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Receive the annual report and Capital Improvement Plan for the English Hills Transportation Impact Fee Program for FY2024/25; Conduct a noticed public hearing; and Consider adopting a resolution approving the updated English Hills Transportation Impact Fee Area Capital Improvement Plan with a revised fee structure aligning with State Law
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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 FY2024/25; and
2. Conduct a noticed public hearing and consider adopting a resolution approving the updated English Hills Transportation Impact Fee Area Capital Improvement Plan with a revised fee structure aligning with State Law.
SUMMARY:
Each year, the Board is required by State law to review the English Hills Transportation Impact Fee program (“Program”), adopted by the Board of Supervisors in 2001. The Board must adopt a resolution approving the Capital Improvement Plan for the Program and must also include findings relative to expended and unexpended funds generated by the fee program. In FY2024/25, the Program did not fund any improvements, ending the fiscal year with a balance totaling $234,309 (Attachment C). Given the small existing fund balance, staff’s recommendation is not to fund any projects shown in the English Hills Transportation Impact Fee Area Capital Improvement Plan (CIP) (Attachment B) in FY2025/26 and to wait until the fund balance grows to a larger amount.
State law also requires the Board of Supervisors provide a comprehensive review of the adequacy of the fee every 5 years. The last 5-year review was completed in 2021, resulting in the County reducing fees due to the completion of CIP improvements and adjusting the fee for secondary dwelling units.
With the passage of California Senate Bill 477 (SB477) in 2024, §66324(c)(1) of the Government Code was updated to clarify the application of the assessment of an impact fee to a Secondary Dwelling/Accessory Dwelling Unit (ADU) be in proportion to the square footage of the primary dwelling. This clarification only affects those ADU’s totaling 750 square feet or more. Those ADU’s 749 square feet or less have no impact fees assessed, exempting them from the Impact Fee Program under existing State law. The change to a proportional fee assessment under SB477 for larger ADU’s has the potential for reduced fee assessments on applicants/builders which can generate more economical opportunities for housing within the County. 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 the proportional fee adjustment be made to the Program.
FINANCIAL IMPACT:
Funds collected from the Program are placed 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 amount totaled $7,971 per single family dwelling at the end of FY2024/25. It is anticipated that at build-out of the fee area, the total fees collected for the updated Capital Improvement Plan will generate $6,792,765 in funding, which is not sufficient to construct all road projects identified within the plan area. Other public funding, when available, is typically used to supplement Program funding to complete individual road improvements.
The costs associated with preparing the agenda item are nominal and absorbed by the Department’s FY2025/26 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 D). 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 5-year review due to completion of CIP improvements and to adjust the fee for secondary dwelling units. Allowances for secondary accessory dwelling units in the County’s zoning ordinance and State law result in the Capital Improvement Plan costs for improvements to be spread over a larger number of units. In accordance with California’s SB13 passed in 2019 (§65852.2 of the Government Code), accessory dwelling units less than 750 square feet cannot be charged impact fees. In addition, previously permitted homes that were damaged or destroyed during the LNU Lightning Complex Fire in 2020 are exempt from the English Hills Transportation Impact Fee since those structures were already accounted for in the Impact Fee Program prior to the fire.
California Senate Bill 477 (SB477)
Previously, Secondary Dwelling/Accessory Dwellings Units (ADU) that were built from 750 to 1,000 square feet in size had a proportionally reduced fee set to 75% of the primary dwelling fee. These smaller residences typically have fewer bedrooms and thus generate less traffic than primary dwellings. In 2024, California Senate Bill 477 (SB477) updated §66324(c)(1) clarifying the application of the assessment of an impact fee in proportion to the square footage of the primary and secondary dwelling/ADU be applied at dwellings 750 square feet or greater. As a result of SB477, the County Impact Fee structure requires a minor update to comply with current State law.
Fee Examples
• The impact fee for a Primary Dwelling remains unchanged, requiring 100% of the published fee.
• The impact fee for a Secondary Dwelling/ADU (750 square feet or greater) shall be assessed in proportion to the primary dwelling’s square footage (examples below):
o Example 1
§ 2,000 square foot Primary Dwelling (existing)
§ 750 square foot Secondary Dwelling/ADU
§ Secondary Dwelling/ADU is assessed at 37.5% of the published fee
o Example 2
§ 2,000 square foot Primary Dwelling (existing)
§ 1,200 square foot Secondary Dwelling/ADU
§ Secondary Dwelling/ADU is assessed at 60% of the published fee
• The impact fee for a Secondary Dwelling/ADU (749 square feet or less) remains exempt from the published fee.
The Department reviewed the Capital Improvement Plan financial needs based on recent construction costs, construction inflation, right-of-way easement costs, current zoning, and eligible dwelling units. Per the 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 has increased each period; however, it remained relatively static in FY2024/25. For July 2025 CCI, a slight uptick in the CCI has resulted in an adjusted fee of $7,971 increasing to $8,065. The Department will return next year with a comprehensive review of the Program as required every five years.
The Department performed outreach and noticing as required for a Public Hearing, which provides the public with a forum to comment on the fee change. With Board adoption of the Resolution, the Department will plan for and construct projects listed in the English Hills Transportation Impact Fee Area Capital Improvement Plan as future project funds become available. Additionally, the published fee structure will be adjusted in compliance with current State law.
ALTERNATIVES:
The Board could choose not to adopt the resolution. This is not recommended since the proposed Capital Improvement Plan provides for the collection of fees to subsidize the road improvement costs needed to bring the road system within the Zone of Benefit up to County adopted standards.
OTHER AGENCY INVOLVEMENT:
None.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION