Cotati adopts AB 602‑compliant impact fee update; council asks staff to refine hotel and affordable-housing options

Cotati — The Cotati City Council on Aug. 11 adopted a comprehensive update of the city’s development impact fees, moving most fees to a square‑foot basis to comply with state law (AB 602) and the Mitigation Fee Act, and approved an ordinance to standardize inflation adjustments and enable residential fee deferrals to occupancy.

Carlos Villareal of Willdan Financial Services, the consultant who prepared the updated nexus study, presented the analysis and the recommended fee schedule. Villareal summarized the study’s conclusion: “The maximum justified fee for residential across all the fees that we are looking at is $25.54 per square foot.” He told the council the study used multiple allocation methodologies — planned facilities, buy‑in, existing standards and system planning — and projected citywide build‑out of roughly 2,100 dwelling units and 3,900 additional residents.

After public comment that included support from affordable‑housing advocates, the council voted by roll call to adopt the nexus study and the associated fee updates (Savage: yes; Sparks: yes; Harvey: yes; Vice Mayor Lemus: yes; Mayor Ford: yes). The resolution sets a 60‑day waiting period before the new fees take effect.

Council also approved an ordinance to pull the city’s disparate inflation indices together under a single index and to permit deferral of many residential fees until occupancy. That ordinance passed on a unanimous voice vote.

Policy discussion: lodging and affordable housing

Council then held a separate, nonbinding policy discussion about whether the city should reduce or waive development impact fees as an incentive for (a) new higher‑quality lodging and (b) deed‑restricted affordable housing. Staff framed lodging as distinct because hotels generate transient occupancy tax (TOT) revenue; staff estimated a hotel could repay forgone fees through TOT in about three years under typical scenarios but said they would run updated scenarios tied to the new fee schedule if the council wanted more detail.

For affordable housing, staff summarized regional precedents (Petaluma, Santa Rosa, Sonoma County) that either waived or piloted fee waivers for deed‑restricted units and presented two possible backfill sources: Cotati’s Inclusionary Housing fund and linkage fee fund, which together held about $1.2 million as of the last accounting. Staff noted that those funds could be used to backfill waived fees but would be depleted faster for larger single‑family units than for multifamily units.

Council direction and next steps

Council members expressed a preference for targeting incentives toward multifamily and mixed‑market projects that are most likely to be stalled rather than broadly waiving fees for single‑family subdivisions that historically have had better development activity. Several council members asked staff to return with refined options that could include: a limited pilot (for example, 12–36 months), entitlement‑time allocations with a fixed window to pull building permits, sliding‑scale fee reductions favoring very‑low and low income units, and scenario analyses showing TOT payback periods for lodging under the finalized fees.

Why this matters: The updated nexus study aligns Cotati with AB 602 and gives developers a single, transparent square‑foot metric to estimate impact fees. The council’s policy direction indicates possible targeted use of fee waivers or deferrals as levers to accelerate certain project types, but no change to the fee schedule or fee waivers was adopted tonight.

Next steps: Staff will record the adopted nexus study and fee schedule (effective after the 60‑day period) and return with refined policy options and financial scenarios for lodging and affordable‑housing incentives.