Traffic Impact Fees for New Developments Could Fall Dramatically

The Pasadena City Council will consider Monday directing the city attorney to draft an ordinance updating its Traffic Reduction and Transportation Improvement Fee (TR/TIF), lowering fees for most land uses and adding new categories for the first time since 2017.

The proposed changes are based on a recently completed nexus study by transportation consultants Fehr & Peers, which reevaluated how new developments contribute to traffic impacts and infrastructure needs through 2035.

The new fee structure would align with updated state regulations and the city’s evolving development patterns, transportation goals, and legal obligations under the Mitigation Fee Act.

Under the updated structure, the fees for new single-family residential developments would range from $5,202 to $5,722 per unit, down from the current $11,141.89, depending on the size of the home. Multi-family units would be assessed between $2,158 and $2,352, also down from the current $4,314.10.

Fees for accessory dwelling units (ADUs) under 800 square feet would be waived; larger ADUs would pay a fee proportional to the size of the primary residence.

The ordinance would also introduce the following four new land use categories to the TR/TIF fee structure, medical offices: $20.66 per square foot, hospitals: $1.62 per square foot, lodging: $1,437 per room and research and development facilities: $5.15 per square foot

These categories were previously assessed under broader classifications, such as office or multi-family residential, which staff said did not accurately reflect their traffic impacts.

Fees for retail, office, and industrial development are also being revised. The new fees are retail: $11.89 per square foot (down from $13.48), office: $7.57 per square foot (down from $10.14) and light industrial: $1.15 per square foot (down from $1.38)

According to the nexus study, the fees were calculated based on a “fair share” methodology, estimating that new development will account for 12.1% of total traffic growth during peak hours in the city. That share translates into approximately $43.7 million of the city’s total $361 million transportation infrastructure needs, which include bicycle, pedestrian, safety, and road efficiency improvements drawn from various adopted city plans.

The Transportation Advisory Commission supported the updated fees and encouraged the City Council to consider whether the revised categories might yield better development outcomes.

In addition to aligning with Pasadena’s General Plan and Mobility Element goals — including enhanced livability and reduced car dependence — the updated TR/TIF structure complies with new state legislation such as Assembly Bill 602 and Senate Bill 13, which require fee assessments for housing to be proportional to size and exempt smaller ADUs.

The council’s direction would give the city attorney 60 days to prepare an ordinance amending Municipal Code Section 4.19 accordingly. If adopted, the new fees will be incorporated into the city’s Capital Improvement Program budget process.

The updated fees will not cover all the costs of needed improvements, and separate conditions of approval will still be required for developments with specific localized impacts.