In a recent Daly City City Council meeting held on November 25, 2024, city officials discussed a significant update to the development impact fees, which have remained unchanged for 25 years. The proposed changes stem from a comprehensive study conducted by DTA Consulting, aimed at justifying the need for increased fees to better reflect current infrastructure demands due to new developments.

Development impact fees, established under California's AB 1600, are one-time charges imposed on new construction projects to help cover the costs associated with public services and infrastructure, including parks, roads, and emergency services. The last adjustment to these fees occurred in 1999, and city officials acknowledged that the existing fee structure is outdated and does not adequately address the growing needs of the community.

During the meeting, Amanda Halbert, along with finance director Tim Nevin and consultant Richard Ruiz, presented the findings of the justification study. Ruiz explained that the fees are designed to mitigate the additional strain on city resources caused by new developments. He emphasized the importance of these fees as a funding tool, noting that they are not a constant revenue stream but are crucial for maintaining and improving city infrastructure.

The proposed new fees include a residential rate of $15.50 per square foot, a hotel fee of $6,600 per room, and various rates for commercial and industrial developments. These figures represent the maximum allowable charges based on the study's findings, which take into account projected growth and infrastructure needs through 2040. The council discussed the potential impact of these fees on future development, particularly in light of the city's recent housing element plan, which aims to increase housing availability.

City staff recommended adopting the updated fee structure and implementing an annual cost escalator based on the California construction cost index to ensure the fees remain relevant over time. If approved, the new fees would take effect 60 days after the council's decision, marking a significant shift in how Daly City manages the financial implications of new development.

The council's discussions highlighted the necessity of updating these fees to align with current economic conditions and community needs, a move that has been long overdue according to several council members. As Daly City continues to grow, the adjustments to development impact fees will play a critical role in supporting the infrastructure required to accommodate new residents and businesses.