Fremont City Council Meeting: 05/07/24 07:00 PM
3300 Capitol Avenue Div/Dept: Community Development
Fremont, CA 94538 Category: Fees & Rates
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 4864) DOC ID: 4864
Updated: 5/2/2024 4:58 PM by Dina Lewis Page 1
AMENDMENT TO MASTER FEE SCHEDULE – Public Hearing (Published Notice) to Consider an Amendment to Master Fee Resolution 8672 (Master Fee Schedule) to Update Building and Planning User Fees to Reflect Updated Hourly Costs, Address Recent State Law Changes for Certain Fees, Establish New Fees for New Services, and Simplify Fee Descriptions and Methodology. The Proposed Action is Exempt from the California Environmental Quality Act (CEQA) per CEQA Guidelines 15378 and 15061(b)(3)
Contact Persons:
Name: Jennifer Craven Dan Schoenholz
Title: Business Manager Community Development Director
Div/Dept: Community Development Community Development
Phone: 510-494-4554 510-494-4438
E-Mail: [email protected] [email protected]
Executive Summary: The proposed action is an update to Building and Planning user fees to ensure recovery of the costs associated with processing permits and entitlements. These fees fund the services provided by the Building and Planning Divisions.
This proposed update does the following:
• Updates hourly rates and (in some cases) the estimated staff time used to calculate Planning and Building flat fees and deposit-based fees; • Establishes new sub-categories of Planning deposits to better align deposit amounts with average project billings;
• Establishes new and modified fees to address service modifications driven by changes in State law;
• Modifies a number of existing fees including those for “trade” plan reviews and inspections and Express Permits;
• Modifies the Community Planning Fee to include Climate Action Plan implementation as an eligible use of fee revenues;
• Eliminates obsolete fees (e.g., those related to handling paper records); • Establishes a number of new fees;
• Clarifies and modifies fees related to appeals; and
• Reorganizes the fee schedule to combine all development-related fees in one section.
Staff recommends the City Council approve the fee changes discussed in the report and listed in Attachment 1. These fee adjustments would be effective 60 days from the date of Council action.
BACKGROUND: The Development Cost Center (DCC) is comprised of the Planning, Building, and Engineering funds. The DCC provides development permitting services to developers, property owners, and the City’s own public works projects. Council policy requires that DCC revenues cover its costs, and that the DCC maintains a contingency reserve equal to at least 25% of its annual operating expenses to help mitigate the effects of economic downturns and variability in development activity.
Council Staff Report (ID # 4864) Meeting of May 7, 2024 Updated: 5/2/2024 4:58 PM by Dina Lewis Page 2
Building Fees: The Building Division’s core responsibility is enforcing the California Building and Fire Codes, including local amendments, through its construction/plan review, permitting, and inspection services. Building’s operations are funded entirely by three types of fees: 1) fees based on the project’s construction valuation; 2) flat fees based on the number of “widgets” being installed (e.g., switches, circuits) or on the average time required to provide the service; and, 3) hourly rate fees for certain plan checks and inspections. Fees based on construction valuation generate about 70% of Building’s revenue, with flat and hourly rate fees comprising the remaining 30%.
Planning and Engineering Fees: Planning and Engineering development services are funded by user fees and a General Fund allocation to support general customer service and City-initiated projects and initiatives. Planning user fees are comprised of both flat fees and deposit-based fees.
Flat fees are applied to requests that are routine to process and where the staff time involved is predictable. Examples of flat fee projects are temporary signs and home occupation permits.
Deposit-based fees are applied to projects that are more complicated and varied, making it difficult to estimate the full cost recovery amount when the application is initially submitted.
For these projects, applicants provide a deposit at submittal to set up a project account, and then are billed for time spent on the project once the deposit is exhausted. If any deposit monies remain, they are refunded. Examples of projects utilizing deposit-based fees are General Plan amendments, conditional use permits, and design review.
Planning, Building, and some general development fees (applicable to most permits), are proposed to be adjusted or established as part of this Master Fee Schedule amendment, as described below.
DISCUSSION/ANALYSIS: The majority of Building fees were last updated in 2004 and Planning flat fee and hourly rate fees were last updated in 2014. As described below, the proposed update will ensure that fees reflect current labor costs; changes in the way the DCC provides services; and changes in State law. It should be noted that the proposed update does not propose changes to Building fees that are based on construction valuation.
The recommended fees in this action do not exceed the cost to the City to provide these services to the public.
Updates to Hourly Rates: This amendment will update all fees calculated using hourly labor rates in both the Planning and Building fee schedules. Job classifications used as the basis for each fee are identified in the footnotes and reflect the position most likely to provide the service. Most Planning flat and hourly rate fees are based on the Planner II rate.
Most Building flat and hourly rate fees are based on the Community Development Technician, Plan Check Professional, and Building Inspector II positions, depending on the service provided (e.g., permit processing, plan check, and inspection, respectively).
New Sub-Categories to Better Align Deposits with Costs: For Planning fees, most services are deposit-based. Staff has identified some deposit categories that are currently quite broad and, if broken into sub-categories, would lower the deposit amount for certain projects. For example, the Design Review Limited category requires a deposit of $3,120.
Council Staff Report (ID # 4864) Meeting of May 7, 2024 Updated: 5/2/2024 4:58 PM by Dina Lewis Page 3
Staff has analyzed the different types of design reviews that fall under this category and determined that the average cost for accessory dwelling units is $2,000, for one-story additions it is $2,500, and for commercial projects it is $5,000. Staff is recommending that the Design Review Limited deposit (and several other existing deposit categories) be split into sub- categories so that deposits are better aligned with average costs.
Fee Adjustments/New Fees Driven by Changes in State Law: Over the past several years, the State has enacted numerous changes to laws related to development permitting.
Recommended fee revisions due to changes in State law are listed below. All recommended fees are based on the position expected to perform the work and (for flat fees) the estimated time needed to complete the work.
• AB2234 Post Entitlement Permit Completeness Review: AB2234 requires local agencies to establish complete submittal lists for permits required after a Planning entitlement has been approved. Staff is recommending a new flat fee of $128 to reflect this new service required by State law.
• Renewable Energy: AB1124 establishes a maximum dollar rate per kilowatt for renewable energy systems. The proposed minimum fee for systems up to 15 kilowatts is $266 for a residential system and $539 for a commercial system. Because larger systems typically require more staff time for plan check and inspection, staff recommends scaling the fee based on the system size as allowed under AB 1124.
• HCA Preliminary Review: The Housing Crisis Act (HCA; SB330) allows development applicants to have their project fees and development standards vested (i.e., locked in) when their SB330 preliminary review is determined complete. A new flat fee of $1,254 would cover the cost of this HCA preliminary review.
• Exterior Elevated Elements Evaluation: As required by SB721 (apartments) and SB326 (condominiums), all multi-family property owners with wood framed buildings with exterior elevated elements (i.e. stairways, walkways, and balconies) must submit a report to the City evaluating the integrity of these elements. Staff is proposing a new flat fee of $280 to complete the review.
• SB9 “Urban Lot” Subdivision: SB9 requires that municipalities allow the splitting of a single-family zoned parcel into two lots. SB9 subdivisions are parcel maps, for which there is an existing deposit of $16,000. However, because the City cannot require public right-of-way improvements for SB9 subdivisions, the scope of the SB9 review is reduced. As such, staff is recommending a new subdivision fee category with a deposit that is half of the parcel map deposit, or $8,000.
Modifications to Existing Fees: The following fees would be modified as part of this update to reflect changes in hourly rates, technology advances, and City policy objectives.
• Building Application Fee: Currently, a $50 application fee is charged per permit. Many projects include multiple permits, including: building (structural/non-structural); electrical; mechanical; plumbing; and fire. For these projects, the applicant would pay $250 in application fees. Staff is proposing an application fee of $145 per “record” that would include all permits required as part of that record. This methodology more Council Staff Report (ID # 4864) Meeting of May 7, 2024 Updated: 5/2/2024 4:58 PM by Dina Lewis Page 4
accurately reflects the cost of processing a record regardless of the number of permits associated with it.
• Trade Plan Review: Building “trades” code sections are those specific to the electrical code, mechanical code, and plumbing code. Currently, the City charges an hourly rate for each trade plan review. Staff is proposing the following modifications:
o For new construction, staff proposes that trade plan reviews be equal to 25% of the building plan review fee. This methodology is used by many cities, as it easily scales the fee to be commensurate with the size of the project and provides cost predictability for applicants. The fee would cover all three trade plan reviews (i.e., one trade plan review fee for electrical, mechanical, and plumbing code).
o For modifications to existing structures projects would continue to be charged at an hourly rate, with a minimum of two hours per trade review required.
• Trade Inspection Fees: Fees for trade inspections are currently widget-based, meaning the fee is charged per component (such as a switch or outlet). Staff is proposing to establish a flat minimum rate based instead on the estimated amount of time required to complete the inspection service requested. If the time needed to complete the trade inspections exceeds that covered by the minimum inspection rate, applicants would be charged the difference.
• Community Planning Fee: The Community Planning Fee (CPF) was adopted in 2002 as a means of establishing a funding source for comprehensive updates and ongoing maintenance of the General Plan and Zoning Code. The CPF fee is a 15% surcharge on building permits. It is intended to cover 75% of the costs associated with comprehensive and ongoing General Plan and Zoning Code update services, while the remaining 25% of the cost is funded by the City through the General Fund.
The City recently adopted Climate Ready Fremont, the update to the City’s Climate Action Plan (CAP). Climate Ready Fremont was designed to be a “qualified” CAP, allowing new development to rely on compliance with the CAP to satisfy environmental review requirements under the California Environmental Quality Act (CEQA). Ongoing maintenance of the CAP therefore benefits development in a similar fashion to General Plan and Zoning Code maintenance. Staff is therefore recommending that the eligible uses of the Community Planning Fee be expanded to include updates and ongoing maintenance of the CAP.
New Service Fees: The following new fees would be established to facilitate new services.
• Zoning Verification Report (ZVR): The ZVR is a service that is typically requested by realtors and brokers working on the purchase or sale of a specific property. This work was processed as a research request and typically takes two to three hours to complete.
With the advances the City has made with its permitting system, the ZVR work has been formalized as a specific record type that is requested through Citizen Access. The proposed ZVR fee is based on two hours at the Planner II hourly rate, resulting in a flat fee of $365.
Council Staff Report (ID # 4864) Meeting of May 7, 2024 Updated: 5/2/2024 4:58 PM by Dina Lewis Page 5
• Historic Evaluation Screening: In the past, screening of historic properties and structures was provided by a historic consultant and the cost was passed on to the applicant similar to other consultant services. This service is now provided by City staff with expertise in this area, necessitating a new fee category. This new $183 flat fee covers the cost of providing this service.
• Express Permits: Express Permits are records that do not require a plan review to be issued and mostly are only offered to residential uses due to the simple nature of the project. Express Permits generally include: reroofs; electrical panel upgrades; kitchen and/or bathroom remodels (when like-for-like); water heaters; window replacements; residential foundation retrofits (using pre-approved plan); and swimming pool demolitions.
Express Permits are exempt from the building application fee since no staff processing is required to issue them. To cover the cost of inspection trips/visits to the property, which generally is one to two inspection trips, staff is proposing a flat fee of $126 or $252 for most Express Permits.
Staff also proposes to convert the Home Occupation Permit (HOC) to an Express Permit.
HOCs are required by any business operating in a residential building. As an Express Permit, the HOC fee will reduce from a $120 flat fee to a $39 flat fee, which covers a 15- minute review of the issued HOC by Planning staff to verify the new home-based business operation.
• Overtime Inspection Fees: This update proposes overtime building inspection fees to match overtime provisions in the applicable Memorandum of Understanding between the City and the City of Fremont Employee Association (CFEA).
Fees Proposed for Elimination: Because development services are now wholly electronic, the Planning Record Retention fee and Building Document Imaging fees are no longer necessary. These fees were established to cover the cost to digitize and archive paper files.
New development projects (beginning March 2021) are submitted and issued/approved electronically, eliminating the need for digitizing and making these fees unnecessary.
Proposed New General Development Fees: General development fees are not specific to covering the cost of DCC services. Instead, they are required for broader community needs associated with development that must be paid prior to building permit issuance (e.g., construction tax, art district fees, impact and affordable housing fees). This update proposes two new general development fees (i.e., Addressing and Permitting Technology), as described below.
• Addressing: The Addressing fee is new and will recover the cost for Geographic Information System (GIS) staff to review and issue address and street name requests associated with development permits. For new addresses, staff is proposing a flat fee of $268, with an additional $67 for each subsequent address. For a new street review, staff is proposing a flat fee of $134 per street.
• Permitting Technology Fee: The Permitting Technology Fee (PTF) is a new fee and would recover a portion of the cost to fund the software licensing costs required to support development permitting. Three programs are used to process permits, including Accela Council Staff Report (ID # 4864) Meeting of May 7, 2024 Updated: 5/2/2024 4:58 PM by Dina Lewis Page 6
(permits), ePlanSoft (electronic plan review), and DocuSign (“authorized”/legal signatures). Software licensing costs associated with these programs currently total about $800,000 annually.
Staff is recommending a 3% surcharge be adopted to recover 65% to 70% of the software technology costs on all Planning, Engineering, and Building records. The fee would be applied to all plan review and inspection services but would not be applied to fees collected on behalf of the State, development impact fees, affordable housing fees, or the construction tax. Staff is not recommending to recover 100% of these costs from permit applicants because a portion of the technology is used for City-specific services, such as Code Enforcement, and Finance and ITS support, which consume a number of licenses that are not directly related to permit services and thereby should not be borne by development applicants.
Since this is a new fee for Fremont, staff surveyed other Bay Area cities to see if and how much of a technology fee was charged. The survey results verify that, while a number of cities have a technology fee, a large range exists in what cities are recovering for their technology costs. The survey results are provided below:
Fremont (Proposed): 3% Sunnyvale: 5% Berkeley: 5%
Union City: 2% Mountain View: 4% Concord: 10.5%
Milpitas: 3.8% Menlo Park: 3% Santa Clara: 3.37%
Hayward: 9% Redwood City: 16% Emeryville: 10%
San Leandro: 6% Pleasanton: 5% Walnut Creek: 5.75%
Oakland: 14.75% South San Francisco: 2%
Based on historic permit activity, staff estimates that a 3% surcharge will generate approximately 65-70% of the DCC’s technology licensing costs on an ongoing basis.
• Refund Processing Fee: This is a new $96 flat fee would cover the cost for staff to process refunds on any Building record.
Proposed Modifications to Appeal Fees: Appeals of development decisions are processed by Planning, Building, or Engineering staff based on the part of the Fremont Municipal Code each group is responsible for. All three of these groups are within the DCC. Consistent with Council policy related to DCC cost recovery, the full cost of appeals is charged to appellants.
Staff is proposing the following modifications to clarify and update appeal fees.
• Actual Cost Applicability: Staff is proposing revised language in Master Fee Schedule Section I.H. Development Services Billing Process, and Section I.P, Appeals to City Council/Commissions/Committees to clarify that appeals of Planning and Engineering decisions are deposit based and the actual cost of the appeal processing is required.
• Resident Appeals: Staff proposes to establish an appeal deposit for residents that is half the appeal deposit of the applicant or a third-party appellant. The proposal to reduce the deposit is intended to make the initial cost of filing an appeal more affordable. However, the resident would still be responsible for the full cost of the appeal process. Lowering the deposit makes it more likely that the resident will be invoiced for appeal costs exceeding the deposit.
Council Staff Report (ID # 4864) Meeting of May 7, 2024 Updated: 5/2/2024 4:58 PM by Dina Lewis Page 7
• Appeal of AB2234 Post-Entitlement Phase Permits: AB2234 includes provisions for appeal of any staff action during the permit review. These staff actions include determining that an application is incomplete and any review cycle decision that does not approve a permit request regardless if the request is in conformance with code requirements. Staff is proposing to establish appeal deposits for AB2234 appeals of Engineering post-entitlement permits and a flat deposit rate for AB2234 appeals of Building post-entitlement phase permits.
• Appeal of Title 12 (Sidewalks, Streets, and Highways) and 17 (Subdivision): Staff is proposing to revise appeals of Engineering staff administrative actions from a flat $50 appeal cost to City Council to a deposit-based service that provides for full cost recovery. Engineering staff administrative actions occur as they implement Title 12 (Sidewalks, Streets, and Public Property) and Title 17 (Subdivisions). Appeal of Engineering administrative actions is not common. However, this update will provide an appeal cost structure that will ensure costs are fully recovered, if needed. Engineering appeal deposits are proposed at the average rate of Planning appeals. If the deposit amount for Engineering appeals is demonstrated to be too high or too low, staff will update it based on the procedure set forth in Council Resolution 2010-23.
Combining Development Fees in Master Fee Schedule: Staff is proposing to bring together in the same section of the Master Fee Schedule all development-related fees that are currently listed in the Departmental listing of fees. Consolidating development fees in one section will make it easier for applicants to identify all applicable development fees. For example, fees related to Tentative Tract Maps processed by Planning and Final Tract Maps processed by Engineering are currently in different sections of the Fee Schedule. In the revised format, these related subdivision fees will be directly adjacent to each other. This fee combining effort will integrate Engineering and Building fees into Section II, “Planning & Development.” The section will be renamed “Development – Planning, Engineering, and Building & Safety.” Attachment 2 provides a draft of the revised Section II with all development-related fees.
Comparison Fee Survey: Because many Building fees are being adjusted as part of this update, staff has completed a comparison survey of Fremont’s existing and proposed fees to other Bay Area cities. The survey is provided in Attachment 3. Generally, the proposed fee adjustments are comparable to other Bay Area cities.
FISCAL IMPACT: Development services provided by Building and Planning are funded by a variety of fees. Adjusting the fees as proposed would ensure that the cost to provide these services is recovered, thereby ensuring that the General Fund does not subsidize services related to private development. The proposed fees do not exceed the costs to the City to provide these services.
Given that employee costs vary from year to year, this update would authorize staff to administratively update hourly rate fees annually on January 1 to reflect any cost of living adjustments implemented the prior July 1. This annual update will ensure that fees based on hourly rates keep pace with hourly rate increases.
ENVIRONMENTAL REVIEW: The proposed action to update the Master Fee Schedule is exempt from and not subject to review under the California Environmental Quality Act Council Staff Report (ID # 4864) Meeting of May 7, 2024 Updated: 5/2/2024 4:58 PM by Dina Lewis Page 8
(CEQA), because, without limitation, the action is not a “project” as defined in CEQA Guidelines Section 15378(b)(2) and/or 15378(b)(5) and as it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment pursuant to CEQA Guideline 15601(b)(3), each as a separate and independent basis for CEQA compliance.
PUBLIC NOTICE: Public hearing notice was published in the Tri-City Voice for the proposed fee adjustments on April 23. In addition, also on April 23, notice of this public hearing was sent via email and SMS text notification to the 4,150 persons registered on the City’s Builders Interest List.
ATTACHMENTS:
• Draft Resolution Building Master Fees 2024
• Draft Resolution_Exhibit 1_Planning-Building MFS Amendment • Attachment 2-Revised Master Fee Schedule Section II, Development - Planning, Engineering, and Building & Safety
• Attachment 3-Building Fee Comparison Survey
RECOMMENDATION: Adopt a resolution approving an amendment to Master Fee Resolution 8672 (Master Fee Schedule) as drafted in Attachment 1.