Citywide Development Impact Fee (DIF) Program

Background

For several decades now the City has utilized existing infrastructure capacity to support new development and when capacity is no longer available has relied on proposed developments to fund new infrastructure. In-depth analysis showed that the City’s development impact fee (DIF) system is outdated, piecemeal, difficult to navigate, and falls far short of funding infrastructure required to support the build out of the 2035 General Plan. Also, the City’s incremental evolution of fees has resulted in a complex system that is cumbersome for the City to manage and for developers to determine financial feasibility of projects. Finally, in several parts of the City, infrastructure deficiencies have halted new development and urban infill development is seldom able to pay for the type of large scale off-site infrastructure required through exactions.

Proposal

This program will streamline the current system by establishing a common set of rules and administration polices for all impact fees while also providing funding for critical transportation needs and desirable parks improvements. Additionally, the program creates financing districts (for 65th St, River District and Jacinto Creek) that support localized infrastructure needs by providing a funding and reimbursement mechanism where none currently exists. Finally, the proposal includes a fee deferral ordinance which postpones payment of fees from permit issuance until final building permit inspection, saving developers thousands of dollars per unit. The CDIF program provides more consistency and certainty for developers and staff, provides funding for needed infrastructure and offers a financial incentive to developers.

Below is a summary of the benefits of the program:

Provides for a streamlined master ordinance, with a common set of rules and requirements for fee administration that would apply to all new fees, and would consolidate all fees into section 18 of City Code
Provides consistency and more certainty for developers and staff
Promotes infill development by reducing the required number of park acres built, while providing funding to improve the parks we have, including new funding for regional parks
The fee deferral and finance district elements provide for flexibility on the timing of payments
Economic incentives for River District and 65th Street Finance Plans allows projects to incorporate the costs into pro-formas
Provides a mechanism to allow credit for prior use and credits for impact fees previously paid on the same property
Offers a uniform refund and protest policy
Includes a reimbursement process for infrastructure which serves more than the project itself
Transportation DIF: funds transportation improvement projects citywide and leverages local match funds when competing for grants.
Park DIF: funds neighborhood, community and citywide parks facilities while reducing the required park acreage (Quimby). Reduced LOS means more developable land in our core, while funding more robust improvements and money for regional parks.
Subarea fee funds local infrastructure that catalyzes development (for 65th St, River District, etc.)
Implementation of a fee deferral program to assist infill development. For residential, mixed use, and large non-residential (greater than 100,000 square feet) fees could be deferred to final inspection. This would allow developers to pull more permits at once, developing economies of scale, while also saving on costly soft-cost financing.

On February 2nd, the City of Sacramento will hold a stakeholder meeting on the Proposed Citywide Development Impact Fee (CDIF) Program. Staff will report on the following items: 1) the CDIF program, 2) the initial feedback received from the stakeholder community, and 3) the revisions made thus far to the fee proposal. An outreach summary and the revised schedule will also be presented. CDIF documents and materials are included below:

For further information, questions, or comments, contact us by emailing de @cityofsacramento.org .