Vehicle Miles Traveled (VMT) Fee

Heavy nighttime traffic on the San Francisco-Oakland Bay Bridge.

Why consider a Vehicle Miles Traveled (VMT) Fee?

Key reasons for developing a VMT fee include:

  • Providing jurisdictions with a method of funding transportation infrastructure projects that will reduce the growth of VMT, potentially providing a California Environmental Quality Act (CEQA) VMT impact mitigation option consistent with SB 743
  • Increasing opportunities to align mitigation of development impacts with other goals, such as improved safety, mobility and equitable access to affordable multimodal transportation systems.
  • Supporting the jurisdiction’s designation as a Connected Community Priority Development Area (PDA) and access to related MTC funding opportunities, if adopted in concert with a Parking and Transportation Demand Management (PTDM) Policy

What is a VMT Fee?

VMT fees on land use developments provide jurisdictions a method of collecting funds for the mitigation of VMT-related transportation impacts which can be used to fund transportation infrastructure projects that will reduce the growth of VMT. A VMT fee can be used to complement a PTDM Policy by providing a source of funding for off-site improvements, as well as providing a mechanism for projects to satisfy required VMT reduction targets. VMT fees may be applied to a designated capital improvement program (CIP) inclusive of transit, bicycle and pedestrian projects identified to mitigate development impacts on the transportation system by reducing the jurisdiction’s VMT. These programs also offer the opportunity to align mitigation of development impacts with other goals, such as improved safety, mobility and equitable access to affordable multimodal transportation systems.

Depending on the structure of the fee that is implemented, VMT fees may also offer a VMT mitigation option consistent with SB 743. Achieving full mitigation of a project’s significant CEQA impact requires substantial evidence that the proposed mitigation is feasible and will be effective in reducing the project’s impact to a less-than-significant level. When establishing a VMT fee program, the lead agency will consider the costs associated with achieving varying levels of VMT reduction in their community and make a determination about what level of VMT reduction is both physically and economically feasible in the local context. In some instances, a lead agency may set the fee at a level that will fund VMT reductions sufficient to fully mitigate the VMT impacts from most projects, while other agencies may set fees at a level that would partially mitigate most impacts. Therefore, a VMT fee program may or may not serve as full mitigation for a significant VMT impact, depending on the agency’s CEQA thresholds and approach to setting the fee.

A VMT fee may take the form of a traditional development impact fee pursuant to the Mitigation Fee Act (AB 1600). These fees typically apply to all development in a jurisdiction and must be documented in a nexus study that complies with AB 1600 requirements. Alternatively, agencies may establish an in-lieu fee program that provides a mechanism for applicants to offset VMT impacts; only projects with a significant CEQA VMT impact would pay the fee. There is no state statute outlining specific requirements for in-lieu fee programs, but such programs should demonstrate that the CIP projects funded through the program have a linkage to VMT reduction. To function as CEQA mitigation, an in-lieu fee program should be tied to an adopted local policy stating the agency’s VMT mitigation expectations and for which the policy itself has undergone CEQA review; this would commonly take place as part of a General Plan or Specific Plan update. An understanding of the local development and funding landscape, as well as Consultation with the City Attorney or County Counsel is essential to the development of a fee program that aligns with the jurisdiction’s goals and with legal requirements.

Jurisdictions with a Connected Community PDA may use a VMT fee for off-site improvements and a complementary PTDM policy to satisfy MTC’s VMT reduction planning requirements for Connected Community PDAs.

What Kinds of Communities Should Consider Developing a VMT Fee?

  • Communities with substantial demand for new development
  • Communities interested in generating local funds that could be used as matching funds for grants to implement VMT-reducing projects
  • Communities where new development projects are likely to result in significant CEQA impacts related to VMT
  • Communities that are considering a General Plan update in which a fee program may serve as an implementation mechanism

Key Planning Steps

The steps to develop a VMT fee are listed below. Refer to the VMT Fee Policy Development Guide for more detailed guidance

  1. Establish leadership and clarify plan objectives
    • Identify a champion
    • Convene a working group
    • Identify and contact stakeholders
    • Identify what kind of fee type to develop
  2. Solicit consultant services if desired
  3. Develop the fee program
  4. Implement the fee program

Sample Documents

In addition to the guidance linked in the key planning steps above, the following sample documents are provided: