Memorandum
To: Jeff Thomas, Chief Building Official, Fairfield
From: Tony Thrasher, Principal Consultant, Willdan
Date: March 24, 2026, 2 p.m.
Subject: Willdan Responses to BIA Questions
The following is Willdan’s response to the Building Industry Association of the Bay Area’s (BIA) letter sent on March 25, 2026. Note that the decision to subsidize any fees included in the study is a policy decision up to the City Council. The recommendation of the study as determined by staff is full cost recovery since the services provided are private benefits related to regulatory compliance activities.
The City endeavors to continue to provide excellent regulatory services to the public. Therefore, it is essential that the City recover the cost of providing regulatory services to ensure that the existing service standard continues. Subsidies for such services can contribute to declining services standards and cause delays in plan check and inspection activity completion if the cost of such services are forced to compete with general benefit activities for a portion of the City’s general unobligated tax dollars. Regulatory compliance services are not general benefit activities.
Below are responses to the 23 questions under the 7 sections of concern by the BIA.
I. Cost Recovery Baseline and Supporting Documentation
1. The cost portion of the analysis utilized the budget of the Building department for FY 2026 excluding technology expenses, an allocated share of Community Development Administration for Admin support and compared that against the actual revenue received for providing inspection and plan check services for FY 2025.
2. The fiscal year 2026 budget can be used to determine that the expenses included in Appendix A are not above the adopted budget. The difference between Appendix A and the City budget is achieved by excluding contract services from overhead calculations.
3. The 2% referenced in the report is the average change in existing flat fees (set fee amount listed for service) comparing the total change in all flat fees to the total current existing fees treating each fee equally (irrespective of usage) only. It is not a statement of revenue effect.
Each fee listed has a full cost determination and so is restricted to full cost recovery or less on an individual fee basis. The valuation permit program is calculated separately and will be monitored on an annual basis and adjusted when needed to be at or below full cost recovery as policy dictates.
II. Overhead Allocation Methodology and Nexus to Building Services
4. The Cost Allocation Plan (CAP) allocation includes City Manager, Cable and Media Services, Human Resources, Finance Administration, Revenue, Accounting, Accounts Payable, Payroll/Purchasing, Operations Admin, Building Maintenance, Custodial Maintenance. All allocations in the CAP represent indirect support, as determined through a study that determined the reasonable allocation of indirect support to operating units. Such plans are reasonable for the determination of indirect support for user fee activities under California law.
5. CD admin was allocated based on the amount of personnel cost for all organization units they support. That includes Planning, Building, Business License, and Economic Development. Community Development Administration activities supporting the Building Division include departmental leadership, operational oversight, permit system management, staff supervision, and coordination of development services across divisions and departments. This is a sample of the functions necessary to support the delivery of Building Safety services including plan review, inspections, and permit issuance.
6. The allocations from the Cost Allocation Plan are reviewed by City auditors annually.
III. Productive Hours and Fully Burdened Hourly Rate Calculations
7. 1,650 is a reasonable amount reflective of reducing the total workable hours in a year by vacation, holidays, sick leave, and allowing for a couple breaks each day. The staff involved with providing services in the study do not perform daily timekeeping to allow for detailed attribution, which is typical for cities.
8. Reasonable estimates of time were provided by City staff that directly provide services to the public and multiplied by the respective fully burdened hourly rates to determine a reasonable estimate of cost to provide each service.
9. Fee determination is determined on an individual service request bases for flat fees and based on personnel explicitly budgeted to Building to provide services so there is no risk of including support of other budgeted activities or support for other City functions.
10. Building has 13 positions budgeted and vacant budgeted positions are intended to be filled in order to provide services for the fiscal year. A set standard of productive hours was used, not a department wide determination, so there is no effect on productive hour calculations.
IV. Public Information and General Public Benefit Cost Recovery
11. See question 5, as CD Admin was allocated.
12. Please provide page of cited reference in the City budget.
V. Fund Classification and the Limits of 100 percent Cost Recovery
13, 14. The Building budget is within the General Fund, and the City may charge up to the reasonable estimate of the full cost of providing regulatory compliance services.
VI. Phase-In of Fee Increases
15. The suggested fees in the report would place the City at the low end of fees for providing services in their area. This question states that there is only a 15% gap to full cost recovery but at the same time the increase needed to get to full cost is a meaningful amount, which is contradictory. The fee increase suggested is to close the 15% gap to achieve full cost recovery.
16. Each fee is detailed in the report, and no “phase in” to the suggested fee amount listed for each fee is being recommended.
17. Economic feasibility studies are not typically done in conjunction with a user fee study; the fee study is designed to establish the cost of providing services and ensures compliance with State law. The City has considered potential impacts of the proposed fee update, including its housing production goals and RHNA obligations. Building fees represent one component of overall development costs, and the proposed adjustments are modest when viewed across the full fee schedule.
VII. Peer Jurisdiction Comparison
A comparison was completed and presented in the study session on March 17, 2026 (video available online), and the only City that was less than Fairfield for the building plan Check and permit fees was Vacaville, who hasn’t done a fee study in almost a decade. 18, 19, 20. It is against the law for cities to set fees based on a comparison with their neighbors, or peers under any other characteristics. The study’s purpose was to determine the reasonable estimate of full cost of providing services for the City of Fairfield, and Fairfield alone as required by law. Since fee schedules are public information on each City’s website, the BIA is free to perform any additional comparisons.
VIII. Third-Party Contracting and Potential Double-Recovery
21. Contract services are used to provide some services as listed in the fee schedule, and the cost of such services are not included in the hourly rate calculations for City staff, and such costs are reflected directly in the cost of providing plan check and permit fees.
22. Consultant and contact service usage varies based on the needs of the project and such costs are reflected directly in the cost of providing plan check and permit fees. The consultant cost incurred that would be involved with providing Building services is not included in any overhead calculations.
23. See question 2. Building contract costs are excluded from fully burdened hourly rate calculations entirely.
Response to the conclusion in the BIA letter
The Bay Area BIA challenged the City of Hollister on their fees in 2019 alleging that the fees they adopted were not based on the reasonable cost of providing service. The City then contracted with Willdan in 2020 to do a cost study on the fees and subsequently adopted fees based on that study in 2021. Morgan Hill contracted with a different vendor in 2020/21 for their user fee study.
The fees included in this study are subject to a 60-day delay in implementation after Council adoption, if it is the will of the Council to adopt, on April 7, 2026, but the actual implementation date would be July 1, 2026, or 85 days after adoption. Since public hearing notice requirements require that the hearing is noticed 10 days in advance of the meeting, the public hearing has already been noticed and therefore must open on that date. The Council may open and then continue the hearing to a later date if it is their desire, but the City and Willdan have provided sufficient responses to the BIA’s questions above and believe that the 85 day delay in implementation is more than enough time to address any additional questions the BIA has.