Residential Impact Fee Will Not Increase This Year

The City Council on Monday voted to accept a staff recommendation not to raise residential impact fees (RIFs), despite a study that shows the city could justifiably raise fees by almost 50 percent. 

However, the city is not recommending an increase due to the economic downturn caused by the novel coronavirus.

Residential impact fees were created in 1988 to mitigate the impact of new residential developments on city parks and other public facilities. The fee is reviewed every five years based on residential land values, according to a city staff report.

Land values in Pasadena (based on recent sales and appraisals of various properties) are $4.6 million per acre for parkland and $294,348 per acre of open space land.

On July 7, the Recreation and Park Commission was presented with an information item that included details on the RIF 2020 Nexus Study Update . 

The study indicates that the city could adopt a park impact fee at a rate of $39,598 for a three-bedroom unit, which is approximately $13,151, or 49.7 percent more than the current fee for a three-bedroom unit.

The city can charge a lower fee than the rate calculated by the nexus study, but it cannot charge a higher rate.

The RIF ranges from $19,622 for a studio to $36,321 for a home with five or more bedrooms, and affordable housing units. Skilled nursing units and student housing units pay $1,016 per unit.

If the Inclusionary Housing Ordinance is applied to the development, the non-affordable units receive a 30 percent discount on the RIF. The resolution also provides an incentive for developers to build workforce housing by offering a rebate of the RIF for eligible unit

“Although the Nexus Study shows justification for a 49.7 percent increase, given the current COVID-19 emergency situation and the economic uncertainties, staff does not recommend increasing the RIF rates at this time,” according to a city staff report. 

The City Council can amend the fee at any time, which would allow for the fee to be increased at a later date.

Over the last five fiscal years, the fee has generated $29.1 million.