COUNTY OF SAN MATEO

ENVIRONMENTAL SERVICES AGENCY

Date:

March 17, 2003

Set Time:

9:30 a.m.

Hearing Date:

April 8, 2003

To:

Honorable Board of Supervisors

From:

Marcia Raines, Director of Environmental Services

Subject:

Increase in Planning and Building Fees and County Fire Plan Review Fees

RECOMMENDATION

1.

Adopt a resolution approving: (a) annual increases in Planning and Building fees to correlate with the Cost of Living Adjustment (COLA) in the recently approved salary contracts, as follows: effective July 1, 2003, 5% (extra 1% to cover non-labor related cost increases); July 1, 2004, 3%; July 1, 2005, 3%; July 1, 2006, 4%; and, (b) increase in County Fire plan review fees.

2.

Consider approval of up to an additional 36% increase in Planning and Building fees the first year to eliminate the general fund contribution to providing development review services.

3.

Consider approval of up to an additional 15% increase on top of #2 above in Planning and Building fees in the first year to recover from permit applicants, in accordance with Government Code Section 66014, up to 100% of the cost of providing long range planning services (preparation and maintenance of County General Plan and development regulations).

BACKGROUND

County Ordinance 2512 adopted June 13, 1978 authorizes the setting of building fees by resolution of the Board of Supervisors. Ordinance 2193, April 10, 1973, authorizes a similar process for planning fees. State law requires that fees not exceed the cost of providing services.

Recent County practice has been to adopt multi-year fee schedules that correlate with the COLAs in our labor contracts. Since labor is the major cost in providing planning and building services, this has maintained a consistent relationship between planning and building revenues and the cost of providing planning and building services. Fee increases have been regular but modest and clearly linked to labor cost increases and, as a result, non-controversial. We recommend the same approach this year, with an added 1% in the first year to cover some extraordinary cost increases in other areas, such as health and retirement benefits.

However, this year County government faces extraordinary fiscal challenges and the County Manager has requested that all departments that collect fees for service consider adjusting those fees to achieve full cost recovery. Hence recommendations 2 and 3, above.

DISCUSSION

1.

Planning and Building Division budget strategy.

The Planning and Building Division, like the rest of Environmental Services, has been given a budget target for Fiscal Year 2003-2004 requiring a 20% reduction in Net County Cost. To meet its target, the Division is proposing elimination of up to three vacant permanent positions (one long range planner, one current planner and one building inspection counter technician), a substantial reduction in extra help funding and adoption of the 5% fee increase recommended above.

2.

Amount of recommended fee increases.

Consistent with past practice, we recommend that the Board adopt a four-year fee schedule implementing annual fee increases each July 1, correlating with the most recent labor COLA. The annual labor COLAs in the recently approved labor contracts affecting Planning and Building are: 4%, 3%, 3%, 4%. We are recommending an additional 1% in the first year to compensate for some extraordinary additional cost increases in areas such as health and retirement benefits. The fee schedules in the attached Resolution accomplish the specified percentage increases, although there will be some minor discrepancies in specific fees due to rounding or other computational factors. In accordance with State law, the resulting fees would not exceed the cost of providing services, as development review revenues would remain below development review costs.

3.

Full cost recovery for development review and long range planning services.

In compliance with the County Manager's direction, we are also presenting for your Board's consideration possible additional increments to Planning and Building fees to achieve near full cost recovery. These fall into two categories: (a) an increase to recover the cost of development review services from permit applicants; and (b) an increase to recover from permit applicants the cost of preparing the general plan and development regulations pursuant to recent changes to Government Code 66014.

We have determined the percentage changes needed to accomplish near full cost recovery by determining the Division's projected net county cost attributable to development review services and long range planning services next fiscal year after meeting the Division's assigned net county cost target. So, the percentage increase required to fully recover the cost of development review services is the projected net county cost of those services divided by projected development review revenues after the recommended "base" 5% increase. The same approach was taken for the increase required to recover the cost of long range planning services.

Regarding Government Code Section 66014, it was recently amended to expressly authorize the recovery from permit applicants of the cost of preparing the plans and regulations against which their projects must be evaluated. The logic here is that for development to proceed in any given jurisdiction, the community must have adequate plans and regulations conforming to State requirements, that plans and development regulations are prepared largely for the benefit of new development, so that it can be accommodated, and that it is appropriate for that development to pay those costs.

With regard to cost recovery, we use the term near full recovery to reflect our belief that revenues should remain slightly below costs, so as to remain in compliance with State law that limits fees to the cost of providing services.

4.

Increase in County Fire Plan Review Fees.

County Fire contracts with the California Department of Forestry and Fire Protection (CDF) for fire protection services. This includes the County fire marshal's review of subdivision; planning permit and building permit applications within County Fire's jurisdiction for compliance with the County fire code. The Planning and Building fee schedules have historically included the fees charged by County Fire to recover the cost of those services. The attached fee schedules include increases in those fire plan review fees correlating with the COLAs in CDF's current labor contract, as follows: effective July 1, 2003, 15%; July 1, 2004, 18% and July 1, 2005, 7%

5.

Fee comparison.

The Planning and Building Division conducted a fee survey to compare the proposed fees for common applications or projects with similar fees in comparable jurisdictions (those the County uses for salary comparisons). The results appear in Attachment B. In each case we show three levels of proposed County fees ("base" 5% increase, base plus increment for recovery of development review costs, base plus increment for recovery of development review costs plus increment for recovery of long range planning costs). The base increase in all cases falls within the range of costs in other jurisdictions. The higher "cost recovery" fees would generally put us beyond the high end of the range. We expect, however, that other jurisdictions will be considering similar fee increases to substantially reduce or eliminate the general fund contribution to planning and building services and that, when all is said and done we will remain within the range of fees charged elsewhere.

6.

County Counsel review.

The fee proposals and resolutions have been reviewed by County Counsel.

VISION ALIGNMENT

Maintaining a proper relationship between Planning and Building costs and revenues serves the County Commitment of Responsive, effective and collaborative government, and the related goal of Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain, and it also serves the goal of Leaders work together across boundaries to preserve and enhance our quality of life, and the related goal of Residents accept individual responsibility for contributing to the qualify of life of the County as a whole, by assuring that those who utilize planning and building services pay the cost of providing those services, rather than receiving a subsidy from taxpayers and thereby diverting resources from other needed programs without a source of cost recovery.

FISCAL IMPACT

The fee increases approved by your Board will be included in the Planning and Building budget for FY2003/04, to be submitted to the County Manager in April.

If your Board approves the minimum recommended fee increase of 5%, that will be combined with the elimination of three vacant positions and a reduction in extra help funding to meet the Planning and Building Net County Cost target of $1,610,911, which is based on a 20% NCC reduction goal set by the County Manager's Office.

Approval of the second 36% fee increment above the base 5% increase would increase revenues by approximately $1,022,911, thus reducing our NCC to approximately $588,000. Approval of the third 15% fee increment would further increase revenues by approximately $588,000, thus reducing our NCC to approximately zero.

All of the above scenarios include the elimination of three positions and the reduction of extra help funding. Adding back any of those cuts in conjunction with whatever fee increase is approved would increase NCC above the indicated levels.

ATTACHMENTS

A.

Resolution amending development services fee schedules.

A-1.

Proposed planning service fee schedules for FY2003/2004

A-2.

Proposed planning service fee schedule for FY2004/2005

A-3.

Proposed planning service fee schedule for FY2005/2006

A-4.

Proposed planning service fee schedule for FY2006/2007

A-5.

Proposed building inspection service fee schedule for FY2003/2004.

A-6.

Proposed building inspection service fee schedule for FY2004/2005.

A-7.

Proposed building inspection service fee schedule for FY2005/2006.

A-8.

Proposed building inspection service fee schedule for FY2006/2007.

B.

Fee comparison table.

COPIES

Associated General Contractors of California

Building and Construction Trades Council

Building Industry Association

Peninsula Builders Exchange