All right. I'm going to call this meeting to order at 9.02.

We'll take a roll call.

Member Lucas Ramirez. Mayor Emily Ann Ramos. Vice Mayor Chris Clark.

All right. We're going to move on to item three, minutes approval.

The recommendation is to approve the Council Finance Committee meetings of December 2, 2025, without modifications.

Do you have any comments?

No comments. Do we have any public comments?

No public comments.

All right. We're ready for a motion.

Move to approve.

Second.

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.

Thank you.

So it's absolutely clear.

Alright, item four, oral communications from the public.

Do we have anyone online or in person to do oral communications from the public?

We have four people online for the public but no comments.

Great.

So we will move on to item 5.1,

review of fiscal year 2024-2025 single audit report.

The recommendation is to receive

and accept the city's single audit report

for the fiscal year ending in June 30th, 2025.

We have a presentation.

Yes. Thank you, Chair.

Derek Ramponia,

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 firm that performs our annual financial statement audit,

Badawi & Associates, also performed the single audit as part of their engagement. And we have

Ahmed Badawi from Badawi & Associates online and will walk us through a quick presentation on the

single audit report. 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 want to make sure my slides.

Oh, there we go.

All right.

So I'm going to 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 auditor. As far as our firm and the engagement team,

I know I've presented to you before, so I'm not going to 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

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, a federal award. And this is a schedule that the city lists 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 testing.

We then perform risk assessment on noncompliance.

We test internal control over 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 if we have any.

A summary of the audit results.

So as far as the auditor's 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 control.

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 Grids.

Total federal awards expended by the city was about 2.7 million.

The percentage of federal awards covered for testing was about 52 percent.

So just over half of the federal expenditures were tested.

Deficiencies in internal control, we had none noted.

And non-compliance, we also had none 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 CIFA 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 major program compliance requirements,

and take corrective action on any audit findings.

And that concluded my presentation.

In summary, 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 questions? No questions. All right.

So this is a hybrid meeting allowing the public to comment in person and virtually.

Any 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-person.

We have questions, Rachel.

No questions, Rachel.

Oh, okay. Thank you. I will 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 June 30th, 2025?

Moved.

Second.

All right. All in favor?

Aye.

Any opposed? Any abstentions?

Second pass it.

All right. We're moving on to 5.2.

Thank you.

Thank you.

Thank you very much.

All right, now we'll move on to 5.2, Park B Nexus Study and Park Impact Fees Update.

The Community Services Director, John Marchant, will make a brief remarks before the presentation

by Tepeon Rice Evans, the Economic and Planning Systems.

Good morning, committee.

Don Marchant, 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 park land fees.

We have been working with economic and planning systems, also known as EPS, who have completed

similar studies in the Bay Area.

We are working to complete details of this study.

With us today is Taifion Rice-Evans, and with him virtually is Andrew Williams, also from

EPS.

With that, I will turn it over to Taifion.

Great.

Thank you.

Good morning.

Council members, so IPMI 7's EPS, please 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 Nexus study that is part of the requirements of the Mitigation Fee Act 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 want to consider as you decide whether to apply the maximum or not.

What the technical analysis that I'm presenting to you today does is basically establish that maximum. That's what I'm going to walk through 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 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 fee.

So first of all, as we'll talk about some more, the city has a longstanding 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, number of residents generated.

It becomes a very important kind of driver of the park fee calculation.

um a second a second kind of presumption we've made is um that we we should be exploring the

possibility of charging parks fees on non-residential development your current

program only charges it to housing um but for the purposes of this technical analysis we have

included it so you can see what those maximum fees would look like on non-residential as well

as residential. And then the third component is that we have outside of 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 basic tenants 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 park sphere as having two components, a parkland component,

a park improvement component. We calculate each of those in a similar manner, 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 the

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 non-residential uh next slide please

i think we might do we do it jump yeah thank you um so it's important to understand with park fees

There'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 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 funding of parkland costs.

So the basic kind of setup that we've used here and the parkland fees are not different between Quimby 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 Quimby 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 our expectation of how many acres should new residents and new workers be providing to the city?

The second then is we 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 non-residential development, we understand how many workers may be present

or may occupy different scales of different types of non-residential 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 going to run through the assumptions that drive the analysis here.

Next slide, please.

Excuse me.

So, again, the city has an adopted service standard of 3 acres per thousand residents.

And so that's what we're using as a barometer for what the city would like from new development going forward.

We also, because we're now exploring non-residential 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 non-residential development.

You will see others that acknowledge the demand from workers and choose to charge non-residential 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 efforts have been made to calculate that.

You'll see sometimes that, you 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 gets us from the three acres per thousand residents down to the 0.4 acres per thousand workers using that equivalent service standard.

Next slide, please.

Okay, so next is the OCMC 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 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 residential categories into single family, single family detached and attached with distinct persons, 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 approach here or the data sources are primarily, this is the U.S. Census information.

The U.S. Census kind of, you know, brings together information on housing units, population.

So from that, we can derive the average 2.74 and 2.59 persons per unit.

On the multifamily side, the city has recently conducted the East Wisdom and 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 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 non-residential development just to kind of create.

Again, the goal here is 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 on the right there that we can derive how many workers you'd expect in 1,000 square feet. So it goes from a high of over three workers in an office R&D, 1,000 square feet, down to about 0.63 in a hotel building. So you see that differentiation that also converts into the fees.

Next slide, please.

Okay, so the third piece of the equation is the per acre costs.

And these numbers are obviously very important because they drive, well, like the other assumptions, they drive our calculations.

Again, we're going to 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 $7.8 million per acre and an improvement cost of $3.4 million per acre.

So when put together, you kind of have an obligation of about or a cost of about $11.2 million per acre as the total cost.

The city has for a long term worked with an appraiser who evaluates the value of land.

And so that number, that $7.8 million comes from their latest study.

The $3.4 million 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 kind of show that detail.

So here you can see seven parks that were built by the city.

You can see that budget in nominal dollar terms.

We did some inflationary adjustments to account for the timing of them.

And overall, you can see kind of on the right hand column how we have a range of cost per acre cost of about $2.1 million up to $6.6 million.

So we basically put that together, take an average and say, we think on average, when we think about the future parks and the improvement costs that will go with them, it's going to be about $3.4 million 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 illustrate how the kind of how all those factors work together to bring us to a fee.

And here I'm going to 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 of the fee categories is 26 plus units, which is effectively most likely to be a multifamily unit.

So we're comparing the fee, 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 we just go down the table, starting with the current fee, you can see that as the three acres per thousand residents,

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 land cost was actually had a higher per acre cost of about $11.3 million per acre.

But included no specified costs for improvements.

Under the new system, as you move to the right, you'll see that we actually have both, but our land cost is lower.

So we have about a $7.8 million per acre in land costs, $3.4 million per acre in improvements, and an overall cost of $11.2 million per acre.

Where does that leave us?

Well, in terms of these three land uses we have up here, we can see that the current city number, it's actually a low-end number for the current city number, is $67,800 per unit.

So that's the current fee that if I was building an apartment building in the city that 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, so more.

So basically, these are all driven, again, by that set of assumptions.

Next slide, please.

So to bring it all together 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 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 there that depending on whether you compare to the low or the high, the single family attached fee, for example,

the maximum new fee would actually push the single family attached fee up by between 28 and 39 percent.

On the other hand, on the multifamily side of things, there's more variation.

So the fee on studio multifamily would go down between 42% and 48%.

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, 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 0.4 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&D, down to $2.83 per square foot for hotel motel development at the maximum level.

Next slide, please.

All right. So within the staff report, we've asked four questions for your consideration.

In addition, just want to touch on the three acres per thousand that Tfion brought up, which 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 planning level, the planning area level.

And this is 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 lieu fee requirement under both the Quimby Act as well as the Mitigation Fee Act?

Does the committee support the recommendation to apply park and recreation impact fees to non-residential 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. All right. Back to me right now, right? Okay. Does any member of the

COMMITTEE HAVE ANY QUESTIONS? LET'S GO. COUNCE MEMBER RAMIRISS.

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

act subject properties dedication would be permitted how so how are what would dedication

continue to be uh acceptable for uh projects without a subdivision

okay so yeah i mean i think i think that the um uh 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 creates a kind of

clearer and specific system.

And I think for the mitigation fee act,

I think we just have,

you have to kind of 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,

it's part of this overall exercise

just to kind of 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.

So the intent is through some policy will have like an alternative mitigation program to allow for dedication or focus or something.

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.

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 Gray Star

and El Camino and Castro Project

that a commercial subdivision,

the residential units were not mapped

but there was a commercial mapping

that triggered the Quimby Act.

So they withdrew their map.

So how are we treating projects

without a residential NAP, 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 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 Quimby or you calculate it under Mitigation Fee Act, you're

going to get the identical fee, right?

But 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.

Functionally equivalent. Functionally equivalent. 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 would that be for us?

So adoption of a capital improvement plan is required.

Did you want to we we adopt a capital improvement plan, but do you want to add to that?

Yeah, I mean, the way that we often do it.

So, yeah, 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.

And the way we've dealt with this with other cities is we establish 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 going to put the amount of land, you know, obviously it probably depends on.

We need growth projections, right, or presumptions about growth projections to understand how much money we're going to get in.

But the general idea is like we'll be buying we'll be buying parkland.

We'll be doing these kinds of improvements, like 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 accept certain fees, you also adopt that capital improvement program.

obviously it's a broader level and is fed by the more detailed capital recruitment programs that

you know kind of the cities do right on a kind of frequent basis is it going to be tied into

the parks and recreation strategy or is it a different document it's different yes

um according to seeing that um uh what is the difference if i'm hoping this is easy uh in value

um the the ranges if you were to compare fees calculated based on square footage

uh with the fees that staff is recommending based on bedroom counts

very divergently different or they kind of are very similar?

I mean, yeah, they come out pretty similar.

What you'll find is that the, you know, so the number of persons, for example,

in a studio is less than the number of persons in a two bedroom, right?

So you create that.

but the actual kind of, it's not a perfect relationship, right?

It's not a linear relationship.

So you will have slight differences because a unit under the per square foot

approach, a unit that's twice as big will play 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 certainly calculate it.

you know, we would need to just kind of,

you 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 can 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, kind of look at the most.

Okay, I have some comments about that later.

Okay.

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

and one part of the city might be closer to 12 million an acre and another part of the city

might be closer to 6 million do we have something that shows sort of the distribution of land values

across the city? That would be something we can work get. 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 city staff I

has done a lot of work through the R3 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 particular parks fees,

I believe it will be 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 going to be tied to the R3 work, as I understand it.

And then we also, we can and need to work a little bit more with staff

on this, looked at the townhome feasibility side as well, ourselves,

and so can provide some feedback on that.

And of course, the impact on the feasibility is, well, it 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 at some different scenarios on fee change in order to be able to kind of articulate what the feasibility impact.

so sound i don't want to put words in your mouth but it sounds like we're not doing

we i think we've done you were around when we did the east wisbon precise plan adoption there

was a feasibility analysis for the community benefit fee thing right to show what was we we

could charge 20 you know uh dollars a square foot but i think we ended up adopting five for

residential because anything above that impeded financial feasibility to the point where nothing

get built. Well, we assumed it would. We don't know that.

Well, not a lot's been built.

Same with the commercial linkage for affordable housing back in the day.

Right. 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 related to the R3 feasibility work to

write some of those answers, but we're not doing a ground up.

Okay. 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 build those 100 unit apartment complex and you build 100 units, you would pay zero dollars in fees.

Yeah, I mean, that's something you just have to be clear about in your ordinance and your regular.

But you absolutely can't do that.

How does that, is that true for the commercial square footage as well?

So a change in use would not trigger a new park fee.

It would simply be 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 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 path forward. So these are

things that we can do, but that's a discussion for, 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 is very helpful for us as we move forward in drafting the ordinance.

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

Oh, I'm not saying that. 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 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.

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

Thanks, Mayor Clark. Do you have any questions?

I think just two. In the NEXUS studies, they've done since Sheetz, which is 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 doesn't work anymore.

Or has it been pretty south where 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.

So, yeah, so we, right, so we follow, like, right, she's created a lot of anxiety and got a lot of press, appropriately so. And so there was a lot of debate amongst us practitioners, and obviously we were talking to our lawyer friends about to what extent we think it would make a difference.

I do think that the I'm probably going to get it wrong, but it was remanded right to the California Superior Court who looked and said, we think what happened in El Dorado County was actually OK.

So that I think will need a little bit of pressure and concern.

But it did. What is definitely true is that we need to, you know, it kind of, I think, reemphasize.

And again, Jennifer can save me if I'm getting this wrong, but it reemphasized the importance of making sure that our Mediation Fee Act,

you know, Fee Walk and Nexus Findings are very consistent with some of the Nolan Dolan Supreme Court cases.

That was kind of one of the issue. And I think it also just raises, like other legislation, just raises, you know,

increasingly as it raises the bar, but means like, you know,

let's do a thorough job and, you know,

those I's cross those T's create those connections very clearly.

And the final piece of advice that I was, that I received,

but I, again, refer to Jennifer on this,

it's just in that, at least in that case,

and in some of the cases where cities don't have an appeals process,

you can more accelerate yourself into a contentious situation.

So I think I've seen some cities since then say,

okay, we'll have a thing where the 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.

So I'll just follow up on that.

That was everything that you said was correct.

sheets 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 good news for that jurisdiction, but also does reiterate,

it's about dotting 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 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? 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 some of the public comments,

and I did take a look at the Cal HDF 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 Cal HDF and the

challenges that they made on the, 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,

we got a new opinion, but on remand, those fees were still upheld, right? Even applying Nolan

those fees were still upheld. 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 seemed 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.

The...

Is there anything in here that's unusual compared to the studies that you've done in other communities or like three acres per thousand that's standard or just the approach that we're taking?

I'm just curious sort of where we fall in the this is very boilerplate or this is very you're weird sort of thing.

Yeah, yeah.

You never want to be the kind of pretty creative consultant in the Nexus study world.

The study world.

Probably true.

In other words, it's fine. So, yeah, we have. And 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 that 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, there are indeed some cities out there that have higher.

So, I mean, 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

going to be a lot less than the one here and it would be announced to be. So it ends up being,

From my perspective, it's kind of like the 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 people.

There are other policy considerations out there.

Right. So it's a mechanical answer of a maximum fee.

doesn't necessarily mean it's the fee that you or your community will want to adopt,

but it gives us the, you know, it's kind of based just on the bedrock of standard practice.

Any questions?

Okay.

Go ahead.

Okay.

So I totally get that this is mostly about the NEXIS study,

but it also talks about the impact fee updates.

so um i had a question from uh from a resident um 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 um uh and

would we just have to leave away uh the park fees but my understanding is that this next study is

supposed to help us both not bolster it as in like increase it but bolster like the um 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

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 Quimby 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 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.

Absolutely.

Okay.

Okay, because they also have the question of like, how does, hypothetically, we pass the

next study, we pass the park piece based on that next study, how does that interact with

things like developments under SB 79? And yeah, I'll just go with, how does that interact

with like developments that would fall under SB 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 going to be bound by that. But Christian, do you

want to 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 SB 330 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' Remedy projects,

for instance, have filed preliminary applications under SB 330, 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 cities' 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 Quimby Act for a lot of those fees, but we are now adding the mitigation mitigation fee.

And so both of those will be considered the park fee updates.

Yes.

How does that align with our housing element program that said that we are going to reduce our park fees by 20 percent?

Sure.

I think 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 the other peripheral requirements of that program, including exploration of expanded credits against the city's 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.

A clarifying question.

So this 20% reduction is based on

what's currently we have as PAR fees

or what the maximum allowable part fees based on the NEXA 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 NEXA study

and the fee adopted by counsel,

which could be lower than what the NEXA 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 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 um my familiar familiarity but the next study is mostly but has anything to do with

affordable housing nexus study fees but my understanding is that um 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 nexus study

correct correct yeah it's essentially you could artificially reduce in various areas as christian

was saying the various types this gives you the baseline that we just haven't had yet so so it's

kind of like our how when we did our fee study we like this is how much is costing the city and then

if we did a 100 recovery then it'd be this yes but like we could 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?

Correct. But since we're aligning it with our Quimby fee, I mean, they're going to be the same across the board. So I think what Christian was saying is that in an easier world, our Nexus study would have 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 we have any more questions?

After public comment.

All right.

Okay.

So, we're going to 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.

I don't see any in-person.

in person. I don't see anyone who's in their hands online. Oh, okay. Thank you. I will now bring the

item back for community 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? All right. I appreciate the questions that each of you asked since you actually covered some

of the other ones that I have on my list. I think this is directionally very good. I think we're,

I'm glad that we're doing this work. The ambiguities that we've been contending with

have been hard, right? Practically and also politically. So 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 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 council,

where most of the big decisions will have to be made.

But at the nexus level,

a couple of the things that are,

probably me, I guess,

the big one is,

we are de facto penalizing family units.

I am pleased personally to see that there is substantial fee relief for multifamily housing, but especially when you get to the two-bedroom and three-bedroom units, you start seeing, I think, economic disincentives to create units of that size.

And I know that's been a priority for the council for a long time.

So 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 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 and 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 better units. But if we can do that, then

maybe we don't have to fix the problem at the next study level. But that's why I think seeing

the comparison between the values or the ranges based on a square footage calculation compared

with the per bedroom calculation would be instructive.

I think you're probably going to end up, I think like we were hearing earlier, 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 direct disincentive

to just having the two and three bedrooms.

That's a helpful distinction.

So if the per square foot calculation

helps us achieve the...

unrelated council goal of adding units that are available for families, then I think that might be

a good approach for us to consider. But if it also means that the fees are substantially higher,

you know, we're not ending up in a better place. So 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 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.

Can I add one thing to that or is that okay?

I do whatever you want.

So I think it's just so it sounds like it would 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 bedroom is still going to have a higher fee.

So I don't, it's worth looking at so you can see the impact on your kind of, on that goal.

And so you can understand what, you know, if it makes a difference, but I think you'll still have that same, in terms of the maximum fees, that same challenge.

I agree with you.

I think that's true.

It's just the, where the disincentive is placed 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 more of a direct penalty as opposed to the total size of the unit.

You could have, you know, in this case, really enormous studios, penthouse studios, right, that fetch a lot of rent.

and, you know, they'll pay a minimal fee, right?

So, like, I'm having a hard time articulating the difference,

but that's one thing I think would be helpful to explore.

The other thing that troubles me is I'm looking at the,

this is a really helpful chart, slide 10, the park improvements.

um it's it's really notable that they the went for you know the low per acre cost and the high

per acre cost the highest per acre cost is the smallest park 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 in 2025. Below is the biggest park. And so 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.

There's sort of an inflation based on including the smallest parks, which are important. I don't

want to diminish the value of having mini parks that are you know 0.3 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 build so i think one thing that would be right like i i don't really

know how to fix that but uh it what it tells me is we need bigger parks you know maybe we should

stop doing 0.3 acre parks there are other benefits to that like maintenance you know so um i maybe

that that's a policy issue but um i i almost want to take out the um uh the outliers the ones that

are like that almost seven million dollars per acre for a 0.3 acre park means that the total fee

impact is much greater. What would it be if we took out the outliers, right? And we just said,

moving forward, we're not going to have mini parks less than half an acre or something, right? And

that half an acre, it really starts to kind of moderate out. So I don't want to ask you the

question directly, John, because I feel like this is a tough question, but like, why is it that

very small parks are so gosh darn expensive? There's probably a good answer. I'm going to

start and then I'll turn it over to public

course director Jennifer Ng.

There is certainly an economy of scale

as you can see. That's really

what that comes down to and

I'll let Jennifer go into more details

on that.

She says this is where I'm supposed to sit.

So 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 a larger area. And

You'll see that in any jurisdiction in this area.

Smaller ones cost more.

That's just the way it is.

So again, I think thinking about this a little bit more, and maybe there's the unrelated body of work related to the Parks and Recreation Strategic Plan.

Do we want to have very small parks that are very expensive?

Maybe not.

But I do think if there's a way we can think about this where we're taking out those outliers, I mean, they're still expensive, right?

We're still upwards of $3 million, more than $3 million typically.

So it's not a tremendous amount of relief, but it could help to keep the fee impact less severe or reduce that burden a little bit.

So I would welcome creative ideas for thinking about that.

I think it's prudent to include the park improvements cost, right?

It's not just buying a 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 prudent.

I just think that if we can think about whether this is a fair representation of the types of parks that we want to create moving forward, do we really want parks that cost almost $7 million an acre to build that's excluding the acquisition cost?

As a policymaker, I'd say let's find ways to reduce those costs, and maybe that means not having, unfortunately, very, very small parks.

um so those are the two things that I wanted to flag to go to the questions um so yes uh I support

staff's recommendation to maintain the existing parkland dedication for a loopy requirement

and also adopt uh the uh next study pursuit of the mitigation fee act that seems good and sensible

So number two, yes, I also support the staff's recommendation to include non-residential development.

We're going to need, we have a very ambitious parks and recreation strategic plan that started to go through it.

And I think it's really good.

And 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 community from non-residential 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 acres per thousand residents.

So I think those three are good.

There's additional input and direction.

And the things I would add are, one, 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 parks too right if it's just green space right that's probably a lot cheaper

than you know in aquac so right thinking about like what we include in these parks i think will

be helpful to consider um i do think we should have a financial feasibility analysis i don't

think the R3 analysis is sufficient, especially if we're going to include non-residential

development, which we should do. But non-residential development also should be financially feasible.

So 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.

um if there is 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 what one part of the city let's say a rock

street property compared to a cuesta you know yeah exactly quest area property then i think that we

should actually we should reflect that in the next study and we might want to just 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 think that would be helpful to

have if there is a meaningful difference in land values. And then the last thing is, I think,

something, I don't remember who it was, maybe it was you, Aaron, but 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 we don't have a mitigation fee next to study, so we can't 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 we have within recent history projects that are treated so differently.

And I think having staff, maybe 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.

Vice Mayor Clark.

The short version is yes to all four of the 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

choose some period

of time and

say this is what we

collected over

that period of time and

had

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 going to be we're going to be asked to do

more with less or the same with less and it would just be good from a policymaker standpoint to know

what that delta is so we know 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 folks have come to expect.

I guess I, the only thing that 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, the council member

Ramirez pointed out there are fees that, at least under this prediction, increase for

free bedrooms.

And I'm not sure how you, that will, you know, we can come up with the, you know, what is

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 want to create from a policy perspective.

but I don't think that should influence the, you know, just figuring out what the framework should

be. I think there's a second layer of incentive structures where if we want to reduce the cost of

two, three, four bedroom units, then we find a way to lower that and make it up somewhere else,

either in 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 need for a full-grown financial feasibility study

because I don't think any of these fees,

one, they're going down in most 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 um they're going to 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 um i think there

just all the other components and fees and other things that we can impose. So I guess if what

you're proposing is that we we do a feasibility study solely based on these changes that 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 we probably already know.

So I see.

Thank you, Mayor.

So Christian and I were just chatting about this

because my flag on doing a feasibility study

is just the timing of it all.

So for us needing to get to or adopt the next 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 going to 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 going to 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 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's the hindrance,

is that those higher bedroom units are the kind of key factor,

then that is something that you all have to go to policy-wise,

is just reduce that fee.

I do think that it's just going to take a lot longer for the feasibility study.

I just want to 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 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 a tilt

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

I have a perspective. I think if we saw multifamily projects break ground in the past

several years, I might be a little bit less. Yeah. 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 not really comfortable with an arbitrary adoption of fees. The fee should be $17.64 per

square foot. It's just a number I pulled out of thin air because it sounds good. I would rather

it be informed by some understanding of the the totality of impacts that affect feasibility right

it's you're right it's not just bark fees right we're not pointing numbers out of the sky we

hired a very expensive consultant and the fees are going down and so some of them are you can

show me that materially this this fee reduction of you know the reason that no one can build 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 qualm is would i like to know the totality of everything or yes i would do i think

it's going to change my mind in terms of the overall framework that we're discussing today

we can have the next the next study is an independent document these are legally defensible

maximum correct but if we do anything less than that it's arbitrary it's 20 percent or it's you

know so like 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 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 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 solver's

decision. Anyway, I don't think I'm going to convince you of anything. The only other thing

I wanted to mention just because the um 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's because really at the end of the day it's about how many humans are we trying to support

And what is the level which we can justify their usage of all this?

So if you're changing the use from commercial to lab or something

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 going to have in order to be our overall three years.

And we're going to be finding out what we're going to be like.

Lex, 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 not necessarily a yes or no question.

Yeah, yeah, yeah.

I mean, well, we do kind of have a short point.

Can I just add something?

Just on that last point, I think this is 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 do net out, but for a change of use, they use the kind of new fee study to guide that, right?

So 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 the expectations, there'll be more, there would be more people, even the same size, right?

There'd be more workers in there.

And so 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 and the use has changed, then I'm not going to bother with any fee additions.

So there's just some options.

It gets more into a policy discussion of, I just, I've seen a lot of, or maybe just heard rumblings of, you know, you have some, some smaller projects who, you know, the economy shifted and they want to 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.

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.

stuff that we'll deal with someday. All right. So one through three, those are easy yeses.

So yay for that. For the additional input. So I struggle like seeing some of the like earlier

moves and how does that impact like when it finally goes. This is why when I code, I push

code directly to production, see what happens. And if it breaks, it breaks kind of thing, which is a

really bad thing to do. So I do support many of my colleagues input and direction. So I guess the

big point of contingent in my understanding is the feasibility study, having a feasibility study.

So 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 these fees so uh because

as as customer 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 um

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

kind of thing and if the nexus study shows that like oh the maximum fees we can charge is 20 less

than the current fees are like we're we're kind of good but if it's if it's something like if we do

have to take whatever the nexus study um shows us of what the maximum fees that we are allowed to

to to charge and then pick a number in there it makes it difficult for me to to make that decision

without some form of feasibility study to back that up kind of thing um 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 through the next study and then we have our

obligation of that 20 however we interpret it so um like i don't know how we can get there

without like having a good sense of feasibility i'm just trying to think about sorry

go ahead 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 uh 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 it 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 go down or it's supposed to go down by 20%.

So if you want to 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 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 never heard of it um to do that sort of

all-encompassing study um 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.

I'll have a suggestion.

Okay.

So I'm hearing the hard word.

We do an annual cost of development study in the city I work for.

We were writing about this in a professional computation,

but I don't think it's a bad thing to do

because it does show sort of order of magnitude

that delta between feasibility and what you would have to do a project to actually be built.

Every city is entitling a lot of projects that will never get built.

As Congressman Liccardo would say, 100% of zero is zero, right?

So this is meaningless.

We don't actually build housing that generates fees.

But if the park improvements chart can be sort of rethought and that has some impact on the relative increases in the maximum new residential fee chart,

then I think that's, again, directionally the right way to go. And 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 probably sufficient, right? If staff

comes back with, look, you know, thinking about where we want to go with the Parks and Recreation

strategic plan, thinking about the types of parks that we want to build and economies of scale,

here's kind of a rethinking of the cost of park improvements and it sort of has a moderating

effect on some of the fee burden I'll be satisfied with that and then we could all go to work

does that that sound okay to staff oh great yay um I do know like

we we don't do like a cost development study here in our city but I've seen up as as council member

Ramirez mentioned we see it and rented I think it was severely lacking in data but anyway um we but

we do know on a general level that one of the highest fees put on to building new housing is

is affordable housing fees which I'll 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 uh of developments um so

I'm happy that we found a way to essentially get some backing on the decision that we make.

Just having more data to back up why we made that decision is very important, especially

I hate it all the time when we have some requirements on a developer and it doesn't

pencil out. I was like, what does that mean? And I would love to have our own answer to that.

um so but that's that's my general direction um and i think um 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 okay just

wanting to make sure we don't need any further clarity i i just wanted to um 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 going to go back to the drawing board.

We need all the time. We need to punch numbers and incorporate all of this. Do you want us coming

back to you? Are we coming to council? That's my first question. Because implementing this,

right do you want to 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 i would suggest it just go to council

but with uh some summaries paragraph summaries of the discussion that just occurred right and

incorporating your comments but that way that way everyone knows sort of how we got the world that

that was going to 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 30-minute item. I definitely do not think it will be a 30-minute

item to council, 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

it 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. Cause there is no way we can, we're going to 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 this has been great,

is for you to understand this is just the adoption of 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 going to adopt a coinciding policy that's a temporary waiver or something

like that to incentivize some type of residential development.

And that is all going to go hand in hand with the ordinance.

And I think that maybe when we come with the NEXA study, one of the questions to counsel

will be as you're thinking through this and you're adopting the NEXA 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 going to have to make that ordinance decision on the night that you

are adopting the NEXA study. I strongly recommend separating those two things. Otherwise, you will

get an ordinance that maybe doesn't accomplish all of your goals. So when staff brings us,

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 updated park fees then is that what staff was

wanting to do anyway or sorry can you repeat that question okay so the the way uh city attorney

loge was mentioning so when the adopting the nexus study is different from it is going to be a

separate item from us adopting the park fees yes and ordinance yes the nexus study does not adopt

the fees the ordinance adopts that work with the deadlines we need to make well the deadlines are

just driven by i think the uh 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 going to 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 going to 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 think we'll be okay. So we talked about bringing it back. John, will you confirm, was it mid-year or with the budget workshop in April?

The fees.

The ordinance.

we had talked about originally um going to council at the end of february was the original

it was mid-year so we may just need to think differently about february just based on this

feedback you all have given us and bring it at a later time just to involve um 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 April budget workshop

that we've added. So maybe that's more appropriate timing wise for it, but we'll work together and

figure out timing. So I'm not too concerned about the deadline because you're helping get us there.

And as Jennifer said, if we need to, we can show the good faith efforts and work that we're doing to to get to resolution on this issue.

And when you adopt an exit 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 next study is a data point.

I'm happy for it.

back to council.

Yeah. Great.

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

I moved to what is the... I moved to receive the update and I guess provide the direction which,

please correct me if I'm wrong, staff, I think it included looking at the park improvement costs.

absolutely yeah well but no i i am um i don't know if it was important for this meeting but uh what

the vice mayor was suggesting about uh changes in use and and some of those um i guess it's more

net new right we're thinking about net new yeah but that's just me that'll be a policy thing that

the whole council does fair enough i was just sharing my thoughts i i do agree with that

direction and then um 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 oh and then alternative methodologies to slide 10 that's the one you said

was that this um square footage versus that it was your first one you're looking at the cost uh

per land acquisition and improvement you had asked for basically reviewing alternative methodologies

no i think that was the cost improvements chart right right yeah and i trust staff to figure out

how to yes and then the last thing was the money that um reflected over time versus what

it's like council member vice mayor clark brought up it was just a high level yeah i think you would

do that anyway. It's just kind of

giving you a before and after.

Just so you kind of... What the difference would be.

Just so you have a sense of

the trade-offs. Money collected

as opposed to we've entitled

it and it's people. Yeah, what we

collected and what we collected

under, if roughly

it doesn't have to be for the penny, 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 want to make sure we're talking about projects

that actually paid the fee.

Yeah, yeah, yeah.

Title projects that never paid the fee.

That's totally fine.

Okay.

There could be another line for all right there.

There in favor.

Second.

All right.

All in favor?

Aye.

Any opposed?

Any abstentions?

Motion passes unanimously.

All right.

On time.

Thank you.

All right.

Number six, committee staff comments, questions, committee report.

Other committee members of the year staff comments, questions, or committee reports from

the committee members.

I just had a question about...

what would sort of be things that we'll be talking about this year.

We usually have the two audits.

Agenda.

Yeah.

So there's the internal audit, you know, as the city auditor,

we'll be bringing back the work plan and results of prior audits that have been done.

There was one more that was thinking.

A-11.

Yes.

A-11.

Yeah.

Modifying our finance and budgetary policy to just match what's in practice

and be updated for the new GASBs.

Those are the two, I think.

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

Yeah, so that'll be part of the work.

I'll give you some insight into that.

Great.

All right.

And one more thing.

Did we say the homebuyer program was CPPC or CFC?

I don't think we decided, but it might be CFC, actually,

now that you mention it.

Potentially.

Yeah, potentially bring back the homebuyer program for the employees.

Yeah.

All right.

So those are the community reports.

This meeting is adjourned at 1048.

Thank you.

Thank you so much.

Appreciate it.

We're going to be so happy when I'm up.