Chapter 18.48


18.48.010    Authority.

18.48.020    Intent and purpose.

18.48.030    Definitions.

18.48.040    Application and payment of fee.

18.48.050    Exemptions.

18.48.060    Use of fee.

18.48.070    Fee adjustments.

18.48.080    Refund of fee.

18.48.090    Statutory exemption.

18.48.100    Severability.

18.48.010 AUTHORITY.

This chapter is enacted pursuant to the Mitigation Fee Act, California Government Code Section 66000 et seq., and to the charter city authority provided by the Constitution of the state of California.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).


(a)    The city council of the city of Santa Cruz declares that:

1)    A childcare impact fee is needed to support funding for childcare facilities;

2)    The city General Plan includes objectives and policies to encourage an adequate and diverse supply of childcare facilities and services citywide and to implement a childcare impact fee on new development due to its impacts on childcare needs;

3)    The establishment of a childcare system which will adequately provide for childcare needs is an essential public service prerequisite to any increase in either residential or nonresidential development;

4)    A developer voluntarily choosing to create new development will place new, additional, and cumulatively overwhelming burdens on the childcare system. As a condition of project approval, new development must mitigate its adverse impact of increased demand for childcare generated by the development;

5)    Childcare impact fees are necessary in order to establish a childcare funding mechanism to improve and augment the childcare system so as to enable developers of new development to pay a fair share of the costs of the system through assessment of fees or exactions reasonably related to the increased use of the childcare system generated by new development;

6)    There is a reasonable relationship between the use of the fee and the type of development project upon which the fee is imposed; and between the need for the childcare facility and the type of development project upon which the fee is imposed;

7)    The fee shall be imposed upon residential and nonresidential development projects which can reasonably be anticipated to create new or additional need for a quality childcare system due to the greater number of residential or employment opportunities which result from that type of development;

8)    The childcare impact fee established by this chapter is consistent with the city General Plan and Government Code Sections 65913 through 65913.8 and 66000 through 66008, including those provisions thereof which involve the housing needs described in the city General Plan.

(b)    The purpose of this chapter, therefore, is to provide for the financing of a childcare system with development fees and other exactions consistent with state law, in order to implement the childcare policies of the city General Plan. The intent of this chapter is not to raise general revenues. Instead, the intent is to provide for the capital improvements and augmentation to the childcare system to help satisfy the childcare needs generated by growth from new development, in a balanced and efficient manner which will mitigate the adverse impacts on the childcare system and promote the public health, safety, and general welfare.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).

18.48.030 DEFINITIONS.

As used in this chapter, all words, phrases, and terms shall be interpreted in accordance with the definitions set forth in the Mitigation Fee Act, unless otherwise defined herein. For the purposes of this chapter, the following definitions shall apply:

(a)    “Childcare facility” means existing or proposed childcare facility, including the site, buildings, modifications to buildings, and accessory structures adequate for licensed programs and personnel to provide childcare services, including but not limited to shelter, food, education and play opportunities.

(b)    “Childcare system” means the overall system of childcare located within the boundaries of the city of Santa Cruz, including (without limitation) childcare facilities, programs, and services.

(c)    “City” shall mean the city of Santa Cruz.

(d)    “Development project” shall mean a proposal for the development or use of land, requiring the granting of an entitlement, whether residential, nonresidential or both, within the land use jurisdiction of the city of Santa Cruz. A “development project” means any project undertaken for the purpose of development and involves the issuance of a permit for construction or reconstruction, but not a permit to operate. A development project includes, but is not limited to, a General Plan amendment, zoning or rezoning a property, a use permit, a design permit, a coastal development permit, a variance, a planned development permit, subdivision map, parcel map, building permit, or another permit for construction, reconstruction, or development.

(e)    “Fees, exactions or impact mitigation measures” means measures taken by a developer to mitigate the impact of the proposed project on the need for childcare. Measures include development fees, land dedication, participation in the construction or establishment of a childcare facility, provision of childcare services, operation of a childcare program, or alternate participation by a developer approved by the city council. No such measure shall raise general revenues or otherwise be imposed as a tax.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).


(a)    Unless otherwise exempted, a childcare impact fee shall be assessed as a condition of approval, in connection with any development project within the city limits as an impact mitigation measure (including, without limitation, payment of a fee, dedication of land, participation in the construction or establishment of a childcare facility, provision of a childcare service, operation of a childcare program, or arrangement of an approximately equivalent exaction) which is reasonably attributable to the development project, as determined by resolution of the city council. In accordance with the General Plan, the fee shall support new or expanded uses of childcare facilities, a key community facility and service as identified in the civic and community facilities element of the city’s General Plan.

(b)    The specific amount of monetary fees for childcare shall be established by resolution of the city council and made a part of the city’s unified master fee schedule, and be updated by the Construction Cost Index (CCI) automatically on an annual basis in January. The adjustment will be based on the year-over-year percentage change in the 20-City CCI reported in the Engineering News Record (ENR) for the twelve-month period ending October the prior year.

(c)    The city council shall complete annual and five-year reporting, including all findings, as required in the Mitigation Fee Act, Government Code Section 66006 or successor statute.

(d)    The childcare impact fee shall be paid or exaction shall be made prior to the earlier of:

1.    The issuance of a building permit;

2.    The issuance of a certificate of occupancy;

3.    The date of final inspection;

4.    If no final inspection is required, prior to occupancy of the use;

5.    Such other time as permitted under Government Code Section 66007 or successor statute, or other applicable law.

(e)    Amount of Land or Premises Dedication. Upon requirement or approval by the city council, land or premises shall be dedicated to the city or to a nonprofit organization for childcare purposes, based on a certified appraisal approved by the city public works or economic development department. The market value of land or premises dedicated pursuant to this chapter shall be reasonably related to the monetary value of the fees or exactions which would be otherwise required pursuant to this section.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).

18.48.050 EXEMPTIONS.

A.    The following exemptions from the requirements for fees and exactions are imposed:

(a)    Any type of project determined by the city council to have a reduced or insignificant childcare impact as per Section 18.48.070.

(b)    Childcare or School Facility. Childcare facilities and any school or day care facility for children including preschools and kindergarten through grade twelve.

(c)    Senior Housing Project. Senior housing projects, except for congregate care or nursing home care projects for which the fee or exaction shall be based upon the number of employment opportunities resulting from such a type of project.

(d)    Affordable Housing Projects. For purposes of this exemption, affordable housing projects are projects where one hundred percent of the units, excluding managers units, within the development are dedicated to lower income households. The affordable units within the development are subject to a recorded affordability restriction for a minimum of fifty-five years or per local inclusionary requirements, whichever is greater.

(e)    Accessory dwelling units and junior accessory dwelling units.

(f)    Repairs or Replacement. The repair, remodel, modification, reconstruction or replacement of a residential or nonresidential building substantially equivalent to the preexisting building. Existing square footage beyond the preexisting amount is not exempt. This includes residential and nonresidential square footage being replaced due to natural disaster.

(g)    Nonresidential Change of Use. Any change of use of an existing legally established nonresidential use, unless the change in use is determined by the city council to be so significant as to require a childcare impact fee.

(h)    Public Project. Projects undertaken by a public agency except projects undertaken by a private developer on public property, and except property not used exclusively for a governmental purpose.

(i)    Project with Complete Application on Effective Date of Ordinance. Project for which an application for permit was complete prior to the effective date of the ordinance codified in this section, except for any project which is required to comply with these measures pursuant to the provisions of a development agreement.

B.    Change of use is entitled to an offset or a credit:

(a)    If a project is changing its use, a credit in the amount offsetting the impact of its prior use shall be applied. For example, a development project converting existing hotel square footage into residential multi-family will have the fee for the proposed (including any addition) multifamily calculated and the fee for the existing hotel space calculated, and the existing hotel space will be credited against the new multifamily fee use. In the event that the credit exceeds the new fee, the fee shall be zero and no refunds are applicable.

C.    No credits or exemptions will be given to properties that have been vacant for more than three years by the time of applying for building permit.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).

18.48.060 USE OF FEE.

A.    Upon receipt, childcare impact fees shall be deposited, invested, accounted for, and expended as required per the Mitigation Fee Act, Government Code Section 66001, or successor statute. Revenues, along with any interest earnings on the account, shall be used to:

(i)    Pay for offsetting the reasonably projected costs to the childcare system in the city due to the increased childcare needs generated by new development, which includes, but is not limited to, financing the construction or purchase of public childcare facilities, or improvements otherwise consistent with law.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).


A.    A developer of any project subject to the childcare impact fee may apply to the city council for a reduction or adjustment to that fee, or a waiver of that fee, based upon the absence of any reasonable relationship or nexus between the impacts of that development and either the amount of the fee charged or the type of facilities to be financed. The application must meet all of the following requirements:

(1)    Applicant must pay the required fee first in full, or provide satisfactory evidence of arrangements to pay the fee when due, or ensure performance of the conditions necessary to meet the imposition of the fee imposed;

(2)    File a written statement with the city clerk that: (i) the fee has been tendered or will be tendered when due, or that any conditions which have been imposed are provided for or satisfied, but under protest; (ii) states in detail the factual basis of the claim of waiver, reduction or adjustment; (iii) and pay appeal fee.

(3)    The applicant shall bear the burden of proof in presenting substantial evidence to support the application.

B.    The city council shall consider the application at the public hearing on the permit application or at a separate hearing held within sixty days after the filing of the fee adjustment application, whichever is later. The city council shall uphold the fee and deny the application if it finds that there is a reasonable relationship between the impacts of the development and the amount of the fee charged and the type of facilities to be financed. The city council shall consider (1) the land use category determination; (2) the substance and nature of the evidence, including the fee calculation method and supporting technical documentation; (3) for a residential project, the type and level of occupancy; and (4) for a nonresidential project, the number of employment opportunities reasonably resulting from the type of nonresidential project involved. In lieu of waiving a fee pursuant to a fee waiver application, the council may adjust the fee upon concluding that the evidence offered at the hearing justifies an adjustment rather than a waiver. The decision of the city council shall be final. If a reduction, adjustment, or waiver is granted, any change in use within the project shall invalidate the waiver, adjustment or reduction of the fee. The decision of the city council may be appealed within one hundred eighty days of the service of the notice of the decision in accordance with Government Code Section 66020, or successor statute.

C.    A fee protest filed pursuant to subsection (A) must be filed the earlier of:

(1)    No later than ten days prior to the public hearing on the developer’s permit application for the development project;

(2)    Within ten days of the approval of the project, at which time the developer shall receive a written statement of the amount of the fee; or

(3)    If the development project does not involve a public hearing or if the written statement of the fee amount is not provided at least twenty-one calendar days in advance of a required public hearing, the protest request must be filed with the city clerk no more than ninety calendar days following the developer’s receipt of the written statement of the fee, which shall include notification that the ninety-day period in which the applicant may protest the fee has begun.

D.    Where the imposition of the childcare impact fee is determined by the city at a public hearing to be valid and is required for reasons related to the public health, safety, and welfare, and is a condition of approval of the proposed development project, then in the event a protest is lodged pursuant to subsection (A), that approval of the development project shall be suspended pending withdrawal of the protest, the expiration of the limitation period of subsection (C) without the filing of an action, or resolution of any action filed.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).

18.48.080 REFUND OF FEE.

(a)    If a development permit expires, is cancelled, or is voided and any fees paid pursuant to this chapter have not been expended, no construction has taken place on either the development project or the public facility, and the use has never occupied the site, the director of planning and community development or their designee shall, upon the written request of the applicant and the findings of these factors, order return of the fee and the interest accrued thereon, less administrative costs.

(b)    If the city council fails to make the annual and five-year findings as described in the Mitigation Fee Act, the city shall refund the fee as set forth in Government Code Section 66001(e) or successor statute.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).


The city council hereby finds and determines that pursuant to Public Resources Code Section 21080(b)(8) the enactment of this chapter constitutes a project which is statutorily exempt from the requirements of the California Environmental Quality Act. Specifically, this chapter establishes and approves childcare impact fees that will generate funds for capital projects which are necessary to maintain acceptable levels of childcare service within the city. This chapter does not, nor is it intended to, approve or predetermine any development project which may be proposed in the future for which a childcare impact fee may be exacted in accordance with the chapter. As such, it merely provides the city with the procedural authority to impose childcare impact fees if and when any such development project might be proposed or applied for.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).


The provisions of this chapter shall not apply to any person, association, and corporation or to any property as to whom or which it is beyond the power of the city of Santa Cruz to impose the fee herein provided. If any section or portion of this chapter is found to be invalid by a court of competent jurisdiction or otherwise, such finding shall not affect the validity of the remainder of this chapter, which shall continue in full force and effect.

(Ord. 2021-10 § 1, 2021; Ord. 2019-26 § 1 (part), 2020).