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Receive the annual report and Capital Improvement Plan for the English Hills Transportation Impact Fee Program for FY2025/26; Conduct a noticed public hearing; and Consider adopting a resolution approving the updated English Hills Transportation Impact Fee Capital Improvement Plan and adjusting the Impact Fee to $8,384, effective January 1, 2027
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Published Notice Required? Yes __X__ No __ __
Public Hearing Required? Yes __X__ No _____
DEPARTMENTAL RECOMMENDATION:
The Department of Resource Management recommends that the Board of Supervisors:
1) Receive the annual report and Capital Improvement Plan for the English Hills Transportation Impact Fee Program for FY2025/26;
2) Conduct a noticed public hearing; and
3) Consider adopting a resolution approving the updated English Hills Transportation Impact Fee Capital Improvement Plan and adjusting the Impact Fee to $8,384, effective January 1, 2027.
SUMMARY:
Each year, the Board is required by State law to review the English Hills Transportation Impact Fee Program (“Program”), established in 2001, and approve an updated Capital Improvement Plan (CIP). The County must also prepare an annual report documenting fee revenues, expenditures, and fund balances and make specific findings regarding unexpended funds in five-year intervals. During FY2025/26, the Program did not fund any improvements and ended the fiscal year with a balance totaling $319,451. Given the limited available fund balance, the department recommends not funding any projects identified in the English Hills Transportation Impact Fee Area Capital Improvement Plan (Attachment C) during FY2026/27, allowing additional fee revenues to accumulate before initiating improvements.
State law also requires the County provide a comprehensive review and make specific findings regarding unexpended fee revenues at five-year intervals. The last five-year review was completed in 2021, which resulted in a fee reduction due to the completion of CIP improvements and an adjustment for secondary dwelling units. The current review considers updated construction costs, right-of-way acquisition costs, anticipated development, and projected Program revenues to determine the appropriate fee.
State legislation has modified the assessment of transportation impact fees for accessory dwelling units (ADUs). Government Code section 66311.5 exempts ADUs containing 750 square feet or less of interior livable space from impact fees and establishes proportionate fee requirements for larger ADUs. Effective January 1, 2027, Senate Bill 1117 further modifies the calculation for up to two ADUs on a lot by requiring impact fees to be assessed only on the interior livable area exceeding 750 square feet. These provisions are intended to reduce development costs associated with qualifying ADUs while maintaining a proportionate contribution toward necessary infrastructure improvements.
The Department recommends that the Board conduct a Public Hearing and adopt the Resolution, resulting in no projects being selected for the current fiscal year, allowing for the increased growth of Impact Fee Program fund balance, and adjusting the Impact Fee to $8,384, effective January 1, 2027.
FINANCIAL IMPACT:
Funds collected from the Program are deposited in a separate fund for future improvements to specific roads as outlined in the English Hills Transportation Impact Fee Area Capital Improvement Plan. The fee was $8,196 per primary dwelling at the end of FY2025/26. The Department proposes increasing the fee by $188, or approximately 2.3%, to $8,384 per primary dwelling, effective January 1, 2027. It is anticipated that at build-out of the fee area, total fees collected for the updated Capital Improvement Plan will generate approximately $9,911,280 in revenue, which will not be sufficient to construct all road projects identified within the plan area. Other public funding, when available, is typically used to supplement Program revenues to complete individual road improvements.
The costs associated with preparing the agenda item are nominal and absorbed by the Department’s FY2026/27 Working Budget. There is no impact to the General Fund.
DISCUSSION:
Transportation Impact Fee Program History
In 2001, the Board established a Transportation Impact Fee Program for the English Hills area. The intent of the Program is to collect funding from the construction of new residences in the English Hills area in order to mitigate the anticipated significant traffic impacts of development on the County’s road system in that area (Attachment C). Funds are to be expended on right-of-way acquisition and road improvements to bring the public roads within the English Hills zone of benefit up to adopted standards. §66006 of the Government Code and §11-470 of the Solano County Code require that a report be prepared each year containing specific information regarding the fees.
As previously stated, the Board reduced the Program fee in FY2021/22 during the last five-year review due to completion of CIP improvements and changes in the anticipated number of dwelling units contributing to the Program. Allowances for accessory dwelling units (ADUs) in the County’s zoning ordinance and State law result in the Capital Improvement Plan costs for improvements being spread over a larger number of units. Previously permitted homes that were damaged or destroyed during the LNU Lightning Complex Fire in 2020 have been exempt from the English Hills Transportation Impact Fee since those structures were already accounted for in the Impact Fee Program prior to the fire.
In 2024, California Senate Bill 477 (SB 477) updated Government Code §66324(c)(1), clarifying the proportional assessment of impact fees for ADUs exceeding 750 square feet. In 2025, the Board of Supervisors approved this adjustment to align the Fee Program with current State law. Typically, these smaller residences have one or two bedrooms and thus generate less traffic than primary dwellings. Effective January 1, 2026, Senate Bill 543 (SB 543) amended the ADU provisions and moved the applicable impact-fee requirements to Government Code §66311.5. Effective January 1, 2027, Senate Bill 1117 further modifies the calculation for up to two ADUs on a lot by requiring the proportional impact fee to be calculated using only the interior livable area exceeding 750 square feet.
Per the Solano County ordinance, the fee is administratively adjusted every 6 months utilizing the Engineering News Record Construction Cost Index (CCI), as has been done since the impact fee area was created. The CCI includes inflation in the adjustments and has tracked reasonably well with actual road construction costs in Solano County. Historically, the CCI increased in each period; however, the adjustments were relatively modest in FY2025/26. The fee increased to $8,065 in July 2025 and to $8,196 in January 2026.
Transportation Impact Fee Program Review
The Department reviewed the Capital Improvement Plan financial needs based on recent construction costs, construction inflation, right-of-way acquisition costs, current zoning, and eligible dwelling units. Since the last five-year review was performed in 2021, the economy has seen an increase in construction costs and associated labor. The cost of acquiring right-of-way has also increased and generally follows the trends of the housing market. However, in recent years the State has passed legislation to encourage the development of ADUs, and the Department has seen an increase in building permits issued for ADUs in the fee area. Subdivisions have also added parcels which increase the number of potential dwelling units and associated revenue for the Program.
While overall construction costs have increased in the last five years, the number of added parcels and potential dwellings per parcel have also significantly increased. The Department recommends adjusting the Impact Fee from $8,196 to $8,384, an increase of $188, or approximately 2.3%, effective January 1, 2027. This fee amount is slightly lower than the amount that would result from applying the CCI adjustment alone, reflecting the effect of additional anticipated development on the allocation of roadway improvement costs.
The Department performed outreach and provided notice as required for a public hearing (Attachment G), which provides the public with a forum to comment on the fee change. With Board adoption of the resolution, the Department will plan and construct projects listed in the English Hills Transportation Impact Fee Area Capital Improvement Plan as future project funds become available. No projects are proposed for funding during FY2026/27, allowing additional Program revenues to accumulate for future improvements.
ALTERNATIVES:
The Board may choose not to adopt the resolution. This is not recommended because the updated Capital Improvement Plan identifies roadway improvements needed to accommodate development within the English Hills Zone of Benefit, and the proposed fee adjustment reflects updated improvement costs and anticipated development. Failure to adopt the resolution would delay approval of the updated Capital Improvement Plan and the proposed fee adjustment.
OTHER AGENCY INVOLVEMENT:
None.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION