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CITY COUNCIL AGENDA ITEM NO. 27



Meeting Date: April 24, 2007

Subject/Title: Adopt a Resolution amending the 2006/07 Master Fee Schedule and Cost Allocation Plan adopted by Resolution No. 2006-198 by revising the planning fees. The proposed amendment will allow the City to recover staff costs associated with the processing of development applications for planning services.

Prepared by: Heidi Kline, Planning Manager

Submitted by: Howard Sword, Community Development Director


RECOMMENDATION
Adopt a Resolution making certain findings and amending the 2006/2007 Cost Allocation Plan by revising the planning fees.

BACKGROUND
State law requires that fees not exceed the estimated reasonable cost of providing the service. The purpose of a Cost Allocation Plan is to conform to state law and to have a method to recover direct and indirect costs associated with providing services and establish a framework for computing fees and charges. The Cost Allocation Plan computes two overhead factors, departmental and City-Wide, both of which are applied against direct costs to determine the total cost of providing a given unit of service. Departmental and City-Wide overhead factors are based on the distribution of expenditure categories including personnel, operating and ongoing capital costs.

In September of 2004, the City contracted with Maximus to update current City fees and charges. Maximus worked with City staff from each department to develop a system for updating the fee-for-service charges. City staff provided information relating to the actual time it takes to produce or complete each user fee or permit service. The hourly rate calculations were applied to the actual time estimates to come up with a total cost of providing each user fee activity.

Management Partners was consulted to review the recommendations by Maximus. Management Partners began the Revised Planning User Fee Study with a close review of the October 2005 study by Maximus. Informational meetings were then held with Planning Division staff by telephone and in person. Management Partners concluded that the majority of work completed by Maximus was satisfactory and should not be redone. However, critical items were identified within the study that necessitated further review and revision. As a result, City staff and Management Partners agreed that the Revised Planning User Fee Study would concentrate solely on rezoning, design review (residential and non-residential), and tentative map fees.

Based upon staff experience, it was identified that the time and permit demand estimates created for these three permit types were incorrect in light of current market conditions and the maturation of development in the City. Earlier estimates for these three areas, consisting of rezoning, design review and tentative maps, did not reflect current practices as they had evolved over the last two years. Therefore, City staff and Management Partners conducted further analysis to identify the total hours needed to complete each step in the review process.

Management Partners used the following method to evaluate the rezoning, design review, and tentative map fees:

1) Analysis of fee amount (as estimated by Maximus)
2) Processing time adjustment (as necessary)
3) Recalculation of base fee (Maximus, plus the cost of additional processing time)
4) Inflation adjustment (recalculated base fee, plus inflation)

In addition to evaluating each fee based on the aforementioned methodology, Management Partners analyzed the tiered structure of each fee. In two areas, we recommend the inclusion of an additional tier to recoup actual processing costs.

The Finance Department provided inflation figures. The Department also determined that the current cost data does not reflect a 5.2 percent increase in labor costs which occurred between the time that the original data by Maximus and the time of this report. The Finance Department further determined that despite routine adjustments, the current fees recover approximately 75% of actual costs.

The recommended fees in the Maximus study were believed to recover 100% of the costs in most cases. However, Management Partners, working with Finance staff, found that the lack of full cost recovery stems from assumptions that no longer accurately reflect the process and user demands. For example, while the total staff hours (and cost) were accounted for, variations between project types and time spent on projects were not reliably reflective of actual practice.

Management Partners determined that another problem relates to the original report’s calculation of total available staff hours for application processing. In all cases, fees were determined by estimating the amount of hours staff spent on processing applications and allocating the appropriate staff costs to the various planning fees. To determine the total hours that each staff member spends on applications, each employee’s annual 2,080 hours was reduced by vacation, sick leave, and general overhead (training, seminars, staff meetings, etc). The remaining hours provided the basis for allocating staff time and calculating planning fees.

Management Partners believes that the above calculation, while theoretically correct, is not reliably accurate. This has resulted in fees which do not recoup the actual processing costs. In reality, Planning Division staff works overtime and reduces the amount of time spent on general items, such as training and professional development to process applications. For these reasons, we conclude that additional hours should be factored into rezoning, design review and tentative map fees. In some cases, the amount of additional hours is 10 more than the Maximus estimate, but in other cases it is as high as 123 additional hours.

In the future, Management Partners recommends that Planning Division staff track the hours spent on processing applications by type. This information will provide data for the periodic rate adjustments and the next comprehensive fee study.


FISCAL IMPACT
The resultant approximately $80,000 increase in planning fees would have a positive fiscal impact on the City’s General Fund and help the City to cover its costs to provide planning services.

Attachments:
1. Resolution
2. Exhibit A, Proposed Amendment to the 2006/2007 Cost Allocation Plan for Planning Fees
3. Revised Planning User Fee Study – Report by Management Partners, dated November 29, 2006
4. Excerpt of User Fee Study FY 2005/06 for the Planning Department, prepared by Maximus, dated October 13, 2005
5. Planning Counter Handout with Proposed Universal Application and Fees for Planning Division
6. Existing Planning Fees as shown on Pages 196 through 201 of the 2006/07 Cost Allocation Plan and Schedule of Fees


RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD ADOPTING AN AMENDMENT TO THE 2006/2007 COST ALLOCATION PLAN, ADOPTING THE MAXIMUS USER FEE STUDY IN PART AND THE MANAGEMENT PARTNERS USER FEE STUDIES FOR COMPUTING FEES FOR THE CITY’S PLANNING DIVISION SERVICES AND REVISING THE CITY’S FEES FOR CERTAIN PLANNING SERVICES

WHEREAS, Government Code Sections 65104, 65909.5, 66014 and 66451.2 allow the City to establish fees to offset the City’s administrative costs in processing permits, licenses, subdivision maps and entitlements; and

WHEREAS, Brentwood Municipal Code § 17.800 requires payment of such processing fees in conjunction with any application submitted for permits, licenses, subdivision maps and entitlements; and

WHEREAS, on November 14, 2000, by Resolution No. 2198 the City Council adopted the DMG-Maximus Report for computing fees for City services and revising the City services fees; and

WHEREAS, the City has compiled certain Cost Allocation Plans, the most recent of which was adopted August 22, 2006, to compare direct and indirect administrative costs in providing various services to the community; and

WHEREAS, the City retained Maximus and Management Partners to work with City staff to review the City’s Planning Division processing fees; and

WHEREAS, City staff, Maximus, and Management Partners researched and developed costs incurred in response to requests for land use entitlements, permits, maps, licenses and entitlements, and which proposes a revised schedule of such fees; and

WHEREAS, the Reports and supporting data were available for public inspection and review for ten (10) days prior to this public hearing; and

WHEREAS, a Notice of Public Hearing was published in the Brentwood Press on April 13, 2007 and mailed to all interested parties, if any; in accordance with Government Code Sections 66016 and 66018; and

WHEREAS, the City Council has considered the information provided to it by those testifying, and has reviewed and considered the information provided in the staff report and staff presentation and has read and considered the Reports and supporting data at a Public Hearing held on April 24, 2007.

NOW, THEREFORE BE IT RESOLVED:

Section 1. Findings:

The Council makes each of the following findings:

A. The purpose of the processing fees is to support those City services which are undertaken as a direct or indirect result of members of the public using the services of the City, in particular the services of permits, licenses, subdivision maps and entitlements.

B. After considering the Report and supporting data and the testimony received at this public hearing, the Council approves and adopts the amendment to the 2006/ 2007 Cost Allocation Plan for Planning Fees and the Reports, attached hereto, and incorporates them herein, and further finds that future development in the City of Brentwood will generate a continued need for the services specified in the Report.

C. The Reports and the testimony establish:

1. That there is a reasonable relationship between the amount of the fee and the estimated reasonable cost of providing the type of service for which the fee is imposed; and

2. The amount of service provided does not exceed what is reasonably necessary in order to process the requested service;

3. That the cost estimates set forth in the 2006-07 Cost Allocation Plan and the Report are reasonable and best approximate the direct and indirect (overhead) costs of City staff and consultants for providing the necessary service to respond to the public’s requests.

D. The method of allocating the City’s administrative costs of processing service bears a fair and reasonable relationship to each member of the public’s burden on, and benefit from, the services requested by that member.

E. The fees do not exceed the estimated reasonable cost of providing the service for which the fee is charged.

Section 2. Fees Imposed:

A. Each person requesting a service in the City of Brentwood for which a fee is imposed pursuant to the Report shall pay the processing fee set forth in the attached Exhibit A, Planning Fees, Proposed Amendment to 2006/2007 Cost Allocation Plan.

B. On July 1 of each year, the fees shall be automatically adjusted by an amount equal to the percentage of increase or decrease in the consumer price index for this region, as last computed before the July 1 date.

C. The fees may also be adjusted if the City updates or modifies the Cost Allocation Plan or the Report and conducts a public hearing to implement a new or revised fee or fees based upon such update or modification.

D. The applicable fee shall be determined on the basis of the fee schedule in effect at the time the application is submitted to the City for the requested service. The fee shall be payable in full at the time the application is submitted.

E. The adoption of this Resolution does not affect the ability of the City to request an agreement between the applicant and the City to pay extraordinary processing costs and to establish deposit accounts.

F. Notwithstanding anything to the contrary herein, the fee for copying public records requested by a member of the public, shall not exceed the direct costs of duplication.

Section 3. Fee Adjustment or Waiver or Reimbursement:

A person subject to the fee imposed pursuant to this Resolution may apply to the City Council for adjustment to that fee, or a waiver of that fee, or reimbursement of part or all of the fee, solely by following the written protest procedure in the time and manner provided by Government Code Section 66020 and detailing the reasons for the adjustment, waiver or reimbursement.

A. A person subject to the fees imposed pursuant to this Resolution that desires an adjustment or waiver of such fees shall follow the protest procedure contained in Government Code Section 66020 (as may be amended), and within the time frame set forth in subsection (d) thereof (as may be amended) or risk the loss of the legal ability to request such adjustment or waiver. In no event shall the City waive its right to rely on other applicable limitations periods, including without limitation those set forth in Government Code Section 66022 (as may be amended).

B. A person may apply to the City Council for an adjustment to the fees by filing an application with the City Clerk. The application shall be made in writing and must identify the reasons why the City’s processing fees should be adjusted. At a minimum, the reasons should explain why a reasonable relationship is lacking between the service provided by the City, the costs incurred by the City for such service and the fees imposed by the City for such service.

C. The application shall be filed with the City Clerk no later than the deadline for filing protests as mentioned in subpart A. above. The City Clerk will present the application to the City’s Finance Director or designee.

D. The City’s Finance Director, or designee, shall make a written determination on the application. The City’s Finance Director, or designee, may authorize an adjustment so long as the adjustment does not exceed Ten Percent of the total amount of fees sought to be imposed by the City. Recommendations by the City’s Finance Director, or designee, for adjustments in excess of Ten Percent will be forwarded to the City Council for final determination. The method and timing of implementing the adjustment is subject to the discretion of the City’s Finance Director (or designee) or City Council where applicable.

E. Any adjustment granted is limited to the project as proposed. If there is any change in the project, the fee adjustment is suspended so that the City’s Finance Director, or City Council where applicable, may re-evaluate where the adjustment is still appropriate.

F. Decisions of the City’s Finance Director, or designee, are subject to appeal to the City Council so long as such appeal is made in writing and within 10 days of the decision.

Section 4. Use of Fee Revenues:

The revenues raised by payment of these fees, along with any interest earned, shall be used to pay for the City’s administrative costs spelled out in the Report, including without limitation the capital costs and labor and contract costs directly or indirectly associated with providing the requested service.

Section 5. Subsequent Analysis of the Fees:

The fees established herein are adopted and implemented by the Council in reliance on the comprehensive studies that have been prepared by the City and consultants to the City. During the coming years, the City will continue to gather additional information that may affect the nature, scope and type of services to be provided in response to requests of the public. Notwithstanding any term or condition of any permit, subdivision map, license or entitlement granted by the City, it is existing policy that the City Council may revise the fees to incorporate the findings and conclusions of further studies, as well as increases due to inflation, and that such revisions shall apply to any prior approved projects, as well as new projects.

Section 6. Effective Date of Revised Fees:

The fees shall be effective sixty (60) days after the adoption of this Resolution; provided, however, that, upon enactment of this Resolution, any person may pay the revised fees instead of the current fees.

Section 7. Severability:

Each component of the fees and all portions of this Resolution are severable. Should any individual component of the fee or other provision of this Resolution be adjudged to be invalid and unenforceable, the remaining provisions shall be and continue to be fully effective, and the fee shall be fully effective except as to that portion that has been judged to be invalid.

Section 8. Repeal of Inconsistent Resolutions

The portion of Resolution No. 2006-198 pertaining to Planning Fees is hereby repealed. The remainder of Resolution No. 2006-198 shall remain in full force and effect.

Section 9. Exemption from California Environmental Quality Act (CEQA):

The City Council finds that CEQA does not apply to the adoption of this Resolution, pursuant to Sections 15061 and 15273 of the State CEQA Guidelines because:

A. The fees established by this Resolution will be collected for the purposes of meeting operational expenses and maintaining service to those that request it; and

B. Because the fees authorized by this Resolution will be collected at the application stage of the project, CEQA review will take place during the processing of the project. Therefore, it can be seen with certainty that the adoption of this Resolution establishing processing fees will not have a significant effect on the environment.

Section 10. Statute of Limitations:

Any judicial action or proceeding to attack, review, set aside, void, or annul the fees established by this Resolution, or the Resolution itself, shall be commenced within one hundred twenty (120) days of the passage of this Resolution. Any action to attack an adjustment adopted pursuant to Sections 2 or 5 shall be commenced within one hundred twenty (120) days of the adjustment.


 

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