Coming soon: The development at Lincoln & Ocean Park. Courtesy image

When it comes to financing building projects in Santa Monica, there’s a lot to consider — the permit fees, the architects, the cement, the labor, the light fixtures, the sewer connection, the paint and, somewhere in that very long list, the Development Impact Fees.

Development Impact Fees are collected from builders to offset the effect new projects are anticipated to have on the surrounding neighborhood. A 16-unit building built on a formerly vacant lot could bring a few dozen new neighbors who want to ride on bike paths, swing on swing sets and flush toilets as they please.

“Santa Monica collects Council authorized fees from developments to offset increased demands on public improvements, public services, and community amenities, including child care, transportation, parks, affordable housing, and water conservation,” according to information from city staff. “The City has also used these funds to meet the City’s match requirement when seeking grant funding that further offsets costs for City projects.”

The fees are gathered in line with a 1987 state law that outlines how such fees can be collected.

On Tuesday, Santa Monica City Council will receive a report on the latest fees gathered for development in fiscal year 2021-22. 

In that year, which went from July 1, 2021 through June 30, 2022, the City of Santa Monica collected a little more than $5 million in such fees.

In that time, developers chipped in $676,866 toward the Childcare Linkage Fee, for commercial projects over 7,500 square feet and multi-family residential projects. The fund, which ended the fiscal year with a balance of $769,644, did not make any expenditures last year.

The Transportation Impact Fee, which is “collected on eligible new development and changes in land use that result in increased trip generation,” is intended to fund transportation infrastructure improvements like crosswalks, traffic signals and bike facilities. Last year, this fund collected $1.7 million, which together with interest ended in a final fund balance of $11.4 million. The fund also expended $929,000 on various pedestrian and bicycle improvements like multimodal signal detection, the modification of the intersection of Ocean Avenue and the California Incline and other enhancements. Next year, the City expects to spend $4.1 million on the annual repaving project; the year after, another $3.2 million will be spent on planning/construction of various protected bikeways.

The Parks and Recreation Development Impact Fee, which amounted to $1.9 million last year, is collected from new residential and commercial development. Last year, the fund spent about $944,000 and ended with a final balance of $4 million. 

Money spent in 2021-22 went to improvements at Marine Park, plus the removal and re-landscaping of the petanque courts in Palisades Park. In addition, Beach Park #1 got new picnic tables and Reed Park’s tennis courts were resurfaced with money from the fund.

Santa Monica received another $742,931 (plus $2,719 in interest) toward the Affordable Housing Commercial Linkage (AHCL) Fee. The AHCL was founded at the start of FY 2015-16 with its stated goal “to contribute to the creation of affordable housing production and preservation to offset the additional need for affordable housing generated by new commercial development.”

According to the Tuesday meeting’s staff report, the fund is expended in the form of loans toward the production and preservation of affordable housing; the AHCL is just one part of a larger Housing Trust Fund compiled by the City to support affordable housing.

Last fiscal year, none of the AHCL was expended and the fund’s ending balance was $1,284,476.

The final fund, the Water Demand Mitigation Fee, did not collect any new fees last year; in 2017, a new fee called the Water Neutrality Fee was established to replace it, but because of the lengthy building process, fee collection is still expected for the next few years for permit applications submitted prior to FY 2017-18.

Although no new revenue entered the fund last year, it expended $93,325 and ended the year with a balance of $320,894. 

The expenditures went toward the Recycled Water Main Expansion Project and the SWIP Injection Well, with future expenditures anticipated to go toward a future exploratory well project.

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