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The City's 2017-2018 Work Plan includes updating the City's Development Impact fees as a priority under the Maintain Fiscal Responsibility category. City staff initiated the project in the fall of 2015 through the award of a contract to Economic & Planning Systems ("EPS") to conduct a nexus study to update its capital facility, transportation and affordable housing impact fees based on development anticipated through build-out in the City's General Plan and other related planning documents. EPS completed its efforts in the fall of 2017 and finalized draft reports after incorporating City staff peer review and feedback in the spring of 2018. DISCUSSION The Development Impact Fee nexus study ("Nexus Study") is divided into three categories as described in more detail below: 1. Affordable Housing Impact Fees — New development in Pleasanton will generate the need for services and therefore jobs that require housing for lower income households. The City addresses this need through its Inclusionary Zoning Ordinance (IZO) and Lower Income Housing Fees. The IZO requires that new residential development provide 15 to 20 percent of the units at affordable levels. It also provides for the payment of in-lieu fees (payment of a Lower Income Housing Fee) at the City's discretion to meet this obligation. The Lower Income Housing Fee is also charged to residential projects not subject to the IZO and non-residential projects. The maximum amount that the City can justify for these fees by each type and size of development have been determined by the Nexus Study and are illustrated in Table 4 in this report, although as with all the fees addressed in this report, the City can choose to charge a lesser amount. It should be noted that based on the California Supreme Court opinion in California Building Industry v City of San Jose, the City is not required to complete a Nexus Study to charge such fees, but rather has the right to do so under the City's "...general broad discretion to regulate the use of real property to serve the legitimate interests of the general public and the community at large." However, the Nexus Study is helpful in establishing a justifiable ceiling for any such fees the City wishes to implement. 2. Capital Facility Impact Fees — New development in Pleasanton will create demand for public facilities and parks. The Nexus Study identified parks, recreational facilities and public facilities that the City plans to undertake through build-out of the General Plan that serve new development. The Nexus Study includes project cost estimates and allocates a portion of those costs to development depending on the extent to which the facility or improvement is required to serve new development. For the Capital Facility Impact Fees, EPS estimated that 18% of the majority of the project costs is attributed to new development. One project—the Police Training Facility— is 100% attributed to new development. As described in the summary table below, the total cost of Capital Facility projects identified is $474,244,000, of which new development's share is $90,000,200 (rounded). Page 3of9