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BACKGROUND The City's development impact fees were established pursuant to AB 1600 (California Government Code Section 66000 et. Seq.). AB 1600 requires cities to justify and account for development fees that they enact as a condition of approval on new development. The justification, or nexus requirement, requires cities to do the following: 1. Identify the purpose of the fee; 2. Identify the use or specific project to which the fee will be applied; 3. Determine how there is a reasonable relationship between the fee's use and type of development project on which the fee is imposed; and 4. Determine how there is a reasonable relationship between the need for the public improvement and the type of development project on which the fee is imposed. The nexus is based on the premise that new and existing development should each pay for its pro rata share of public improvement costs. Because residents, business and their employees create the need for and benefit from the availability of public services and infrastructure improvements, new development should pay its share of public facilities/improvements impacted by development. Most of the City's current development impact fees were last restructured in 1998 or 20 years ago. The methodology for establishing the City's development impact fees established in 1998 included reviewing: (1) the City's 1996 General Plan; (2) projects planned in the City's Public Facilities Master Plan; (3) required park land to meet the community's needs; (4) 1998 land values; and (5) 1998 construction cost estimates. At the time these fees were adopted, staff had recommended that the fees be periodically reviewed to reflect inflation and changes in the City's General Plan. Inflation adjustments have been occurring. The contract with EPS has resulted in an update of all of the City's development impact fees based on the City's current General Plan. It identified capital projects that will mitigate the impact of future development, quantified their estimated costs, and set forth an equitable allocation of those costs to future development. City staff and EPS will present the study results at the May 1, 2018 City Council meeting. Staff expect to bring a proposed development impact fee schedule to City Council in the early summer timeframe. DISCUSSION The City entered into an original agreement with EPS on October 20, 2015 and entered into a first amendment on March 9, 2017 to extend the term to October 27, 2017. EPS has completed the majority of the work required to issue a development impact fee nexus study. However, there are several public meetings that EPS will attend to help present the study results and answer questions as well as help prepare final reports. EPS estimates to require up to $10,000 to complete the project. In addition, the agreement term needs to be extended. Staff estimate that should take no more than four months to do so and are proposing to extend the term to October 19, 2018. Page 2 of 3