In Featured, Research Article

By Joe Colgan, Impact Fee Specialist, and Nicole Kissam, Director

In September of 2021, the California Legislature passed Assembly Bill (AB) 602 and the Governor signed it into law. AB 602 creates some new requirements for impact fees that will go into effect in 2022. Specifically, the new law amends Government Code Section 65940.1 and adds Section 66016.5 to impose the following requirements:

  1. A city, county or special district that has an internet website shall post on its website:
    – A current written schedule of fees, exactions, and affordability requirements applicable to a proposed housing development project, and shall present that information in a manner that identifies the fees, exactions, and affordability requirements that apply to each parcel and the fees that apply to each new water and sewer utility connection.
    – All zoning ordinances and development standards and specifying the zoning, design and development standards that apply to each parcel.
    – A list of the information that will be required from any applicant for a development project, as specified in Government Code Section 69540.
    – The current and five previous annual fee reports required by Government Code Section 66006 and Subsection 66013 (d).
    – An archive of impact fee nexus studies, cost of service studies or the equivalent, conducted on or after January 1, 2018.
  2. The above information shall be updated within 30 days of any changes.
  3. A city or county shall request from a development proponent, upon issuance of a certificate of occupancy or final inspection, the total amount of fees and exactions associated with the project for which the certificate is issued. That information must be posted on the website and updated at least twice a year.
  4. Before the adoption of an impact fee, an impact fee nexus study shall be performed and adopted.
  5. When applicable, the nexus study shall identify the existing level of service for each public facility, identify the proposed new level of service and explain why the new level of service is appropriate.
  6. If a nexus study supports the increase of an existing fee, the local agency shall review the assumptions of the nexus study supporting the original fee and evaluate the amount of the fees collected under the original fee.
  7. A nexus study adopted after July 1, 2022, shall calculate a fee imposed on a housing development project proportionately to the square footage of the proposed units of the development. A local agency that imposes a fee proportionately to the square footage of the proposed units of the development shall be deemed to have used a valid method to establish a reasonable relationship between the fee charged and the burden posed by the development. The law outlines some possible exceptions to this requirement.
  8. Large jurisdictions, as defined in Section 53559.1 (d) of the Health and Safety Code (counties of 250,000 or more and cities within those counties), shall adopt a capital improvement plan as part of a nexus study.
  9. All studies shall be adopted at a public hearing with at least 30 days’ notice, and the local agency shall notify any member of the public who requests notice of intent to begin an impact fee nexus study of the date of the hearing.
  10. Studies shall be updated at least every eight years, beginning on January 1, 2022.

Take note and take action! These new requirements will significantly affect how California’s cities, counties, and special districts structure, implement, and monitor their development impact fee programs in the years to come. For information or assistance regarding these changes and their impacts, reach out to NBS at 800.676.7516.

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