REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Action on Resolutions Approving the Sanitary Sewer Master Plan Update 2025 Report, Sanitary Sewer Conveyance Fee Nexus Study, and Amending the FY 2025/26 Municipal Fee Schedule to Update the Sanitary Sewer Outlet Charge - Conveyance Fee Rates
Report
BACKGROUND
Impact fees are governed by State law (Assembly Bill 1600, 1989, Government Code Section 66000) and allow a City to charge one-time fees to new developments to finance capital facilities and infrastructure needed to serve those developments. Impact fees are established based on a reasonable relationship (i.e. nexus) between the impacts caused by new development and the improvements to mitigate those impacts that will be funded by the fee. These fees cannot be used to pay for the cost of existing deficiencies and are distinct from taxes and special assessments.
Sanitary Sewer Conveyance Fee
In 2007, a Conveyance Fee component of the Sanitary Sewer Outlet Charge was approved by City Council (Resolution 07-7415) to provide funding for capacity improvements to the sanitary sewer system due to intensification and densification of land uses permitted by the General Plan and associated development land use amendments. Updates to the fee were made in 2009 and 2010 through the following actions:
• Resolution 09-7643 approved in June 2009 updated the fee to include costs of bond issuance to fund and implement projects
• Resolution 10-7741 approved in June 2010 updated the fee with consideration of the following: a) resolution of other funding opportunities (i.e. redevelopment and stimulus funds); b) incorporation of latest land use information from the General Plan update finalized in 2010; and c) adjustments to the capacity project improvements listing resulting from a) and b).
In 2022, an Updated Sanitary Sewer Outlet Charge - Conveyance Fee Report was approved by City Council (Resolution 22-9133). The report updated the list of projects funded by the fee and recommended postponing any changes to the fee until completion of an update to the Sanitary Sewer Master Plan.
Sanitary Sewer System Capacity Assessments and Master Plans
Foundational to the establishment and ongoing updates to the Conveyance Fee are the various sewer system capacity assessments and master plans conducted over the years which are further detailed below.
2007 Sanitary Sewer Capacity Assessment - This assessment accomplished the following key objectives:
• Developed wastewater flow projections for the City’s collection area using up-to-date water use and land use information
• Developed a hydraulic model of the trunk sewer system
• Utilized the model to identify existing capacity deficiencies and future capacity requirements
• Developed phased capital projects, including budget cost estimates, for implementing the required capacity improvements to the wastewater collection system.
The initial establishment of the Conveyance Fee in 2007 was based on projects identified in the 2007 Sanitary Sewer Capacity Assessment.
2009 Sanitary Sewer Capacity Assessment - This assessment was an update to the 2007 assessment and accounted for land use changes resulting from the then-in-progress General Plan Update, which was finalized in 2010. Recommended changes to the capacity project improvements listing and project budget cost estimates resulting from this assessment were approved through City Council Resolution 10-7741 in June 2010.
2016 Sanitary Sewer Master Plan - This master plan update was completed by the City’s consultant, RMC Water and Environment, and the report was issued in April 2016. The master plan represented a comprehensive update to the prior capacity assessment work, which considered the latest information on water use and land use changes since 2009. As with prior reports, the master plan recommended phased capacity improvement projects with accompanying project budget cost estimates. Also, the hydraulic model update served as an important tool in the continuous evaluation of individual development proposals with respect to sanitary sewer capacity impacts and resulting development conditions of approval going forward.
2022 Addendum to 2016 Sanitary Sewer Master Plan - This addendum was an update to analyze and address two identified system deficiencies and update one previously identified project. The two identified deficiencies included one on the Calabazas Creek trunk sewer, which was due to the 2021 discovery of existing sewer network conditions that were different than the hydraulic model, and one on the Great America Parkway West trunk sewer, resulting from new development in the sewer tributary area. The Tracy Drive sewer project was also recommended for revision to better balance downstream flow between the Homestead Road and Pomeroy Avenue intermediate trunk lines. A revised capacity project listing was approved in August 2022 (Resolution 22-9133).
It is also important to note that an updated sanitary sewer master plan fulfills the requirement for a system evaluation and capacity assurance plan as required for all sewer system agencies overseen by the Regional Water Quality Control Board. Generally, sanitary sewer master plan updates, including flow monitoring, are performed every 7-8 years to evaluate the system performance and needs.
DISCUSSION
On September 27, 2022, City Council approved an agreement with Woodard and Curran to provide professional engineering services to update the sanitary sewer master plan. The scope of services included data collection, flow monitoring, updating the City’s existing hydraulic model for the sanitary sewer network, analyzing the sewer network to determine deficiencies, developing projects to address deficiencies, and conducting a funding analysis to determine appropriate fees to support the cost of the projects.
Sanitary Sewer Master Plan Update 2025 Report: This report (Attachment 1) is a summary of the activities, results and recommendations from the comprehensive update of the hydraulic model, system deficiency analysis, and recommended projects/costs to resolve system deficiencies.
The updated master plan allows the City to determine which improvements are needed for the sanitary sewer system to accommodate current and future development and ensure the City continues to provide a high level of reliable service to its customers.
Key benefits of the updated master plan include:
• Expansion of the system hydraulic model to increase the pipelines modeled from 34% (trunk lines only) to 96% (all-pipes model)
• Calibration of the hydraulic model to the updated dry weather and wet weather flows based on the sewer flow monitoring results
• Update of the hydraulic model with the latest water use and land use changes
• Re-validation and/or correction, as needed, of prior model attributes
• Fulfills regulatory requirement for a system evaluation and capacity assurance plan.
This report indicates that the total projected program of necessary capacity improvements is approximately $102.5 million (in 2024 dollars). Using the General Plan horizon of 2035 as the planning period, the escalated cost of the program is approximately $149.15 million.
Sanitary Sewer Conveyance Fee Nexus Study: This report (Attachment 2) provides an analysis of the costs associated with the necessary sanitary sewer capacity improvements and the proposed fee rates to support the program.
The City is required to identify a reasonable relationship (nexus) between an impact fee and new development, and to make findings regarding the following:
• the purpose of the fee
• the use to which the fees will be put
• the nexus between the fee’s use and the type of development that will be charged the fee
• the nexus between the need for the improvements and the type of development that will be charged the fee
• the nexus between the amount of the fee and the cost of the needed improvements.
The Sanitary Sewer Conveyance Fee Nexus Study is designed to support these findings. As further detailed in the Sanitary Sewer Conveyance Fee Nexus Study, the following conveyance fee rates would provide for full cost recovery of the escalated program costs:
• Residential - $1.14 per square foot
• Non-residential - $6.34 per gallon per day (gpd)
Residential Fees Rates: There are two main changes to the current fee that include the way the rate is charged, and the rate itself. Based on prior project completion and the new projects identified in the current Plan, the rates are proposed to be reduced.
The residential rate, currently assessed per dwelling unit, is proposed to be changed to a square footage rate to bring the fee in compliance with State Assembly Bill (AB) 602 (Grayson, 2021). AB 602 requires an impact fee assessed for residential development to be assessed per square foot of development or requires the City to make specified findings explaining why square footage is not an appropriate metric to calculate the fees. It is recommended that the residential rate be changed from its current per dwelling unit rate to one based on square footage.
By comparison, the proposed residential conveyance fee for an average-sized single-family home of 2,650 square feet would be $3,021 compared to the current dwelling unit charge of $4,218, which results in a decrease of 28.4 percent. An average-sized condo/townhouse of 1,660 square feet would experience a fee decrease of 55.1 percent to $1,892.40. An average-sized apartment/high density unit of 800 square feet would experience a fee decrease of 78.4 percent to $912.
An Accessory Dwelling Unit (ADU) is currently assessed at $2,653, which is 62.9 percent of the residential dwelling unit fee of $4,218. The current fee is based on the percentage rate of sanitary flow of an apartment compared to a single-family dwelling. Per AB 68, a fee cannot be charged for an ADU of less than 750 square feet. The proposed fee for an ADU (750 square feet or larger) would be at the same residential per square foot rate as all other residential units ($1.14 per square foot). The fee for an 800 square foot ADU would be $912 (800 square feet times $1.14), which results in a decrease of 65.6 percent.
Non-Residential Fee Rates: The non-residential fee is currently assessed at $8.60 per gallon per day (gpd) and is proposed to be reduced to $6.34 per gpd, which represents a decrease of 26.3 percent. It is recommended that the fee continue to be assessed based on gpd since the sewage flow range per square foot for non-residential uses can vary widely depending on the use. For example, a mini-storage warehouse is projected to generate 0.02 gpd per square foot of development whereas a fast-food restaurant is projected to generate 0.9 gpd per square foot, a multiple of 45 times the flow of a mini-storage warehouse. Additionally, a fee based on the sewage flow generated per gallon per day is the more equitable method for calculating non-residential fees since the potential range of sewage flows varies widely.
It is recommended that the Sanitary Sewer Master Plan Update 2025 Report be approved (Resolution - Attachment 3) to serve as a guide for ongoing management of the capacity of the sanitary sewer system. Additionally, it is recommended that the Sanitary Sewer Conveyance Fee Nexus Study and the proposed new Conveyance Fee rates be approved (Resolution - Attachment 4) to implement the fee reductions and to fully fund the anticipated sanitary sewer capacity improvement program.
ENVIRONMENTAL REVIEW
Pursuant to Section 21080(b)(D) of the California Public Resources Code, as the purpose of the Sanitary Sewer Conveyance Fee Nexus Study and Fee Rates Resolution is to continue collection of an impact fee to fund necessary sanitary sewer capacity improvements, the setting and imposition of the fee is exempt from environmental review under the California Environmental Quality Act (CEQA).
The Sanitary Sewer Master Plan Update 2025 analyzed both existing conditions and future expected land uses based on the General Plan Phase III 2035 Scenario. Public Utilities, including wastewater systems, are addressed in the Final Environmental Impact Report (EIR) for the 2010-2035 General Plan. The EIR considers the environmental impacts of increased land use densification and the resulting need to increase sanitary sewer capacity. For any specific project from the capacity improvement program that moves from the programming stage to construction, the project will be evaluated in accordance with the California Environmental Quality Act as part of the approval process.
FISCAL IMPACT
The Conveyance Fee proposed rates are set to provide full cost recovery of the anticipated sewer capacity improvement program needs. If aggregate program costs over time are above or below anticipated costs, the Conveyance Fee rates will be re-evaluated and advanced to City Council for adjustment to maintain 100 percent cost recovery.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
PUBLIC CONTACT
On November 5 and November 12, 2025, notices of the public hearing were published in the Santa Clara Weekly in the manner set forth in Government Code 6062a and 66018. Additionally, the City notified all interested parties that had requested to be notified regarding proposed fee updates. 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.
On September 23, 2025, staff notified members of the City’s development community by electronic mail about a public meeting on October 9, 2025, to inform and solicit feedback on the proposed conveyance fee changes. Additionally, on October 9, 2025, staff posted the Sanitary Sewer Master Plan Update 2025 Report and Sanitary Sewer Conveyance Fee Nexus Study on the City’s web page and notified the development community that it was available.
ALTERNATIVES;
1. Adopt a Resolution Approving the Sanitary Sewer Master Plan Update 2025 Report as presented
2. Do not adopt a Resolution Approving the Sanitary Sewer Master Plan Update 2025 Report
3. Adopt a Resolution Approving the Sanitary Sewer Conveyance Fee Nexus Study (Nexus Study) and Amending the FY 2025/26 Municipal Fee Schedule to Update the Sanitary Sewer Outlet Charge - Conveyance Fee Rates Consistent with the Findings Contained in the Nexus Study
4. Do not adopt a Resolution Approving the Sanitary Sewer Conveyance Fee Nexus Study (Nexus Study) and Amending the FY 2025/26 Municipal Fee Schedule to Update the Sanitary Sewer Outlet Charge - Conveyance Fee Rates
5. Provide additional direction to staff
RECOMMENDATION
Recommendation
Alternatives 1 and 3
1. Adopt a Resolution Approving the Sanitary Sewer Master Plan Update 2025 Report as presented
3. Adopt a Resolution Approving the Sanitary Sewer Conveyance Fee Nexus Study (Nexus Study) and Amending the FY 2025/26 Municipal Fee Schedule to Update the Sanitary Sewer Outlet Charge - Conveyance Fee Rates Consistent with the Findings Contained in the Nexus Study
Staff
Reviewed by: Craig Mobeck, Director of Public Works
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. Sanitary Sewer Master Plan Update 2025 Report
2. Sanitary Sewer Conveyance Fee Nexus Study
3. Resolution for the Sanitary Sewer Master Plan Update 2025 Report
4. Resolution for the Sanitary Sewer Conveyance Fee Nexus Study and Amending the FY 2025/26 Municipal Fee Schedule to Update the Sanitary Sewer Outlet Charge - Conveyance Fee Rates