Title
Adopt: 1) First Reading of an Ordinance Amending the Municipal Code to Update Parkland Dedication Requirements for Residential Subdivisions; 2) A Resolution Amending Administrative Code Title 8, Chapter 8 (Park Facilities Development Impact Fee) to Update the Park Land Acquisition and Park Improvement Fees, Establish Fee Waivers/Reductions for Accessory Dwelling Units (ADUs) and Affordable Housing Units, and Approve the Park Development Impact Fee Study and Parks Capital Improvement Plan; and 3) A Resolution Exempting ADUs from the Development Fees for Street Improvements
Staffreport
COUNCIL PRIORITY
• Quality of Life
• Infrastructure
• Housing and Homelessness
SUMMARY
The City retained NBS Government Finance Group to prepare a comprehensive nexus study to analyze the impact of new residential development on the City’s parks and to calculate updated fees in compliance with State law, including the Mitigation Fee Act and the Quimby Act. The study proposes fees proportionate to the size of new units, ensuring compliance with Assembly Bill 602 (AB 602) and recent court decisions requiring clear nexus and proportionality.
The proposed amendments would update the City’s parkland dedication and impact fee framework, improve consistency with State requirements, and support the City’s objectives to enable residential development and maintain park service levels as the community grows.
RECOMMENDATIONS
Staff recommends that the City Council conduct a public hearing and receive public comment on the proposed updates to park land dedication requirements and development impact fees and:
• Approve an Ordinance amending San Leandro Municipal Code Section 7-1-815 to update the City’s parkland dedication requirements for residential subdivisions (Attachment A).
• Adopt a Resolution (Attachment B):
o Amending Administrative Code Title 8, Chapter 8 (Park Facilities Development Impact Fee) to update the Park Land Acquisition and Park Improvement Fees, including the establishment of fee waivers/reductions for accessory dwelling units (ADUs) and affordable housing units;
o Approving the San Leandro Park Development Impact Fee Study, dated May 14, 2025; and
o Approving the Parks Capital Improvement Plan for expenditures of revenues received from Park Development Impact Fees.
• Adopt a Resolution (Attachment C) Eliminating the Development Fees for Street Improvements (DFSI) for ADUs
Additionally, staff seeks Council direction on the creation of a public art requirement for new development projects. If so directed, staff would prepare an Ordinance for future consideration by Council.
BACKGROUND
Pursuant to the Mitigation Fee Act (Government Code Sections 66000-66025), the City of San Leandro collects a range of development impact fees to mitigate impacts on public facilities from new development. The City’s development impact fees include Park Development Impact Fees, which are charged to single-family, multi-family, and ADU developments at a cost per unit to fund parkland acquisition and park improvements.
The City’s current Park Development Impact Fee was adopted in 2000 and has not been comprehensively updated since 2005. Since that time, the State legislature has enacted significant changes to the legal framework governing development impact fees.
The Mitigation Fee Act establishes the process and findings required for imposing, collecting, and using development impact fees in California. Key requirements include:
• Demonstrating a reasonable relationship (“nexus”) between the fee’s use and the type of development project.
• Showing a reasonable relationship between the need for the public facility and the type of development.
• Ensuring that the amount of the fee is proportional to the cost of the facility attributable to the development project.
• Identifying the purpose and use of the fees and adopting findings supporting the fee.
• Segregating fee revenue in separate accounts and preparing annual reports and periodic updates.
AB 602, effective January 1, 2022, introduced additional requirements that affect this fee update:
• Fee Calculation Based on Square Footage: AB 602 mandates that residential impact fees be calculated proportionately based on the square footage of proposed units rather than solely on unit type (e.g., single-family or multi-family).
• Existing and Proposed Levels of Service: The nexus study must identify the existing level of service for each facility and, if proposing a higher level of service, explain why that increase is appropriate.
• Capital Improvement Plan (CIP): For jurisdictions over 250,000 residents or cities within such counties, a Capital Improvement Plan must be adopted with the nexus study to demonstrate how the fees will be used to expand facilities proportionate to new development.
• Public Transparency: The City is required to post the nexus study, fee schedules, and supporting documentation on its website.
• Periodic Updates: Nexus studies must be updated at least every eight years to ensure fees remain legally defensible and tied to current costs.
The City’s 2023-2031 Housing Element contains a goal to increase housing production by removing constraints to residential development. The Housing Element includes various action items (Actions 10.8, 13.2 and 14.3) to ensure that the City’s development impact fees are not a constraint to residential development. These action items include the following:
• Prepare a comprehensive Impact Fee Study.
• Revise Park Development Impact Fees to reduce identified constraints to development.
• Identify the need for a standardized fee reduction and/or impact fee waiver program for affordable housing projects.
• Analyze ADU development impact fees with the goal of reducing, loaning, granting, or waiving those costs in exchange for providing rents affordable to low- or moderate-income households.
The City Council Housing & Homelessness and Infrastructure Work Plans also include amending development impact fees and preparing a market feasibility study to support housing production and capital projects at City facilities.
The City retained NBS Government Finance Group to prepare a comprehensive evaluation of development impact fees and retained Bay Area Economics (BAE) to assess market feasibility for a variety of development prototypes. NBS’s Park Development Impact Fee Study dated May 14, 2025 (Attachment D) documents the methodology, data, and legal basis for the proposed fee updates and Quimby Act dedication requirements.
ANALYSIS
To balance the need to fund critical infrastructure while reducing barriers to much-needed housing development, staff recommends that the City Council:
• Adopt revised Park Land Acquisition and Park Improvement fees;
• Amend the City’s parkland dedication requirements for residential subdivisions, and the in-lieu fee payable if parkland is not being dedicated;
• Establish a fee waiver program that would:
o Waive Park Development Impact Fees for affordable housing developments by non-profit developers;
o Provide a 50 percent reduction in Park Development Impact Fees for affordable housing developments by for-profit developers, including inclusionary housing units in mixed-income developments; and
o Waive Park Development Impact fees and DFSI for ADUs over 750 sq ft (ADUs less than 750 sq ft are exempted from impact fees per State Law).
Market Feasibility
To understand the financial impacts of current and potential development impact fees, the City conducted a feasibility analysis across various development types. Fees were calculated per capita and scaled based on unit size. Staff consulted development finance professionals and industry stakeholders to assess how the proposed fees could affect project viability.
Key market feasibility findings included:
• Market-rate multifamily rental projects already face significant financial hurdles due to high construction costs, stagnant rents, and high financing costs (including interest rates).
• Affordable housing projects continue to have substantial funding gaps, even when impact fees are reduced or waived.
• Developers weigh many factors beyond City control-such as location, market absorption, and regional competition-along with factors the City can influence, like processing timelines, zoning capacity, and impact fees.
Nexus Study Methodology
NBS evaluated the City’s current Park Facilities Development Impact Fee as well as potential new fees for other categories of City facilities. Given the results of the market feasibility study, NBS was directed to focus on updating the Park Facilities Development Impact Fee to comport with recent updates in legislation. The Park Development Impact Fee Study calculated fees that would maintain the current level of service by dividing the value of existing park facilities by the existing demand. The fees were evaluated based on square footage ranges per AB 602. The ranges were developed by reviewing the housing entitlement pipeline and calculating typical unit sizes by bedroom count.
Updated Parkland Dedication Requirements
Amendments to Municipal Code Section 7-1-815 are proposed to adopt an updated parkland dedication standard for subdivided properties of 3 acres per 1,000 residents (previously 5 acres) to align with the updated nexus study and legal requirements. The acreage dedication is tied to unit size and average occupancy, ensuring a consistent, legally defensible methodology.
Updated Park Impact Fees
Table 1 in Attachment F provides the existing Park Facilities Development Impact Fee structure based on residential development type as opposed to square foot ranges.
Table 2 in Attachment F shows the proposed Park Facilities Development Impact Fees, which are structured by square footage ranges in compliance with updated legal requirements and would prioritize improvements to existing park facilities rather than parkland acquisition, consistent with the recently adopted Parks Master Plan. Although City fees are not the primary factor influencing development feasibility, the proposed fee levels are intended to right-size Park Development Impact Fees to better enable housing development in San Leandro given current market conditions inhibiting and/or affecting housing financing and construction.
As required by State Law, a list of planned capital improvements is included that identifies priority park improvements and land acquisitions eligible for impact fee funding, supporting the General Plan standard and ensuring timely expenditure of fee revenues.
Fee Waiver Program
To implement the Housing Element and remove governmental constraints to housing development, a fee waiver program for affordable units and ADUs was evaluated. Staff proposes targeted fee reductions and waivers:
• Affordable Housing Developments:
o Projects where all units are affordable and developed by qualified nonprofit organizations would be exempt from all Park Development Impact Fees.
o Other affordable projects may qualify for a 50% reduction in Park Development Impact Fees if units are income-restricted for the required duration (55 years for rentals, 45 years for ownership).
• ADUs: Park Development Impact Fees and DFSI are proposed to be waived to encourage ADU construction (ADUs less than 750 sq ft are exempted from impact fees per State Law).
Public Art Program
Staff also seeks Council direction on the creation of a public art requirement for new development projects. The Public Art Master Plan (2017) calls for establishing an art obligation for private development projects set at one percent of overall construction costs (exceeding $250,000) with a minimum percent allocated into a public art fund. Such programs typically include an optional in-lieu fee used to fund art in public locations.
The opportunity to establish a new art requirement without compromising market feasibility was taken into consideration when drafting the proposed park development impact fees. If so directed, staff would prepare an Ordinance for consideration by the City Council at a future date.
Committee Review and Actions
The City Council Finance Committee reviewed the proposed fee updates on May 28, 2025, and recommended advancing the discussion to the full Council for consideration of fee feasibility and market conditions. The Committee was supportive of creating a public art requirement for new development projects.
APPLICABLE GENERAL PLAN POLICIES
Land Use Element:
• Policy LU-4.2 - Fair Share Contributions. Require new residential development to pay its fair share of the cost of capital improvements needed to serve that development
• Policy LU-4.4 - Park and School Site Acquisition. Consider acquiring vacant or underutilized sites for park or school development in addition to facilitating private development on those sites.
Open Space, Conservation, and Parks Element:
• Policy OSC-1.1 - Park Rehabilitation. Encourage the rehabilitation of the City’s parks to provide residents of all ages and physical capabilities with access to as wide a variety of recreational experiences as possible. Park improvements should maintain a balance between active and passive recreation areas and should ensure that the park system benefits a diverse range of user groups.
• Policy OSC-1.4 - Priority on Renovation. Where cost savings and equivalent benefits would be achieved, rehabilitate existing recreational facilities before building entirely new facilities. A priority should be placed on renovating athletic fields and swimming pools, improving energy efficiency, and replacing outdated facilities with new facilities that are safe, attractive, and more responsive to current needs.
• Policy OSC-2.3 - Park Dedication. Require new residential development to pay an impact fee and/or to dedicate parkland to offset the increase in park needs resulting from new residents. Where on-site parkland is dedicated, it should be improved, maintained, and accessible to the general public.
Housing Element
• Policy P.1.1 - Reduce Barriers to Housing Development. Facilitate innovative housing models and promote regulatory reforms that reduce the costs of housing production while also promoting broader citywide housing priorities.
ENVIRONMENTAL REVIEW
The proposed Ordinance and Resolutions are exempt from CEQA under the “common sense” exemption (CEQA Guidelines §15061(b)(3)), as adoption of fee schedules and dedication standards has no potential to cause a significant environmental impact, and CEQA Guidelines Section 15273(a)(4), adoption of fees to obtain funds for capital projects necessary to maintain level of service. Each of the foregoing provides a separate independent basis for CEQA compliance.
SUMMARY OF PUBLIC OUTREACH EFFORTS
Public notice was provided in accordance with Government Code Sections 66016 and 66018. A notice of public hearing was published in the East Bay Times Daily Review newspaper on July 11, 2025, posted at City Hall, and provided to interested parties and developers with an active, or recently active, residential development application with the City. Additionally, a project webpage (www.sanleandro.org/ImpactFeeUpdate) was prepared with information about the project. The project webpage also includes a link to the Fee Study and the May 28, 2025 presentation to the City Council Finance Committee.
FINANCIAL IMPACTS
Adoption of updated fees will ensure that new development contributes to the costs of maintaining current park service levels. Actual funds generated by the updated Park Development Impact Fee program for park improvements and land acquisition will vary from year to year depending on the amount and type of housing construction.
ATTACHMENTS
A: Draft Ordinance of the City Council of the City of San Leandro Amending Portions of Chapter 7-7, “Subdivision Ordinance”, of the San Leandro Municipal Code Regarding Park Land Dedications
B: Draft Resolution of the City Council of the City of San Leandro Approving the Updated Park Land Acquisition and Park Improvement Fee and Adopting Amendments to Chapter 8.8 of the San Leandro Administrative Code
C: Draft Resolution of the City Council of the City of San Leandro Eliminating the Development Fees for Street Improvements for Accessory Dwelling Units
D: City of San Leandro Park Development Impact Fee Study prepared by NBS
E: Parks Capital Improvement Plan
F: Existing and Proposed Park Facilities Development Impact Fees
PREPARED BY: Avalon Schultz, Assistant Community Development Director, Community Development Department