City Council Proposes Impact Fee Adjustments for Mixed Market Housing Development

The City Council of Cotati, California, convened on August 12, 2025, to discuss significant changes to impact fees related to housing development. A primary focus of the meeting was the proposal to eliminate or reduce impact fees for mixed-market housing projects, aimed at encouraging the development of affordable housing units.

City officials explained that while lowering these fees could ease the financial burden on developers, it would not eliminate costs for the city. Instead, the financial responsibility would shift to other funding sources. The council's long-standing policy goal is to promote inclusionary housing, which integrates affordable units within market-rate developments. This approach is intended to expedite the construction of affordable housing, as conventionally financed projects can move to market more quickly than fully affordable projects that require complex funding arrangements.

The proposal specifies that mixed-market projects would benefit from reduced or eliminated impact fees, while 100% affordable housing projects would not receive such reductions by policy. However, the council retains the discretion to consider fee reductions on a case-by-case basis for these fully affordable projects. This flexibility allows the council to ensure that developments align with community needs and standards.

Additionally, the council discussed the implications of prevailing wage requirements, noting that many public funding sources already mandate these wages for affordable housing projects. The staff emphasized that maintaining control over fee waivers would provide the council with leverage in negotiations, particularly for projects that are developed by right.

The meeting concluded without a set expiration date for the proposed fee changes, although the elimination of affordable housing impact fees would cease if the inclusionary housing and linkage fund balances were to reach zero. The council's decision reflects a commitment to balancing development needs with community interests, aiming to foster a more inclusive housing market in Cotati.