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DATE: March 25, 2024
TO: Mayor and Members of the City Council
VIA: Stefan Chatwin, City/District Manager
Marlene Subhashini, Assistant City/District Manager
FROM: Sofia Mangalam, Director, Community Development
SUBJECT: CHANGES TO THE MASTER FEES AND SERVICE CHARGES
SCHEDULE FOR THE COMMUNITY DEVELOPMENT DEPARTMENT
FOR FISCAL YEAR 2024-2025
RECOMMENDATION
Staff seeks policy direction from the City Council regarding changes to the Fees and Service Charges for the Community Development Department for FY 2024-2025 budget.
EXECUTIVE SUMMARY
Master Fee Schedule is a document that details fees for services that the city provides to its residents and customers. The Community Development Department recommends amending the Master Fees and Service Charge Schedule, including introducing new fees for various services and revising a few existing fees.
BACKGROUND
California State Law, Government Code 66014(a), stipulates that certain zoning and permit fees (“user fees”) charged by local agencies “…may not exceed the estimated reasonable cost of providing the service for which the fee is charged”.
User fees recover costs associated with the provision of specific services benefiting the user, thereby reducing the use of General Fund monies for such purposes. In addition to collecting the direct cost of labor and materials associated with processing and administering user services, it is common for local governments to recover support costs.
Building Fees
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Under the provisions of California Health and Safety Code section 17951, permit fees can only be those that defray the costs of enforcement and are not to be used for general revenue purposes. California Health and Safety Code section 17951 reads in part:
(a) “The governing body of any county or city, including a charter city, may prescribe fees for permits, certificates, or other forms or documents required or authorized by this part or rules and regulations adopted pursuant to this part. (b) The governing body of any county or city, including a charter city, or fire protection district, may prescribe fees to defray the costs of enforcement required by this part to be carried out by local enforcement agencies.
(c) The amount of the fees prescribed pursuant to subdivisions (a) and (b) shall not exceed the amount reasonably required to administer or process permits, certificates, or other forms or documents or to defray the costs of enforcement required by this part to be carried out by local enforcement agencies and shall not be levied for general revenue purposes. The fees shall be imposed under Section 66016 of the Government Code.”
ANALYSIS
The Community Development Department is organized into two (2) divisions - the Planning/Code Enforcement Division and Building Division.
1. The Planning/Code Enforcement Division is responsible for long-term planning regarding the growth and development of the City, for reviewing and processing applications for all land use and development proposals, and for maintaining the appearance of the community. Typical entitlement applications, such as Use Permits, Architectural Reviews, Variances are processed through the Planning Division.
2. The Building Division is responsible for ensuring that all construction projects permitted within the City comply with the California Building Code, the Foster City Municipal Code, and all other applicable codes and regulations. The Building Division oversees the plan check, permit issuance, and conduct inspections of all development projects and construction improvements to ensure compliance with the local and state building codes.
Building fees
In 2023, a User Fee Study was prepared that included a comprehensive assessment of the reasonable costs associated with each service provided. This evaluation included an in-depth analysis of the time spent on various tasks, such as reviewing plan submittals, conducting inspections, and the administrative work involved in issuing permits.
It became evident that the process for most permits involves the participation of multiple staff members, each dedicating varying amounts of time - ranging from a few minutes to several hours - to different aspects of the permit process. This multifaceted involvement underscores the complexity and resource-intensiveness of our operations. The result of the fee study was an updated master fee schedule which was approved by the City Council on 1 9
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May 01, 2023. The new updated fees became effective July 1, 2023. However, upon further review, it was noted that certain crucial activities and services currently lack specific fees in our approved master fee schedule.
New Fees
As discussed above, certain fees need to be added in order to recover costs of providing services, as described below:
•Alternate Method and Material Request (AMMR):
For certain building permits, staff receive requests for alternate methods and materials (AMMR) to mitigate a shortcoming in the design of a project with respect to an applicable building code. This needs the involvement of the Chief Building Official (CBO) and/or the Plans Examiner to evaluate the safety and compliance of the proposed alternatives.
Following are examples of AMMR fees charged by a few cities:
•City of San Mateo: $907.73 flat fee ( link to master fee schedule, page 2.5) •City of Burlingame: $351 per hour ( link to master fee schedule, page 4) Staff recommend adding the actual cost for AMMR applications. •New Address:
Staff receive requests for new addresses or to retire existing addresses to maintain an up-to-date address database. For example, a large commercial tenant wanting to divide or add a new space. Additionally, in residential usage, when a new ADU (Accessory Dwelling Unit) is created, it requires a new address for the ADU. To keep the address database current, staff need to create new addresses or retire unused addresses from the system. This process involves notifying the USPS, utility providers, emergency responders, and the County Assessor's office. Staff has created a new form for requests to either add a new address or retire an existing one. This often requires the attention of the building staff to assess the impact on city addressing systems and ensure compliance with regulations.
Following are examples of new address request fees charged by a few cities:
•City of San Mateo: $959.30 flat fee ( link to master fee schedule, page 10.10) •City of Burlingame: $378 flat fee ( link to master fee schedule, page 20) •City of San Bruno: Fully burdened hourly rate and/or actual consultant cost (link to master fee schedule, page 10)
Staff is recommending charging the actual cost for staff time spent on evaluating and processing addressing requests.
•Permit Extension:
In the past year, due to high inflation and high construction interest rates, staff received requests to extend permits which have been either approved or issued.
These requests involve checking the reason for the extension, the progress of the project, and any other relevant information.
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Following are examples of permit extension fees charged by a few cities:
•City of Palo Alto: $107.91 flat fee ( link to master fee schedule, page 54) •County of Santa Cruz: $96.35 flat fee ( link to building permit fees) •City of San Jose: $105 flat fee ( link to fee schedule, page 14) Staff recommends charging an hourly rate of the Permit Technician II to ensure that the city recovers the costs associated with processing permit extension requests, including administrative time and resources.
•Temporary Certificate of Occupancy (TCO) Request:
A TCO enables occupancy or partial occupancy of a building before the building project is completed and the CBO is required to assess safety and compliance issues before allowing the temporary occupancy. It is issued only when incidental construction, such as site and interior work not regulated by the code or exterior decoration not necessary to the integrity of the building, remain.
Following are examples of TCO fees charged by other cities:
•City of San Mateo: $481.92 flat fee (link to master fee schedule, page 2.6) •City of San Bruno: Fully burdened hourly rate and/or actual consultant cost (link to master fee schedule, page 10)
Staff recommend charging the actual cost to cover CBO's time and expertise in reviewing and issuing TCOs.
•Revision Reviews:
Staff frequently receive revisions to the initial set of construction plans that were initially submitted and approved as part of the building permit application. Upon receiving such requests, the Plans Examiner reviews and assesses the proposed changes for building codes and regulations.
Following are examples of AMMR fees charged by a few cities:
•City of San Mateo: $294.87/hour with minimum ½ hour ( link to master fee schedule, page 2.5)
•City of Burlingame: $351 per hour ( link to master fee schedule, page 5) •City of San Bruno: $218 per hour with minimum ½ hour ( link to master fee schedule, page 8)
Staff recommend charging the actual cost to cover staff time spent on reviewing the revisions.
Revised Fees
•Express Plan Review Fee:
Express Plan Review is a fast-track review process where various city departments, 1 9
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like Building, Planning, and Public Works, review building permit plans all at once.
This service is a great option for businesses and residents in our city, allowing them to speed up the approval of their permit applications. The service not only accelerates the review timeline but also provides applicants with a unique opportunity to address any necessary corrections or revisions immediately.
Furthermore, it allows for the issuance of permits on the same day as approved, facilitating a swift and efficient process for applicants.
The current master fee schedule in the City of Foster City's Building Division sets a flat fee of $161.00 for all express plan reviews. However, this is not justifiable considering the diverse types of projects offered under express reviews. This includes various residential projects like Accessory Dwelling Units (ADUs), Junior Accessory Dwelling Units (JADUs), Solar installations, electrical vehicle charging stations (EVCS) and more. Additionally, in commercial projects, it covers interior tenant improvements and minor structural work. The reason for revising the fee for Express Plan Review is rooted in the recognition of the substantial effort and resources that city staff dedicate to prioritizing these requests.
Cities Offering Express Review and Extra Fees: the City of San Jose provides residential express service and charges 1.5 times the current plan review with 1 hour minimum (link to master fee schedule, page 15).
Staff is recommending that for “Express Plan Review”, City charges additional 50% of regular plan checking fee except for minor projects like ADUs, JADUs, solar, and EVCS.
Exemption: Staff is recommending that certain permit types be exempted as they are subject to timeline requirements under state law, as follows:
oADUs/JADUs (AB 2221): The applications for ADU/JADUs must be approved/denied within 60 days of plan submission.
oEVCS (AB 970): For projects with 1-25 stations at a single site, applications must be reviewed for completeness within 5 business days and approved/denied within 20 business days.
•Penalty Fee
If work is completed without a building permit being issued, it is a violation and a stop work order is issued by the Code Enforcement Officer.
If the unpermitted work is residential, a building inspector performs a site inspection to access the construction work and informs the property owner/applicant what documents and information must be provided to the building division in order to obtain a building permit. A licensed engineer or architect may be required to certify plans and documents. Any work that cannot be verified by the inspector must be certified by a licensed engineer or architect to the satisfaction of the Building Official.
If the unpermitted work is commercial, a licensed architect or engineer must prepare and certify all plans and documents and submit them to the Building Official for 1 9
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review and approval. When the plans are approved by the Building Official, a building inspector performs the inspections. However, any construction which the inspector cannot verify needs to be qualified by a licensed engineer or architect to the satisfaction of the Building Official. This may require testing and/or demolition and often becomes very time-consuming.
Master Fee schedule includes penalty fees for work without permit, including the following:
a. R-1 $344 processing fee, + 200% of the permit fee
b. Others $688 processing fee, + 200% of the permit fee Following are examples of penalty fees charged by a few cities:
oCity of Menlo Park: A penalty fee equal to the amount of the permit fee will be imposed on projects undertaken without the appropriate permits ( link to master fee schedule, page 24)
oCity of San Bruno: Up to 10 X Permit Fee ( link to master fee schedule, page 10)
oCity and County of San Francisco: For work without a building permit, the penalty is nine times the issuance fee plus the original permit fee (link). oCity of Daly City: $1,180 with continued accrual, 31 to 60 days: $475, 61 to 90 days: $575 (link).
However, staff would like the City Council to consider making revisions to penalty fees. It has been noted that in many instances especially related to minor home repairs, the homeowners might not be aware of the requirements related to a building permit and causes undue burden on the homeowner. Staff is proposing the following revisions:
a. R-1 permits
permit applied* within 10 days $376 processing fee
permit applied* 11-30 days $376 processing fee + 100% permit fee permit applied* after 30 days $376 processing fee + 200% permit fee b. Others
permit applied* within 10 days $753 processing fee
permit applied* 10-30 days $753 processing fee + 100% permit fee permit applied* after 30 days $753 processing fee + 200% permit fee (Note * with complete drawings/documents and applicable fees) Staff wants to encourage the applicants/property owners to apply for the permits with complete drawings and applicable fees within ten (10) days and proposing to apply a flat fee of $376 for residential permits and $753 for all other permits, to cover the cost of the initial inspection(s) and permit processing, and subsequently, increase the penalty if the violation is not abated. The increase from $344 to $376 and $688 to $753 is after the annual adjustment to account for annual inflation based on prior year annual percentage (9.4% per Building Cost Index (BCI) published by the California Department of General 1 9
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Services, Real Estate Services Division).
Planning Fees
Specific to Planning Division, the schedule includes fees for planning, zoning, and subdivision activities and recently adopted development impact fees. In the current Planning Division fee schedule, there are 30-line items (CDP-01 through CDP-30). These fees are either flat fees or deposit-based fees.
•Deposit-based fees:
Deposit-based application fees are identified as “Actual Cost* Subject to a minimum Deposit at time of filing” under the applicable fee(s). The planning staff draws against these deposited funds at the staff hourly rates adopted by the City Council for actual time spent on the review of the application. The Applicant and/or Property Owner are responsible for any supplemental deposits necessary to cover any costs which were not covered by the initial deposit. If there are funds remaining in the Deposit account at the end of the review of the application, the funds are refunded to the Applicant and/or Property Owner. The deposit amount in the fee schedule depends on whether the specific planning action warrants staff-level approval (administrative) or approval from Planning Commission/City Council and ranges from $500 to $5,000.
The existing fee structure for subdivision mapping imposes a flat rate alongside the actual City expenditures incurred. However, this flat rate only covers two to four hours of staff time, which is quickly depleted. Moreover, given the complex nature of subdivision mapping, Public Works frequently engages third-party professional engineers and/or surveyors to ensure compliance with the Subdivision Map Act, Foster City Municipal Code, and technical accuracy.
Under the current fee structure, staff have to immediately request additional deposits from applicants to cover the costs of these third-party reviews. This procedural delay hampers the review process. To remedy this, the staff proposes a more realistic deposit, aligning with the minimum costs observed for such reviews in the past.
Implementing this adjustment would enable applicants to have a clearer understanding of the minimum associated costs prior to submitting their applications.
Additionally, it would allow staff to conduct reviews more efficiently, facilitating a smoother and more expedited process for all parties involved.
For Subdivision Map fees, staff is recommending a 2.6% general increase to the application fee and adding deposits amounts, including $10,000 for Tentative Subdivision Map, Tentative Parcel Map, Revision, and Extension fees and $5,000 for Lot Line Adjustment to cover the cost of staff time based on current staff’s hourly rates and third-party professional engineers. In addition, add a $5,000 deposit for third party reviews, when applicable.
a-d. Tentative Subdivision Map/Tentative Parcel Map/Tentative Subdivision or Parcel Map Revision/Tentative Subdivision or Parcel Map Extension - $831 Application Fee plus Actual Cost subject to a minimum $10,000 initial 1 9
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deposit.
e. Lot Line Adjustment - $488 Application Fee plus Actual Cost subject to a minimum $5,000 initial deposit.
f. Third Party Reviews - Actual Cost subject to a minimum $5,000 initial deposit. •Fee for Signage violations:
During the review of the current sign ordinance and drafting of the revisions, staff noted that there are fee violations, which are part of the sign ordinance and are not included in the master fee schedule, as follows:
1. A fine not exceeding one hundred dollars for a first violation;
2. A fine not exceeding two hundred dollars for a second violation of the same provision within one year; and
3. A fine not exceeding five hundred dollars for a third or subsequent violation of the same provision within one year.
4. For purposes of this section each day in which an illegal condition continues is a single violation and each subsequent day such illegal condition continues is a new and separate offense.
For transparency, staff would like these fees to be included in the master fee schedule under Planning fees.
Housing Fees
The Community Development Department (CDD) oversees Affordable Housing programs, including Deed Restricted Ownership Units, Below Market Rate (BMR) program, Existing Unit Purchase Program, HIP Home Sharing Program, and Housing Rehabilitation Loan Program. The staff is responsible for overseeing and monitoring existing BMR programs are aligned with existing property covenants and agreements.
On November 20, 2023, the City Council approved amendments to Title 17, Zoning Chapter 17.90 Below Market Rate Inclusionary Housing Program and revisions to BMR Administrative Procedures and Guidelines “BMR Guidelines”.
Staff recommends establishment of a BMR compliance and monitoring fee schedule to be added to the City’s Master Fee Schedule. The fee schedule would consist of a) an annual monitoring fee to cover staff time to review annual reports, conduct audits and inspections of BMR properties and files, and review and calculate rent and utility allowance calculations annually; and b) compliance fees, comprised of penalties on a per property and/or per unit basis that would be assessed for non-cooperation with staff enforcement efforts or continued or repeated non-compliance.
a) Monitoring fees
Staff recommends that monitoring fees only apply to future development projects, not existing BMR properties. In researching monitoring fees, staff found that fees range from 1 9
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$35 per unit to $150 per unit. The California Tax Credit Allocation Committee charges $415 per unit for their compliance monitoring fee. While no jurisdiction in San Mateo County was found to use monitoring fees at the present time, several jurisdictions are considering establishing monitoring fees for BMR developments. In Foster City, the Workforce Housing Affordable Housing Regulatory Agreement and Declaration of Covenants includes an annual monitoring fee of $70 per unit. However, the City does not charge this amount because it has retained ownership of the units.
Staff is recommending an annual monitoring fee of $72 per unit per year for the term of affordability with reasonable periodic increases for BMR units in all future affordable housing development agreements.
b) Compliance fees
It is critical to maintain the integrity of the City’s BMR Housing Program through compliance with regulatory agreements, the BMR Rental Housing and Ownership Housing Procedures and Guidelines, Municipal Code Chapter 17.90, and the Housing Element.
As per BMR guidelines, in the event that the City determines that BMR management practices are not in compliance with the provisions of the property’s affordability restrictions, or other regulatory document in effect, City staff shall notify the Property Manager with a Notice of Non-Compliance, and remedies. Property Managers/Owners that remain in a state of non-compliance for more than ninety (90) days after the date of a Notice of Non-Compliance or Denial of an Appeal of Non-Compliance or are notified by the City of non-compliance may be subject to fines.
To facilitate compliance, staff recommend assessing penalty fees on non-compliant owners/managers of both existing and future BMR properties as part of the enforcement process. Penalty fees would be assessed only if non-compliance remains uncured for more than 90 days. Examples of types of penalty fees include, but are not limited to:
•Unwarranted removal of a tenant from a BMR program. Penalty fees would be in addition to any credits owed to the tenant.
•Non-compliance with BMR Rental Procedures and Guidelines, such as failure to use required methods to determine eligibility or annual recertification of income, or failure to maintain files as required.
•Non-compliance with term or terms of deed restrictions or affordability agreements, such preferences, annual report deadlines, annual recertifications, adhering to occupancy standards, or overcharging of rent, or not handling over-income tenants as required, or not maintaining property or units as required. Penalty fees would be in addition to any credits owed to individual tenants.
•Late payment or non-payment of annual monitoring and compliance fees.
Staff recommends the establishment of compliance fees in the event of non-compliant BMR property owners and managers in the amount of $500 per incident (approximately two hours of staff time), plus the actual cost of City Attorney time. All revenues for BMR compliance and monitoring fees would be allocated to Affordable Housing Funds 122 and 1 9
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124.
These proposed fees are designed to align with the actual costs incurred by the city in providing these services while also offering transparency and fairness to applicants. They ensure that those requesting expedited or specialized services cover the additional expenses associated with their requests, ultimately benefiting both the city and its residents.
It shall be noted that as included in the master fee schedule, all the fees are subject to annual adjustment to account for annual inflation based on the prior year annual percentage (%). Upon approval, these new and revised fees will be in effect in 60 days.
CALIFORNIA ENVIRONMENTAL QUALITY ACT
This action is exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3) (general rule for projects that have no direct or reasonably foreseeably indirect physical change to the environment).
FISCAL IMPACT
The amended changes to the 2024-2025 Master Fees Schedule for Community Development will allow the City to more efficiently recover costs for materials and staff times associated with specific projects. Since the fees cover actual costs, there is no additional fiscal impact to the City or the applicant.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Smart Planning, Development, and the Local Economy