CITY COUNCIL STAFF REPORT
Meeting: April 19, 2022
Subject
Fiscal Year (FY) 2022-23 Fee Schedule Update
Recommended Action
Adopt Resolution No. 22-XXX approving FY 2022-23 Fee Schedules A, B, C, D, and E effective July 1, 2022.
Summary
User fees are reviewed each year in conjunction with budget preparation. City policy ensures that, to the extent possible, fees cover the cost of providing services. The majority of the fees prop osed for adoption are based on the estimated actual cost to perform the service. Some fees, such as those for recreational purposes, are based on market conditions or fees charged by outside service providers and other governments. Fees that do not generate sufficient revenue to cover the cost of providing the service are subsidized by the General Fund.
Background and Recommendation
The Fiscal Year (FY) 2016-17 Fee Schedule was revised after a comprehensive Fee Study was completed in conjunction with a Cost Allocation Study. Both studies relied upon the same data to determine costs that can be allocated between City departments and costs that can be recovered through fees charged to the public. These studies are conducted approximately every seven years. Staff has submitted a budget proposal in the FY 2022- 23 Proposed Budget for the next comprehensive fee study. If the budget proposal is approved, staff plans to develop a Request for Proposal ( RFP) in the first quarter of FY 2022-23. The study is expected to be completed prior to the end of FY 2022-23.
The City adjusts fees between studi es using either the Bay Area consumer price index (CPI), Bay Area construction cost index (CCI), or the estimated increase in budgeted labor costs. For FY 2022-23, the CPI increase is 5.2%, the CCI increase is 9.8%, and the labor cost increase is 1.0%, as shown below.
February
2021
February
2022
Index Increase % Increase
CPI for All Urban
Consumers (CPI-
U)
304.39 320.20 15.81 5.2%
Construction Cost
Index (CCI)
13,110.16 14,396.70 1,286.54 9.8%
Cost of Labor
Increase $37,422,3321 $37,781,3962 $359,064 1.0%
1 Base Salary and Benefits (FY 2021-22 Amended Budget as of 2/28/2022) 2 Base Salary and Benefits (FY 2022-23 Proposed Budget as of 2/28/2022)
The City is currently negotiating with its bargaining groups because labor agreements expire on June 30, 2022. Due to the uncertainty, the 1.0% labor cost increase only accounts for step increases and changes in CalPERS retirement rates. The labor cost increase does not include any cost-of-living adjustments (COLA) or equity adjustments. As a result, i n FY 2023-24, the labor cost factor will consist of a true-up for FY 2022-23 and the normal labor cost increase for FY 2023-24.
The CPI increase was applied to Schedule s A and C, the CCI increase was applied to Schedule B, and the estimated labor cost increase was applied to Schedules B, C, and D to produce the City' s recommendations described in more detail below . No escalator was applied to Schedule E, as Parks and Recreation fees are market driven in order to be competitive with entities that offer competing services.
In FY 2016-17, a comprehensive Fee Study was conducted by a City consultant, Matrix, which allowed the City Council to update the City fee schedules for FY 2016- 17. The changes to fees since FY 2016-17 are summarized in the table below:
Fiscal Year Schedule A –
General Fees
Schedule B –
Engineering
Fees
Schedule C –
Planning Fees
Schedule D –
Building Fees
2022-23
(proposed)
5.2% CPI 9.8% CCI
1.0% Estimated
Labor Cost
Increase
5.2% CPI
1.0% Estimated
Labor Cost
Increase
1.0% Estimated
Labor Cost
Increase
2021-22 1.6% CPI 2.5% CCI
5.7% Estimated
Labor Cost
Increase
1.6% CPI
5.7% Estimated
Labor Cost
Increase
5.7% Estimated
Labor Cost
Increase
2020-21 2.91% CPI 6.3% CCI
17.3% Estimated
Labor Cost
increase
17.3% Estimated
Labor Cost
increase
17.3% Estimated
Labor Cost
increase
Fiscal Year Schedule A –
General Fees
Schedule B –
Engineering
Fees
Schedule C –
Planning Fees
Schedule D –
Building Fees
2019-20 3.53% CPI 1.0% CCI
4.0% Estimated
Labor Cost
Increase
4.0% Estimated
Labor Cost
Increase
4.0% Estimated
Labor Cost
Increase
2018-19 3.55% CPI 3.5% CCI
4.1% Estimated
Labor Cost
Increase
4.1% Estimated
Labor Cost
Increase
4.1% Estimated
Labor Cost
Increase
2017-18 3.44% CPI 11.2% Estimated
Labor Cost
Increase
11.2% Estimated
Labor Cost
Increase
11.2% Estimated
Labor Cost
Increase
2016-17 Varied and comprehensive changes due to Fee Study.
New Fees and Substantial Changes
Schedule A – General: This schedule is being updated by CPI of 5.2% across all applicable fees. Increases to these fees are mostly impacted by the cost of materials or external prices that are not under the control of the City. The following addition is proposed for Schedule A:
• Animal Establishment Permit
o An "Animal Establishment Permit" category is being added. An existing fee, "Commercial Kennel Permit ," is being moved to this category. New fees for "Private Kennel," "Pet Shop," "Grooming Business," and "Horse Establishment" are also being added to this category. The new fees are proposed at the same rates as the "Commercial Kennel Permit."
Schedule B – Engineering: A 9.8% CCI or 1.0% labor cost increase has been applied for fees in Schedule B, except for Park Land Dedication In-Lieu fees.
• Park Land Dedication In-Lieu Fees
o Park Land Dedication Fees are calculated per Municipal Code section
13.08. On an annual basis, the Public Works Department updates the fair market value of land based on appraised values of land sales. In last year's appraisal, the land in Cupertino had a value of approximately $10 million/acre. This year's appraisal shows that property values are $13 million/acre, an increase of 30%. As a result, Park Land Dedication In-Lieu Fees are increasing by 30%.
Schedule C – Planning: A 1.0% labor cost increase for FY 2022-23 has been applied for all fees in Schedule C, except the Housing Mitigation In-lieu fees. The Housing Mitigation In-lieu fees increase annually (on July 1 of each year) by the Consumer Price Index (CPI)
for All Urban Consumers for San Francisco, CA , which is 5.2% for FY 2022- 23. The following change is proposed for Schedule C:
• Parcel Map: Subdivisions, including ministerial subdivisions - up to four (4) parcels (CMC Chapter 18.20).
o The definition of Parcel Map is being modified to add "ministerial subdivisions." The addition clarifies staff's earlier determination that the process of processing ministerial subdivisions closely matches existing parcel map processes. Therefore, the same fee would apply.
Schedule D – Building: The Building Fee Schedule contains four tables that have been numbered to facilitate reference between them. The tables are numbered as follows:
1. Table 1 – Plan Check Fees Only
2. Table 2 – Inspection Fees Only
3. Table 3 – Mechanical, Electrical and Plumbing Fees
4. Table 4 – Miscellaneous Items
The Schedule D fees have been increased by the 1.0% anticipated labor cost increases for FY 2022-23. If 1.0% of the original fee was less than $0.50, then the fee for FY 2022-23 did not increase since Schedule D fees are rounded to the nearest dollar.
The following fees are proposed additions to Schedule D:
Table 3 – Mechanical, Electrical, and Plumbing Fees
• Install/Relocate forced air or gravity-type furnace or burner (including attached ducts and vents) up to and including 100,000 Btu/h (each)
o The description is being modified to remove " or gravity-type." Gravity- type furnaces are no longer used.
• Repair/Alter/Add heating appliance, refrigeration unit, cooling unit, absorption unit, mini-split system/heat pump, or each heating, cooling, absorption, or evaporative cooling system, including installation of controls and/or ducts. o The description is being modified to change "split system" to "mini-split system/heat pump" and add "and/or ducts" for clarification. • Mechanical Permit Fee
o This fee is being added. It was inadvertently left off in the FY 2021- 22 fee schedule.
• Electrical Permit Fee
o This fee is being added. It was inadvertently left off in the FY 2021- 22 fee schedule.
• Plumbing/Gas Permit Fee
o This fee is being added. It was inadvertently left off in the FY 2021- 22 fee schedule.
Table 4 – Miscellaneous Items
• Accessory Dwelling Unit (ADU) - Plan Check Fees
o "Non Hillside" is being removed because the fee applies to ADUs in Non - Hillside and Hillside areas.
• Accessory Dwelling Unit (ADU) - Inspection Fees
o "Non Hillside" is being removed because the fee applies to ADUs in Non - Hillside and Hillside areas.
• Cellullar/Mobile Phone, alterations to existing facility o This fee is new. Currently, there is no fee for installing antennas on existing pole structures.
• Battery Energy Storage System
o This fee is increasing to align with the standard hourly rate. • Inspections: Courtesy Inspection - 2 hour minimum
o This fee is increasing to align with the inspection hourly rate. • Inspections: Outside of normal business hours (2 hour minimum) o This fee is increasing to align with the inspection hourly rate. • Expedite Plan Review
o This fee is being removed because the City does not offer expedited service. • Plan Review: Overtime Plan Review (2 hour minimum)
o This fee is increasing to align with the plan review hourly rate. • Plan Review: Pre-Submittal Plan Review (2 hour minimum) o This fee is increasing to align with the plan review hourly rate.
Schedule E – Parks and Recreation: City staff are proposing the following modifications to the schedule:
• Quinlan Community Center
o Establishment of fees for the Craft Room, the room's capacity matches Creekside Park building at 50 occupants maximum. The fees are proposed at the same rates.
• Monta Vista Recreation Center/Creekside Park Building/Wilson Park Building o Establishment of fees for the Monta Vista Kitchen and Room 5. The kitchen's capacity most closely matches the Senior Center's Classroom at 30 occupants maximum, so the fees are proposed at those rates. Room 5 most closely matches Creekside Park building, so fees are proposed at that rate.
• Senior Center
o The $7 Flex Pass is being replaced with a Drop-In Rate to more accurately adjust to the varying costs of classes and programs offered at the Senior Center. This rate is for members to drop into specific fitness classes listed in The 50+ Scene.
• Outdoor Facilities
o Field attendant fee amount is increasing from $17 to $18 per hour to align with minimum wage requirements.
o Establishment of picnic area rental fees for Creekside Park. New BBQ pits were installed, and the picnic area capacity matches Portal Park at 80 occupants maximum, so the fees are proposed at the same rate. • Sports Field Fees
o The sports field fees were updated to incorporate an hourly fee schedule starting in FY 2021 -22. However, this shift to an hourly rate resulted in increased costs for permitted field users. To ease this increase, City Council approved the proposed fees to be phased o ver two years, established at 50% in FY 2021-22 and 100% beginning in FY 2022-23.
• Park Special Events Permits
o Establishment of fees for the Civic Center Plaza for festivals and events.
The plaza's capacity matches half of Memorial Park at 500 or fewer attendees, so the fees are proposed at the same rate as the “half of Memorial Park” fee.
Sustainability Impact
None.
Fiscal Impact
Due to the proposed fee schedule increases, additional revenues of $92,662 in the General Fund and $158,000 in the Enterprise Funds are estimated in FY 2022 -23.
Revenues are based on a three-year historical average (FY 2019-20 to FY 2021- 22), accounting for the proposed increases. If the increases are not adopted, the cost of providing the related services will be further subsidized by the General Fund, and the service cost will compete with tax dollars used for City services benefitting the general public. Revenues derived from changes to Schedule E mainly increase Enterprise Funds of the City and not the General Fund.
The recommended increase in fees and estimated revenue are summarized as follows:
Fee Schedule Additional Revenue Factor and Basis
Schedule A – General $4,872 5.2% CPI for Bay Area
Schedule B – Engineering $17,628 9.8% CCI,
1.0% for labor costs
Schedule C – Planning $9,536 5.2% CPI,
1.0% for labor costs
Schedule D – Building $42,626 1.0% for labor costs
Schedule E – Parks &
Recreation
General Fund: $18,000,
Enterprise Funds: $158,000
Primarily market
driven
_____________________________________
Prepared by: Thomas Leung, Senior Management Analyst
Reviewed by: Kristina Alfaro, Director of Administrative Services Approved for Submission by: Jim Throop, City Manager
Attachments:
A – FY 22-23 Proposed Fee Schedule A – General (Redline) B – FY 22-23 Proposed Fee Schedule B – Engineering (Redline) C – FY 22-23 Proposed Fee Schedule C – Planning (Redline) D – FY 22-23 Proposed Fee Schedule D – Building (Redline) E – FY 22-23 Proposed Fee Schedule E – Parks & Recreation (Redline) F – FY 22-23 Proposed Fee Schedule A – General (Clean)
G – FY 22-23 Proposed Fee Schedule B – Engineering (Clean) H – FY 22-23 Proposed Fee Schedule C – Planning (Clean) I – FY 22-23 Proposed Fee Schedule D – Building (Clean) J – FY 22-23 Proposed Fee Schedule E – Parks & Recreation (Clean) K – User Fee Study 2016
L – Draft Resolution No. 22-XXX approving FY 22-23 Fee Schedules A, B, C, D, and E