Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Steve Monowitz, Director of Planning and Building
Subject: Multi-Jurisdictional Inclusionary Housing and Non-Residential Linkage Fee Study
RECOMMENDATION:
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Recommendation to:
A) Adopt a resolution approving a Memorandum of Understanding (MOU) with the City of Belmont, City of Brisbane, City of Daly City, City of East Palo Alto, City of Half Moon Bay, City of Menlo Park, City of Pacifica, City of Redwood City, City of San Bruno, City of San Mateo, and Community Planning Collaborative for the Multi-Jurisdictional Inclusionary Housing and Non-Residential Linkage Fee Study; and
B) Adopt a resolution authorizing an agreement with Strategic Economics to complete a Multi-Jurisdictional Inclusionary Housing and Non-Residential Linkage Fee Study, with a term commencing on December 15, 2025 through June 30, 2027, for a total amount not to exceed $619,135.
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BACKGROUND:
Under California law, local jurisdictions can levy fees on new development to help mitigate specific impacts created by that development, provided there is a rational link between the fee and the impact the fee addresses, and the amount of the fee is roughly proportional to the impact of the project. The rationality and proportionality of the type and amount of impact fee levied on development are typically established by a “Nexus Study,” which determines the link between new development and the impact it creates, and the fee that may be justifiably levied on a given development to defray its share of the impact.
Recognizing the severity of the ongoing and increasing housing shortfall in the County and throughout the State, the growing imbalance between employment and housing, and the acute shortage of affordable housing for County residents, in 2015 and 2016 the County partnered with a number of County jurisdictions to complete a Nexus Study (“2016 Nexus Study”) to establish appropriate impact fees on residential and non-residential development, to help mitigate the impacts of new development on the need for housing. Through the collaborative multijurisdictional 2016 Nexus Study process, the County and partner jurisdictions obtained the services of a Project Consultant to complete Nexus Studies for all partner jurisdictions, and a Project Management Consultant, to provide project management services to facilitate work across and between the various jurisdictions and the Project Consultant. Given the many similarities across County jurisdictions, this collaborative approach provided significant time- and cost-savings, while still generating individual assessments of fees appropriate to each jurisdiction.
The 2016 Nexus Study determined the extent to which each type of new development increases the number of employees and residents in the County, the consequent demand for housing, and the appropriate fee levels to address this impact. On the basis of the 2016 Nexus Study’s findings, the Board of Supervisors in 2016 adopted impact fees on various kinds of residential and non-residential development. These fees are assessed as part of the building permit process and are then transferred to the Department of Housing’s Housing Trust Fund for distribution to support the creation of affordable housing.
The 2016 Nexus Study was necessarily based on market, economic, demographic and other conditions specific to the time of the study’s completion. As conditions change over time, it is useful to periodically revisit impact fees to determine if the types and levels of fees assessed remain appropriate to address the targeted impact. Fee levels adopted some time ago may no longer be appropriately scaled to address the impact. A revised Nexus Study can assess fees in the context of current conditions and ensure that fee types and levels are appropriately set.
DISCUSSION:
With the intent of leveraging the same cross-jurisdictional efficiencies provided by the 2016 Nexus Study, the County and 10 other San Mateo County jurisdictions are undertaking an updated Multijurisdictional Nexus Study (“Nexus Study”), to reassess and determine the appropriate fee levels on various kinds of development, and in the case of some jurisdictions, to assess the feasibility and appropriateness of inclusionary housing requirements, i.e. a requirement that new residential development include some percentage of dedicated affordable housing.
The County will act as fiscal administrator for the project, managing the receipt of funds and distribution of payments for the project as described in the Memorandum of Understanding, and managing the selection and contracting processes to obtain services from 1) a contractor to complete the Nexus Study (Project Consultant), and 2) a contractor to provide project management services to facilitate work and coordination between the Project Contractor and the various participating jurisdictions (Project Management Consultant).
The role of the parties and the financial commitments of the jurisdictions are described in the Memorandum of Understanding. The bulk of the cost of the project will be covered by a $500,000 Transit Oriented Communities (TOC) grant from the Metropolitan Transportation Commission, obtained by the City of Belmont on behalf of a number of the jurisdictions eligible for TOC funding, as described in the MOU. While the County as fiscal administrator will enter into contracts with both the Project Consultant and Project Management Consultant, the County’s maximum financial contribution will be $51,681, which includes a 20% discount on project costs to cover the County’s cost of acting as fiscal administrator. The remaining consultant costs will be covered by the TOC grant and by contributions from individual jurisdictions.
The Planning and Building Department (Department) circulated a request for proposals (RFP) (RFP number PLN25-040, closed on May 2, 2025) seeking an experienced consultant or consultant team to complete the Nexus Study. The Department received four proposals. After careful review by the RFP evaluation committee, the Department recommends the contract be awarded to Strategic Economics, Inc.
The Department is seeking approval of an agreement with Strategic Economics, Inc for a total amount not to exceed $619,135 for a term of December 15, 2025 to June 30, 2027. Strategic Economics, Inc.’s scope of work and timeline is included in the contract.
Separately, Baird + Driskell + Abrams Community Planning has been selected to act as project management consultant for the project, providing a variety of project management services throughout the course of the project, including convening the participating jurisdictions, serving as a single point of contact for Strategic Economics, coordinating logistics, assisting in collecting data and information from the participating and neighboring jurisdictions, and supporting the County in its role as fiscal agent in reviewing and confirming budgeting and invoices. Baird + Driskell + Abrams Community Planning’s contract for this work was approved by authority of the Director of Planning and Building, with approval of the County’s Procurement Division.
The County Attorney’s Office has reviewed and approved the resolutions and agreements as to form.
COMMUNITY IMPACT:
The Nexus Study will help the County determine the appropriate level of impact fees to establish to help support affordable housing, helping to increase the availability and diversity of housing types available for residents of all types and income levels across the County.
FISCAL IMPACT:
The fiscal impact to the County is the cost of its participation in the Nexus Study, $51,681, which is included in the Planning and Building Department’s approved budget.