Palo Alto Municipal Code Ch. 16.64 Development Fee and in-Lieu Payment Administration

This Chapter 16.64 applies to any fee or in-lieu payment imposed under any provision of this code that states that that payment of the fee or in-lieu payment shall be made pursuant to this Chapter 16.64. For purposes of this chapter the term "fee" shall be used to refer to any such fee or in-lieu payment, regardless of how denominated elsewhere in this code.

(Ord. 5400 § 17 (part), 2016)

A fee shall be paid on or before the issuance of the first building permit for the project. For a phased project, payments may be made for each portion of a phased project prior to issuance of the first building permit for that phase. If there is no building permit for the project, the fee shall be paid upon issuance of the first city permit or other approval. If no city permit or other approval is required, and the obligation to pay the fee is triggered by a change in use, payment of the fee must be made before the change in use occurs.

(Ord. 5400 § 17 (part), 2016)

For residential development only, payment of a fee may be deferred to the date the development is approved for occupancy. If the development contains more than one dwelling, the fee shall be paid on a pro rata basis for each dwelling when it is approved for occupancy.

The fees may be deferred only if the owner of the real property for which the fees are required enters into a recordable agreement with the city prior to issuance of the building permit for the development, which from the date of recordation, shall constitute a lien on the property and shall be enforceable against successors in interest to the property owner. The agreement shall provide that final occupancy approval shall not be given until the fees are paid. The director of planning and development services may execute the agreement on behalf of the city in a form acceptable to the city attorney.

(Ord. 5691 § 2, 2026: Ord. 5645 § 2, 2025: Ord. 5641 § 2 (part), 2024: Ord. 5494 § 3, 2020: Ord. 5400 § 17 (part), 2016)

A fee shall be payable at the rate specified in the council-adopted municipal fee schedule in effect on the date the fees are paid, except: (1) an applicant for a vesting tentative map for a development project shall pay the fees in effect on the date the application for the vesting tentative map is deemed complete, and (2) an applicant that defers fees for a designated residential redevelopment project, as defined in California Government Code Section 66007, may elect to pay the fees in effect at the time of building permit issuance.

(Ord. 5691 § 2, 2026: Ord. 5645 § 3, 2025: Ord. 5641 § 2 (part), 2024: Ord. 5400 § 17 (part), 2016)

The city council can revise the rate of any fee by amending, by ordinance or resolution, the rate set forth in the municipal fee schedule. Any inflation-adjustment provided in this code with respect to a fee shall go into effect upon approval by the city council of a change to the municipal fee schedule reflecting the adjusted amount of the fee.

(Ord. 5400 § 17 (part), 2016)

(a) Each applicant is hereby notified that, in order to protest the imposition of any impact fee required by this chapter, the protest must be filed in accordance with the requirements of this chapter and, if applicable to the protest, the Mitigation Fee Act. Failure of any person to comply with the protest requirements of this chapter and, if applicable, the Mitigation Fee Act shall bar that person from any action or proceeding or any defense of invalidity or unreasonableness of the imposition, to the extent allowed by law.

(b) On or before the date on which payment of the fee is due, the applicant shall serve a written notice to the director of planning and development services with all of the following information:

(1) For challenges under the Mitigation Fee Act, a statement that the required payment is tendered, or will be tendered when due, under protest; and

(2) a statement informing the city of the factual elements of the dispute and the legal theory forming the basis for the protest.

(Ord. 5669 § 2, 2025: Ord. 5494 § 3, 2020: Ord. 5400 § 17 (part), 2016)

(a) The director shall schedule an informal hearing regarding the protest, to be held no later than sixty days after service of the applicant’s written notice of protest, and with at least ten days' prior notice to the applicant (unless alternative dates are agreed by the director and the applicant).

(b) Either at the applicant’s request or upon the director’s initiative, the director may seek preparation, at the applicant’s expense, of additional analysis of the impacts created by the application. The time in which an informal hearing must be scheduled shall be tolled while these studies are prepared.

(c) During the informal hearing, the director shall consider the applicant's protest, relevant evidence assembled as a result of the protest, and any additional relevant evidence provided during the informal hearing by the applicant and the city. The director shall provide an opportunity for the applicant to present additional evidence at the hearing in support of the protest.

(d) The director shall issue a written determination regarding the protest directing that the fee shall remain unchanged or shall be increased or decreased based on the evidence presented at the hearing.

(e) The director may elect to appoint an independent hearing officer or other designee to hear and decide a protest under this section.

(Ord. 5669 § 3, 2025: Ord. 5400 § 17 (part), 2016)

The applicant shall pay all city costs related to any protest pursuant to this chapter, in accordance with the fee schedule adopted by the city. At the time of the applicant's protest the applicant shall pay a deposit in an amount established by the city to cover the estimated reasonable cost of processing the protest. If the deposit is not adequate to cover all city costs, the applicant shall pay the difference within twenty days after receipt of written notice from the director.

(Ord. 5669 § 5, 2025: Ord. 5400 § 17 (part), 2016)

The city manager, or her/his designee, is authorized to adopt administrative regulations or guidelines that are consistent with and that further the terms and requirements set forth in this code. All such administrative regulations or guidelines must be in writing. Such regulations or guidelines may interpret any provision of this chapter, as well as any provision of this code relating to the calculation of a fee.

(Ord. 5400 § 17 (part), 2016)

Where it is indicated in this code that a fee is subject to inflation adjustment pursuant to this section, on each July 1, the amount of the fee shall be recalculated according to the following formula:

Adjusted Rate = Prior Rate * Most Recent ENR / ENR for Prior Rate

Where the "Prior Rate" is the rate in effect prior at the time this adjustment is calculated, "Most Recent ENR" is the most recently published construction cost index when the adjustment is calculated and "ENR at Council-Approval" is the construction cost index (i) used to calculated the prior rate when it was set pursuant to this section or (ii) published for the month in which the council approved the "Prior Rate." "Construction cost index" means the construction cost index for the San Francisco Bay Area set forth in the Engineering News Record published by McGraw Hill and Associates. In the event the Engineering News Record ceases to calculate and publish this index, then the city manager may designate a comparable, alternative index to serve as the construction cost index.

The existing rate for a fee shall remain in effect until the recalculated rate is adopted and effective pursuant to Section 16.64.050.

(Ord. 5400 § 17 (part), 2016)