed)

Single-Family

$1,640-$8,364
 per unit

$6,135 per unit 1

$14,306 per unit

$8,168 per unit

$18,620 per unit 2

 $1,434 per unit

$2,614 per unit

Multi-Family

See above

$3,804 per unit

$9,417 per unit

$5,717 per unit

$10,613 per unit 6

$1,313 per unit

$1,418 per unit

Commercial/Retail

$7.00-$7.44 per sf

$7.79 per sq. ft. 3

$15.71 per sf

$12.27 per sf

$20.29 per sq. ft. 4

 $4.45 per. sf.

$3.87-$6.26 per sf.

Professional Office

$7.28-$9.63 per sf

$7.36 per sq. ft. 5

$12.57 per sf

$5.33-$12.77 per sf

$17.20 per sq. ft.

 $3.64 per. sf.

$2.83-$7.88 per sf.

Notes:  

Fee shown is applied for infill areas of the City. Does not include other roadway fees including SPRTA and City of Roseville/Placer County joint roadways fee program.  Source: 2021-2022 Residential Fee Booklet.pdf (roseville.ca.us)

Fee shown is for District 2 (adjacent to City) for units between 1,200 and 2,500 sq. ft. Source: https://sacdot.saccounty.net/Pages/DevelopmentFees.aspx

Fee shown is applied for infill areas and for retail less than 200,000 sq. ft.

Fee shown is for District 2 (adjacent to City) for retail less than 175,000 sq. ft.

Fee shown is applied for infill areas and for professional office less than 50,000 sq. ft.

Source: Fehr & Peers, 2021.

6 Fee shows is for District 2..

 

The City proposes to review and adjust the impact fees annually to keep pace with percentage changes in construction costs. Use of Engineering News Record (ENR) Building Cost Index or the California Construction Cost Index (CCI) published by the California Department of General Services are considered industry standard inflationary factors applicable to impact fees.

 

 Comments/Feedback


Interested parties may provide written comments at FeeStudy@citrusheights.net or mail to:

Citrus Heights Fee Study

6360 Fountain Square Drive

Citrus Heights CA, 95621