Council Finance Committee - meeting_joint_regular

Everything Yep. Is up? Yes. Alright.

I'm gonna call this meeting to order at 09:02. We'll take roll call. Meeting member Lucas Ramirez? Here. Mayor Emily Ann Ramos? Here. And vice mayor Chris Clark?

Here.

Alright. We're gonna move on to item three, minutes of approval. The recommendation is to approve the Council Finance Committee meetings of December 2025 without modifications. Do you have any comments?

No

comments. Do we have any public comment? No. Alright. We're ready for a motion.

Move to approve.

We have

a motion and a second. Shall we take a roll call vote? Committee member Ramirez?

Yes.

Mayor Ramos? Yes. Vice mayor Clark?

Yes.

Let's see. Thank you. Alright. Item four, oral communications from the public. Do we have anyone online or in person to do oral or oral communications from the public? We do have four people online for the public, but no comments. Great. So we will move on to item 5.1, review fiscal year twenty twenty four, twenty twenty five single audit report. The recommendation is to receive and accept the city's single audit report for the fiscal year ending in 06/30/2025. Do have your presentation?

Yes. Thank you, chair. Derek Gampong, your finance and administrative services director. This item is the annual single audit report, which is a review and audit of the city's federal financial assistance expenditures. We have our audit our audit firm that performs our annual financial statement audit. Bedawi and Associates also performed the single audit as part of their engagement, and we have Ahmed Bedawi from Bedawi and Associates online and will walk us through a quick presentation on the single audit report. Great. Hi, Ahmed.

Good morning, and thank you, Derek, for the introduction. Let me share my screen. So this hopefully would be a very quick and easy presentation. But this, like Derek said, is a presentation of the 2005 single audit for the city of Mountain View. Just wanna make sure my slides oh, there we go.

Alright. So I'm gonna start by letting you know the agenda for today. I'll give you a brief overview of our firm and the engagement team, also a brief overview of the methodology we followed, a summary of the audit results of the single audit, and provide you some of the required communications as your independent audit. As far as our firm and the engagement team, I know I've presented to you before, so I'm not gonna spend a lot of time on that. But this is just a summary of our firm as far as a number of years of experience.

We're a very focused firm, work mostly with governmental clients. We have about 44 city audits that we can perform every year, about 30 employees, and so far, zero lawsuits. We just completed the peer review and received a clean opinion on our system of quality control. Also wanted to highlight to you the engagement team that was assigned to the city. So this is the composition of our engagement team.

I am the engagement partner. We always have a quality control reviewer. We had an IT specialist, an audit senior, and four professional staff assigned to the audit. As far as the audit methodology, so this is really just focusing on the single audit, and it starts by receiving what we call the CIFA, which is a schedule of expenditures of federal award. And this is a schedule that the city list all the federal expenditures incurred during the fiscal year.

We go through a risk assessment process to determine whether the city is a low risk auditee or not and also to select which programs would be tested. The selection is really governed by the federal rules, so we don't really get to exercise professional judgment as to which programs are selected for a test. We then perform, risk assessment on noncompliance. We test internal control over the compliance, and we also test the compliance with the federal grants. And then finally, we, prepare the single audit report and issue any, opinions and findings that are, if we have any.

Summary of the audit results. So as far as the auditors report, we have issued an unmodified report that basically means it's a clean opinion. Auditee risk, the city did qualify as a low risk auditee. Normally, the city qualify as a low risk auditee if it had single audit done in the last two years and had no findings, no material weaknesses on internal controls. So the city met all those criteria and qualified as a low risk auditee, which enable us to justify testing less of the federal expenditures than we have to.

Major programs tested, we tested two programs, the home investment partnership program and disaster grants. Total federal awards expended by the city was about 2,700,000.0. The percentage of federal awards covered for testing was about 52%, so just over half of the federal expenditures were tested. Deficiencies in internal control, we had not noted. And noncompliance, we also had not noted.

As far as our required communications as your independent auditor sorry, slide keep popping for some reason. Apologize. Our responsibility is we need to provide an opinion on whether the city complied with the compliance requirements for each major program. Also provide an opinion on the CIFA, the schedule of expenditures of federal award, whether it's fairly stated in relation to the city's financial statements. Evaluate and test internal control over compliance, evaluate compliance with major program requirements, and then finally communicate with the governing body.

Management have responsibilities in this process. Management has to take responsibility for the completeness and accuracy of the CIFAP provided to establish and maintain internal control over compliance, to make all records available to us, to establish internal control, to prevent and detect fraud, inform us of all known and suspected fraud, comply with law with major program compliance requirements, and take corrective action on any audit findings. And that conclude my presentation. In summary, it was it was a clean, straightforward audit, and Citi had no issues or findings there. So thank you for allowing us the opportunity, and I'm happy to answer any questions.

Thank you. Does any member of the committee have any questions?

No questions.

No No questions? Questions. Alright. So this is a hybrid meeting allowing the public to comment in person and virtually, and instructions for addressing the committee virtually can be found on the agenda. Would any member of the public joining us virtually or in person like to provide comment on this item? If so, please click the raise hand button in Zoom. In person attendees should raise their hand to be called on. We will take in person speakers first. Each speaker will have three minutes. I see no in persons. We have questions, Rachel. Questions, Rachel.

Oh, okay.

Thank you. I'll bring the item back to committee for deliberation and action. Is there a motion and a second to receive and accept the city's single audit report for the fiscal year ending 06/30/2025?

Moved. Second.

Alright. All in favor?

Aye. Aye.

Any opposed? Any abstentions? That's been passed unanimously. Alright. We're moving on to 5.2.

Thank Thank you. Thank

you very much.

You're welcome. Alright.

Now we'll move on to 5.2, Part b Nexus study and Part Impact fees update. The community services director, Jean Marciont, will make a brief remarks before the presentation by Tefion Rice Evans, the Economic and Planning Systems.

Good morning, committee. Donald Mark Schonck, community services director. And you received our memo on this item. And just to cap due to recent law updates, court decisions, and the most recent housing element, we are preparing a nexus study for the development of parkland fees. We've been working with economic and planning systems, also known as EPS, who have completed similar studies in the Bay Area.

So we are working to complete details of this study, and with us today is Tayfun Rice Evans with and with him virtually is Andrew Williams, also from EPS. And with that, I'll turn it over to Tayfun.

Great. Thank you. Good morning, council members. So IPMI seven's EPS, needs to give you an overview of the technical analysis we've done, to date. Can I get the next slide, please?

So when we're doing updates to development impact fees or fee programs, there's a technical analysis that's required, to help establish the maximum allowable fee. That is analysis that goes into your next study that is part of the requirements of the mitigation fee and other statutory requirements. So it's really the first step in establishing and looking at your fee update is where do we stand, and what is the maximum allowable fee. There's kind of a second component from that, which is here's the maximum, but there's a whole set of policy issues and topics you may wanna consider as you decide whether to give the max 50 or not. What what the technical analysis that I'm I'm presenting to you today does is basically establish that maximum.

That's why walk through, excuse me, here now. Next slide. And, yeah, please please ask me questions or however this should go as we as we go. So before jumping into some of the more the kind of details on assumptions, the technical work, I just wanted to kind of note a few underlying assumptions that drive the calculation of the maximum fees. So first of all, as we'll talk about some more, the city has a long standing service standard of asking of three acres per thousand residents from well, in general, but also from new development.

That service standard is becomes because it ties park need to number of residents and number of residents generated, it becomes a very important kind of driver of the park fee calculation. A second a second kind of presumption we've made is that we we should be exploring the possibility of charging parks fees on nonresidential development. Your current program only charges it to housing, but for the purposes of this technical analysis, we have included it so you can see what those maximum fees would look like on nonresidential as well as residential. And then the third component is that we have outside of the the world of, you know, credits and dedications, which is kind of a, in some ways, a parallel conversation. For those developers who are paying the fees, the presumption is that the city would ask them to pay fees to both cover the cost of purchasing parkland, but also the cost of, improving the parkland.

So those are just some some basic tenants that that kind of drive through the analysis. Next slide, please. So this is a little bit repetitive here, but, basically, again, just to just to clarify, we can think of a parks fee as having two components, a park land component, a park improvement component. We calculate each of those in a similar manner, but but distinctly, and then we put them together for the total fee. So, again, here, we're choosing to include for all development types, parkland and improvement costs.

I'll talk about a little bit in a second in why we make the distinction between residential subdivision and residential non subdivision. But, basically, the idea here is that we want to cover all kinds of residential, whether it's subdivision or not, and all kinds of nonresidential. Next slide, please.

I think we might do we do we jump?

Yeah. Thank you. So it's important to understand with park fees, and it's actually two different statutes to provide, the legal kind of guidance and permission for jurisdictions to establish park fees. One is the mitigation fee act, and one is the Quimby act. And so there are and different cities take different, pathways in the way in which they kind of put these together to charge their fees.

It is possible to charge all your fees based on the mitigation fee act. But the Quimby act, which many cities, have had for a long time and, in some ways, prefer parts of them because of the flexibility they provide, those are very specifically charged on residential subdivisions, and they involve the the funding of Parkland costs. So the basic kind of setup that that we've used here and the Parkland fees are not different between Quinnby Act and Mitigation Fee Act, but in terms of the adoption and the way these things get established, they are slightly different. So just so you know, we have both a kind of combination of QMB Act and Mitigation Fee Act statutes in play. Next slide, please.

Okay. So to the calculation. So how do we get to the maximum fee? There's really three key, components. It's like a math equation.

The first one is the city service standard. What is their expectation of how many acres should, new residents and new workers be, providing, to the city? The second then is we only need to understand if our service standard tells us acres tied to residents and workers, we need to tie that back into land use. So we need to have occupancy assumptions so we understand how many people are living in each of these different kinds of units so we can make a distinction between the fee on different kinds of units. And similarly for nonresidential development, we unders understand how many workers may be present or may occupy different scales of different types of nonresidential development.

And then finally, of course, it's just the cost. What is the cost of the city of buying parkland and improving parkland to critical assumptions? So those are the key assumptions. I'm just gonna run through, the assumptions that drive the analysis here. Next slide, please.

Excuse me. So, again, the city has an adopted service standard of three acres per thousand residents, and so that's what we're using as a a barometer for what the city would like for new development going forward. We also because we're now exploring nonresidential development fees, we also need to consider what the equivalent service standard is for workers. In general, it's accepted that workers do not generate the same level of demand for parks as residents, but they will generate some demand. Again, you see out there when you look at the different jurisdictions, you will see some that do not charge fees to nonresidential development.

You will see others that acknowledge the demand from workers and choose to charge, nonresidential development, these fees. So, basically, the question then becomes what is the equivalency between a worker in your city and a resident in your city in terms of the amount of park use and demand that they have. And so we've seen different, you know, different different different efforts have been made to calculate that. You'll see sometimes that, you we know, we've seen kind of more aggressive numbers where, workers are considered to be you know, to have a kind of an equivalency rate of, 50%, 30% of a resident. Our preference is to be a bit more conservative.

There have been some park surveys of other cities, recently that have basically found that it takes about in terms of, like, when you're if you survey the users of your parks about 7.5 workers, it takes 7.5 workers to have kind of the equivalent use profile as one resident. So we use that kind of relationship to reduce the we use that relationship to reduce the service standard on workers, and that's what that's what gets us from the three acres, per thousand residents down to the point four acres per thousand workers using that equivalent service standard. Next slide, please. Okay. So next is the occupancy assumptions.

We need to understand, first, how many residents there are in each unit type. A lot of fee programs going back a little ways, we just have a single family and a multifamily category. It's increasingly state law and and, other kind of, for other reasons, there's an increasing desire to make greater distinctions. So, units that generate fewer people and perhaps have smaller demand, an impact on parks will have a smaller fee. So here you can see we've broken out the the residential categories into single family, single family detached and attached, with distinct persons per average persons per unit.

And then multifamily units, you can see, we have a broad range there in terms of a studio is estimated on average to have about 1.17 residents versus a three bedroom of 2.53 residents. So these numbers become, again, another important piece of the puzzle. The the approach here or the data sources are primarily the this is The US census information. The US census kind of, you know, brings together information on housing units population. So from that, we can derive the average two point seven four and two point five nine persons per unit.

On the multifamily side, the city has recently conducted the East Wissman Nexus study, where they went through a similar kind of approach exploring, using census data to explore the variation in number of persons per unit. And so you'll see that that we have to be consistent with that recent city study, we have adopted that same, set of ratios in terms of persons, per unit. Next slide, please. So we also need to kind of in the same way, we need to understand and think about, how many workers are generated per we use here a metric of per thousand square feet of new nonresidential development just to kinda create again, the goal the goal here is to to to measure demand, but also to create differences between the different kinds of land uses. And so, here, you'll see on the right how based on the city's, kind of standard planning assumptions about how many workers fit into a thousand square feet, you can see you can see on the right there that we can derive how many workers you'd expect in a thousand square feet.

So it goes from, you know, a high of over three workers in an office r and d, thousand square feet down to about point six three in a hotel building. So you see that differentiation that also converts into the into the fees. Next slide, please. Okay. So the third piece of the of the equation is the per acre costs. And these these numbers are obviously very important because they drive well, like like the other assumptions, they drive our calculations.

Again, we get we're

gonna use this we're using the same parkland cost and the same park improvement costs for all, you know, equivalently and similarly for all different land use types. You can see there we have a parkland cost of about $7,800,000 per acre and an improvement cost of $3,400,000 per acre. So when put together, you kinda have an obligation of about or a cost of about $11,200,000 per acre as the total cost. The seven point, the city has, for a long term, worked with an appraiser, who evaluates the value of land, and so that number, that $7,800,000 comes from, their latest study. The $3,400,000 number comes from a collection of information we've received from city staff in terms of relatively recent park improvement projects.

On the next slide, we kinda show that detail. So here you can see, you know, seven parks that were built by the city. You can see their budget in kind of nominal dollar terms. We did some inflationary adjustments to account for the the timing of them. And overall, you can see kind of on the right hand column how we have a range of cost of per acre cost of about $2,100,000 up to 6.64 $66,600,000.0.

So we basically put that together to take an average and say, we think on average, when we think about the future parks, and the improvement cost that will go with them, it's gonna be about $3,400,000 per acre will be the overall cost. And so that's the cost that gets consolidated into the land cost. Next slide, please. Okay. So here, just trying to gonna try to illustrate how the kind of how all of those factors work together to bring us to a fee.

And here, I'm gonna focus on, multifamily development. So the current you'll see in the kind of beyond the formulas, the current fee, we're looking at the current fee is done on a density basis. So it's done one one of the fee categories is 26 plus units, which is effectively most likely to be a multifamily unit. So we're comparing there, the fee the the existing fee and fee calculation on an existing unit to, calculations new maximum calculations on a multifamily studio and a multifamily three bedroom unit. And if if we just go down the the the table, starting with the current fee, you can see that as the three acres per thousand residents.

That's that's actually being maintained, so that's not changing. Persons per household, you can see next, which you can see there is variation there based on our desire to differentiate between different kinds of multifamily development. When we bring the service standard and the persons per household together, we then translate that into, okay, how many acres per unit would be your obligation under the service standard? We then apply the costs, the cost side, to derive a final, cost per unit or fee amount. You'll notice there that under the current program under multifamily, the the land cost has actually had a higher, a higher per acre cost of about $11,300,000 per acre, but had but included no, specified cost for improvements.

Under the new system, as you move to the right, you'll see that we have a we actually have both, but our land cost is lower. So we have about a $7,800,000 per acre in land cost, $3,400,000 per acre in improvements, and an overall cost of $11,200,000 per acre. Where does that leave us? Well, in in in terms of these three land uses we have up here, we can see that this the current city number so I see a low end number for the current city number is $67,800 per unit. So that's the the current fee that if I was building an apartment building in the city and I came in, that would be the basis of the charge, the fee that I would pay.

You can see to the right there that if I came in now with a studio unit, I would pay $39,000 per unit. So less. But if I came in with a three bedroom unit, I'd pay $85,000 per unit or more. So what so what basically the you know, these are all driven again by that set of assumptions. Next slide, please.

So to bring it all together, after some, yeah, after a lot of numbers, on the left hand side there, you can see your current fee schedule. So this is the current fee schedule. You've got the low and the high for your for your different land use types. And then to the right there under maximum fees, you can see, including the land and the improvements components, what the new maximum fees would look like. And then on the far right, we've shown the percentage differences in terms of whether they go up or down relative to the current level.

So you can see that that depending on whether you compare to the low or the high, the single family attached fee, for example, would would the maximum new fee would actually push the single family attached fee up by between 2839%. On the other hand, on the multifamily side of things, there's there's more variation. So the fee on studio multifamily would go down between 42 and 48 percent. The one bedroom would go down also substantially by 32 to 39%, but the three bedroom fee would go up. So that's again, those are the maximum fees as calculated based on these assumptions for residential.

Next slide, please. And then I think finally, the the we also need to calculate a fee for the residential development. And here, we follow a similar process. We have our four land use categories. We know the number of workers per thousand, square feet.

We've established a service standard of point four acres per thousand workers. So we can figure out the acres per thousand square feet, the cost per thousand square feet, and, you know, as is often the norm, translate that into a fee per square foot of development. So that would be you can see ranging the maximum fee from $14 per square foot for office development, office r and d down to $2.83 per square foot for hotel motel development, at the maximum level. Next slide, please. Over to you, John.

Alright. So within the staff report, we've asked, four questions for your consideration. In addition, just wanna touch on the the three acres per thousand that Tafion brought up, which is has been our historic number. And then through the parks and rec strategic plan, we did look at our overall number, and we looked at the reduction of the school sites. We looked at the reduction of publicly accessible area within Shoreline Park, and we came up with, we're currently offering 4.74 acres, per thousand.

And so, however, we are not meeting that three acres per thousand goal within each of our planning areas. Only two of the 10 are currently meeting that. And so that's another reason we were looking at keeping the three acres per thousand compared to, raising it up or even even lowering it is because we are currently meeting that three, but not at the at the planning level the planning area level. And this is, you know, early in the process. We wanted to get in front of you to see how some of the metrics are being looked at, how the maximum fee is being provided, and an opportunity to get your input on the process to date.

And so with that, the questions are, does the committee support the staff's recommendation to maintain the existing parkland dedication and new fee requirement, under both the Quimby, Quimby Act as well as the mitigation fee act? Does the committee support the recommendation to apply park and recreation impact fees to nonresidential development in addition to the residential? And then does the committee support maintaining the current park service level that I just mentioned of three acres per thousand? And then, do you have any additional input or direction to guide our next steps of the NEXUS study? And with that, we'll turn it that's the end of our presentation.

We have city attorney Jennifer Logue, and some other heavy hitters in the room, Christian Murdoch, community development director, and then Jennifer Ng, the public works director. And we're here to answer questions that you may have. Thank you.

Alright. Back to me, Ram. Right? Okay. Does any member of the committee have any questions? Let's go. Councilmember Ramirez.

Yes. Thank you for the presentation. I have several clarifying questions and then ones that may take a little bit more time. So just to clarify, the Quimby Act provides flexibility in allowing for dedication of land, but it wasn't clear if for mitigation fee act subject properties, dedication would be permitted. How so how how are what would dedication continue to be acceptable for, projects without a subdivision?

Good. Okay. So, yeah, I mean, I think I think that the the city would develop, and I think you already have some some language around this, but I think part of what the larger conversation here is to is to develop specific crediting dedication and crediting policies for the mitigation fee act. The Quimby act is is creates a kind of clearer and specific system. And I think for the mitigation fee act, I think we just have you have to kinda lay out, you know, what it is, what kind of land you would accept, how it works, but that's very much part of the I think that might be part two of the exercise, but it's definitely, is is part of this overall exercise is to to kinda nail that down so that everybody knows, right, you can pay the fee and or you can do this and get these discounts to your fee.

And so the intent is through some policy, we'll have, like, an alternative mitigation program to allow for dedication or

or something. Exactly. And I think you should think of it this way. Think of the Quimby Act as starting with land dedication as the first step and paying a fee as an alternative. Yeah. Whereas under mitigation fee act, it's typically fees, but it's not that the city couldn't accept land in lieu of payment of a fee.

Okay. That's helpful. Thank you. And then we learned through the Greystar and El Camino And Castro project that a commercial subdivision that weren't the residential units were not mapped, but there was a commercial mapping that that triggered the Quimby Act. So they withdrew their map. So how are we treating projects without a residential map but with a commercial subdivision?

I think you could collect the fee. I mean, the adoption of the Nexus study and adoption of the mitigation fee act would make it easier, and you could just charge the fee under the mitigation fee act and collect the fee that way and avoid sort of the complicated conversations that we had leading up to the, that project. And so the goal of having both would allow us to I mean, one of the questions in the discussion was, have you adopted a nexus study? Because I think it was intuitive to the attorneys that we were working with that if we had a nexus study, we could legally charge a fee under the mitigation fee act. So that's why we're trying to keep the fees totally aligned.

Whether you calculate it under Quimbee or you calculate it under mitigation fee act, you're gonna get the identical fee. Right? But depend depending on the type of development that is going up, whether there's a map or not a map, you might choose how you impose a fee. But we've got we will eventually have an ordinance that allows collection under both methods.

It's functionally equivalent.

Functionally equivalent. Okay.

Yes. Very helpful. Thank you. I got a, I guess, public comment that said that, adoption of a capital improvement plan would be required if we use the mitigation fee act. Is that true? And do we have what what what would that be for us?

So adoption of a a capital improvement plan is required. Did you wanna we we adopt a capital improvement plan, but do you wanna add to that?

Yeah. I mean, the way that that we often do it so, yeah, the the the recent state law has made it clear that, you know, when you when you when you adopt a mitigation fee act fee, you need to have a capital improvement plan within it. The way we've dealt with this with other cities is you is we we established the fee and we basically articulate broadly the kinds of improvements that will occur. So in this case, it would be, you know, kind of we're gonna put the amount of lands, you know, obviously, it probably depends on. We we need growth projections, right, or presumptions about growth projections to understand how much money we're gonna get in.

But the general idea is, like, we'll be buying we'll be buying part of land. We'll be doing these kinds of improvements, like a a kind of general synopsis of the kind of capital improvements that will, be being done. And I think that as part of the process when you if you adopt an extra study and ex you know, and accept certain fees, you also adopt that capital improvement program. Obviously, it's it's a broader level and is fed by, the more detailed capital improvement programs that, you know, kind of that that cities do, right, on a on a kind of frequent basis.

Is is it gonna be tied into the parks and recreation strategy, or is it a different document?

It's different. Yes.

I'm looking forward to seeing that. What is the difference I'm hoping this is easy, in value, the the the ranges if you were to compare fees calculated based on square footage, with the fees that staff is recommending based on bedroom count? Very divergently different, or are they kind of ballpark very simple?

I mean, they yeah. They they come out pretty similar. What you'll what you'll find is that the the you know, so the the number of persons, for example, in a studio is less than the number of persons in a two bedroom as you create that. But the the actual kind of is not a perfect relationship. Right?

It's not a linear relationship. So you'll you will have slight differences because a unit under under the per square foot approach, a unit is twice as big will pay twice the fee. But when you use the bedroom approach, it's a little bit more tied to how many people you actually expect to be in there, which isn't always perfectly linear. So we could we could certainly calculate it. You know, we would we would need to just kind of need to determine the average size of these different units, but then it's very we have all the data to calculate it so you could see them both side by side. I don't I haven't done that at this point, but one could you could do that readily and then, you know, kinda look at the most.

Okay. I have some comments about that later. Okay. Do do we have the so thank you for breaking out park improvement costs based on the most recent projects. Do we have something comparable for land values across the city? Right? If you purchase a property in one part of the city, it might be closer to 12,000,000 an acre, and and another part of the city might be closer to 6,000,000. Do we have something that shows sort of the the distribution of land values across the city?

That would be something we we can work

at. Yes. I think that would be helpful. And then two more, and then I'll give others a chance. Are we planning to do a financial feasibility analysis to supplement this work when the council reviews it?

So we the Citi stuff, I know it's done a lot of work as through the r three program on feasibility analysis. So I think the initial ideas we had was to those were based those analyses were done around the existing parks fee level. And so to the extent that we have, as we hone in on on particular parks fees, I believe it will be put then possible to look through the lens of those analyses to ask, you know, what difference does it make, if any, to the results of that analysis. So it's gonna be tied to to the to the r three work as I understand it. And then we also we we we all we can and and and, you know, we need to work a little bit more with stuff on this, looked at the townhome feasibility side as well ourselves and so can provide some feedback on that.

Of course, the the impact on on the feasibility is is will will will depend obviously on the cost change, which depends on whether the fees go up or down or what happens to them. So we'd have to pause this in different scenarios on fee change in order to, you know, be able to kind of articulate what the feasibility impact. So sound I

don't wanna put words in your mouth, but it sounds like we're we're not doing we I think we've done Chris, you were around when we did the East Wizman precise plan adoption, there was a feasibility analysis for the community benefit fee thing. Right? To show what was we we we could charge 20, you know, dollars a square foot, but I think we had ended up adopting 5 for residential because anything above that impeded financial feasibility to the point where

nothing would get built. Well, we assumed it would. We don't know that. Sure. But Well, not

a lot's

been built. Same with the commercial link. It's the affordable housing back in the day. Right.

So but it sounds like we're not planning to do a separate financial feasibility analysis.

I think we're trying to build on prior city work and related to the r three feasibility work to write some of those answers, but we're not doing roundup

Okay.

Analysis.

I have some comments about that too. And then our last question is, just to clarify, this will continue to only apply to net new units. Right? So if you bulldoze at 100 unit apartment complex and you build a 100 units, you would pay $0 in fees.

Yeah. I mean, that's a that's something you just have to be clear about in your ordinance and your regular, but but you you absolutely can't do that.

Does that is that true for the commercial square footage as well? So the change in use would not trigger a a new park fee. It would simply be your you know, you you tear down, I don't know, 8,000 square feet of commercial space and you build 10,000. You would pay a park fee based on the that delta, the 2,000?

So the answer is yes. We can do all of those things. Those are the things that will be in the ordinance. Those are not things that we are thinking about necessarily with regard to the nexus fee study. To the extent that our ordinance already provides you know, only imposes the fee on net new, it's not that we would recommend changing the ordinance, but these are discussions that we can have when we bring the ordinance to implement the fees that would be supported by this nexus fee study.

So, yes, we could do net new only. We could do the same thing for commercial. We don't have anything in our ordinances addressing commercial because this is a new Right. Path forward. So these are things that we can do, but that's a discussion for and and definitely feedback we should get today as we're thinking about drafting the ordinance. Right? But, yes, we could adopt all of those types of elements in the ordinance on how we impose the fee and what we impose it on. So that type of feedback's very helpful for us as we as we move forward in it in drafting the ordinance.

Just to clarify, legally, we also could subject replacement units to a park fee?

Oh, I'm not saying that. Oh. I I would need to I would need to look into that. But what I'm saying is the items that you're bringing up are things that would be in the ordinance implementing the fee that is supported by the nexus fee study. So that type of feedback, you know, if if and and, yes, of course, our ordinance would be legal. So to the extent that we couldn't do it on replacement, I would ensure that it wasn't in there. It's just not something we had necessarily thought about in detail in the aspects of the NEXUS study, but would be part of the ordinance. Okay.

Thank you. I've got some others, but I'll give it a break.

Okay. Vice mayor Clark, do have any questions?

I think just two. In the the nexus studies being done since since sheets, which, you know, it's fairly recent. I'm just curious if there have been any surprises in the courts in terms of, like, oh, that nexus study, that whole that logic that you used or, you know, if there's a word, is or has it been pretty south? Their folks are just accepting. As long as you've done a reasonable study, most people aren't challenging it.

I can I'm happy to

You can start, and

then I can follow-up. Yeah.

So, yeah, so we right. So we follow like, right, she's created a lot of anxiety and got a lot of press, and appropriately so. And so there was a lot of debate amongst us practitioners, and, obviously, we're talking to our lawyer friends about to what extent we think it'll make a difference. So I do think that the, I'm probably gonna get it wrong, but the it it was reminded right to the California Superior Court who looked and said, we think what happened to El Dorado County was actually okay. So that, I think, will leave a little bit of pressure and concern.

It did what is definitely true is that we need to, you know, it kind of, I think, reemphasize, and they're gonna Jennifer can save me if I'm getting this wrong, but it reemphasize the importance of making sure that our mitigation fee acts, you know, fee work and nexus findings are very system with some of the Nolan Nolan Supreme Court cases. That was kind of one of the issue. And I think it also just raises, like like other legislation just raises, you know, increasingly as it raises the bar, but means, like, you know, let's do a do a thorough job and and, you know, throw those eyes across those trees, create those connections very clearly. And and the final the final piece of advice that I was that I that I that I received, but I and, again, for the to Jennifer on this is just that in that at least in that case and in some of the cases where cities don't have an appeals process, you can more you can, you know, more more accelerate yourself into a into a contentious situation. So I think I've seen some cities since then say, okay.

We'll we'll we'll have a thing where developer can appeal to the city manager or the mayor or community development director to at least create a pathway for conversation, not straight into the lawsuit. But

So I'll just follow-up on that. That was everything that you said was correct. Sheetz did create a lot of anxiety. It did get remanded, and the fees got upheld, finding that there was sufficient data to support the fees that were imposed in that case, which in a sense, was was good news for that jurisdiction, but also does reiterate, it's about i's and crossing t's. It's ensuring that you have the backup data to support the amount of fees that you are imposing on the particular development project.

So sheets at the Supreme Court level, right, it's not that it it it created new law in the sense that it said Nolan Dolan do apply to both types of fees, but it didn't change Nolan Dolan. Nolan Dolan has existed for a very, very long time. Right? It we now know that we have to apply Nolan Dolan to both types of fees. Right?

Legislatively enacted fees being the new piece. Right? And so in sheets that that particular when it on remand that that particular fee got upheld just reinforces the importance of the detail, the level of detail in the NEXUS study. And we've had many, many, many meetings talking about the level detail, you know, justifying the fees. We had actually lots of conversations between square footage versus unit size, right, and which one is actually better and more accurate.

So that's the kind of work that we're trying to do to ensure that our nexus fee study does dot all those i's and cross those t's. And I did read the some of the public comments, and I did take a look at the CalHDF versus, Los Altos case. It appears they had a hearing in December. There is no ruling yet. That's trial court level.

Whatever comes out of that isn't going to be precedent setting. It'll be informative. We'll see if they appeal, right, depending on what the decision is. I read I actually read the briefs. I read the brief from CalHDF and the challenges that they made on the part they they challenged several fees, but just the challenges they made on the park fee We're already aware of the capital improvement plan adoption. That's one of the things that they said they violated. But I didn't really see just in the brief itself. It didn't raise concern for me. It's things that we've already thought about. It's things that we're working on.

I obviously can't guarantee that we won't get challenged, but everything that was raised in here doesn't feel like anything that we have missed. Right? We are talking about those things, trying to ensure that we have that on the back end. So as these cases are kind of new, you know, post Sheets and you're getting these challenges, like I said, this one's still at trial court level, and I don't even have a decision. We don't even have a decision from the trial court judge yet. What happens after that, you know, up on appeal, kind of like sheets. We've got an we got a new opinion. But on remand, those fees were still upheld. Right? Even applying Nolan, fees were still upheld.

Yeah. So it's really hard to to this early to say, I have yet to see a case where on remand, you know, it's gotten all the way up and it's come back, and the court has said, under sheets, you did it wrong. And this is the factor you missed. This is where more work needs to be done. So we're kind of a shot in the dark trying to make sure we're doing all the work and that we can withstand challenge.

And then the last question is just, I mean, it all seem pretty this feels pretty standard to me, aside from just the sheer magnitude of the numbers, quite per person, per human, it's, like, 30 something thousand dollars. Right. The is is there anything in here that's unusual compared to the studies that you've done in the communities or, like, you know, per thousand that's standard or just the the approach that we're taking? I'm just curious sort of where we fall in that this is very boilerplate or this is very you're weird sort of thing. Yeah.

Yeah. So, yeah, doing getting truth you never wanna be the the kind of pretty creative consultant in the next study world. So

Study world. That's true. That's true.

Yeah. In other words, it's fine. So, yeah, we we we have and and I so we basically follow this. To your point, it's a very standard common structure. You know, those same the same conversations, what's the service standard, what's the occupancy rates, do we charge it per unit or per square foot, what's the cost?

I think the obviously, the big difference if you look more broadly amongst California getting beyond the, you know, the kind of South Bay and the Peninsula is the costs are way lower. So you could you'll often I mean, then there there are indeed some cities out there that have higher so, I mean, three three acres per thousand, I think, is the most common, but there are folks who have higher ones. But, obviously, if your land costs $500,000 an acre, you know, your fee is still gonna be a lot less than the one here and and would be announced to you. So it ends up being you know, from my perspective, it's kind of like, it's a standard approach. We can certainly all discuss, and we should discuss from a technical perspective, like, the land cost and the improvement cost and get all those assumptions right.

But then we have this maximum. That doesn't always give, you know, people there are other policy concessions considerations out there. Right? So it's a it's a mechanical answer of a maximum fee. Doesn't necessarily mean it's the fee that you or, you know, your community will want to adopt, but it gives us the you know, it's it's kind of, you know, based just on the bedrock of of standard practice.

Any questions?

Okay. Did Go go ahead.

Okay. So I totally get that this is mostly about the NEXUS study, but it also talks about the impact fee updates. So I had a question from from a resident, and I think it was just because when we had our builders' remedy projects, they're like, would this next study even, like, do anything? And would we just have to waive away the park fees? But my understanding is that this nexus study is supposed to help us bolt not bolster it as in, like, increase it, but bolster, like, the backing of of our park fee as it is. Correct?

So the purpose of the nexus study is to allow us to adopt a fee under the mitigation fee act. We only have a fee under the Quimby Act. Quimby Act does not require nexus fee study. The mitigation fee act does require a nexus study. A mitigation fee act fee can be imposed on properties that do not have subdivision maps or partial maps.

Right now, we are bound by Quimby Act, which has that limit. And that is what has created the problem with, for instance, a development project that is only going to have rental units and apartments, and they are not mapping that for condo conversion later and they're or they're not building a condo project. Right now, our Quimby Act fee cannot be imposed against a project like that. And so we are leaving some of those fees on the table right now in light of our Quinby act fee. Doing this nexus study is step one in order to adopt a mitigation fee act fee, which would not require the city to leave those types of fees on the table anymore.

So that's a good question, and I can understand the confusion. But what we are trying to do is close the gap in our fee collection at this time. And so it's I know it's hard to think of it, but that's why the the slide started with there's two mechanisms under which cities can adopt these fees. Right now, we've got one. We are trying to do it so that we have both, and that's what this nexus fee study is going to help us do. Set. Absolutely.

Okay. Because they also have the question of, like, how does hypothetically, we pass the nexus study. We pass the park fees based on that nexus study. How does that interact with things like developments under s p 79 and what's the other one? Yeah. I'll I'll just go with how does that interact with, like, developments that would fall under s b 79 or other essentially state laws or oh, state density bonus.

So all of those laws will remain in place, and we will still be subject to those laws. And I don't know if Christian wants to help, but to the extent that they create exceptions or you can't impose the fees, we are gonna be bound by that. But, Christian, do you wanna help in that area? Thanks, Christian.

Members. Christian Murdoch, community development director. I think the main law that comes to mind for me in this context is s b three thirty and the preliminary application process, which vests developers into certain fee levels and other city requirements at the time of the preliminary application. Many of these development projects, including some of the Builders' Germany projects, for instance, have filed preliminary applications under s p three thirty, and so we would not be allowed to impose this fee on those projects unless they voluntarily chose to subject themselves to the new fee. So I think that's probably one key distinction.

Beyond that, it's hard to provide a broad response about other state laws and applicability of fees to specific projects. Things like SB 79, I'm not aware that they affect city's ability to impose fees of this sort as an example, but I think those responses would need further research, in relation to other state laws potentially.

And so as we're looking at adopting this this updating the park fees. So as in previously, we've been using the for a lot of those things, fees, but we are now adding the mitigation mitigation fee. And so both of those will be considered the park fee updates. Yes. Correct? Okay. How does that align with our housing element program that said that we are going to reduce our park fees by 20%?

Sure. I think the main, the main relationship of what we're talking about this morning to the housing element program 1.8 is the completion of the NEXUS study. That is a critical building block for all of the other peripheral requirements of that program, including exploration of expanded credits against the city's parkland dedication parkland dedication, and move fee requirements. And so we need to know what those fee levels are, what the maximum permissible levels are, update our assumptions, including modernizing and best practices for the land valuation as an example to calculate where that new upper limit is, and then compare that to the average across a variety of development types language for the 20% reduction that the program requires. And so we need to know where this neXus study ends in terms of a maximum, compare that across the different typical development types.

Some

of them

will already potentially achieve that reduction and may not need further specific interventions. Some of them potentially could go up, if the council supports adopting those, and we would need to explore how credits and other measures, under that program could achieve the 20% reduction.

Clarifying question. So this 20% reduction is based on what's currently we have as park fees or what the maximum allowable park fees based on the nexus study?

Yeah. It's a great question. I think there's not a lot to provide clarity in

the program language.

I think there's some art there that we will need to provide a rational basis. So I think we are looking at what the current fees are as probably the best form of comparison. We know that the current fees will calculate at a given level. The new fees that would come out of this Nexus study and the fee adopted by council, which could be lower than what the Nexus study supports, will set a new fee. And if there's not a 20 reduction across an average range of typical residential projects, we will have some further work to do to either lower the fee, change certain other assumptions, or provide additional credits that would provide a reasonable pathway to achieve a a reduction for typical projects. So that is a separate phase of work that we haven't done yet because we need to know where these fees will end up based on the nexus study at this point in time.

Okay. So, my familiar familiarity, but the nexus study is mostly with has nothing to do with affordable housing next to study fees. But my understanding is that you can you have the next study, and that tells you the maximum amount you can charge, but then the council can choose less than that if necessary. And that's the same thing for this next study.

Correct.

Correct.

Yeah. It's essentially you could artificially reduce in various areas, as Krishna was saying, the various types. So this gives you the baseline that we just haven't had yet. So

So it's kinda like our how when we did our fee study, we'd like, this is how much it's costing the city. And then if we did a 100% recovery, then it'd be this. Yes. But, like, we can choose to, like, not

Just one point of clarification. Since we currently don't have a mitigation fee, there is no current baseline for the mitigation fee. This would establish that. Right? Okay.

Correct. But since we're aligning it with our Quimby fee, I mean, they're base they're gonna be the same across the board. So I think what Christian was saying is that in in an easier world, our NexSys study would've NexSys study would've already taken our current fee and dropped it down 20%, so we didn't have to do additional work. And in that sense, we would have already met our obligation. But doing this neXus study tells us, are we equal?

Are we above? Are we below? And how much below are we? And if we're only 5% below across, residential types, do we need to do some sort of artificial or credits or waivers or whatever to get us further down? So we're here, and we're trying to see what the NEXUS study tells us where we can be.

Okay. Perfect.

Now do you have any more questions, doctor Member?

Wait after public comment.

Alright. Okay. So would any we're gonna move on to public comment. Would any member of the public joining us virtually or in person like to provide comment on this item? If so, please click the raise hand button in Zoom. In person attendees should raise their hand to be called on. We will take in person speakers first. Each speaker will have three minutes. Hello, first time. Don't see any person? I don't see anyone who is in their hands online.

Oh, okay.

Thank you. I will now bring the item back for committee deliberation and to provide direction to the guide, the final development of the study as future consideration and potential adoption by the city council. Who wants to go first? Alright. Councilmember Oh,

and I appreciate the questions that each of you asked since you actually covered some of the other ones that I had on my list. I think this is directionally very good. I think we're I I'm glad that we're doing this work. The the ambiguities that we've been contending with have been hard, right, both practically and also politically. So it's it's really good that we're doing this work, and I think there's a strong foundation to work from.

There are some things I think we we can work through at the nexus level, but I think what I'm hearing is there are policy considerations that I don't know if they go to the finance committee or directly to counsel where most of the big decisions will have to be made. But at the the nexus level, a couple of the things that are probably me, I guess. The the big one is we are de facto penalizing family units. The the I'm I am pleased personally to see that there is substantial fee relief for multifamily housing, but especially when you get to the the two bedroom and three bedroom units, you you start seeing, I think, economic, disincentives to free eight units of that size. And I know that's that's been a priority for the council for a long time.

So I whether there are decisions we could make in crafting the NEXUS study that could help address that, or if we need policy solutions to address that, I'm open to suggestions. But if if there are limited options at the policy level that allow us to distinguish between studios and three bedroom units, for instance, then we really need to fix it now. If we can't, for instance, say, we're going to apply, you know, an arbitrary 20% reduction for three bedroom units, then for if we if there's a legal prohibition from doing that or even an ambiguity, then we can't wait to get to the policy adoption phase since it will prohibit us, I think, from making policy decisions that could help incentivize specifically two and three bedrooms. But if we can do that, then maybe we don't have to fix the problem at at the NEXUS study level. But that's why I think seeing the comparison between the the values or the the ranges based on a square footage calculation compared with the per bedroom calculation would be instructive.

I think you're probably gonna end up think we were hearing earlier. It's it's something that's functionally equivalent. But in my mind, I would rather incentivize smaller units that have two and three bedrooms rather than provide a a direct disincentive to just having the two and three bedrooms. That's that's a helpful distinction. So if the per square foot calculation helps us achieve the unrelated countable of adding units that are available for families, then I think that might be a a good approach for us to consider.

But if it also means that the fees are substantially higher, you know, then, you know, we're we're we're not ending up in a in a better place. So that that's a tricky one. And without the math, without the charts for me to point to, I don't really know what the answer is. But I I would like for us to continue to think about, while this is directionally very good, how do we make sure we're not we don't end up penalizing family units when they're already hard to provide?

So I that was one thing into that, or is that okay? Push over my sorry. I'm what

you want. Sorry. Nothing.

Yeah. So I think it's I just so I answered that. So it sounds like, right, it will be helpful for you to have calculations on a per square foot basis so you can compare them. Yeah. My instinct is that there will be a difference. I don't think it'll be hugely different because in the same way that a studio has smaller square footage than a three bedroom. Right? Three bedroom even if we have a flat per square foot, the three bed two bedrooms still gonna have a higher fee. Right. So I don't it's worth looking at so you can see the impact on your kind of on on that goal and so you can understand what you know, if if it makes a difference. But I think you'll still have that same in terms of the maximum fees, that same challenge. Right. Right.

I I agree with you. I I think that's that's true. It's just the where the disincentive is placed is is a little bit different. Right? Here, we're saying, if you provide family units, you will be punished. Right? Like, every bedroom you add is is more of a direct penalty as opposed to the total size of the unit. You could have I got you. You know, in this case, really enormous studios, penthouse studios, right, that are that's a lot of rent. And, you know, it they'll they'll pay a minimal fee. Right? So, like, I'm I'm having a hard time articulating difference, but

We're seeing the same square footage.

So that's that's one thing I think would be helpful to explore. The other thing that that troubles me is I'm I'm looking at the I I this is a really helpful chart. Slide 10, the park improvements. It's it's really notable that the the went for, you know, both low per acre cost and the high per acre cost. The highest per acre cost is the smallest part. Right? And it's not even new. It's 2019. So those those costs were, you know, substantially less than than I would imagine they would be, you know, in in 2025. The low is the biggest part.

And so I I feel the I I I feel and, again, I don't really know how to articulate this, but I think we need to think about why that might be the case. The if there's sort of a an inflation based on including the smallest parks, which are important. I don't wanna diminish the value of having many parks that are, you know, point three acres, but it also means you you end up shifting up the per acre cost and inflating the fees on on development, which creates a disincentive to bill. So I think one thing that would be like like, I I I don't really know how to fix that, but, it it what it tells me is we need bigger parks. You know?

Maybe we should stop doing point three acre parks. There are other benefits to that, like maintenance. You know? So Mhmm. I maybe that that's a policy issue, but I I almost wanna take out the the outliers, the the ones that are like that almost $7,000,000 per acre for a point three acre park means that the the total fee impact is is much greater. What would it be if we took out the outliers? Right? And we just said, moving forward, we're not gonna have mini parks less than half an acre or something. Right? And that half an acre, it it really starts to kind of moderate out.

So I I I I I don't wanna ask you the question directly, John, because I feel like this is a tough question. But, like, why is it that very small car parks are so gosh darn expensive? There's probably a good answer on it.

You know? I'm gonna start, and then I'll turn it over to, oh, the first part of Jennifer Ng. There is certainly an an economy of scale as you can see. That's really what that comes down to, and I'll I'll let Jennifer go into more details on that.

Because she says this is where I'm supposed to sit. So it it absolutely is economy of scale. If you think about the type of work that goes into designing and creating and putting a park out to construction, a lot of the effort is really spent on community engagement. That effort is sunk cost whether your park is, you know, a quarter of an acre or whether your park is seven acres in size or bigger. Right?

And so that is just cost that goes into any size park that we do. But as John said, there is definitely economy of scale. Right? You the the the larger parks overall, they're just the the design costs are spread out more amongst the larger area, and you'll see that in any jurisdiction in this area.

The smaller ones cost cost more.

That's that's just the way it is. So so, again, I I I I think thinking about this a little bit more, and and maybe there's the yes. And the unrelated body of work related to the parks and recreation strategic plan, you know, do we want to have very small parks that are very expensive? Maybe not. But I I I do think if there's a way we can think about this where we're we're taking out those outliers, part I mean, they're still expensive.

Right? We're still, you know, upwards of of $3,000,000 more than $3,000,000 typically. So that that it's not a tremendous amount of relief, but it it could it could help, you know, to keep these these the fee impact, less severe or reduce that burden a little bit. So I would welcome creative ideas for for thinking about that. I think it's prudent to include the park improvements cost.

Right? It's not just, like, buying the land is important and very expensive, but so too is the development of the park. So including both of those things in the analysis, I think, is good and improvement, and and prudent. I just think that if we can think about whether this is a, like, a fair representation of of the types of parks that we want to create moving forward. Do we really want parks that cost almost $7,000,000 an acre to build that's excluding the acquisition cost?

You know, as a policymaker, I'd say, let's let's find ways to reduce those costs, and and maybe that means not having, unfortunately, you know, very, very small parks. So those are the two things that I wanted to flag to go to the questions. So, yes, I support staff's recommendation to maintain the existing parkland dedication for a loose feet requirement from the and also adopt medical study pursuant to the mitigation fee act. That seems good and sensible. Number two, yes.

I also support the staff's recommendation to include nonresidential development. We're gonna need we have a very ambitious parks and recreation strategic plan that started to go through it, and I'm I think it's really good. And I'm I'm going to tell you the same thing in the briefing tomorrow, but it's also expensive. So I think we need to think about additional sources of revenue, and there are real impacts on the on the community, from nonresidential development. So I think it's appropriate for them to contribute.

And then, yes, I support the staff's recommendation to continue the park service standard of three, APRS per thousand residents. So I think those three are good. There's additional input and direction, and the things I would add are, one, trying thinking through the, family unit penalty issue, and that could be having staff share with us the side by side comparison of per bedroom fees and per square foot fees and see if that may be useful, or, alternatively, if there's policy solutions that we could implement to reduce that penalty, like the arbitrary reduction in fee, whichever makes sense. The second one would be thinking through the park improvements cost chart a little bit more and trying to drive down that per acre cost so the total fee burden on development goes down. So, again, that's that's tricky.

I don't have good solutions for that, but I think that that will be important to to include. And, also, like, what we include in parts too. Right? If it's just green space, right, that's probably a lot cheaper than, you know, So right. Thinking about, like, what we include in these parks, I think, will be helpful to consider.

I do think we should have a financial feasibility analysis. I don't think the birth three analysis is sufficient. And and especially if we're going to include nonresidential development, which we should do, but nonresidential development also should be financially feasible. So I I think that that actually is an important step that we should provide direction on. I would like to see the range in land values across the city.

That's fairly easy to provide. If there's if the range is very minimal, then I I support this direction. But if there's a big difference between a property, you know, in, I don't know, one one part of the city, let's say, a Rock Street property compared to a Cuesta, you know, yeah, exactly, Cuesta area property, then I think that we should actually we should reflect that in the in the next study. And we might wanna as we do with planning areas, right, breakout. This planning area has a higher land acquisition cost, so the fee is higher.

This area has a lower cost, so the fee is lower. So I I think that would be helpful to have if there is a meaningful difference in the land values. And then, the last thing is, I think, something I don't remember who who it was. Maybe it was you, Arndt, but I'm I'm thinking about we now have sort of four different classes of development. There's entitled projects using the old Quimby Act methodology, which is the highest fee.

And then there's the more recent approved projects under the new Quimby Act methodology, which is substantially lower and probably lower than with the post NEXUS study adoption fee. And then there were the projects entitled or in the queue that are exempt from Quimby because there's no subdivision. And but but we don't have a mitigation fee at NEXUS study, so we can impose a fee. And I think what would be helpful is for staff in whatever way is appropriate to tell the council how we're going to approach that because this is complicated and not necessarily something that we can solve today, but that's a problem that before we have, you know, within recent history projects that are treated so differently. And I think having staff give you the confidential memo or something or in briefings just sort of share, here's how we're approaching this challenge.

So that's that's my feedback.

Alright. Vice mayor Clark.

For the I the short version is yes to all four other questions. I think the only at some point, I know this is down the road, but one thing that would be helpful would just be to see, you know, choose some period of time and say, this is this is what we this is what we collected over that period of time and, you know, had you whatever scenarios we're coming up with, here's what we would have collected over that period of time just so we can get a sense of I think this will actually help with the feasibility question because I think the answer is we're gonna be we're we're going to be asked to do more with less or the same with less. And it would just be good from a policy maker standpoint to know what that delta is just so we, you eyes wide open what we're going into and what we'll probably have to make up in terms of, you know, revenue from other sources in order to maintain the standards that we've that that folks have come to expect. Yes. I the only thing that I I I do think that the one thing that did stand out was the,

you know,

the high level table that was here with table four is what council member pointed out there there are there are fees that, at least under this projection, increase for three bedrooms, and I'm not sure how you that will you know, we can come up with the you know, what is a a generally accepted overall maximum fee, and then, you know, we can we can get into the weeds of what sort of incentive structures we wanna create from a policy perspective. I but I don't think that should influence the you know, just figuring out what what the framework should be. I think there's a second layer of incentive structures where we want to reduce the cost of two, three, four bedroom units, then we we find a way to lower that and make it up somewhere else either in fees or other road sources. But in terms of, like, actual the only thing I'm torn on and that I'm not sure I fully agree on is the the need for a, like, full blown financial feasibility study because,

I don't think any of

these fees one, they're going down from in those cases from where they are today. I don't think that component alone is going to be the thing that pushes an applicant, one, for a developer one way or the other in terms of where they're going. They're gonna build this. It's there are all the other things that go into feasibility, whatever economic cycle you happen to be in time. And I think this is just one lever.

So I think it's good to I think it's it's good for us to think about feasibility or this this component as a part of the overall feasibility. I think whether we need to do a feasibility study on this specific thing, I think there are just all the other components and fees and other things that we can impose. So, I guess if if what you're proposing is that we we do a feasibility study solely based on these changes, then I'm not sure that is worthwhile. But maybe I'm wrong. It seems like a lot of work to come to an answer that you probably already know.

So I see. Thank you, mayor. So Christian and I were just chatting about this because my my flag on doing a feasibility study is just the timing of it all. So for us needing to get to or adopt the NexSys study and then consider all the policy issues that I think you raised very well. The feasibility study is a separate beast.

So that would take months to do. And in some ways, it's speculative because it's based on all kinds of variables from interest rates to the economics to the viability of the developer to just a number of other factors applied to both residential and commercial developers and development. So I just wanted to let the committee know that if that is something that you want to give staff direction on, that is gonna take a lot longer than actually adopting a nexus fee, which we know we need legally to do and have been working on for quite some time. So they're kind of two different things, and I understand where you're coming from to see, well, are our fees gonna be so high that we can't get development built. But I think, anecdotally, we've seen that our pipeline is probably the largest pipeline in the area of projects.

Yes. We are entitling. Maybe they don't build right away, but it it hasn't necessarily hindered development in Mountain View, and you still have the ability to artificially reduce from the maximum level, which is your point about the family units, you know, the larger bedrooms. And so if we are seeing that you know what? That that's the hindrance is that those higher bedroom units are the are the kind of key factor, then that is something that you all have to go to do policy wise is just reduce that fee.

I do think that it's just gonna take a lot longer for the feasibility study. I just wanna let be honest and let you all know that. It won't be done in time with all of the Nexus feed stuff that we were planning to bring to council. I'd say full, if if that

Yeah. I think that's a a reasonable initial estimate. Several months, you know, internal review and then sort of packaging it with options that are based off of that analysis easily could take until we're called.

And we'd have to hire a consultant for that as well. So just something to consider.

And then I think the or did you wanna I

put I have a perspective. I I think if if we saw multifamily projects break ground in the past several years, I I might be a little bit less. But even with an environment where we have projects paying $0 in part fees, you know, we're not seeing projects break ground. It makes me, like I'm I'm I'm not really comfortable with with an arbitrary adoption of fees. The fee should be $17.64 per square foot.

It's just I I remember I pulled out of thin air because it sounds good. I would I would rather be informed by some understanding of the the totality of impacts that affect feasibility. Right? It's you're right. It's not just spark fees. Right?

It's clear we're not pulling numbers out of this guy. We hired a very

expensive consultant. That's what these numbers are. Well, it's a fee. Sorry.

And and the fees are going down. And so

Some of them are.

Yeah. You can show me that, materially, this this fee reduction of you know, the reason that no one can bill anything even with no park fees is because we have a park fee that doesn't make any sense. So I I guess I guess my my problem is that would I like to know the totality of everything here? Yes. I would. Do I think it's going to change my mind in terms of the overall framework that we're discussing today?

The the next the Nexa study is an independent document. These are legally defensible maximums. Correct. But if we do anything less than that, it's arbitrary. It's 20% or it's Oh, I see what you're saying. So, like, I've if we do something less than this, which is what I think we will probably have to do to meet the housing element obligation at the very least, it's it's not based on an understanding of, you know, the the market reality or how it affects how it interplays with community benefits or inclusionary housing or, you know, off-site improvements. Right? It's just we're just picking a number.

But I think what you're

the

the path

that you're going down suggests that there needs to be a feasibility study every market cycle, and I just don't think that we can do that as a community because all the different inputs this is just one input into a developer's. Anyway, I don't I don't think I'm going to convince you anything. The only other thing that I wanted to mention because the, city's already mentioned might be helpful in terms of my one council member's thinking is so for these changes of uses and things, like, I don't if there isn't a net increase in either units or square footage, then I don't really care if the use changes. It it's because, really, at the end of the day, it's about how many humans are we trying to support and what is the what is the level which we can justify their usage of all this. So if if, you know, you're changing the use to from commercial to lab or something like that, I don't think it really changes anything.

Or if you're replacing just changes of uses generally is are not really a concern to me. It's really the nexus between the number of users that we're gonna have in order to meet our meet our overall creators above, and we're we're in, like, finding area over the.

Vice mayor, I might have missed it, but did you say yes to the first three questions when you got started?

Yeah. I said yes to all four.

Thank you.

Four is more like a not necessarily a yes or

no question. Yeah. Yeah. Yeah.

I I mean, we well, we do kind of have an issue, but But

can I just add something on or just on on that last point, I think they're so I think I think you can this is, right, more of an ordinance policy kind of issue of what kind of netting out do I do, and do use changes matter? What some cities do do is they'll they, you know, they do net out, but they use for a change of use, they use the kind of new fee study to Mhmm. Guide that. Right? So if I'm if I'm taking a 10,000 square foot industrial building, but converting it to a 10,000 square foot office building, like, based on, you know, the expectations, there'll be more there would be more peep even the same size, right, there'd more workers in there.

And so one one approach is just to kind of calculate the kind of, like, you get a credit for the industrial building you had, what would be the new fee on the office building? And there might still be an increase, but it would be just a net increase of use. That would be if that makes any sense. But that's just one way to apply the fee program to figure out the net changes. Alternatively, right, you could just say, you could have another policy which was you know, if it doesn't if it's the same building, I don't and and the use has changed, then I'm not gonna bother with any any fee additions. So there's just some options

in there. It gets more into a policy discussion of I just I've seen a lot of or maybe we just heard rumblings of, you know, you have some some smaller projects who you know, the economy shifted, they wanna go from lab to this or from that back to lab or whatever. And you have a small 30,000 square foot something or other where the fee ends up being really impactful. Yeah. And all they're trying to do is fill a vacant space, which we want. So that gets into incentive structures and all the other stuff that we'll deal with someday. But

Alright. So one through three, those are easy guesses. So yay for that. For the additional input so I I struggle, like, seeing some of the, like, earlier moves and how does that impact, like, when we finally close. This is why when I code, I push code directly to production, see what happens, and if it breaks, it breaks kinda thing, which is a really bad thing to do.

So as as I I do support many of my colleagues' input and direction. So I guess the big point of contention in my understanding is the feasibility study having a feasibility study. So what I what I'm concerned about is so we know we have certain obligations. So I don't know at the end of all this where we're going to land, essentially, with where we are in this in these fees. So because as as council member Ramirez said, there's, like, four different kinds of scenarios where there might be more, might be less kind of thing.

And so I'm trying to look at the totality of it. And so I know that we we made an obligation in the housing element to what we, well, I guess depends on how we interpret it. But my interpretation was like, the fees we have now and drop it by 20% kinda thing. And if the next study shows that, like, oh, the maximum fees we can charge is 20% less than the current fees amount, like, we're we're kinda good. But if it's if it's something like if we do have to take whatever the Nexa study, shows us of what the maximum fees that we are allowed to to to charge and then pick a number in there, I it makes it difficult for me to to make that decision without some form of feasibility study to back that up kinda thing.

Like, I don't know if there's, like, a way to, like, not do a full blown feasibility study, but, like, a half feasibility study. I don't I don't know if that's even possible. But I would love some backing if we have that scenario where, like, we have our maximum allowed fees to the next study, and then we have our obligation of that 20% however we interpret it. So, like, I don't know how we can can get there without, like, having a good sense of usability.

I'm just trying to think about sorry. I mentioned

Go ahead.

That's why in that there are 20 different factors that are, you know, involved in a developer's ability to build. You know, Parkland fees would be one of them. We have other fees. There's other variables that they, you know, might have. There's the price of paying workers.

There's the cost of buying the land. There's the cost of supplies and goods that they have to use to build the units. And so I'm just trying to think of how a feasibility study solely based on Parkland fees alone could help you all and could help the council just inform you all about those larger size units. Because I think that's really what you're getting at is for the areas where the fee has gone up. What do you do?

You know? Especially if the housing element program, to your point, says it could go down or it's supposed to go down by 20%. So if you wanna give staff direction, I think, to figure out how there might be some sort of way we can look at it without it being a full blown feasibility study solely based on a Parkland fee. Because to me, it just seems so arbitrary to do a study about a developer's feasibility based on this fee alone. And if it's based on everything, I don't even know that that's a common or normal thing to do.

I I was talking to Christian. Is this done in other cities? I've I've never heard of it to do that sort of all encompassing study of whether a developer could build or not. Perhaps on major projects, but I don't know that we've done that. So if you could give us direction to have some leeway because, otherwise, I can see this just taking a very long time.

Sure. I'll I'll I have a suggestion. Okay. Okay. So I I'm hearing the heartburn. We we we do an annual cost of development study in the city air work board. It's we were writing about this in a professional connotation, but it's I I I I don't think it's a bad thing to do because it does show sort of order of magnitude that that delta between feasibility and, like, what you would have to do to get a project to actually be built or entitled every city is entitling a lot of projects that will never get built.

I don't

as as congressman Ricardo would say, a 100% subzero is zero. Right? So we can this is this is meaningless. We don't actually build housing that generates fees. But, the the we can if the the park improvements chart, you know, can be sort of rethought and that has, you know, some some impact on the the relative, if increases, and and the, you know, maximum new residential fee chart, then I think that's, again, directionally the right way to go, and I'll I'll be satisfied with that.

So I could spare you all the trouble of needing to do a full blown feasibility analysis, which I still think is a good thing to do someday. But that's that's probably sufficient. Right? If if staff comes back with, look, you know, thinking about where we wanna go with the parks and recreation strategic plan, thinking about the types of parks that we wanna build and economies of scale, here's kind of a rethinking of the cost of park improvements, and it sort of has a a moderating effect on some of the the fee burden. I'll be satisfied with that, and then we could all go

to work. That's fine.

Does that sound okay to staff? Oh, great. Yay. I do know like, we we don't do, like, a cost development study here in our city, but I've seen as as council member Ramirez mentioned. We see it in a rented. I think it was severely lacking of data. But, anyway, we but we do know on a general level that one of the highest fees put onto building new housing is is affordable housing, which I will not touch for the 50 foot pole. And then the second one, though, is park fees. So it is it is a significant portion of feasibility in our of developments. Yeah.

So I'm happy that we we found we found a way to to essentially get some backing on the decision that we make. Just having more, data to back up why we made that decision, and it's it's very important, especially. I hate it all the time when we we we have some requirements on a developer and developer. It doesn't pencil out. Was like, what does that mean? And I would love to have our own answer to that. So that that's that's my general direction. And I think, so is there a motion to receive the update and provide the direction discussed by the committee?

Can I just clarify? So is staff clear on what council member Ramirez said about that chart and looking at how we're Mhmm. Okay. Just wanting to make sure. Yep. You don't need any further clarity.

I I just wanted to maybe update on next steps. I actually really appreciate the feedback that's been given, and I think this is very helpful. I think that we were pulling our hair out on a lot of these things, and this is super helpful direction that we've gotten today. We're gonna go back to the drawing board. We meet all the time. We need to crunch numbers and incorporate all of this. Do you want us coming back to you? Are we coming to counsel? That's my first question. Because implementing this, right, do you wanna see what it looks like after we've implemented some of these changes by comparison before we go all the way to council, or do you want us just to bring it we can show the before and the after at council? That's my first question.

I would suggest that just go to council, but with some summaries paragraph summaries of the discussion that just occurred, right, and, yeah, incorporating your comments. But that way that way everyone knows

sort of we got

the world.

That that was gonna be my recommendation that and I would echo what, Jennifer said. Like, this is super helpful, and this has been, as you all know, a very long process to get here. So my recommendation would be we can bring it to council. We can let council know about the feedback from the committee, which is typical. That's what we would do anyways, and bring those items back.

We had originally thought this might be a thirty minute item. I definitely do not think it will be a thirty minute item to counsel, and we can talk about the timing of that to make sure we're capturing, basically, all of your feedback and the chart and how it's done. And then if the council has different direction at that time, then we can also bring it back. But I think we'll just capture everything that you all did now so that we can move on this.

I also wanted to clarify one other thing. I've done some research in different jurisdictions. Some jurisdictions have brought the nexus study with the ordinance implementing the new fee, and some have separated the two with significant distance between the two couple of months between the two, the nexus study being adopted and then the ordinance coming back for adoption. I am recommending I am telling you do not expect to see the ordinance when this nexus fee comes. Okay?

Because there is no way we can we're gonna need to come in and letting you know with all of this information, the before and after so that you can see what the maximum is. I think one of the things that was really important for me, and and this has been great, is for you to understand this is just the adoption of the the maximum. Right? We do have more work to do in order to draft a really good ordinance that provides incentives or other credits, or maybe you're gonna adopt a a coinciding policy that's a temporary waiver or something like that to incentivize some type of residential development. And that is all gonna go hand in hand with the ordinance.

And I think that maybe when we come with the nexus study, one of the questions to counsel will be as you're thinking through this and you're adopting the neXus study, you give us direction on the types of credits or incentives or things that we want to be looking at or bringing to you for consideration and adoption of the ordinance. So I just wanted to provide clarity that you're not gonna have to make that ordinance decision on the night that you are adopting the NEXUS study. We I I strongly recommend separating those two things. Otherwise, you will get an ordinance that maybe doesn't accomplish your all of your goals.

So when staff brings us up, like, whether or not we choose to bring the next study here to this committee or to straight to council, like, we we're not we're not passing the the updated parties then. Is that what staff was wanting to do anyway? Or

Sorry. Can you repeat that question?

Okay. So the the way city attorney Logue was mentioning, so we're when the adopting the nexus study is different from it is gonna be a separate item from us adopting the park fees.

Yes. Mhmm. An ordinance. Yes. The nexus study does not adopt the fees. The ordinance adopts

the work with the deadlines we need to make?

Well, the deadlines are just driven by, I think, the legal

So adoption of the nexus study will is is meeting one portion of program 1.8. And once again, you know, we have these deadlines that we set in our housing element, and then there are the realities of trying to accomplish those deadlines. I think that HCD will work with us. I think that to the extent that we are showing that we are making progress and the fact that this conversation is so thoughtful. Right? You're not just doing something arbitrary. You're genuinely looking to find a way to reduce these fees and to enable housing development. I think HCD is gonna work with us. I just we have to have faith that and I'm not saying six months in between. I'm saying a little bit of time in between.

I'm just saying don't expect it to see on the same day. And when I say a little bit of time, you know, maybe we get that done in a month or a month and a half. I'm gonna say a month and a half because we have noticing deadlines and things like that in state law that we have to meet. But so I'm not saying six months in between. I'm just saying I didn't want you to expect to see it on the same night. Your ordinance will come later, And so adoption of the NEXUS study will not prohibit the council from thinking of bigger, better things you might want to or need to do in order to accomplish your reduced fees.

I I think we'll be okay. So we talked about bringing it back. John, will you confirm? Was it midyear or with the budget workshop in April?

The fees. The ordinance I'm

talking about.

We had talked about originally going to council at the February was the original. Midyear.

So we may just need to think differently about February just based on this feedback you all have given us and bring it at at a later time just to involve all this work that we need to do. But it doesn't mean that we'll be so delayed that it will be problematic. I think it just might not be next month in February. It might be April instead. So we were trying to tie it to budget touch points with council.

So your touch point after February is that the new April budget workshop that we've added. So maybe that's more appropriate timing wise for it. We'll work together and figure out timing. So I'm not too concerned about the the deadline because you're you're helping get us there. And as Jennifer said, if we need to, you know, we can show the good faith efforts and work that we're doing to to get to resolution on this issue.

And, Mary, when when you adopt the NEXUS study, you're adopting a methodology and then the output. You're adopting a data point. The policy discussion will still occur, and so the NEXUS study is a data point.

Okay. Yeah. I'm happy for him to

go back to cancel. That seems crazy. Yeah. Great.

Alright. Was that everything? Wait. Oh, can someone make a motion?

I didn't hear what. No. I moved to what what what is the

To I

moved to receive the update and, I guess, provide this direction, which and please correct me if I'm wrong, Steph. It it I think it included looking at the park improvement costs.

Can you provide us with your collections?

Yeah. Well but but, no, I I I I don't know if it was important for this meeting, but what the vice mayor was suggesting about changes in views and and some of those I guess it's it's more net new. Right? We're thinking about

net new. Yeah. But that's just me. I That'll be a policy thing that the whole council does.

Fair enough. I was just sharing my thoughts. I I I do agree with that direction. And then I think the family unit versus square foot. Yeah. Oh, yeah. That was the other and then I think the last one was the range in land values across the city. Did I miss anything?

Thank you. Got it. And then Alternative

methodologies to slide 10. That's the one you said.

Was that the square footage versus It was your first one.

You're looking at the cost per land acquisition and improvement. You had asked for basically reviewing alternative methodologies.

I think it's more furniture.

No. I think that was the cost improvements chart. Right?

Right.

Yeah. And and I trust staff to figure out how to, yes, out.

And then the last thing was the money that, reflected over

time versus what it's what

council member vice mayor Clark brought up.

Oh, it's just a high level. Yeah. I think you would do that anyway. It's just kind of giving you a bit more and after just so you

can kind of

What the difference would be?

Just so

you have a sense of

the trade offs. Money collected as opposed to that you've entitled it and its people.

Yeah. What we what we collected and what we collected under if roughly it doesn't have to be should have been. Just just roughly under the new framework, what would have been collected, just so we

know the delta. I agree with that in spirit, but I just wanna make sure we're talking about projects that actually paid the fee. Yeah. Yeah. Yeah. Entitled projects that

That's totally fine. Wait for me another lion, bro. There it is. Second.

Alright. All in favor?

Aye. Any

opposed? Any abstentions? Motion passes unanimously.

Alright. On to the motion.

Alright. It's number six, committee staff comments, questions, committee report. Either committee committee or staff comments, questions, or committee reports from the committee members.

I just

had a question about what or think what what sort of the things that we'll be talking about this year. So we usually have the two

audit agenda. Yeah.

Yeah. So there's the internal audit, you know, as the city auditor who's bringing back up the work plan and results of prior audits that have been done. There was one more I was just thinking. A

11. Yes.

Policy 11.

Yeah. As adopt modifying our finance and budgetary policy to just match what's in practice and be updated for the new GASBs.

Okay.

Those are the two, I think, that As

as the auditor, you're moving forward to the TOT audit.

Yeah. So that'll be part of the work plan.

I'll give

you some insight into that.

That's all. Thank you. Great.

Alright. And and and one more thing. Did we say

the home buyer program was CPPC or CFC?

I don't think we decided, but it might be CFC, actually, now that you mentioned it.

Potentially.

Yeah. Essentially, bring back the home buyer program for the employees.

Yeah.

Alright. So those are the community reports. This meeting is adjourned at 10:48.

Thank you.

Thank you so much. Appreciate it.

We're gonna be so happy when I'm