TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
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Overview of the Development Impact Fee (DIF) Nexus Study Update.
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RECOMMENDATION
1) Receive and file the presentation regarding the Development Impact Fee Nexus Study Update; and 2) discuss and provide feedback to staff on the methodology, infrastructure project lists, and fee calculations included in the Public Review Draft Development Impact Fee Nexus Study.
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FISCAL IMPACT
This agenda item provides an overview of the Development Impact Fee Nexus Study to the City Council. Because the item is informational only and no fee adoption or modification is being considered at this time, there are no fiscal impacts associated with this report.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Responsible Long-Range Planning
BACKGROUND
The City's current Development Impact Fee (DIF) Program is supported by nexus studies that establish the relationship between new development, the demand for public facilities and infrastructure, and the fees charged to mitigate those impacts. Pursuant to Government Code Section 66016.5, development impact fee nexus studies must be updated at least once every eight years to ensure fees remain reasonably related to the impacts of new development. The City's last comprehensive update was completed in Fiscal Year 2017-18.
To comply with State law and reflect current growth projections, infrastructure needs, facility costs, and development trends, the City retained Willdan Financial Services to prepare a comprehensive update to the DIF Nexus Study. The updated study evaluates growth-related infrastructure needs and establishes the maximum justifiable fees necessary to fund capital improvements required to serve future development.
The purpose of this Study Session is to provide the City Council with an overview of the proposed methodology, infrastructure project lists, and preliminary fee calculations that will be incorporated into the Public Review Draft Development Impact Fee Nexus Study Update. Following City Council feedback, the Public Review Draft will be published and distributed to the Building Industry Association (BIA), Lewis Management Corporation, interested stakeholders, and agencies included on the City's distribution list for review and comment.
The Public Review Draft will be subject to a 30-day public review and comment period. Following the review period, staff will evaluate and respond to comments received and make any necessary revisions to the study. Staff anticipate returning to the City Council on July 21, 2026, to initiate the public hearing process for consideration of the updated DIF Nexus Study.
Consistent with State law, any adopted development impact fee adjustments would become effective 60 days following adoption. Based on the anticipated schedule, the updated fees are expected to become effective on or about November 1, 2026.
ISSUES/ANALYSIS
The following is a summary of key proposed topics:
• Updates to infrastructure project lists and capital improvement costs, including transportation, water, sewer, storm drain, parks, public facilities, police, and fire facilities.
• Updates to the fee calculation methodology, including the transition of residential fee calculations from a per-unit basis to a square-footage-based methodology, consistent with current State law requirements.
• Evaluation of existing fee program balances, projected revenues, funding gaps, and growth-related infrastructure needs.
• Updates to construction cost assumptions, land acquisition values, facility replacement costs, and other economic factors affecting fee calculations.
• Updates to the Park DIF Program, including revisions to the park fee calculation methodology, park development cost assumptions, and corresponding amendments to the City's park fee ordinance.
• Preparation of a comprehensive Public Review Draft Nexus Study that will serve as the basis for future public hearings and City Council consideration of updated Development Impact Fees.
Attachment: Development Impact Fee Nexus Study Update Report - Draft