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Council reviews updated Nexus study that recommends higher parks/storm fees, new per‑square‑foot fee schedule and ADU exemptions
Summary
Willdan consultants presented a Nexus (impact fee) study update recommending maximum-justified development impact fees expressed per square foot, with a substantial parks increase and higher storm‑drain fees in the RBD; staff proposed policy options including exempting the first 750 sq ft of ADUs and allowing fee payment timing under SB 937.
City staff and Willdan Financial Services presented an updated Nexus (impact fee) study and an accompanying financial feasibility analysis at a March 4 public hearing. The study covers five fee categories: water capacity, parks and trails, public facilities, transportation and storm drainage, and recommends expressing residential fees per square foot in line with AB 602 guidance.
Carlos Villareal of Willdan explained the methodology: estimate demand, set facility standards, identify capacity‑expanding projects, and allocate costs proportionally to new development rather than existing deficiencies. The consultants reported nearly $400 million in contemplated program costs; if the council adopted maximum justified fees, new development’s share could be about $203.4 million while existing development would carry roughly $196.3 million.
Consultants and staff highlighted several changes from the 2019 study: (1) use of an RBD (Ravenswood Business District) growth scenario with larger projected nonresidential square footage, (2) exclusion of Loop Road project costs in the draft, (3) revised worker‑trip factors and inclusion of a 40% Transportation Demand Management (TDM) trip reduction assumption for residential development, and (4) removal of redundant storm‑drain projects to avoid double‑charging. Willdan’s comparison of peer cities showed East Palo Alto’s maximum‑justified fees fall within the regional range.
Staff recommended several policy adjustments beyond the maximum‑justified schedule: set retail transportation fees equal to office rates to encourage restaurants and street‑level retail; exempt the first 750 square feet of accessory dwelling units (ADUs) from fees and charge only for square footage above 750, and incorporate SB 937 to allow qualified residential developments to pay impact fees at final inspection or occupancy rather than at permit issuance. The staff report also notes opportunities for project‑level fee credits when a project demonstrates on‑site mitigation (storm drainage retention, TDM performance), and mentions that the council may adopt fees below the maximum justified amounts to meet other policy objectives or feasibility concerns.
Council discussion split along familiar policy lines: some members favored keeping fees high so developers pay for public infrastructure and taxpayers are not asked to subsidize facilities; others urged flexible fee timing and credits to improve feasibility and signal East Palo Alto is open for development when the market returns. Consultants emphasized that, given current construction costs and market conditions, impact fees are not the primary barrier to feasibility for most high‑density prototypes; factors such as construction costs, parking requirements and lease rates are more influential.
The transcript excerpt ends with staff framing next steps: the hearing was open for comment and the council was to consider whether to adopt the study and fee resolution (which would include a CEQA exemption finding and the fee schedule in the resolution’s exhibit B). No final adoption vote appears in the provided portion of the record.
