EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: April 19, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: Patrick Heisinger, Assistant City Manager
Greg Henry, Senior Management Analyst
SUBJECT: Comprehensive Fee Schedule Update
Recommendation
Adopt a Resolution adopting the Comprehensive Fee Schedule to become effective July 1, 2022.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Priority No. 2: Enhance Economic Vitality
Priority No. 3: Increase Organizational Effectiveness and Efficiency Priority No. 5: Improve Communication and Enhance Community Engagement Background
Cities collect user and regulatory fees and charges at rates generally intended to recover costs associated with the related City services and oversight; including building, planning, public works, regulatory oversight, and community and administrative services. The City’s Comprehensive Fee Schedule discloses fees charged for the following purposes:
User/Regulatory fees are charged by the City to the public for a service-related or regulated activity. User-fees are developed for specified services provided or required due to the request or action of an individual/entity, while regulatory fees are those charged to recover costs associated with the City’s power to govern certain activities, such as building code or environmental compliance.
User and regulatory fees for services and activities are imposed by California municipalities through provisions of the State Constitution. Cities may perform broad activities related to local policing power and other service authority as defined in California Constitution Article XI, Sections 7 and 9. Cities also establish fees for service through the framework defined in Article XIIIC, Section 1. Under Article XIIIC, §1 fees for service 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.
Development Impact fees are collected by the City to fund capital infrastructure project costs attributable development impacts. These development impact fees are typically due at the time of building permit issuance.
The purpose of these fees is to defray all or a portion of the cost of public facilities related to the development project. The legal requirements for enactment of an impact fee program are set forth in Government Code Sections §66000 - 66025 (the "Mitigation Fee Act"). The Mitigation Fee Act is commonly referred as “AB 1600”.
Primarily, a local government bears the burden of proving that a levy, charge, or other fee is not a tax, and that the amount is no more than necessary to cover the reasonable costs of the governmental activity.
In July 2020, the City Council passed Resolution No. 108-2020 adopting the first major revision of the City’s Comprehensive Fee Schedule, effective September 20,2020. The Fee Schedule was first adopted in 2012 with minor amendments, including periodic adjustments for inflation, and minor changes to parks, recreation, and housing fees.
Development impact fees are studied and adopted separately from user and regulatory fees and are generally amended annually by the change in a “construction cost index” or CCI.
On April 20, 2021, the City Council passed Resolution No. 60-2021 revising the City’s Comprehensive Fee Schedule, effective July 1, 2021. This update was mostly to adjust for inflation.
Analysis – User and Regulatory Fee Update
Independent fee studies are costly and time-consuming. In the interim periods between comprehensive studies, staff recommends the City review and compare regional price change indicators (i.e., consumer price index) to relevant General Fund cost changes to support cost updates and changes in user and regulatory fees on an annual basis.
Staff recommends the San Francisco-Oakland-Hayward CA, CPI-U twelve-month as the regional price change indicator. The February 2021, San Francisco-Oakland-Hayward CA, CPI-U is 5.2%, and staff is recommending the Council increase most user and regulatory fees by this amount, with the following fees excepted:
• Photocopy Fees
• Ellis Act Withdrawn Property Administrative Fee
• Returned Check Fees
• Overdue Invoice Fee
• Business License – First Time Application Fee
• Repossession Verification Fee
• Proof of Correction Citation
• Clearance Letter
Planning Fee Changes
The Planning Division is requesting minor changes and additions to certain planning fees.
New Fees (each are hourly at $308/hr):
• Initial SB 35 Pre-Application (hourly, 5 hr. minimum) o Explanation: SB 35 requires cities to quickly approve multi-family or mixed-use developments that meet objective zoning standards using only a ministerial review process.
o Reason: Fee is not provided in Fee Schedule for preliminary review for SB 35 projects, which are otherwise exempt from planning entitlements. o Staff Activity: Thorough review of complex applications, including coordination with other departments and outside agencies, similar to entitlement review process. Following the review, staff would issue a letter that would authorize the submittal of a building permit if deemed eligible.
• Initial Review for Accessory Dwelling Unit (ADU) (hourly, 2 hr. minimum) o Explanation: Consistent with the Municipal Code, new ADUs are required to obtain a zoning clearance to determine compliance with the Municipal Code and to deem eligibility to submit a building permit.
o Reason: There is no fee identified for the ADU Zoning Clearance Process. It takes staff approximately 2 hours to process a zoning clearance for ADUs.
Approval of the fee will facilitate the process.
o Staff Activity: Thorough review of complex applications, including coordination with other departments and outside agencies, similar to entitlement review process. Following the review, staff would issue a letter that would authorize the submittal of a building permit if deemed eligible.
• Zoning Clearance – Initial Administrative Review for Accessory Dwelling Unit (ADU) (hourly, 2 hr. minimum)
o Explanation: Consistent with the Municipal Code, new ADUs are required to obtain a zoning clearance to determine compliance with the Municipal Code and to deem eligibility to submit a building permit.
o Reason: There is no fee identified for the ADU Zoning Clearance Process. It takes staff approximately 2 hours to process a zoning clearance for ADUs.
Approval of the fee will facilitate the process.
o Staff Activity: The fee will enable staff to review proposed ADUs for compliance with the Municipal Code.
• Zoning Clearance – Additional Administrative Review for Accessory Dwelling Unit (ADU) (hourly, 2 hr. minimum)
o Explanation: Consistent with the Municipal Code, new ADUs are required to obtain a zoning clearance to determine compliance with the Municipal Code and to deem eligibility to submit a building permit.
o Reason: There is no fee identified for the ADU Zoning Clearance Process. It takes staff approximately 2 hours to process a zoning clearance for ADUs.
Approval of the fee will facilitate the process.
o Staff Activity: The fee will enable staff to review proposed ADUs for compliance with the Municipal Code.
• Zoning Clearance – SB9 (hourly, 3 hr. minimum)
o Explanation: SB 9 is a new state law that requires ministerial review for the certain types of development in the RLD zoning district. The State requires ministerial review for proposals be developed with two units and to be subdivided into two parcels, irrespective of local standards. In short, the law allows for two new types of development activities that must be reviewed ministerially without any discretionary action or public input.
o Reason: There is no fee identified for the Zoning Clearance Process. It takes staff at least 3 hours to process a zoning clearance. Approval of the fee will facilitate the process.
o Staff Activity: The fee will enable staff to review proposed developments otherwise exempt from planning entitlements for compliance with the Municipal Code.
Fee Updates:
• Appeal to the City Council – Update from current fee of $4,831 to $8,394 o Explanation: The purpose of this fee is to pay for staff time to prepare a project for a hearing for the appeal of a permit in front of the City Council. Based on a recent appeal for the Glory Mobilehome park, the $4,831 was not adequate to fund the work.
o Reason: The process for a City Council appeal is identical to the process for the Planning Commission review. So, it is proposed to make the fee the same.
Analysis – Development Impact Fees Update
In accordance with authorizing resolutions and ordinances for the development impact fees listed in the table below, staff is proposing an annual cost change to update impact fees based upon the reference price index indicator – in this case the Construction Cost Index (CCI). The impact fees, as increased by current year CCI, are incorporated as a separate chapter of the City Comprehensive Fee Schedule.
Resolution 108-2020, adopted July 30, 2020, increased the City’s impact fees by 1.6% in accordance with the April 13, 2020 CCI published by Engineering News Record.
Resolution 60-2021, adopted April 30, 2021, increased the City’s impact fees by 3.1% in accordance with the March 2021 CCI published by Engineering News Record.
Staff are recommending an 8.9% increase for FY 2022-23 in accordance with the March 2022 CCI published by Engineering News Record. The following table reflects the referenced authorizing code and resolutions:
Fee Type
Authorizing
Municipal
Code
Authorizing Fee
Setting and
Annual Increase
Parks & Trails
13.28.040 Reso - 5093 &
MC – 13 .28.100
Public Facilities
Storm Drainage:
Inside Ravenswood Business District
Outside Ravenswood Business District
Transportation
Water Capacity 13.24.100 Reso – 5004
Affordable Housing Commercial Linkage 18.40.010 Reso – 118-2020 Fiscal Impact
User and service fee revenues are expected to increase per 5.2% per activity across most divisions and programs. Impact fees will increase 8.9%, if collected.
Public Notice
The public was provided notice of this agenda item by publishing a notice of the hearing dates in the “San Mato County News” on April 9th and April 14th, sending notice to the Building Industry Association, and posting the proposed Comprehensive Fee Schedule update on the City website.
Environmental
The action being considered does not constitute a “Project” within the meaning of the California Environmental Quality Act (CEQA), pursuant to CEQA Guideline section 15378 (b)(5), in that it is a government administrative activity that will not result in direct or indirect changes in the environment.
Attachments
1. Resolution
2. Exhibit A East Palo Alto Comprehensive Fee Schedule Eff 07.01.2022