COUNTY OF SAN MATEO

Inter-Departmental Correspondence

ENVIRONMENTAL SERVICES AGENCY

DATE:

May 24, 2004

SET TIME:

9:00 a.m.

BOARD MEETING DATE:

June 8, 2004

TO:

Honorable Board of Supervisors

FROM:

Marcia Raines, Director of Environmental Services

SUBJECT:

Adoption of Planning and Building Fees, County Fire Marshal Fees, Parks and Recreation and Coyote Point Marina Fees effective FY 2004/2005

RECOMMENDATION

1.

Adopt a resolution amending: (a) Planning and Building fees; and (b) County Fire Marshal plan review and inspection fees effective August 9, 2004.

2.

Direct the Planning and Building Division to leave any vacancies that arise between now and the end of the next fiscal year unfilled to reduce staffing through attrition.

3.

Adopt a resolution amending Parks and Recreation fees effective July 1, 2004 and Coyote Point Marina fees effective August 1, 2004.

BACKGROUND

Last year, the County Manager directed departments that have the ability to collect fees to cover all or a part of the cost of their operations to take steps to raise those fees to increase cost recovery. The Environmental Services Agency subsequently prepared and presented fee schedules to your Board designed to accomplish that. Those fees were approved on June 10, 2003. The Planning and Building and Parks and Recreation fees included in that package became effective July 1, 2003, with the exception of Marina berth rental fees, which became effective August 1, 2003. For FY 2004/05, ESA divisions examined fees and are recommending the following increases in order to keep fees commiserate with the cost of services.

Planning and Building Fees. Last year's Planning and Building fees were calculated to essentially eliminate the general fund contribution to the operation after including other resources, such as miscellaneous revenue from non-fee sources and the projected fund balance at the start of the current fiscal year. Staff felt that before they asked the development community to pay higher fees they needed to exhaust other resources. That meant, however, that the Division will end this fiscal year without the usual substantial fund balance, which is the starting point for next year's budget. The Division also has cost increases to absorb such as significantly higher salary and benefits costs.

Since this time last year, the County Manager's Office has underscored its desire to see the Planning and Building Division become self-supporting through fee revenues. In these circumstances, we recommend that we discontinue our past practice of multi-year fee schedules adopted shortly following each new labor contract and reflecting the annual Cost of Living increases incorporated into those contracts. Instead, we recommend annual adoption of fee schedules each spring, with the fees set at the level necessary to recover the cost of operations proposed for the next fiscal year.

The attached fees have been calculated to cover the cost of operations next fiscal year at the current level of staffing (44 FTE), after having made all feasible reductions such as the discontinuance of maintenance support to Geographic Information Systems (GIS) and the deferment of computer equipment replacements and upgrades. However, there has been some reduction in permit activity that would warrant reduction in staffing if service were maintained at current levels. For that reason, we recommend a strategy for reducing staffing through attrition by holding vacancies until the end of next fiscal year and then assessing the appropriate level of staffing under the circumstances that prevail at that time and setting staffing levels and fees accordingly for FY 2005/06. The department will monitor revenues throughout the year and make expenditure adjustments as necessary to prevent appropriations exceeding revenues.

Parks and Recreation Fees. In last year's Parks and Recreation fee increase, 17 specific activity areas were increased approximately 20%-25%. For the Marina, berth rental fees were increased 3% and a waiting list fee was implemented. In February and March 2004, Parks Division and Marina staff reviewed the fees charged for use of the parks, park features, park services, marina berth rentals, and other marina services. This review included facility usage, operational costs, changes in the cost of living index, market rate comparisons (other agencies), and legal requirements. Based on that review, staff recommended Park fee schedule changes in the amount of $16,125 and marina fee schedule changes in the amount of $49,000 to the Parks and Recreation Commission. The Parks and Recreation Commission at its May 6, 2004 regular meeting reviewed and moved to recommend to the Board of Supervisors approval of the proposed changes in the Parks and Recreation and Marina fees.

DISCUSSION/KEY ISSUES

Planning and Building Fees.

1.

Authority

County Ordinance 2512, adopted June 13, 1978, authorizes the setting of building fees by resolution of the Board of Supervisors. Ordinance 2193, adopted April 10, 1973, authorizes a similar process for planning fees. State law requires that fees not exceed the cost of providing services. Staff calculations show that the proposed fees would equal but not exceed the cost of the service we provide. Recent changes to Government Code Section 66014 authorize local governments to recover from permit applicants the cost of preparing the general plan and development regulations.

2.

Planning and Building New Fees

As part of this proposal, we recommend establishment of two new fees to cover cost of services by other County departments as part of the development review process that in the past has been absorbed by Planning and Building. The first is a legal services fee surcharge to cover the cost of legal services charged by County Counsel to the Planning and Building Division. The County Counsel's Office provides daily advice on planning issues, provides legal representation at the Planning Commission and Board of Supervisors, provides assistance in resolving disputes, and represents the Planning and Building Division in litigation. In Fiscal Year 2002/2003, the County Counsel's Office provided approximately one full-time attorney, at a cost of about $329,000, at the office's billing rate of $165 per hour. Services are expected to remain at approximately the same level for 2004/2005. Based on projected fees, a 5% surcharge fee for legal services could generate approximately $290,000, which would provide close to 90% cost recovery. The actual amount of the fee generated will depend on the amount of overall fee revenue collected, but the minimum base amount to be paid to the County Counsel's Office will be $135,000. The surcharge would be applied to the total Planning and Building fees paid for any given permit, but not to fees collected by or on behalf of other agencies.

The second is a Public Works plan check review fee to be applied to all planning and building permits that require review by the Department of Public Works. The Department of Public Works provides daily assistance to the public at the Development Review Center and reviews planning permit referrals and building permits for compliance with Department of Public Works standards. Department of Public Works has averaged 500 planning and building project reviews during the past four fiscal years. Therefore, staff is recommending a fee of $400 per permit to generate an estimated $200,000 to cover projected staff and overhead costs of $175,000. This is similar to how plan checks by Environmental Health and County Fire are funded.

3.

Planning and Building General Fee Increase

The Planning and Building fee schedules approved last June included a 3% increase effective July 1, 2004. Staff has calculated that an additional general fee increase of 55% is necessary to meet our budget target for next fiscal year. That has been applied to all fees listed in the fee resolution (see Attachments B and C). This is similar to the fee increase approved last year at this time. As explained above, a second increase is necessary to compensate for cost increases and the lack this fiscal year of the fund balance that was included in last year's fee calculation.

Planning and Building Inspection service fees would be effective August 9, 2004, as Section 66017 of the California Government Code: Planning and Zoning Law requires a 60-day delay for any action adopting a fee or increasing a fee.

4.

Planning and Building Workload and Staffing

It is difficult to evaluate workload, which has both quantitative and qualitative aspects. There is no question that the level of work coming in the door has declined this year. We project total planning and building permit applications for the current fiscal year at 3,144 versus 3,375, 3,278, 3,706, and 3,872 in the previous four years. How that number will change next year is hard to predict in the current confusing economic climate.

At the same time, Planning and Building carries a backlog of work from more prosperous times because staffing was not added when workload and requirements increased. Current Planning staff now average sixty-one (61) assigned cases each in addition to counter coverage and other duties. Examples of new requirements that have been added over the years include the Coastside Design Review Committee, Endangered Species Act compliance, flood regulation compliance, drainage reviews, sediment and erosion control plan reviews, stricter structural requirements due to seismic concerns, construction recycling requirements, more complex zoning regulations, greater input from citizens, more frequent appeals of projects, etc., all of which have come without additional resources to handle them. Although the Division is currently operating with all authorized positions filled, the fact is that authorized staffing in Planning and Building is down 15% from its peak in 1989.

We nonetheless recognize that the current economic climate may necessitate further reductions in staffing. To give us the ability to reduce staffing if necessary without layoffs, we thus recommend that vacancies that arise during the balance of this fiscal year and next fiscal year not be filled. This would give us the opportunity to adjust staffing at this time next year and then set fees at that time to cover the cost of providing the desired level of service in FY 2005/06. We currently anticipate two vacancies and would expect others over the next 15 months.

5.

County Fire Marshal Fee Increase

The San Mateo County Environmental Services Agency contracts with the California Department of Forestry and Fire Protection (CDF) for fire protection services. Part of this contract includes specified fire protection and planning services rendered by the County Fire Marshal. The County Fire Marshal is responsible for jurisdictional compliance with the County fire codes. The issuance of planning and building permits requires that plan review and inspection services be conducted by the County Fire Marshal to assure and verify code compliance. Fees have been set to recover the cost of these contract services as they relate to planning and building projects. These fees have historically been included in the Planning and Building fee schedules.

On June 10, 2003, your Board adopted, by resolution, three yearly fee increases for fire protection and planning services provided by the County Fire Marshal's Office. These increases were scheduled to take effect as follows: July 1, 2003, July 1, 2004, and July 1, 2005. The increases correlated with the known employee salary COLAs in CDF's current labor contract. Since June 30, 2002, employee health benefit COLAs have increased by 23%. This increase was not known, and could not be anticipated at the time of the last adopted fee increase. The attached revised fee schedules reflect the previously adopted employee salary COLA increased by the 23% employee health benefit COLA (see Attachments B and C). The proposed fee increase would become effective August 9, 2004. The fees have been calculated to not exceed the estimated cost of providing plan review and inspection services.

Parks and Recreation Fees.

In reviewing the 2004 Parks and Recreation Fee Survey, it was found that the current San Mateo County Parks and Recreation Fee Schedule still compares favorably (at the average or slightly higher in some cases) with similar fee schedules at other bay area parks and recreation agencies. A review of revenue and year end projections show that approximately 95% of the anticipated additional revenue from the July 1, 2003 fee increases is being realized as projected. Facility reservation and family camping revenue however is approximately 7% below predictions. This shortfall is believed to be due to some resistance to higher fees and to a lesser extent the impact of selected facility closures due to staffing reductions.

The Parks Division is proposing to increase the family camping fee from $18 to $20. This will generate an estimated $10,000. This increase will allow the Division to continue the current level of staffing and maintenance in the Memorial Park campgrounds that otherwise would have been eliminated due to required budget reductions. This increase is in line with other agency's fees for similar activities and would not exceed the cost of services provided. The Division also proposes to apply the current reservation change fee of $5 to campers who change their campsites. This fee will generate approximately $500 annually. It will go to offset staff costs for processing a new campsite permit and updating campground occupancy information.

Effective July 1, 2004, the Parks Division is transferring back the reservation function for Fitzgerald Marine Reserve school and docent led visits from the Coyote Point Museum. These functions were transferred to the Museum in 1998 to address technical and staff constraints within the Division that were hindering the program's success. Those constraints have been addressed and based on identified needs (especially the need to protect the resource and coordinate staff and docent schedules) the Fitzgerald Marine Reserve reservation function is being transferred back to the Parks Division. The Division is proposing to incorporate the current Fitzgerald reservation fee structure used by the Museum into the Parks Division fee schedule. This transfer will result in approximately $5,625 annually in new revenue. It will go to offset administrative, clerical, and operational costs of the reservations and would not exceed the cost of the services provided.

The final change to the Parks fee structure is to make the reservations for Wurr Flat #1 and #2 areas in Memorial Park non-refundable and not changeable. These popular areas are in high demand. However, this demand has resulted in misuse of the advanced booking reservation system resulting in excessive vacancies, numerous cancelled reservations requiring staff time well above normal expectations, and loss of revenue. This change would be the same as for other high demand areas where similar problems have historically occurred such as the Sam McDonald Horse Camp and the Flood Park Baseball Fields. No change in revenue is anticipated by making the fees non-refundable or the reservations non-changeable.

Marina Fee Schedule.

The Parks and Recreation Commission reviews Marina berth rate adjustments annually. The last berth rate change was approved by the Parks and Recreation Commission in May 2003, adopted by your Board in June 2003, and became effective August 1, 2003. The increase at that time was 3.0%. According to adopted procedures, adjustments have been assessed on an annual basis since 1988.

Current loan agreements with the California Department of Boating and Waterways require rate adjustments be made no less than once each year and be no less than the equivalent of the CPI over the previous year. The U.S. Department of Labor, Bureau of Labor identifies CPI's nationally and throughout the State of California. The West Coast Urban, U.S. Recreation Average, and U.S. All Items averages for the 12 months ending February 2004 range from 1.1% to 1.7%.

The County Parks Director, Park Superintendent, Marina staff and berthers of the Marina met on several occasions during this past Fall and Winter to discuss the long-term needs of the Marina. A 10-year Capital Plan and a 10-Year Fiscal Approach to fund the plan was prepared by staff, adjusted by input received from the public and presented to your Commission in March 2003. The Commission approved both the 10-Year Capital Plan and 10-Year Fiscal Approach including a proposed 3% berth rate increase in addition to the regular annual CPI adjustment.

Based on the CPI information, and taking into account the approved funding strategy for the Marina, and operational cost increases in FY 2004/05 of 11.8%, staff is recommending an increase of 4.7% (CPI of 1.7% and 3% Capital Plan). This increase is within the parameters required by our loan agreements with the State of California and is as discussed at public meetings with Marina berthers.

ALTERNATIVES

Planning and Building Fees.

The alternatives to increased Planning and Building fees would be (1) reductions in staffing and service or (2) additional general fund support. Using $80,000 as the approximate average cost per position in the Planning and Building Division, we estimate that each position eliminated would result in about a three point reduction in the required fee increase, i.e., eliminating one position would reduce the increase from 55% to 52%. If no additional fee increase were to be approved above the 3% already approved, this would result in eliminating approximately 20 permanent positions. The same calculation would apply to augmented funding.

There have been questions in the past about alternative methods for recovering the cost of permit processing from applicants. There are basically two methods. The first alternative is fixed fees set at a level to recover, in the aggregate, the cost of the operation. That is the approach recommended above. The second alternative is to track the time spent on each permit and bill the applicant the full cost, including all overhead, of processing his/her permit. That approach is usually combined with deposit accounts, where the applicant makes an up-front deposit to cover the typical cost of processing the permit in question. The department then bills against the deposit and, when it is exhausted, a notice is sent and processing is suspended until an additional deposit is made.

The latter approach is in use in some jurisdictions for planning permits, but staff is not aware of it being used for building permits. We do not recommend that approach at this time because (a) establishing a system of this type would be complex, time-consuming and expensive; (b) it can actually add to permit processing costs due to the cost of maintaining the billing system; (c) it makes permit costs less predictable; (d) it can create conflicts between staff and applicants over time billed to projects; and (e) in a jurisdiction like ours, where development is controversial, it can become a point of leverage whereby project opponents can drive up project costs by making demands that consume additional staff time.

Parks and Recreation Fees.

The alternative to not increasing park usage fees is that the Parks Division will need to reduce services to meet the mandated reduction Net County Cost target. Should the Fitzgerald Reservation Fees not be added, the Parks Division will not be able to resume that program and provide coordinated and enhanced reservation services for the Fitzgerald Marine Reserve.

The alternative to increasing Marina fees is the delay of necessary capital and maintenance projects due to lack of funding. Should the CPI increase in not be approved, the Division will be in violation of the loan agreement with the California Department of Boating and Waterways.

VISION ALIGNMENT

Maintaining a proper relationship between costs and revenues serves the commitment of responsive, effective and collaborative government, and goal #20: government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain. It also serves the commitment of leaders work together across boundaries to preserve and enhance our quality of life, and goal #24: residents accept individual responsibility for contributing to the qualify of life of the County as a whole, by assuring that those who utilize County 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

Planning and Building Fees.

The two new Planning and Building fees proposed to cover the cost of County Counsel and Public Works staff services are estimated to generate $350,000, and the 55% general fee increase requested is estimated to generate up to $1.9 million. Approval of the proposed fees will allow the Planning and Building Division to meet its Net County Cost target for next fiscal year of approximately $125,000, and this fee increase has been included in the Division's recommended budget for FY 2004/05. Future permit fee schedules are anticipated to correlate with the COLAs in our labor contracts.

Parks and Recreation Fees.

The proposed Parks and Recreation Fee Schedule increases are estimated to generate $16,125 in additional revenue for FY 2004/05. This revenue covers actual costs for services or facilities and will allow the Parks Division to continue some camping services and to resume operation of the Fitzgerald Marine Reserve Reservations program.

The proposed Marina Fee Schedule increases are estimated to generate $49,000 in additional revenue for FY 2004/05. All revenue generated by the Marina goes into the Marina enterprise fund. This proposed fee increase will cover actual Marina operating costs and meet the legal requirements of previously secured Department of Boating and Waterways loans.

OTHER REVIEWING AGENCIES

County Counsel

Director of Public Works (Planning and Building fees)

ATTACHMENTS

A.

Resolution Amending Development Services Fee Schedules

B.

Proposed Planning Service Fee Schedule for FY 2004/2005

C.

Proposed Building Inspection Service Fee Schedule for FY 2004/2005

D.

Resolution Amending Parks and Recreation Fee Schedules

E.

Proposed Parks and Recreation Fee Schedule

F.

Proposed Coyote Point Marina Fee Schedule

COPIES

Associated General Contractors of California

Building and Construction Trades Council

Building Industry Association

Peninsula Builders Exchange