Regional Transportation Impact Fee (RTIF), San Joaquin County, CA

Jurisdictions levy impact fees on real estate developers to mitigate the impacts of new developments on infrastructure and facilities such as schools, roads, transportation, water, and sewers. Impact fees are increasingly used in the United States and globally as a value capture tool, because they increase land values by providing infrastructure and services that serve the new development. The extant academic and professional literature on impact fees has primarily focused on fees levied by a single jurisdiction. In the United States and Canada, school impact fees are one well-known example of a regional impact fee, in that it is generated across several local jurisdictions. However, a single jurisdiction determines and expends this fee—the school district. Therefore, the growing use of regional impact fees that several jurisdictions collectively design and implement poses challenges not yet tackled in academic research and policy discussions. This case study advances our understanding of impact fees by focusing on one such regional impact fee: the San Joaquin County Regional Transportation Impact Fee (RTIF). The primary difference from a single-jurisdiction fee is the institutional coordination required to collectively implement such a fee and the attendant attention to transparency and equity.

The RTIF was established in October 2005. It is coordinated by the San Joaquin County Council of Governments (SJCOG)—the regional transportation agency and the metropolitan planning organization, or MPO, for that region. It covers eight jurisdictions, seven cities—Escalon, Lathrop, Lodi, Manteca, Ripon, Stockton, and Tracy—and San Joaquin County. SJCOG’s board comprises elected officials from these eight jurisdictions and a few from other regional and state agencies, such as the Port of Stockton and the California State Department of Transportation. Additionally, the RTIF program is directly overseen by a steering committee composed largely of staff from SJCOG and participating jurisdictions. Finally, the fee is levied and expended transparently with requirements for annual reporting and major program review every five years.

The RTIF has generated $136 million from its inception through FY2021-2022. While the fee enjoys broad-based support among stakeholders, including the business community, the fee rate is very low. For example, while impact fees levied by Fremont, CA, and Cape Coral, FL, fund 50 percent to 100 percent of the cost to serve new growth, the RTIF funds about 13 percent. Furthermore, the fee utilization rate—cumulative revenue expended as a percentage of cumulative revenue generated—is only about 25 percent. Essentially, the RTIF currently accounts for a miniscule 3 percent (25 percent of 13 percent) of the funds needed to serve the regional transportation impacts of new growth. Therefore, the RTIF has been largely ineffective, because many projects do not break ground or get built very slowly.

Furthermore, while the fee design promotes horizontal equity (operationalized by the beneficiary-to-pay principle), it negatively impacts vertical equity (operationalized by the ability-to-pay principle). Other needed improvements include: a) a better assessment of the total transportation impacts of new development, b) a more accurate split of the total impact between the local and regional impacts, and c) better information dissemination from SJCOG to the participating jurisdictions.

The RTIF has significant transferability potential to the other regions of the United States, because most of them have at least one regional agency—such as a metropolitan planning organization (MPO)—that could coordinate the fee program. Other factors that would enhance the transferability include impact-fee-enabling state legislation, a robust real estate market, less real estate developer opposition to fees, and a culture of levying impact fees or where local impact fees are not very low (in the case of the RTIF program, the RTIF is lower than local fees, hence politically acceptable).