Item No. 6
Town of Atherton
CITY COUNCIL STAFF REPORT – REGULAR AGENDA
TO: HONORABLE MAYOR AND CITY COUNCIL
GEORGE RODERICKS, CITY MANAGER
FROM: ROBERT OVADIA, PUBLIC WORKS DIRECTOR
DATE: JANUARY 21, 2026
SUBJECT: BUILDING AND LIFE SAFETY SERVICES
CONTRACTAMENDMENT WITH INTERWEST CONSULTING
GROUP
RECOMMENDATION
It is recommended that the Council approve an amendment to extend the Building and Life Safety Services Contract with Interwest Consulting Group for a period of three (3) years with allowance for extension for up to three (3) additional years, with compensation based on a fixed (65%) percentage of building fees collected; Direct the City Attorney to prepare the amendment; and Authorize the City Manager to execute the amendment.
BACKGROUND
Interwest Consulting Group (Interwest) has been providing Building and Life Safety Services for the Town since 2011. Atherton’s current services agreement with provides that Interwest is paid 58% of the first $1,000,000 in building fee revenue and 55% of building fee revenue in excess of $1,000,000. Additionally, the Town pays Interwest a flat fee per plan review and inspection service for various permits that are subsidized by the Town, such as solar installations, green energy upgrades (electric heat pump and water heaters), and accessory dwelling units. Interwest has held the above rates since the original contract was entered into.
Prior to expiration of the contract in 2023, Interwest advised the Town that the CPI and their cost of service had increased in excess of 33% over the course of the contract and requested an adjustment in their service fees to cover their additional costs of service. As the Town was in the process of completing its fee and cost of service analysis, and it was unknown how the building permit fees would change, Interwest agreed to maintain their current fees until the Town’s fee study was completed and a new fee schedule established. Though the new fee schedule was adopted and became effective on May 1, 2024, Interwest agreed to extend the contract on a monthto-month basis as they assessed the impacts of the fee adjustments against their operating costs.
Building and Life Safety Services
JANUARY 21, 2026
ANALYSIS
Service Delivery
Over the last year, Interwest has had several staff transitions and now has a core group of four (4) on-site personnel, including a Building Official, Permit Technician, and two inspectors.
Additionally, Interwest provides off-site plan review services related to building and life-safety.
Interwest continues to provide high quality services to Atherton residents, and as evidenced in the monthly reports, is able to consistently meet and/or exceed the standards set for permit plan reviews for initial and subsequent reviews for both major and minor permit applications. Interwest works closely with Town staff to provide integrated plan review and inspection services.
Staff does not recommend changes to services or service levels.
Compensation
As stated above, Interwest is paid 58% of the first $1,000,000 in building fee revenue and 55% of building fee revenue in excess of $1,000,000. Additionally, the Town pays Interwest a flat fee per plan review and inspection service for various permits that are subsidized by the Town, such as solar installations, green energy upgrades (electric heat pump and water heaters), and accessory dwelling units. Though Interwest has held the above rates since the original contract was entered into, they advised the Town in 2023 that the fees collected were insufficient to cover their costs.
As the Town was in the process of completing its fee and cost of service analysis, and it was unknown how the building permit fees would change, Interwest agreed to month-to-month extensions as the Town’s completed its fee study, updated the new fee schedule, and Interwest assessed the impacts of the fee adjustments against their operating costs.
Though the fee increases have assisted in reducing the financial gap, Interwest has requested an adjustment in the compensation rate associated with the extension and has offered two options as follows:
Option 1 – Building Fee Percentage + additional per application fees This option provides for a base compensation rate of revenue collected for Building Permit Services (plan review, permit issuance and inspection) plus per-unit charge for various subsidized permits:
• Base Compensation Rate = 60% of Building Fees collected by the Town • Additional plan review/inspection charges:
o ADU - $3,000 per unit
o JADU - $2,000 per unit
o Solar - $250 per application
o Green Mechanical, Electrical, Plumbing (MEP) - $250 per application Option 2 - Flat Building Fee Percentage
Building and Life Safety Services
JANUARY 21, 2026
This option provides for compensation solely based on a percentage of revenue collected for Building Permit services (plan review, permit issuance and inspection). This option would include coverage for the various subsidized permits:
• Compensation Rate = 65% of Building Fees collected by the Town Staff recommends the selection of Option 2 as it limits the Town’s liability and risk related to the compensation for services where the Town either does not collect fees or has subsidized the permit fee. Further, Option 2 provides a simpler calculation and auditing trail.
It is recommended that the City Council extend the Building and Life Safety Services Contract with Interwest Consulting Group for a period of three (3) years with the ability to extend the contract for up to three (3) additional one-year terms with compensation based on a fixed percentage (65%) of building fees collected by the Town.
FISCAL IMPACT
The cost associated with this agreement are directly correlated to Building and Life Safety Services permit activities (plan reviews, inspections and permit processing) and are covered by the revenue collected for development services.
The proposed contract amendment would increase the compensation rate to Interwest Group for Building and Life Safety Services to either:
Option 1.
60% of Building Permit Fee Revenue plus per unit/application charges. If this option is selected, though the compensation is predominantly tied to revenues collected, there is some risk related to the per unit/application charges as these numbers will fluctuate and potentially increase as more accessory dwelling units are constructed.
Option 2.
(Recommended) 65% of Building Permit Revenue with no additional per unit/application charges.
If this option is selected, compensation will be directly linked to revenue collected.
GOAL ALIGNMENT
This Report and its contents are in alignment with the following Council Policy Goals:
• Goal A - Preserve Small Town Character & Quality of Life • Goal C - Maintain Conservative Fiscal Policies and Financial Transparency
POLICY FOCUS
Building and Life Safety Services
JANUARY 21, 2026
The Building and Life Safety Services contract with Interwest Consulting Group has been in place since 2011 (14 years). Extension of the current contract with Interwest Consulting Group will ensure that the Town and its residents continue to receive high-quality services at competitive cost.
PUBLIC NOTICE
Public notification was achieved by posting the agenda, with this agenda item being listed, at least 72 hours prior to the meeting in print and electronically. Information about the project is also disseminated via the Town’s electronic News Flash and Atherton Online. There are approximately 1,200 subscribers to the Town’s electronic News Flash publications. Subscribers include residents as well as stakeholders –to include, but be not limited to, media outlets, school districts, Menlo Park Fire Protection District, service provides (water, power, and sewer), and regional elected officials.
COMMISSION/COMMITTEE FEEDBACK/REFERRAL
This item has not been before a Town Committee or Commission
ATTACHMENTS
1. Interwest Proposal Dated December 3, 2025