Camarillo City Council
AGENDA REPORT
Date: December 11, 2024
To: Honorable Mayor and City Councilmembers
From: Greg Ramirez, City Manager
Submitted by: Mark Uribe, Finance Director
David Sanchez, Community Development Director
Subject: Building and Safety Fees Study Update
BACKGROUND
The City’s current Building and Safety Fees were adopted in 2007, with the previous update occurring in 1996. The current fees are based on the Permit Fee Schedule and the 2007 International Code Council (ICC) Valuation Data Table, which reflects average construction cost across the United States.
Since then, the operating costs of the Building and Safety Division have increased due to:
1. Advancements in construction methods and materials, requiring additional staff time for plan checks and inspections.
2. The cost of utilities, materials, and staffing have increased in line with rising consumer prices.
To address these rising costs and ensure the City can continue to effectively service the community, it is essential to conduct a fee study to review and update the Building and Safety Fees accordingly.
Since July 1, 1994, the City of Camarillo has contracted with Charles Abbott Associates (“CAA”) to provide building and safety services, including plan checking, public counter customer service, permit issuance, field inspection and documentation. The current Professional Services Agreement No. 2024-12 was approved on June 26, 2024, for a three-year term and includes two one-year extensions subject to City Council approval.
Under this agreement CAA has committed to participating in the City’s Building and Safety Fee Study.
California cities are granted the authority to impose user fees and regulatory fees for services and activities they provide through provisions of the State Constitution. Cities are granted the ability to perform broad activities related to their local policing power and
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other service authority under Article XI, Sections 7 and 9. Additionally, cities are granted the ability to establish fees for service through the framework defined in Article XIIIB, Section 8. Under this latter framework, a fee may not exceed the estimated reasonable cost of providing the service or performing the activity. Fees must relate to a service or activity under the control of the individual/entity on which the fee is imposed.
On October 28, 2024, staff met with the Finance Committee to discuss the Building and Safety Fees update. The Finance Committee provided feedback for moving to full cost recovery as quickly as possible for building fees.
The presentation will provide a brief overview of the recommended methodology, and focus on the results of the fee study, considering the fees have been unchanged since 2007. The purpose of this presentation is to provide City Council with an update and solicit feedback. No action on fee amounts will be taken. A public hearing to consider adopting fee amounts will be scheduled in January.
DISCUSSION
In April 2024, the City engaged NBS Consultants to conduct a comprehensive Building Fee Study. The study includes a detailed review of time estimates, overhead costs, and direct labor costs. Overhead costs include support services that provide functions to the direct providers of public service, such as human resources, payroll, financial management, and other similar business functions. These costs are incorporated into the Cost of Service analysis for the direct providers of the service.
The next step after completing the Cost of Service analysis is to establish the fee. City Council Policy 3.01 includes an objective of 100% Cost Recovery to most fees.
Exceptions may be made to the 100% Cost Recovery Goal for fees that have a maximum amount set by State Law or where City Council feels 100% Cost Recovery may compromise compliance.
Since the fees were last updated in 2007, the overall cost of providing services exceeds the revenue from current fees. The Finance Committee discussed a "phase-in" approach, which will incrementally implement an increase to certain fees over multiple years; however, the Committee reached a consensus to address the costs with a single adjustment.
Cost of Service Analysis
A Cost of Service analysis calculates the full cost of providing governmental services by assessing direct costs (e.g., salaries and benefits) and indirect costs (e.g., office and equipment expenses). It uses a fully burdened labor rate, which reflects the total cost per labor hour, to determine the average cost of individual services. Time estimates are reviewed and combined with these rates to calculate the full cost of each service or activity.
Along with the Cost of Service analysis, staff proposed a transition from a construction valuation-based fee calculation methodology to a calculation methodology dependent on Building and Safety Fees Study Update
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square footage and occupancy classification. The proposed refinement in fee structure is consistent with refinements being made by jurisdictions throughout the State. While many agencies still successfully use a construction valuation-based fee calculation methodology, many agencies are moving toward the square footage and occupancy classification model. This type of fee structure results in fees that represent a clearer connection between the service provided and the fee collected, resulting in superior transparency and legal defensibility.
Cost Recovery Evaluation
Current levels of cost recovery from existing fee revenues are determined by comparing the existing fee for each service or activity – if a fee is imposed – to the average full cost of service quantified through this analysis. Cost recovery is expressed as a percentage of the full cost. A rate of 100% means that the full cost of service is recovered from the fee. When the rate is between 0% and 100%, fees partially cover the service cost, and the City subsidizes the remainder. Setting cost recovery targets for new or increased fees involves agency-specific judgments based on factors like City policies, revenue goals, economic objectives, community values, market conditions, and demand.
In determining whether to subsidize fees, the public and private benefits of the service or activity must be considered. When a service or activity completely benefits the public at large, it can be reasonably argued that there shall be no cost recovery from fees with a wide public-benefit service, and is best funded by the general resources of the City, such as General Fund revenues. Conversely, when a service or activity completely benefits an individual or entity, it can be argued reasonably that 100% of the cost shall be recovered from fees collected from the individual or entity.
Building Fee Study Conclusions
The Cost of Service analysis estimates that the City currently recovers approximately 48% of the total annual cost of providing services. Government Code 66015 sets a cap on photovoltaic fees, which will prohibit the City from recovering the cost that exceeds the cap, bringing the maximum fee recovery for the City down to approximately 97% of the City’s total annual cost of providing services. If the Council adopts all fees at the maximum of the Cost of Service, an additional $1.2 million may be recovered.
Additionally, two other fees were studied that will move the City toward full cost recovery.
The General Plan Fee covers the costs related to planning for new development and the Technology Fee covers the costs related to administering the systems in which building and land use permits are tracked, issued, and stored. At 100% recovery, the study determined that the General Plan Fee will be an additional 17.89% of permit costs and the Technology Fee will be an additional 14.44% of permit costs.
FISCAL IMPACT
There is no budget impact as a result of this action. With the current Building and Safety fee schedule, the City is not collecting the revenue required for Building and Safety Building and Safety Fees Study Update
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services. Future adoption of an updated fee schedule will have a positive impact on the budget and move the City toward full cost recovery for Building and Safety services.
RECOMMENDATION
Receive an update on the Building and Safety Fees Study and provide input to staff.
ATTACHMENTS
1. User Fee Study – Building and Safety Department
REFERENCE MATERIALS – AVAILABLE FOR REVIEW AT CITY HALL None