Martinez Council Charts a New Course on Development Fees to Attract Builders

The Martinez City Council used a wide-ranging workshop to send a clear signal: the city is ready to lower the cost of building. In a study session devoted entirely to development impact fees, all five council members coalesced around keeping fees in the low-to-middle range compared to peer cities, waiving fees for accessory dwelling units, and exploring deeper incentives for affordable housing — a package of directions that could reshape the economics of every housing project in town.

• Council directs staff to set development impact fees in the low-to-middle range versus Benicia, Hercules, and Concord, stepping back from full cost recovery
• Impact fees for ADUs over 750 square feet to be waived, with broader waivers for duplexes, triplexes, and affordable projects under discussion
• Childcare facility fee eliminated — only $8,000 left in the fund — but council insists on continued support for working families through other channels
• Cultural facilities fee expanded to include public art, creating the city's first dedicated funding stream for art installations
• New state law AB 179 creates fresh incentive for cities to waive fees on affordable housing projects seeking competitive grants

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Fees Must Come Down — But How Far?

The evening's central question was straightforward: How much should Martinez charge developers to build? The answer will go a long way toward determining whether the city can attract the housing production it needs to meet its 1,345-unit housing element target by 2031.

The basics: A "nexus study" calculates the maximum fee a city can legally charge new development to cover its fair share of infrastructure costs — roads, parks, fire stations, libraries. Consultant Megan Gregory of Economic and Planning Systems walked the council through a comparison showing Martinez's existing single-family fee sits at roughly $14,000 per unit. Full cost recovery would push that to approximately $24,000 — still below Benicia's roughly $26,000 but well above Hercules at roughly $12,000.

Why it matters: Martinez has struggled to attract developers, and fee levels are one of the first line items builders compare across jurisdictions. As staff lead Michael put it bluntly: "Full cost recovery is somewhat misleading because it's cost recovery assuming we actually have development happen. If we don't have development happen, the fees can be as high as we want. We won't actually bring in any money."

Where things stand: The debate split along tactical lines rather than ideological ones — every council member agreed fees should come down, but they disagreed on how far and how fast.

Councilmember Jay Howard pushed hardest for lower fees, advocating for a single-family fee of approximately $13,000, just above Hercules. "I think it's very important to remember that we're not the only ones looking at these cost components comparisons. It's the developers that do this exact same thing," he said, arguing perception matters as much as the actual dollar figure.

Councilmember Greg Young was more cautious, noting that Martinez trails peer cities even at full cost recovery. "I definitely want to make us competitive with impact fees, but not to the extent where it makes us less attractive. So this is definitely going to be something that has to be nuanced," he said.

Vice Mayor Satinder Malhi urged colleagues to view fees as one piece of a broader economic development toolkit. "I'm looking at it as part of a broader initiative. What other pieces have we been working on? So when you take the zoning, for instance, that's going to take time to bear fruit," she said, pointing to concurrent zoning overhauls and Opportunity Zone nominations as complementary strategies.

Decisions: The council reached majority consensus to set fees in the low-to-middle range compared to the three benchmark cities, with staff directed to return with a formal proposal for a future public hearing.

What's next: Staff will develop a fee update proposal reflecting the low-to-middle range direction, along with a recommended phase-in schedule (council discussed a 75/25 split). A formal public hearing will follow.

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ADU Waivers Win Quick Support; Affordable Housing Incentives Gain Traction

State law already exempts ADUs under 750 square feet from impact fees, but proportional fees still apply to larger units — up to the city's 1,200-square-foot maximum. All five council members quickly agreed to extend the waiver to cover all ADU sizes.

Why it matters: ADUs are currently the only new housing type being built in Martinez. Removing fees on larger ADUs eliminates one more barrier to production at a time when the city badly needs units.

Mayor Brianne Zorn pushed further, arguing the city should not stop at ADUs. "I also want us to think about smaller multifamily, like duplexes and triplexes, because we've all talked about how Martinez is basically infill housing is what's left," she said. She cited a conversation with a mayor from another city who credited fee waivers for spurring housing production: "I said, how did you do this? How did you attract people? And he said we waived development fees."

Public commenter Craig went furthest, urging the council to waive fees entirely for 100% affordable housing projects, arguing affordable housing could reduce the police burden from homelessness. He also challenged assumptions about population growth, citing a 9–10% decline in school enrollment since the pandemic.

The other side: Vice Mayor Malhi expressed strong support for waivers on 100% affordable and workforce housing but was more cautious about extending them to majority-market-rate projects meeting only minimum affordability thresholds. The distinction matters: a project with 15% affordable units is fundamentally different from one that is 100% affordable, and the city's financial exposure differs accordingly.

The City Attorney briefed the council on AB 179, a state budget trailer bill effective July 1, 2027, that will require state competitive grant programs to consider whether cities have waived impact fees for affordable housing. The attorney clarified the law incentivizes — but does not mandate — waivers. "The headline that's been batted around is that it requires cities to waive impact fees for affordable housing. And that's not quite right. That headline is a bit of a too much of a collapse," the City Attorney said.

What's next: Staff was directed to return with targeted waiver proposals and analysis of what other Bay Area cities have done, setting the stage for a policy that could position Martinez favorably for state affordable housing grants beginning in 2027.

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Childcare Fee Goes Away, but the Issue Stays

The council agreed to eliminate the city's childcare facility fee — a largely symbolic move given that only about $8,000 remains in the fund and Martinez no longer operates or owns a childcare facility. The city's sole childcare site, previously at Morello Park Elementary, was returned to the school district approximately two years ago.

Why it matters: The Mitigation Fee Act restricts development impact fees to physical infrastructure; they cannot fund operational subsidies like childcare programs. With no capital project behind the fee, continuing to collect it is legally and practically pointless.

But the discussion revealed genuine concern about childcare access. Councilmember Debbie McKillop, a former single parent with twins, pushed for creative alternatives, questioning whether remaining funds could support infrastructure at the Boys and Girls Club. "We have spent a lot of money on the Boys and Girls Club infrastructure improvements. Thousands, millions. So is there a way that we can capitalize on some of these fees to help that?" she asked.

Councilmember Young urged forward thinking, noting that new families are moving to Martinez and the waterfront development will draw more. Vice Mayor Malhi insisted on careful messaging: "I just didn't want the takeaway and the headline to be we don't support childcare. Because this is a lot more nuanced discussion."

Mayor Zorn proposed a clean resolution: eliminate the fee now, but add childcare infrastructure to a future strategic plan discussion. "Can I propose that we ask staff to put this maybe on our next strategic plan discussion because it's clear the council is interested in child care," she said.

What's next: Staff will explore whether remaining funds can be applied to the Boys and Girls Club before being refunded. Childcare infrastructure will return as a topic in a future strategic plan session under community health, safety, and well-being.

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Cultural Facilities Fee Expands to Fund Public Art

All five council members supported broadening the cultural facilities impact fee — which currently covers the library, senior center, and old train depot — to include public art. The fund currently holds approximately $750,000.

Why it matters: Martinez has never had a dedicated public art funding mechanism. The expanded fee will create the city's first ongoing revenue stream for art installations, including projects tied to the city's sesquicentennial.

The City Attorney clarified that the expanded scope would apply only to new monies collected under the updated nexus study, not to existing balances, which remain bound by the prior study's purposes.

Staff member Mike walked the council through the current capital improvement projects covered by the fee before the expansion was endorsed.

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Minor Items

• Public safety fee review: Councilmember McKillop flagged that the public safety fee appeared low relative to parks and recreation fees (~$9,000) and parkland dedication (~$6,000), with only three identified projects. She directed staff to work with Chief White to evaluate whether additional police capital needs should be added to the nexus study. Vice Mayor Malhi agreed.
• Councilmember Howard reminded colleagues that fee decisions are not permanent: "I think it's really important that we remember this doesn't have to be permanent. It's a fluid situation."
• Fee phase-in: Council discussed phasing any fee increases on a 75/25 schedule rather than implementing them all at once.