CITY of
Garden Grove
Building and Planning Fee Study
City Council Meeting | January 28, 2025
• Background
• Fundamentals and Terminology
• Study Findings and Recommendations
• Next Steps
MEETING AGENDA
2 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE
Background
• Garden Grove staff and contract service providers review plans, issue permits, and perform required inspections to ensure safe, orderly and aesthetically pleasing development within the City. • User/regulatory fees are the mechanism by which the City may recoup a portion, or all, of the costs associated with these services.
BACKGROUND
4 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE
• Communities generally use tax revenues to fund services that provide general (community-wide) benefit
• Communities generally use fees and charges (direct recovery) to fund services that provide direct benefit
BACKGROUND
5 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE
• Building Fees - construction permit processing, plan check, and inspection • Planning Fees - review of project entitlement and permits requests for compliance with City Municipal Code
TYPES OF FEES EXAMINED
• This update DOES NOT
examine taxes,
assessments, utility rates,
or development impact
fees
CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE6
Fundamentals and Terminology
• Legal requirements
• Encourage direct recovery of costs incurred to serve
private interests/benefit or respond to individual
actions
• Provide opportunity for relief to General Fund or other Funds where costs are incurred
• Enable continuity of service levels by improving cost recovery levels
MUNICIPAL FEES
• Why do Cities Review
Fees and Charge Fees for
Services?
CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE8
• Fees proposed are not taxes, as defined by Article 13C of the California State Constitution
• Fees are set in accordance with parameters set by Article 13C and by Section 66014 of the California Government
Code:
• Costs allocated to the payer should bear a fair or reasonable relationship to the payer's burdens on or benefits received from the governmental activity
• Fees should not exceed the reasonable cost of providing the service for which the fee is charged
FEES ARE APPROVED BY THE CITY COUNCIL
The City Council has
authority to Directly Approve
User and Regulatory Fees
and Increases to Fees
CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE9
• Full Cost of Service
• Cost Recovery
• Subsidy
TERMINOLOGY
These terms of art have
specific meaning across
California municipalities
and within the City
CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE10
COST OF SERVICE
• The cost of service sets the maximum limit
of a cost-based fee. It includes:
• Direct program costs for labor,
services, and supplies
• Departmental administration
• Citywide administration and central
support services
CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE11
100%
0%
Cost Recovery Targeted
Hourly Rate
for Personnel
Providing
Services
Time Required
to Perform the
Service
Cost of
Servicex =
Fully Burdened Hourly
Rates:
• Direct and indirect labor
costs
• Services and supplies
• Agency overhead
Estimated or Known Times
for Providing Services
Maximum Fee Amount
Exclusively individual benefit
Considerable individual benefit
Balanced individual and community benefit
Considerable community benefit
Mostly community benefit
Entirely community-wide benefit
COST RECOVERY POLICY FRAMEWORK
Cost recovery policy
reflects
local values regarding
the presumed
beneficiaries for each
program area, ranging
from
community
benefit to individual
benefit
CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE12
100%
0%
Cost Recovery Targeted
SUBSIDY
• The amount of a program’s
full cost of service that is
supported by other City
revenue sources
CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE13
100%
0%
Cost Recovery Targeted
Full Cost of
Service ($) Revenue from
Current Fee
($)
City Subsidy
Maximum Level of Cost
Recovery = 100%
Current Level of Cost
Recovery = X%
Minimum Level of Cost
Recovery = 0%
Study Findings and Recommendations
• Building Fees
• Current fees recover less than the City’s full cost of providing fee- related services.
• Current cost recovery from fees is approximately 81%
• Planning Fees
• Current cost recovery from fees is approximately 26%
• Cost recovery levels vary from fee to fee (4% at low end to 100% cost recovery at upper end)
CURRENT COST RECOVERY
15 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE • Staff Recommends Using a Multi-Year Phase-In Approach to Adjust Fees and Enhance Cost Recovery
• Since these fees are regulatory in nature, and typically correlated with high levels of direct benefit to the service recipient, communities frequently target full cost recovery for development-related services.
• In order to allow the City to move toward full cost recovery, while being mindful of broad community goals and values and collaboration with the development community, staff recommends using a multi-year phase in approach to enhance cost recovery levels
MULTI-YEAR PHASE-IN APPROACH
16 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE • Staff Recommends Using a Multi-Year Phase-In Approach to Adjust Fees and Enhance Cost Recovery
• The recommended fee phase-in would take place over a three-year timeframe:
• Year 1 Fee Adjustment: Fiscal Year 2025/26
• Year 2 Fee Adjustment: Fiscal Year 2026/27
• Year 3 Fee Adjustment: Fiscal Year 2027/28
• Future Years: Annual CPI Adjustment
MULTI-YEAR PHASE-IN APPROACH
17 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE • Fees are proposed to be recalibrated to align to the City’s cost of providing services with some specific exceptions for minor projects/requests
• Proposed fees are in alignment with fees collected by other agencies in the region
MULTI-YEAR PHASE IN APPROACH
18 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE • If Council prefers a different approach, staff has also drafted and presented for City Council consideration:
• Two-Year Phase-In Approach
• Immediate Adjustment to Full Cost Recovery Approach
• Proposed fees are in alignment with fees collected by other agencies in the region
MULTI-YEAR PHASE IN APPROACH
19 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE FEE COMPARISON – BUILDING
20 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $356
$405
$462
$463
$521
$579
$607
$667
$812
$0 $100 $200 $300 $400 $500 $600 $700 $800 $900
FULLERTON
GARDEN GROVE - CURRENT
FOUNTAIN VALLEY
GARDEN GROVE - YEAR 1 PHASE-IN
GARDEN GROVE - YEAR 2 PHASE-IN
GARDEN GROVE - YEAR 3 PHASE-IN
WESTMINSTER
COSTA MESA
ORANGE COUNTY
Building Permit Fee - $25,000 Project
FEE COMPARISON – BUILDING
21 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $394
$671
$765
$833
$996
$998
$1,098
$1,158
$1,344
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600
FULLERTON
GARDEN GROVE - CURRENT
FOUNTAIN VALLEY
GARDEN GROVE - YEAR 1 PHASE-IN
GARDEN GROVE - YEAR 2 PHASE-IN
WESTMINSTER
COSTA MESA
GARDEN GROVE - YEAR 3 PHASE-IN
ORANGE COUNTY
Building Permit Fee - $50,000 Project
FEE COMPARISON – BUILDING
22 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $603
$1,086
$1,212
$1,239
$1,391
$1,540
$1,544
$1,695
$2,130
$0 $500 $1,000 $1,500 $2,000 $2,500
FULLERTON
GARDEN GROVE - CURRENT
FOUNTAIN VALLEY
GARDEN GROVE - YEAR 1 PHASE-IN
GARDEN GROVE - YEAR 2 PHASE-IN
WESTMINSTER
GARDEN GROVE - YEAR 3 PHASE-IN
COSTA MESA
ORANGE COUNTY
Building Permit Fee - $100,000 Project
FEE COMPARISON – BUILDING
23 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $1,995
$3,226
$4,081
$4,464
$4,935
$5,012
$5,648
$5,790
$7,844
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000
FULLERTON
GARDEN GROVE - CURRENT
GARDEN GROVE - YEAR 1 PHASE-IN
FOUNTAIN VALLEY
GARDEN GROVE - YEAR 2 PHASE-IN
WESTMINSTER
COSTA MESA
GARDEN GROVE - YEAR 3 PHASE-IN
ORANGE COUNTY
Building Permit Fee - $500,000 Project
FEE COMPARISON – BUILDING
24 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE
FEE COMPARISON – PLANNING
25 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $0
$1,599
$3,000
$3,197
$3,465
$3,800
$4,796
$5,865
$6,000
$6,522
$9,875
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000
GARDEN GROVE - CURRENT
GARDEN GROVE - YEAR 1 PHASE-IN
CITY OF ORANGE (T & M DEPOSIT)
GARDEN GROVE - YEAR 2 PHASE-IN
FOUNTAIN VALLEY
COSTA MESA
GARDEN GROVE - YEAR 3 PHASE-IN
SANTA ANA
ORANGE COUNTY (T & M DEPOSIT)
FULLERTON
WESTMINSTER
Conditional Use Permit - Minor
FEE COMPARISON – PLANNING
26 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $3,000
$3,150
$3,465
$5,007
$6,000
$6,863
$7,500
$8,720
$9,600
$10,321
$16,515
$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000
CITY OF ORANGE (T & M DEPOSIT)
GARDEN GROVE - CURRENT
FOUNTAIN VALLEY
GARDEN GROVE - YEAR 1 PHASE-IN
ORANGE COUNTY (T & M DEPOSIT)
GARDEN GROVE - YEAR 2 PHASE-IN
COSTA MESA
GARDEN GROVE - YEAR 3 PHASE-IN
FULLERTON
SANTA ANA
WESTMINSTER
Conditional Use Permit - Major
FEE COMPARISON – PLANNING
27 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $500
$510
$2,150
$2,495
$3,000
$3,115
$3,800
$5,450
$6,000
$6,374
$7,500
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000
GARDEN GROVE - CURRENT
FOUNTAIN VALLEY
GARDEN GROVE - YEAR 1 PHASE-IN
WESTMINSTER
CITY OF ORANGE (T & M DEPOSIT)
FULLERTON
GARDEN GROVE - YEAR 2 PHASE-IN
GARDEN GROVE - YEAR 3 PHASE-IN
ORANGE COUNTY (T & M DEPOSIT)
SANTA ANA
COSTA MESA
Variance - SFR / Minor / Admin
FEE COMPARISON – PLANNING
28 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE
FEE COMPARISON – PLANNING
29 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $2,700
$4,416
$4,647
$6,120
$6,132
$7,110
$7,848
$9,675
$10,000
$10,000
$20,000
$0 $5,000 $10,000 $15,000 $20,000 $25,000
GARDEN GROVE - CURRENT
GARDEN GROVE - YEAR 1 PHASE-IN
FULLERTON (T & M DEPOSIT)
SANTA ANA
GARDEN GROVE - YEAR 2 PHASE-IN
FOUNTAIN VALLEY
GARDEN GROVE - YEAR 3 PHASE-IN
WESTMINSTER
COSTA MESA
CITY OF ORANGE (T & M DEPOSIT)
ORANGE COUNTY (T & M DEPOSIT)
Zone Change
FEE COMPARISON – PLANNING
30 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE $480
$500
$670
$901
$1,000
$1,220
$1,323
$1,325
$1,744
$1,850
$2,571
$2,655
$3,695
$3,825
$4,944
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000
GARDEN GROVE - CURRENT
ORANGE COUNTY
SANTA ANA - NON-APPLICANT
GARDEN GROVE - YEAR 1 PHASE-IN
CITY OF ORANGE (T & M DEPOSIT)
COSTA MESA - CC NON-APPLICANT
GARDEN GROVE - YEAR 2 PHASE-IN
FOUNTAIN VALLEY - RESIDENT
GARDEN GROVE - YEAR 3 PHASE-IN
WESTMINSTER - RESIDENT
FULLERTON - APPLICANT
FOUNTAIN VALLEY - OTHERS
WESTMINSTER - OTHERS
COSTA MESA - CC APPLICANT
SANTA ANA - APPLICANT
Appeal
FISCAL IMPACT – 3-Year Phase In
31 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE • Additional revenues expected from proposed changes to fees and charges are intended to offset the cost of providing existing services associated with those fee-related regulatory functions. Additional fee revenue is not intended to fund new services.
Description Cost of Service
Fee Cost
Recovery
General Fund
Subsidy
Incremental
Change
Overall Cost
Recovery
Current $5,492,000 $3,790,000 $1,702,000 69%
Year 1 $5,492,000 $4,499,000 $993,000 $709,000 82%
Year 2 $5,492,000 $4,996,000 $496,000 $497,000 91%
Year 3 $5,492,000 $5,492,000 $0 $496,000 100%
Total $1,702,000
FISCAL IMPACT – 2-Year Phase In
32 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE • Additional revenues expected from proposed changes to fees and charges are intended to offset the cost of providing existing services associated with those fee-related regulatory functions. Additional fee revenue is not intended to fund new services.
FISCAL IMPACT – Immediate Adjustment
33 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE • Additional revenues expected from proposed changes to fees and charges are intended to offset the cost of providing existing services associated with those fee-related regulatory functions. Additional fee revenue is not intended to fund new services.
Next Steps
Conduct Public Hearing and Determine Whether to Adopt
Updated Fees and Charges
NEXT STEPS AND RECOMMENDATIONS
35 CLEARSOURCE PRESENTATION TO THE CITY OF GARDEN GROVE Questions or Feedback