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City Council adopts updated nexus study and new development impact fees
Summary
The East Palo Alto City Council adopted an updated nexus study and a package of updated development impact fees for parks, trails, public facilities, transportation, storm drain and water capacity. Council and staff discussed ADU fee thresholds, with staff noting 34 ADU permits since July 2022 and a proposed fee structure that would apply fees only above 750 square feet.
The East Palo Alto City Council voted to adopt an updated nexus study and a set of revised development impact fees, moving the city toward updated charges for parks, trails, public facilities, transportation, storm drain and water capacity.
Councilmember (speaker 4) moved to adopt the nexus-study update and the revised fee schedules, with the motion including the consultants’ errata; a second was recorded and the motion passed by voice vote. City staff noted state law requires new fees to take effect 60 days after adoption: "the new fees become effective 60 days later per state law. The effective date would be May 5, 2025," a planning staff member said.
The council’s discussion included a focused exchange on how accessory dwelling units (ADUs) should be charged. Planning staff reported that "34 building permits [for ADUs] issued since July 2022" and that eight of those ADUs were 750 square feet or larger; the largest permitted ADU was about 1,000 square feet. Staff also explained how fee calculations scale with square footage, citing that a 1,000-square-foot ADU had a current fee of roughly $15,000 under older assumptions and a proposed fee approaching $32,000 if charged on full size.
Several council members said the draft study and fee tables were defensible but stressed the importance of using realistic market assumptions rather than bottom-of-market figures. Council discussion led staff to recommend applying the ADU-related impact fee only to additions above a 750-square-foot threshold, which staff said would reduce the fees for smaller ADUs and help encourage smaller, more common ADU types.
The council approved the motion and the fee schedule; staff will return with final implementation language and the fee-calculation tool that planners said will be published after adoption to allow developers to estimate fees. The council moved on to the next agenda item after the vote.
