HomeMy WebLinkAbout06/17/2003, PH 3A - 2003-05 FINANCIAL PLAN: ADOPTION OF FEE AMENDMENTS counat DW
6-17-03
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CITY O F SAN LUIS O B I S P O
FROM: Ken Hampian, City Administrative Officer
Bill Statler, Director of Finances
SUBJECT: 2003-05 FINANCIAL PLAN: ADOPTION OF FEE AMENDMENTS
CAO RECOMMENDATION
Adopt a resolution amending the City's master fee schedule and setting sewer service rates.
DISCUSSION
Background
General Fund. As an integral part of the City's budget balancing strategy for 2003-05, the
Council has conceptually approved changes in General Fund fees for planning, engineering,
recreation and fiber infrastructure protection
services. As shown in the sidebar graph, while BUDGET BALANCWG STRATEGY
expenditure reductions play the leading budget Closing the Gap
balancing role—accounting for about 75% of the El New
solution in closing an estimated $7 million gap— Rev,e^ues
15
new revenues are also an important part (15%) of
the solution. D Reserves o ap
11% 49%
Of the $1,059,400 in new revenues, about
$560,000 of these are covered by the attached I;Expenditures:114%
resolution. (Other actions by the Council will o opereling
rams
implement the balance of the new revenues, such Pr 5%
as increases in water, sewer and trash franchise
fees.)
Sewer Fund. As part of enterprise fund rate reviews on May 29, 2003, the Council conceptually
approved increases in sewer service charges of 5.5% in 2003-04 and 5.001b in 2004-05.
The Council's conceptual approvals of these increases followed extensive analyses and public
budget workshop and hearings on the proposed fee increases on April 10, May 6, May 22, May
29 and June 3. The purpose of the attached resolution is to formally implement these fee
amendments.
Summary of Proposed Fee Increases
As noted above, all of the proposed fee increases have been extensively analyzed and reviewed
by the Council at a number of public workshops and hearings. The following summarizes the
proposed changes.
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2003-05 Financial Plan: Adoption of Fee Amendments Page 2
Exhibit A: Planning Fees. There are five planning services covered by the proposed
amendments:
1. Higher cost recovery. The Council has conceptually approved moving from 45% to 100%
cost recovery for planning services, and this change is reflected in the Fiscal and Budget
Policies in the Preliminary Financial Plan. For most of the City's development review
functions, such as building, engineering and fire plan check and inspections, it is already the
City's policy to recover 100% of our costs through fees. In the past, the lower cost recovery
for planning services reflected the benefit that the community at-large receives from this
review process. On the other hand, if the applicant—who drives the need for the City to
incur this cost—pays less than the full cost, then general-purpose revenues are making-up the
difference.
Given the fiscal challenges facing us, the practical consequence of continuing lower cost
recovery will be deeper cuts in services that rely heavily on general-purpose revenues, such
as police, fire, street maintenance and parks. Moreover, since the General Fund subsidizes
such a large portion of planning costs, this means that this service is subject to cost cuts as
well, at a time when development activity is at an all-time high. For this reason, the Council
has conceptually approved moving from 45% to 100% cost recovery for planning services.
As noted above, this is consistent with existing policy, which distinguishes between service
beneficiaries (which in this case is largely the community, not the applicant) and service
drivers (those who cause the need for the service, which in this case is clearly the applicant).
Moreover, this will also benefit the development community, by helping to mitigate
reductions that might otherwise be required in our development review services as part of our
budget-balancing strategy.
Based on projected revenues at the current cost recovery rate of 45%, we project that moving
to 100% (under the current costing methodology) will generate about $500,000 in added
revenues annually. In implementing this added cost recovery, the Council has conceptually
approved an approach used by many other cities for planning cost recovery: collecting the
added fee at the building permit stage (as a percentage of the permit fee) rather than wholly
at the planning permit application stage. This has the benefit of recovering these added costs
when the applicant has a "real project" (rather than just the hoped-for one), and the applicant
can finance fees like other development costs. Using projected "baseline" annual revenues
from building and plan check fees of about $1.3 million, achieving the added revenue of
$500,000 for planning services results in a recommended assessment of 37.5% of the
building and plan check fee.
2. Appeal fees. The Council has considered the issue of "free" appeals for planning
applications several times in the past; and because of its unique policy sensitivity, further
consideration of setting this fee has been extensively discussed with the.Council in both the
Strategic Budget Direction budget workshop on April 10, 2003 and again in the Budget
Message of the Preliminary Financial Plan, distributed on May 16, 2003.
The average planning appeal costs the City about $4,000 each to process; and there is a
general belief that because they are free, we have more of them than warranted by the policy
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2003-05 Financial Plan: Adoption of Fee Amendments Page 3
circumstances alone. Based on a recent survey of the practices in over 80 California cities,
the overwhelming prevailing practice is to assess a fee of some kind, even if at a modest
level, with fees ranging from $50 to $2,088. Locally, we are the
only agency in the County that does not have an appeal fee.
Appeal fees in the seven local agencies (including the County) Arroyo Grande $195
range from $100 to $474. The Council has conceptually Atascadero $200
approved setting an appeal fee at $250: it reflects a very low cost Grover Beach $150
recovery of 6%7 and it is in the mid-range of the fees charged by Morro Bay:50%
of application fee
other local agencies. (minimum$120)
Paso Robles $100
The Council also requested background information on the Pismo Beach $300
number of appeals the City processes. The following chart St.O County: $474
summarizes planning-related appeals to the Council over the last
five years. As reflected in this chart, the Council hears about 12 appeals per year; and in
80% of the cases, the original decision is upheld. In addition to these appeals heard by the
Council, the Planning Advisory Body/Hearing Officer Upheld - Denied Total
Commission and Architectural Planning Commission 7 28 35
Review Commission (ARC) ARC 5 10 15
held 42 appeals of staff Cultural Heritage Committee 1 4 5
decisions during this same Administrative Hearing Officer 0 7 7
period, bringing the total Total 13 49 62
number of appeals processed
by Community Development to 104 over the last five years, or about 20 per year.
Given its relatively small revenue potential (estimated revenues are $5,000 annually at the
proposed 6% cost recovery level), this is largely a policy issue, not a budgetary one. As
such, the Council may want to defer consideration of setting this fee separately from the
budget process; or decide not to go forward with it at all.
3. Administrative approval applications. Our current fee schedule is largely based on when
advisory body or Council approvals are required. However, there are a number of
applications for approval that are made at an administrative level by the Community
Development Director for which we have no fee. We do about 10 of these per year, and
based on an analysis of preparation time, the Council has conceptually approved a fee of
$239, which will generate about$2,400 annually.
4. Mills Act application. We process about 4 applications annually for participation in this
property tax reduction program for qualifying historic properties. Based on an analysis of
research, review, evaluation and processing time, the Council has conceptually approved a
one-time application fee of $1,740, which is significantly less than the first-year annual
savings that will continue on indefinitely. This fee will generate about$7,000 annually.
5. Land use documentation requests. We commonly receive requests from lenders and others
for a detailed analysis of allowed uses on specific properties. These go far beyond simple
requests for zoning information. We prepare about 30 of these per year, and based on an
analysis of preparation time, the Council has conceptually approved a fee of$143, which will
generate about $4,300 annually.
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2003-05 Financial Plan: Adoption of Fee Amendments Page 4
Exhibit B: Engineering Fees. It is the City's current policy that engineering fees recover 100%
of costs. On May 6, 2003, we presented the Council with a comprehensive analysis of changes
needed in our engineering fees to achieve this goal. As we discussed with the Council at that
time, the methodology setting fees back in 1999 understated costs and overstated unit volumes.
However, due to unusually high development review activities, this problem was masked by
higher revenue collections. To correct for this, the Council conceptually approved increasing
engineering fees at that time. Additional information on the impact of these fees was provided to
the Council on May 22 and June 3. In this case, it is important to note that increasing
engineering fees will not result in additional revenues compared with prior forecasts; however,
not doing so will result in engineering fees that are about $250,000 less per year than our
"baseline" estimate.
Exhibit C. Recreation Fees. The Council has conceptually approved fee increases in two
recreation service areas:
1. Child care snack recovery._ This new fee will generate $25,000 annually in higher cost
recovery for federally-mandated snacks currently provided at no extra cost. For program
participants, this will result in a modest fee increase of $20 for the school-year programs
(compared with the current year-round fee of $1,300, assuming full attendance during the
year at $2.60 per hour); and $10 for summer camp programs (compared with the current fee
of$850, assuming full attendance for eight weeks).
2. Jack House wedding rental fees. The historic Jack House is a very popular location for
events throughout the year. From May through October, most weekend days are reserved for
weddings, receptions, teas and other celebrations. Reservations are often made a year in
advance and most users are one-time requests rather than repeat customers. Users typically pay
a reservation fee, rental of tables and chairs, security deposit, and are responsible for opening
and closing the facility by picking up a key. Public Works and Parks & Recreation staff check
the facility periodically throughout the weekend.
During a use in September 2002, the facility sustained moderate damages from a user group.
The nature of the damages could have been avoided had a staff person been assigned on site and
active in seeing that damage to trees, turf and the utility building were not occurring. Adding a
part-time attendant during the weekend uses would also bring enhanced customer service, as
someone would be present to assist with problems. Additional benefits include: decreasing staff
callbacks; improving security at the historic gardens and utility building; reducing labor and
materials needed to repair damages and decreasing time spent seeking restitution from users.
To offset the cost of on-site staff, we recommend an increased fee of $111 per day, which
reflects an average of 10 hours of staff time at Senior Recreation Leader level with associated
fringe benefits. For"weddings only," this will increase the daily fee already scheduled for July
1, 2003 from $364.00 to $475.00; and for "weddings/receptions" from $487.00 to $598.00. As
reflected in the attached resolution, the proposed effective date is July 1, 2003. However, we do
not recommend applying this fee to any events already reserved before then.
Both the Parks & Recreation Commission and Jack House Committee have been briefed on the
proposed fee increases, and they have no objections to them..
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2003-05 Financial Plan: Adoption of Fee Amendments Page 5
Exhibit D: Fiber Infrastructure Protection Fees. One of the operating cost changes
recommended in the Preliminary Financial Plan is contracting for services in order to protect the
City's investment in fiber infrastructure from damage by contractors working in the City's
streets. The Council has conceptually approved fully offsetting this cost by establishing user
fees for those needing this service. The proposed fee of $115 covers the direct cost of
contracting for this service ($26,000) plus 15% for contract administration ($4,000), based on an
estimate of 260 call-outs annually. This fee will be collected by Engineering at the
encroachment permit stage. Depending on the success of this program for our fiber
infrastructure, we may return to the Council for a similar contract and fee approach for other
City infrastructure, such as street lighting and traffic signal conduits.
Exhibit E. Sewer Service Charges. At the May 29 public hearing on enterprise fund programs,
projects, revenues and rates, the Council conceptually approved increasing monthly sewer
service charges by 5.5% in 2003-04 and 5.0% in 2004-05.
Effective Dates
Effective dates are noted on each fee exhibit. In most cases, fees are scheduled to be effective
July 1, 2003. However, under State law, development-related fees cannot become effective until
60 days after their adoption. For ease of implementation, we recommend an effective date for
these fees that begins at the fust of the month following this 60 day period: September 1, 2003.
FISCAL IMPACT
As noted above, the City's budget-balancing strategy and the resulting Preliminary Financial
Plan reflect the implementation of these revenues. Any significant changes from these will
require revisiting the expenditure reductions and other budget-balancers reflected in the
Financial Plan, which is also proposed for adoption on June 17, 2003.
ALTERNATIVES
Although the Council has already conceptually approved all of these changes, the option
certainly exists not to implement some or all of these. As discussed above, several of these—
such as appeal fees—are primarily policy issues rather than essential budget-balancers. Others,
however—such as higher cost recovery for planning fees—are significant slices of the budget-
balancing pie. As such, a decision not to implement them will require deeper reductions to the
significant service and cost reductions already reflected in the Financial Plan, which were
arrived at after many months of extensive public workshops and hearings.
ATTACHMENT
Resolution Amending the City's Master Fee Schedule and Setting Sewer Service Rates
Exhibits
A. Planning Fees
B. Engineering Fees
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2003-05 Financial Plan: Adoption of Fee Amendments Page 6
C. Recreation Fees
D. Fiber Infrastructure Protection Fees
E. Monthly Sewer Service Rates
G:Budget Folders/2003-05/Financial Plan/PreGminary Budget/Agenda Report:Fee Adoption,June 17,2003
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RESOLUTION NO. (2003 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AMENDING THE CITY'S MASTER FEE SCHEDULE AND
SETTING SEWER SERVICE RATES
WHEREAS, it is the policy of the City of San Luis Obispo to review General Fund
service charges on an ongoing basis and to adjust them as required to ensure that they remain
adequate to achieve adopted cost recovery goals; and
WHEREAS, in accordance with this policy the Council adopted Resolution No. 9130 on
November 21, 2000 updating the City's master fee schedule; and
WHEREAS, it is also the City's policy to review enterprise fund rates on an annual basis
to ensure that they remain adequate to achieve adopted cost recovery goals, which in the case of
the Sewer Fund is to set fees and rates at levels that will fully cover the total costs—including
operations, capital outlay and debt service—of providing sewer services; and
WHEREAS, as part of the 2003-05 Financial Plan process, the Council considered
amendments to the master fee schedule and monthly sewer service rates at several public budget
workshops and hearings, based on detailed analyses of funding requirements to meet cost
recovery goals.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
that City service charges and rates are hereby amended as set forth in the Exhibits attached
hereto: (A) Planning Fees; (B) Engineering Fees; (C) Recreation Fees; (D) Underground Service
Alert Marking Fees; and (E) Monthly Sewer Service Rates. Effective dates shall be as set forth
in the attached Exhibits.
Upon motion of seconded by and on the
following roll call vote:
AYES:
NOE&
ABSENT:
the foregoing resolution was adopted on June 17, 2003.
Mayor David F. Romero
ATTEST:
Lee Price, City Clerk
APPROVED AS TO FORM:
Jo an P. Lowell, City Attorney
EXHIBIT A
PLANNING FEE AMENDMENTS
Effective September 1, 2003
Service Fee
Development Review Fee for Planning Services: To be collected at the 37.5%of the combined
same time as building permit fees construction permit and
Notes: plan check fee
1. This fee is supplemental to planning application fees..
2. This fee is not applicable to building permits for additions or
alterations of an existing single-family dwelling unit.
3. This fee is not applicable to building permits for construction of
accessory structures serving a single-family dwelling unit,
including additions and alterations thereof.
4. This fee is not applicable to construction permits issued solely for
electrical,plumbing and mechanical work.
New Fees
Appeals $250
Administrative Approval Applications $239
Mills Act Participation Applications $1,740
Land Use Documentation Request $143
U U
EXHIBIT B
ENGINEERING FEE AMENDMENTS
Effective September I, 2003
service Fee
Improvement Plan Check $412 plus 1.9% of the
construction cost
Construction Inspection $3,192 plus 12.9% of the
construction cost
Final Maps
Parcel Map: Four Lots or Less $2,683
Tract Map: More Than Four Lots $2,683 plus$71 per lot or
common interest subdivision unit
Final Lot Line Adjustment Agreements
I to 9 Parcels $521
10 or More Parcels $721
Encroachment Permits
Curb,Gutter, and Sidewalk $189 plus $11.17 per lineal foot
Trenched or Bored Excavation $1,023 plus $2.42 per lineal foot
Annual Encroachment Permit for Utility Companies $6,537
All Other Encroachment Permits(Each) $328
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EXHIBIT C
RECREATION FEE AMENDMENTS
Effective July 1, 2003
Service Fee
Children's Services: Snack Cost Recovery
School Year Program Per Child $20.00
Summer Camp Program Per Child $10.00
Jack House Rental
(Note: Will only be applied to reservations made after July 1, 2003)
Weddings Only: Per Day $475.00
Weddings/Receptions: Per Day $598.00
EXHIBIT D
FIBER INFRASTRUCTURE PROTECTION FEES
Effective September 1, 2003
Service Fee
Fiber Infrastructure Protection Fee: Per Call-Out $115
EXHIBIT E
MONTHLY SEWER SERVICE RATES
Effective July 1, 2003 and July 1, 2004
Effective Date
2003Type of Account July 1, 2004
Single family dwelling, including single meter condominiums and $26.63 $27.96
townhouses
Multi-family dwelling in any duplex, apartment house or rooming 20.97 22.02
house: per each dwelling unit
Mobile home or trailer park: per dwelling unit 15.83 16.62
Public, private,or parochial school: per average daily attendance at the 3.00 3.15
school
All other accounts
Minimum charge 26.63 27.96
Additional charge for every 100 cubic feet in excess of 500 cubic 3.12 3.28
of metered water consumption
Each vehicle discharging sewer into City system
Minimum charge 87.73 92.12
Additional charge per 100 gallons in excess of 1;500 gallons 5.28 5.54
discharged
\ 1/
RECEIVED
JUN 17 200"
jLqCITY CLERK
San Luis Obispo Chamber Of Commerce
1039 Chorro Street • San Luis Obispo, California 93401-3278
(805) 781-2777 9 FAX (805) 543-1255 • TDD (805) 541-8416
June 17, 2003 David E. Garth, President/CEO
COUN IL ,GCDD DIR
Mayor Dave Romero 7CAO 25FIN DIR
Members of the City Council Z ACAO Q'FIRE CHIEF
ATTORNEY 8 PW DIR
990 Palm Street 0 CLERK/ORIG 2 POLICE CHF
San Luis Obispo, CA 93401 ❑ DEPT HEADS REC DIR
,12r-�It� ❑'UTIL DIR
Re: Increased cost recovery for planning services -- _ ;e HR DIR
Dear Mayor Romero and Council Members:
As part of your budget-balancing strategy,you have conceptually approved increasing cost
recovery for most planning services from 45% to 100%. This morning, our Board of Directors
concurred that raising fees and the cumulative effect of such action could have consequences
in the future. While we will not take a position for or against the 100% cost recovery plan,
we would like to communicate to you our general concern about increasing fees and the
cumulative effect that it may have on projects beneficial to the community.
We would like to highlight for you, three positive points that surfaced in our discussions.
First, we appreciate the fact that this proposal will help maintain staffing and a high level of
service in the community development department. It is very important to our members that
their projects are reviewed in a timely manner.
Next, we value the plan to collect the fees at the time when the building permit is issued. In
addition, it is very helpful to the community to have the long range planning fee cost
recovery remain at 25%.
We are aware of the difficulties that this year's budget discussions have presented and
compliment you and City staff on your combined efforts to maintain services while being
fiscally responsible.
Sincerely,
RED FILE
rrero
Board Chairperson MEETING AGENDA
DAM*03 ITEM #?1+ 3A
cc: Ken Hampian, CAO, City of San Luis Obispo
John Mandeville, Community Development Director
e-mail: slochamber@aslochamber.org • websites: www.slochamber.org www.visitslo.com