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HomeMy WebLinkAbout04/20/2004, PH2 - COST RECOVERY PROGRAM FOR CODE ENFORCEMENT council -�- acEnda nEpoRt C I T Y OF S AN L U IS O B I S P O FROM: John Mandeville, Community Development Direc� Deborah Linden, Chief of Police Prepared By: Tom Baasch, Chief Building Official Rob Bryn,Neighborhood Services Manager SUBJECT: COST RECOVERY PROGRAM FOR CODE ENFORCEMENT CAO RECOMMENDATION Adopt a resolution establishing a code enforcement fee in the amount of$264, and direct staff to collect the investigation fee outlined in Section 304.5.1 of the Uniform Administrative Code. REPORT-IN-BRIEF The CAO recommendation will establish a three-tiered approach for recovering the cost of code enforcement: Tier 1: For code violations not initiated by a complaint received or discovered by City staff, but are voluntarily corrected by the property owner, required permits will be subject only to the standard application and permit fees. An example would be when a new property owner comes forward to voluntarily correct existing violations disclosed at time of property transfer. Tier 2: For code enforcement cases where resolution of code violations is not voluntary but does not require more than one official written notice to the property owner, the building permit to correct the violation shall include payment of an investigation fee (equal to the amount of the permit fee) in addition to standard application and permit fees. The result is that the permit fee is doubled. Tier 3: For code enforcement cases where resolution of code violations requires two official written notices to motivate the property owner correct code violations, the property owner shall pay standard application and permit fees, an investigation fee(equal to the amount of the permit fee), and a code enforcement fee of$264. The result is a doubled permit fee plus $264. For violations that do not require a construction permit, a fee of$264 would be added to the Planning Application fee or billed to the property owner. DISCUSSION As part of the City's 2003-05 Major City Goal on Neighborhood Wellness, staff was directed to research and present to Council a plan to recover costs associated with code enforcement activities. The code enforcement workload is primarily processed by the Code Enforcement Officer in the Building and Safety Division of the Community Development Department (CDD), with support from members of the Student Neighborhood Assistance Program (SNAP), located in the Office of Neighborhood Services of the Police Department. .A-1 Cost Recovery for Code Enforcement Page 2 The primary objective of the CAO recommendation is to recover "unreasonable" costs incurred by the City in responding to code violations reported to or discovered by staff, including management of the code enforcement cases and the efforts leading to correction of violations. Staff believes that it is the uncooperative violators and/or more difficult enforcement cases that create excessive staff work and should be subject to fuller cost recovery. The analysis of code enforcement assumes that a minimum level of code enforcement is already built into the fees that support the Planning and Building & Safety programs. This concept is similar to our efforts to provide code information to applicants at the counter, provide code interpretations to designers, post information on the web site, etc. City departments involved in code enforcement utilize the VIOLTRAC software program. This system was developed to track and manage code enforcement cases and provides a common source of information so that each department is able to search the data base to determine if another department is already involved with the property owner, the status of any cases, if there is pending litigation or prior offences, etc. Linked to our Land Use GIS system and Building Permit program, VIOLTRAC allows users to track cases by address, compile reports, issue notification letters to violators, and store digital photographs. What is the cost of code enforcement? The City's Cost Allocation Plan sets labor rates during every two-year budget cycle, accounting for salary, benefits, and indirect costs (office space, utilities, telephone service, automobiles, computers, supplies, legal services, personnel administration, building maintenance, accounting, etc.). Using the Cost Allocation Plan approved on February 3, 2004 and the normal tasks associated with case management, the cost of code enforcement service can be established by reviewing the following steps and associated staff effort in a"typical" CDD enforcement case. 1) Intake. Receipt of the complaint, data entry into VIOLTRAC, and completion of associated paperwork by a Permit Technician requires 15 minutes. At the hourly rate of $46.43, the cost is $11.60. Initial processing of the complaint by the Code Enforcement Officer, including time to review complaint, research permit and code enforcement history, review the address file, assign a building inspector to investigate, etc., is 30 minutes. At the hourly rate of$76.01, the cost is $38.00. 2) Investigation. The time required for the initial investigation of the complaint by a Building Inspector will vary based on staff's ability to contact persons at the residence during the day and the level of cooperation. An average of one hour is required to interview occupants and inspect the alleged violation(s). The Building Inspector then returns to the office, researches automated and hard copy files to determine if the work was done without permits, and prepares a written report with digital photos. An average of 30 minutes is invested in the final report before forwarding to the Code Enforcement Officer. At the Building Inspector hourly rate of$66.75, the cost is $100.13. 3) Notification. The Code Enforcement Officer establishes proper owner information from the Land Use Inventory and county records or a title report, reviews the Building Inspector's work, and generates a notice of violation giving the property owner fifteen days a.-a Cost Recovery for Code Enforcement Page 3 to respond by obtaining a building permit to legalize the work or a demolition permit to remove it. Each notification requires approximately 30 minutes. At the hourly rate of $76.01, the cost is $38.00. A majority of the cases require two notifications before closure. 4) Follow Uv. At the conclusion of the code enforcement case, the Code Enforcement Officer reviews accumulated activity and the status of permits issued to remedy the violation. If resolution is determined satisfactory, final activity and appropriate comments are entered in the case record, and the file documents are transferred to an archive system, consuming an average of 30 minutes of staff time. At the hourly rate of$76.01, the cost is $38.00. Summary of Cost per Violation: Intake $ 49.60 Field Inspection $ 100.13 Notification(2) $ 76.01 Case Closure 38.00 Total Cost $ 263.74 The majority of the code enforcement cases processed by CDD require the issuance of a building permit to either legalize or demolish the unauthorized construction. For the "typical" CDD illegal garage conversion case, the property owner may be able to legalize the work by obtaining the necessary building, plumbing, electrical, and mechanical permits, or may chose to remedy the violation by demolishing the illegal work and returning the area to a garage use. Permit fees are based on the value of the work to be done—the greater the value, the higher the fee. The average permit for a garage conversion is approximately $140. The minimum permit fee to demolish an illegal conversion and return the space to a garage use is $40. How could we recover costs? Cost recovery should strive to meet the following four criteria: 1. Recovers costs incurred; 2. Is fair, and provides an incentive for prompt compliance; 3. Is feasible in that it works in harmony with other procedures and 4. Is supported by stakeholders in code enforcement. Existing Cost Recovery Authority Section 304.5.1 of the Uniform Administrative Code (UAC) adopted by the City states "whenever work for which a permit is required by this code has been commenced without first obtaining a permit, a special investigation shall be made before a permit may be issued for such work." Section 304.5.2 establishes that "an investigation fee, in addition to the permit fee, shall be collected whether or not a permit is then or subsequently issued. The investigation fee shall be equal to the amount of the permit fee required by this code." Therefore, the more extensive the work done without permit, the greater the "investigation fee". From the inception of the current code enforcement program (1989), department practice has been to not assess the investigation fee. This policy, as an effort to gain acceptance and a success record, was seen as an essential tool in negotiating a violator's cooperation in correcting a - 3 Cost Recovery for Code Enforcement Page 4 violations. However, after fifteen years of success, the code enforcement program is established. It is now appropriate for the costs of the program to be shouldered by those that cause the need for code enforcement. As an enforcement tool, the City adopted an administrative citation program in 2002. Revenue from this enforcement tool could yield cost recovery of a minimum of$100 per case, and up to $800 if the violator is uncooperative and the violation persists. While assessment of the investigation fee will meet several of the criteria for cost recovery, by itself it does not fully recover the costs of code enforcement nor is it applicable to cases that do not require a building permit to remedy the violation. For example, a permit to authorize work done without permit in a typical illegal garage conversion would include an investigation fee of $140. A permit to demolish the illegal improvements would include an investigation fee of$40. Neither of these is adequate to cover the minimum City cost of$263.74 incurred in processing the code enforcement case. Issuance of an administrative citation for lack of compliance may generate $100 of revenue, but the citation is not intended to be routine in nature and likely inappropriate where violators are ignorant of the regulations. These programs do not meet the first and second desired program criteria. The existing programs are also not fair in that they treat those who readily comply with a notice to correct the same as those who avoid compliance. Recommended Cost Recovery Program Staff is recommending a two-step plan to recover the cost of code enforcement. The first step changes current practice and directs that all construction permits issued in response to a code enforcement complaint include the payment of the investigation fee as outlined in UAC Section 304.5.1. The second part is setting an additional "code enforcement fee" of$264 for all code enforcement cases that require the issuance of a second written notice to correct a violation. The fee would be collected with either a planning application submittal, issuance of a construction permit, or mailing of an invoice, as applicable. For example, issuance of a building permit to correct the illegal garage conversion scenario by removing improvements and returning the area to garage use, where a second written notice was required to get the attention of an uncooperative building owner, would require payment of a permit fee of$40, and investigation fee of $40, and a code enforcement fee of $264. Not all violations are cleared through the building permit process. Where two written notices are necessary to motivate the violator, resolution of a zoning code violation by planning application approval only would include collection of the code enforcement fee at submittal of the planning application; if a planning application is not required, an invoice will be sent to the violator. For those who voluntarily comply with code enforcement requirements, this approach would maintain the status quo of not incurring added fees. For those cases where the property owner cooperates in response to a complaint, this approach would allow them to pay only the investigation fee if no second notice to correct is necessary. This will continue to give staff the ability to encourage compliance by offering violators the ability to save additional fees and apply the savings to the cost of correcting the violations. For those who continue to be uncooperative after the first notice, this approach would result in greater cost recovery. The administrative citation program will continue as a cost recovery component, but, again, is 4-L� Cost Recovery for Code Enforcement Page 5 not intended to be routine in nature and likely inappropriate where violators are ignorant of the regulations. Does the Recommended Fee Program Satisfy Program Criteria? Recovers Costs Incurred The recommendation will not recover the full cost of code enforcement, since the initial analysis assumed that a minimum effort is included in existing permit and application fees. Cooperative compliance does not burden staff. The costs of pursuing the uncooperative violators will be recovered under the recommended action. Fairness Again, since the initial analysis assumed that a minimum effort is included in existing permit and application fees, the recommended action is fair to those that are cooperative and eager to comply. Uncooperative violators should bear the City's greater cost of achieving compliance. And in this regard, it is important to keep in mind that "the City" really represents the resources of all citizens — citizens who ultimately bear the cost of enforcement against chronic violators. Thus the program brings greater fairness to the community as a whole. Is Feasible in that it Works in Harmony with Other Procedures The recommended flat fee and change in practice is compatible with fee assessment procedures currently in place when planning applications are received and building permits are issued.. Is Supported by Stakeholders in Code Enforcement Obviously, violators subject to the recommended fee will not be supportive, but Community Development staff and organizations close to violation issues, such as Residents for Quality Neighborhoods support recovery efforts for cases involving the uncooperative violator. How Do Other Cities Recover Cost? Thirteen jurisdictions in the State responded to our survey to determine what other cities have established for cost recovery. The respondents included the cities of Morro Bay, Pismo Beach, Burbank, Camarillo, LaQuinta, Milbrae, San Rafael, Sunnyvale, Delmar, Moorpark, Newport Beach, and Glendale, as well as the counties of San Luis Obispo and Santa Barbara. Results found that only three, including the County of San Luis Obispo, had some type of cost recovery effort based on a flat rate or hourly billing. Many rely on the standard code provision assessing an investigation fee equal to the permit fee. However, cities in the survey recognized that 100% cost recovery for code enforcement overall is difficult to achieve. FISCAL IMPACT Staff estimates that 40% of the code enforcement cases require a second written notice. Over the last three fiscal periods, the Community Development Department code enforcement operation processed an average of 403 cases per period, with an average of 161 cases requiring a second notice. Code enforcement fees for "second notice" cases will generate approximately 542,000 annually in revenue towards cost recovery. Investigation fees are difficult to project, but staff a� s� Cost Recovery for Code Enforcement Page 6 estimates that 75% of the cases will require a building permit. At an average investigation fee of $90 paid with each building permit, an additional$27,000 per year in revenue will offset the cost of code enforcement. Further, there will be some level of cost recovery from violations that are not remedied by a planning application or construction permit, and staff conservatively estimates this amount at$6,000. Accordingly, total increased cost recovery under the recommended program will be about$75,000. CONCURRENCES The Finance and Information Technology Department concurs with the recommended action. Staff discussed the three-tier fee concept with Residents for Quality Neighborhoods and they expressed support for the recommendation. ALTERNATIVES 1. Keep the Current Program. Because this action would not achieve the goal of increasing cost recovery for code enforcement programs, this alternative is not recommended. 2. Assess a Code Enforcement Fee for All Code Enforcement Cases. Because assessment of the same fee to all enforcement cases does not correlate to varying degrees of staff effort to obtain resolution of the violation, as well as the difficulty in administering a complicated fee schedule that may or may not address all situations, this alternative is not recommended. 3. Track Time Svent and Invoice the Proverty Owner. The VIOLTRAC software could be modified to provide a tally of time spent by staff in the pursuit of resolution of the violation. Each activity entered in the case management system would include a field to record time spent in 15-minute increments. As a condition of permit issuance, the accumulated staff costs for processing the case would be paid along with regular permit fees. However, the issuance of a permit does not close the enforcement case; additional effort may be expended by code enforcement staff in prodding the violator to complete the work under the permit. At the end of the case, after all violations are corrected, the system could generate an invoice showing the hours billed. If the violator refuses to pay, the bill would be followed up via normal collection procedures by the Finance Division. Because of the staff burden of accounting for time spent on each case and the difficulty in collecting costs after permit issuance, this alternative does not meet the criteria for working in harmony with existing process and procedures, and is not recommended. ATTACHMENT Resolution a-� MACHN i RESOLUTION NO. (2004 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AMENDING THE CITY'S MASTER FEE SCHEDULE BY ESTABLISHING A CODE ENFORCEMENT FEE FOR COMPLIANCE WITH ZONING,PLANNING AND BUILDING CODES WHEREAS, it is the policy of the City of San Luis Obispo to review 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, the City of San Luis Obispo Municipal Code authorizes the establishment of various fees for delivery of municipal services; and WHEREAS, the Director of Community Development has determined that the adoption of the proposed development fee is statutorily exempt from the provisions of the California Environmental Quality Act (CEQA) under Section 15273 of the State CEQA Guidelines as the purpose of theses charges is to meet operating expenses. WHEREAS, the Council considered amendments to the master fee schedule at a public hearing on April 20, 2004 based on a detailed analysis of costs and funding requirements to meet cost recovery goals for code enforcement. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo that the City's master fee schedule is hereby amended to include a Code Enforcement Fee as shown in Exhibit A, effective July 1,2004. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted on April 20, 2004. Mayor David F. Romero ATTEST: Lee Price, City Clerk APPROVED AS TO FORM: Jo P. Lowell, City Attorney C � 1 Resolution No. (2004 Series) Page 2 EXHIBIT A Amend the BUILDING& SAFETY FEE SCHEDULE to add: Code Enforcement Fees When two written notices to correct a code violation have been issued, a Code Enforcement Fee of $264.00 shall be paid at time of planning application submittal or construction permit issuance necessary for correction of the violation. For assessment of this fee, construction permit shall include building, electrical, plumbing, mechanical, sign, demolition, and grading permits. For code violations not requiring a planning application or construction permit for resolution, said fee shall be paid on receipt of an invoice. Construction permits issued for correction of code violations when no written notices have issued shall not be subject to the investigation fee established in Section 304.5.2 of the Uniform Administrative Code. a -�