(a) A city, county, or special district that conducts an impact fee nexus study shall follow all of the following standards and practices:

(1) Before the adoption of an associated development fee, an impact fee nexus study shall be adopted.

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(2) When applicable, the nexus study shall identify the existing level of service for each public facility, identify the proposed new level of service, and include an explanation of why the new level of service is appropriate.

(3) A nexus study shall include information that supports the city’s, county’s, or special district’s actions, as required by subdivision (a) of Section 66001.

(4) If a nexus study supports the increase of an existing fee, the city, county, or special district shall review the assumptions of the nexus study supporting the original fee and evaluate the amount of fees collected under the original fee.

(5) (A) A nexus study adopted after July 1, 2022, shall calculate a fee imposed on a housing development project proportionately to the square footage of proposed units of the development. A city, county, or special district that imposes a fee proportionately to the square footage of the proposed units of the development shall be deemed to have used a valid method to establish a reasonable relationship between the fee charged and the burden posed by the development.

(B) A nexus study is not required to comply with subparagraph (A) if the city, county, or special district makes a finding that includes all of the following:

(i) An explanation as to why square footage is not an appropriate metric to calculate fees imposed on a housing development project.

(ii) An explanation that an alternative basis of calculating the fee bears a reasonable relationship between the fee charged and the burden posed by the development.

(iii) That other policies in the fee structure support smaller developments, or otherwise ensure that smaller developments are not charged disproportionate fees.

(C) This paragraph does not prohibit an agency from establishing different fees for different types of developments.

(6) Large jurisdictions shall adopt a capital improvement plan as a part of the nexus study.

(7) All studies shall be adopted at a public hearing with at least 30 days’ notice, and the city, county, or special district shall notify any member of the public that requests notice of intent to begin an impact fee nexus study of the date of the hearing.

(8) Studies shall be updated at least every eight years, from the period beginning on January 1, 2022.

(9) The city, county, or special district may use the impact fee nexus study template developed by the Department of Housing and Community Development pursuant to § 50466.5 of the Health and Safety Code.

(b) This section does not apply to any fees or charges pursuant to Section 66013.

(c) For purposes of this section:

(1) “City” includes a charter city.

(2) “Development fee” has the same meaning as defined in subdivision (b) of Section 66000.

(3) “Large jurisdiction” has the same meaning as defined in subdivision (d) of § 53559.1 of the Health and Safety Code.

(4) “Public facility” has the same meaning as defined in subdivision (d) of Section 66000.

(d) Nothing in this section shall be construed to relieve a city, county, or special district of the requirement that it comply with Chapter 5 (commencing with Section 66000), the California Constitution, or applicable case law when calculating the amount of a fee.

(Amended (as amended by Stats. 2022, Ch. 128, Sec. 1) by Stats. 2022, Ch. 658, Sec. 2. (AB 2668) Effective January 1, 2023.)