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REVENUE ANALYSIS: APPENDIX A
A-2
| CITY OF MORGAN HILL
Fees can be collected from developers to pay for the impact that their residential development will
have on existing infrastructure or in creating the need for new infrastructure such as roads or parks.
Such fees are required as conditions of approval of a proposed development under the city’s police
powers over land use. Typically these fees are paid prior to City approval of a parcel map or final map
or at the time a building permit is issued. Some Bay Area jurisdictions now impose fees on any
improvements anticipated to increase the number of residents likely to reside in a dwelling unit,
including residential additions, remodels and renovations.
Development impact fees may be reasonably exacted on new non-residential development in a City,
as it may increase the daytime population resulting in additional facility users. A nexus study should
be conducted to quantify such a relationship in order to justify fees on the non-residential
development.
Section 66000 (et seq) of the California Government Code requires the agency exacting the fee to do
the following:
Identify the fee’s purpose
Identify the fee’s uses
Establish a reasonable relationship between the fee’s use and the type of development project
on which the fee is imposed
Determine whether there is a reasonable relationship between the need for the public
improvement and the development project on which the fee is imposed
Justify that the fee is “roughly proportional” to the impact a new development has on public
facilities and services (i.e. parks and community centers)
SALES AND SPECIAL TAXES
Taxes may, with voter approval, be increased to provide revenue for, among other things, parks and
recreation or land conservation purposes. The ability to raise funds through sales or use taxes requires
approval by two-thirds of voters. Many communities throughout the state have been successful in
getting voter support for measures that add one-fourth or one-half cent to local sales taxes. The
following are brief descriptions of the most common funding sources.