REPORT TO COUNCIL
SUBJECT
Title
Adopt a Resolution Updating the Average Per-Acre Land Values and Park Development Costs Per Capita Used for Setting the Parkland In-Lieu Fee Schedule for New Residential Development for FY 2026/27
Report
BACKGROUND
City Code Chapter 17.35 “Park and Recreational Land” requires new residential development to provide developed park and recreational land and/or pay an in-lieu fee pursuant to the Quimby Act (“Quimby”) and/or the Mitigation Fee Act (“MFA”). This enables the City to maintain its existing level of service at the same rate of 2.6 acres to 3.0 acres of parkland and recreational amenities per 1,000 residents.
Parkland in-lieu fees are reassessed as part of the annual adoption of the Municipal Fee Schedule. There are three primary cost components upon which in-lieu fees are calculated:
1. The average cost of land acquisition for parks in Santa Clara, as determined by an annual land valuation appraisal;
2. The average per capita cost to develop parkland into a usable facility, based on the 2019 Parks and Recreation Facility Condition Assessment and adjusted using the Department of General Services California Construction Cost Index (CCCI); and
3. The administrative cost of the program, including review of residential development plans for compliance with the park ordinance and tracking of in-lieu fees (currently set at 2% of total fees collected).
The methodology used to calculate the in-lieu fees is detailed in the Park & Recreation Facilities Development Impact Fee Study (Nexus Study), dated August 27, 2019 (Attachment 1).
The purpose of this report is to:
1. Present the findings of the 2025 Land Valuation Report;
2. Recommend a +3.9% adjustment to the park improvement value in accordance with the latest CCCI figures; and
3. Solicit input from the City Council and the public on the proposed adjustments to parkland in-lieu fees and consider a recommendation that the updated Quimby and MFA fees take effect on July 1, 2026.
On April 13, 2026, the Land Valuation Report, along with associated park improvement cost information, was presented to the Parks & Recreation Commission for their consideration and public comment; no public comments were received. The Commission reviewed this item and voted 5-0 (Commissioner DeMarco was absent), recommending that the City Council adopt the proposed resolution updating the average per acre land values and park development costs per capita for purposes of setting the park in-lieu fee schedule.
DISCUSSION
Land Valuation - Average Cost per Acre
The cost to purchase land for parks is based on an annual land valuation study. The appraisal report is completed by an appraiser in accordance with City Code Section 17.35.040 and the Supplemental Instructions for the Appraisal of the Fair Market Value of Land, approved by the City Council on June 7, 2016 (Attachment 2).
The appraisal report has a valuation date of December 31 to account for the full calendar year (January 1 to December 31) of property transaction data and provides an objective assessment of the average value per acre of land across the City’s three residential ZIP Code areas (95050, 95051, and 95054).
On February 27, 2026, the City’s consultant, the Dore Group, completed the annual land valuation study with a valuation date of December 31, 2025 (Attachment 3). The study results are summarized in Table 1 below, which presents the 2025 valuation and prior years’ values for the City’s three residential Zip Codes. The average land value per acre decreased across all three ZIP Codes from 2023 to 2024, then increased in 2025. The increase from 2024 to 2025 ranges from 0.01% to 4.4%, depending on the individual Zip Codes. However, despite this uptick, 2025 values remain below 2023 levels.
|
Table 1 Average Land Value per Acre |
|
Area |
12-31-17 |
12-31-19 |
12-31-20 |
12-31-21 |
12-31-22 |
12-31-23 |
12-31-24 |
12-31-25 |
% Chg |
|
95050 |
$3.738M |
$4.385M |
$4.720M |
$5.715M |
$5.500M |
$5.455M |
$5.180M |
$5.359M |
+3.5% |
|
95051 |
$3.993M |
$4.630M |
$5.120M |
$6.000M |
$5.840M |
$5.650M |
$5.340M |
$5.573M |
+4.4% |
|
95054 |
$4.035M |
$4.495M |
$4.830M |
$5.495M |
$5.240M |
$5.255M |
$5.000M |
$5.037M |
+0.01% |
The 2025 Annual Land Valuation Appraisal Report was posted on the City website and a two-week public comment period was open from March 20, 2026 through April 3, 2026. Members of the public and development community were invited to review the report and submit questions and comments to the Director of Parks & Recreation. No comments were received during the official comment period.
Park Improvement Value - Average Cost Per Capita
The cost of constructing park improvements (e.g., landscape, furnishings, buildings, etc.), is based on the average per capita cost of improvements within the City’s existing park system. This approach ensures a fair and equitable distribution of costs to be recovered for the development of park amenities and facilities to serve new residents at the same standard as existing residents.
On October 29, 2024, the City Council adopted Resolution No. 24-9383 (Attachment 4), which established the annual adjustments to the park improvement value used in calculating in-lieu fees. These adjustments correspond to the changes (increases or decreases) in the CCCI for the previous calendar year, as reported by the Real Estate Services Division for the Bay Area. Annual increases and decreases are capped at 10% of the base value. In addition, the adjusted base value shall not exceed 100% cost recovery.
This approach builds upon the methodology established by the City Council in 2023 through Resolution No. 23-9220 (Attachment 5), which first defined the framework for annually updating the park improvement value.
Accordingly, park development costs are reviewed and updated annually to reflect changes in construction costs (i.e., escalation/inflation) and the average value of park assets across the existing park system, consistent with Resolution No. 23-9220.
From 2024 to 2025, the CCCI increased by 3.9% (see Table 2). Consistent with the City Council policy, it is recommended that this change is applied to calculate the 2026 Park Improvement Value. Accordingly, the current park improvement value of $4,273 is increased by 3.9%, resulting in an updated value of $4,440.
|
Table 2 Park Improvement Value (Cost per Capita)/Construction Cost Escalation 2024-2026 |
|
Year |
2024 |
2025 Park Improvement Value |
2025 |
2026 Park Improvement Value |
|
CCCI |
+2.3% |
$4,273 |
+3.9% |
$4,440 |
|
Park Improvement Value |
$4,177 |
|
$4,273 |
|
Credit for Qualified Private Recreational Amenities
New residential developments may propose and receive a credit of 50% of the land value for eligible private recreation amenities against in-lieu fees. This credit acknowledges that such amenities provide some public benefit by partially reducing the demand on the City’s existing park system.
Eligible active recreational amenities include, but are not limited to, pools, gymnasiums or fitness areas, community rooms, picnic facilities, playgrounds, off-leash dog areas, large turf areas, sport courts, and community gardens. Each development application is evaluated for size, shape, location, utility/demand, among other criteria, to ensure that the proposed amenities are appropriate and acceptable for reducing demand on existing public parkland. Eligible affordable housing and senior housing projects receive a 15% credit toward the parkland dedication requirement or applicable in-lieu fees.
Use of In-Lieu Fees
The City deposits in-lieu fees into separate accounts designated for either Quimby or Mitigation Fee Act (MFA). During the development of the City’s Capital Improvement Program (CIP) budget, in-lieu fees are allocated to CIP projects including the acquisition of parkland and the development of neighborhood and community parks. Under certain conditions, Quimby funds may also be used for the rehabilitation of existing park facilities. In-lieu fees cannot be used for on-going maintenance.
Spending and Reporting Requirements
The amounts of fees received and allocated are reported annually in the City’s Adopted Budget document.
Proposed Fees for FY 2026/27
Based on the 2025 Annual Land Valuation Appraisal Report, the proposed FY 2026/27 fees have been adjusted to reflect changes in the average land value per acre, as shown in Table 1. These updates result in increases to parkland in-lieu fees in accordance with the Quimby Act and MFA, as summarized in the table below.
The fees were presented to the City Council on April 7, 2026, as part of the study session on the Proposed FY 2026/27 Municipal Fee Schedule and are subsequently included in the public hearing and adoption of the FY 2026/27 Municipal Fee Schedule on April 21, 2026.
|
Zip Code Quimby FY 2025/26 FY 2026/27 |
Change |
|
95050 |
Single Family |
$57,394 |
$59,434 |
+$2,040 |
|
|
Multi Family |
$38,802 |
$40,181 |
+$1,379 |
|
95051 |
Single Family |
$58,785 |
$61,294 |
+$2,509 |
|
|
Multi Family |
$39,741 |
$41,438 |
+$1,697 |
|
95054 |
Single Family |
$55,830 |
$56,635 |
+$805 |
|
|
Multi Family |
$37,744 |
$38,289 |
+$545 |
|
Zip Code Mitigation Fee Act (MFA) FY 2025/26 FY 2026/27 |
Change |
|
95050 |
Single Family |
$51,392 |
$53,224 |
+$1,832 |
|
|
Multi Family |
$34,744 |
$35,982 |
+$1,238 |
|
95051 |
Single Family |
$52,597 |
$54,837 |
+$2,240 |
|
|
Multi Family |
$35,558 |
$37,073 |
+$1,515 |
|
95054 |
Single Family |
$50,036 |
$50,799 |
+$763 |
|
|
Multi Family |
$33,827 |
$34,342 |
+$515 |
To illustrate how in-lieu fees are calculated, the methodology used by staff is provided in Attachment 6.
Fee Implementation
In conformance with state law, the proposed Resolution will provide the required findings for Quimby and MFA. Under state law, fees subject to Quimby may take effect immediately after adoption, while fees subject to MFA may take effect no sooner than 60 days after adoption. The fees set forth in the proposed resolution, for both Quimby and MFA, will take effect on July 1, 2026, which satisfies the MFA’s 60-day requirement.
This information was presented to the Parks & Recreation Commissions (Commission) at its regular meeting on April 13, 2026, to solicit input from the Commission and the public on the proposed changes. No public comments were received. The Commission made the following recommendations:
1. That the City Council accept the Land Valuation Appraisal Report with a date of value of December 31, 2025, as presented; and
2. That the City Council adopt a 3.9% adjustment to the Park Improvement Value in accordance with the State of California Department of General Services Construction Cost Index and prior Council direction.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to California Code of Regulations Title 14 Section 15378(b)(4) in that it is a fiscal activity that does not involve commitment to a specific project which may result in potential significant impact on the environment.
FISCAL IMPACT
There is no impact to the General Fund for consideration of this item. The actual amount of parkland in-lieu fee revenue collected will vary based on the project application type (Quimby/MFA), the City Zip Codes (95050, 95051, 95054), housing density (single-family or multi-family), the amount of public parkland dedicated, and the amount of applicable credits. Credits may include 50% of land value for eligible on-site private recreational amenities and/or a 15% credit toward in-lieu fees for eligible affordable and senior housing projects.
Since the number and type of residential building permits issued in any particular year as well as the amount of dedicated parkland residential developers are unknown, the exact amount of in-lieu fee revenues cannot be projected at this time.
When the In-Lieu Fee Policy is set at 100% cost recovery, the City is able to fully recover the costs necessary to provide new residents with developed public parkland and recreational amenities at the same level of service as provided to existing residents. Without sufficient parkland and facilities, demand on existing facilities increases, which causes competition for access, accelerated wear, more frequent repairs, and higher maintenance and capital replacement costs.
If fees are set below 100% cost recovery, additional General Fund or alternative funding resources will be needed to bridge the funding gap. Within this scenario, the City will need to identify other funding sources for the acquisition, development and redevelopment of parkland to maintain the City’s park system standards of approximately 2.6 to 3.0 acres per 1,000 residents.
COORDINATION
This report has been coordinated with the Finance Department, the City Attorney’s Office, and the City Manager’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Adopt a resolution, in accordance with City Code Chapter 17.35, establishing average per-acre land values and park development costs used for calculating parkland in-lieu fees for residential development for FY 2026/27 and updating the Municipal Fee Schedule.
Staff
Prepared by: Gina Saporito, Staff Analyst
Reviewed by: Damon Sparacino, Director of Parks & Recreation
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. Nexus Study
2. Supplemental Instructions for the Appraisal of the Fair Market Value of Land
3. 2025 Annual Land Valuation Appraisal Report
4. Resolution No. 24-9383
5. Resolution No. 23-9220
6. Fee Calculation Worksheets Tables A, B, C
7. Draft Resolution 26-XXXX