To: Board of Supervisors
From: Warren Lai, Public Works Director/Chief Engineer
Report Title: INTRODUCE Ordinance No. 2025-18 to establish a 13% reduction in the applicable County Area of Benefit traffic impact mitigation fee for housing developments located in transit priority areas and meeting all other criteria in Government Code section 66005.1(a); WAIVE reading; and FIX December 16, 2025, for adoption. Countywide.
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
INTRODUCE Ordinance No. 2025-18 to establish a 13% reduction in the applicable County Area of Benefit traffic impact mitigation fee for housing developments located in transit priority areas and meeting all other criteria in Government Code section 66005.1(a); WAIVE reading; and FIX December 16, 2025, for adoption, Countywide.
FISCAL IMPACT:
Adoption of Ordinance No. 2025-18 will result in a 13% reduction of Area of Benefit transportation mitigation fees from new residential developments that meet the specific requirements of Government Code section 66005.1(a). These reductions are required by state law. Funding shortfalls in AOB fee programs caused by this reduction will need to be made up using funds from other sources, such as gas tax, Measure J funds, and other state and federal funds. (100% Area of Benefit Fees)
BACKGROUND:
INTRODUCTION
California Assembly Bill 3177 was adopted in September 2024 and modified a section of the Mitigation Fee Act (Government Code section 66005.1) to reduce transportation impact fees for residential developments located within transit priority areas that meet certain requirements. A “transit priority area” (TPA) is defined as an area within one-half mile of a major transit stop; a “major transit stop” would include a rail or bus rapid transit station, a ferry terminal served by either bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 20 minutes or less during the morning and afternoon peak commute periods. The agency imposing the fee has discretion to determine the amount of the reduction.
To qualify for the lower transportation impact fee, the residential developments must satisfy all of the following characteristics, which correspond to lower trip generation rates compared to housing developments without these characteristics:
• The housing development is located within a TPA around an existing or planned major transit stop, and the major transit stop, if planned, is programmed to be completed before or within one year of the scheduled completion and occupancy of the housing development.
• Convenience retail uses, including a store that sells food, are located within one-half mile of the housing development.
• The housing development provides either the minimum number of parking spaces required by the local ordinance, or no more than one onsite parking space for zero to two bedroom units, and two onsite parking spaces for three or more bedroom units, whichever is less.
In 2025, Senate Bill 358 was signed into law to make minor adjustments to these criteria. Beginning January 1, 2026, to be eligible for a reduction, the housing development must be located within one-half mile of any three or more of the following: a supermarket or grocery store; a public park; a community center; a pharmacy or drugstore; a medical clinic or hospital; a public library; a school that maintains a kindergarten or any of grades 1 to 12, inclusive; a licensed childcare facility; a restaurant - a change to the second bullet point above. The third bullet point also changes, requiring the development to provide no more than one parking spot for each one-bedroom or two-bedroom unit, and no more than two parking spots for each unit with three or more bedrooms.
FEE REDUCTION ANALYSIS
In October 2024, Contra Costa County retained a consultant to determine how the modified provision of the Mitigation Fee Act applied to the County’s transportation impact fee programs, which are generally referred to as Area of Benefit (AOB) programs. On January 31, 2025, the consultant provided a technical memorandum detailing their analysis of a fee reduction policy specific to the County’s AOB programs, and recommended a thirteen-percent reduction of AOB fees for developments that meet the criteria established by Assembly Bill 3177. The consultant further updated their opinion based on the statutory changes made by Senate Bill 358. The consultant’s technical analysis determined that developments meeting the criteria in Government Code section 66005.1 should receive a 13% reduction in AOB fees, which is proportional to the reduction in vehicle impacts associated with these developments, as compared to developments that do not meet these criteria.
ORDINANCE NO. 2025-18
To implement the recommended fee reduction policy, an ordinance must be adopted that identifies the fee reduction amount and the AOBs in which the fee reduction policy applies. Adoption of Ordinance No. 2025-18 will establish the transportation impact fee reduction of thirteen percent for housing developments that are located within transit priority areas and that meet the requirements listed in Government Code section 66005.1(a). The ordinance is worded to cover both the existing requirements in Section 66005.1, as well as the new requirements that become effective January 1, 2026. Staff recommends that the Board adopt Ordinance No. 2025-18.
CONSEQUENCE OF NEGATIVE ACTION:
Failure to adopt Ordinance No. 2025-18 to establish a 13% reduction in the applicable County Area of Benefit fee for housing developments located in transit priority areas will result in Area of Benefit fees charged at a rate higher than allowed by Government Code section 66005.1(a).