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The 6th Cycle Housing Element incorporates Programs 2.1, 2.2, and 2.3 to evaluate and <br />update the City’s IZO, consider modifications to the inclusionary rate, and monitor and <br />update the in-lieu housing fee – to support policy goals of having market-rate projects <br />build affordable units, generate funding for affordable housing programs and activities, <br />and mitigate demand for affordable housing while ensuring inclusionary requirements <br />and fees do not constrain market-rate housing production. <br /> <br />SUMMARY OF KEY FINDINGS <br />The following reflects the high-level preliminary findings of the study to date, with <br />respect to setting future fee levels relative to the maximum levels supported by initial <br />analysis, the inclusionary rate established in the IZO and opportunities to modify it, and <br />associated in-lieu fees. <br /> <br />Capital Facilities, Traffic Impact, Water and Sewer Connection Fees <br />• The nexus study includes an estimated growth in the service population of <br />approximately 29,000 residents and non-resident employees, or 29.4% over the <br />existing service population at buildout. <br /> <br />• With the increased service population, there will be additional needs for new <br />facilities. EPS recommends taking a “service-standard” based approach that also <br />correlates to City master plans and infrastructure studies, to provide flexibility <br />over time, rather than the project list-based approach used in the prior nexus <br />studies. <br /> <br />• The overall costs associated with the updated facilities has increased <br />substantially since 2018 – in part because the range of facilities and <br />improvements is more comprehensive, but also due to the substantial inflation in <br />construction costs over the past several years. The preliminary estimated total <br />costs for the combined Capital Facilities and Transportation program are $613.15 <br />million; this is compared to about $223.33 million in the 2018 Nexus Studies. <br />These program costs are split relatively evenly between Capital Facilities (54%) <br />and Transportation (46%). <br /> <br />• Accordingly, the preliminary maximum fees supported by the Nexus Study in <br />each land use category for the Capital Facilities Fee (CFF) and Transportation <br />Impact Fee (TIF) are expected to increase. In aggregate, the maximum fees for <br />residential uses would increase by approximately 61%; and non-residential uses <br />would increase between 47% (Industrial) and 143% (Research/Development), <br />with increases in other categories falling within this range. <br /> <br />• The City’s water and sewer connection fees were last updated in 1992 and 2008 <br />respectively and have not escalated in line with inflation. Therefore, these fees <br />fall well short of the rates needed to pay for necessary system improvements to <br />accommodate new growth and demand. The Water and Connection Fees are still <br />under development, but preliminary estimates indicate a 300-400% increase in <br />the maximum supportable connection fees. While the percentage increase is <br />large, because the base fee is extremely low, the total dollar increase is relatively <br />small – for example, increasing by approximately $3,400 for a 5/8” meter