Agenda, closed session, second session — Hillsborough City Council, April 13, 2026 (part 3 of 3)

While the 2025 CWUIC expanded standards beyond Very High FHSZs to also include High FHSZs, the updated CAL FIRE map resulted in reduced CWUIC applicability for Hillsborough.

CWUIC defensible-space site standards currently apply to no Town parcels (as no Very High FHSZ designations remain), and ignition-resistant construction standards apply to fewer than 10% of parcels (only those located within High FHSZ designations). Moderate FHSZ designation is the most prevalent in Hillsborough, but CWUIC construction and site maintenance standards do not apply to these parcels nor to the roughly 75% of non-designated parcels.

On September 22, 2025, the City Council received an information from staff on the CAL FIRE mapping and related CWUIC requirements and the City Council directed staff to continue evaluation of policy development options to increase wildfire preparedness and resilience.

PROPOSED WORK PLAN:

Project Focus Key Activities Anticipated Outcome Anticipated TimeLine
Community
Education
Town-wide wildfire
preparedness and
home hardening
awareness
Implement formal education program based
on Title 24 Part 7 CWUIC, including Appendix
G Voluntary Home Hardening
Recommendations (Attachment), targeting
project and permit submittals of properties
not otherwise subject to CWUIC
Broader community awareness
and improved voluntary riskreduction practices
Implementation:

April 2026 –
August 2026
Vulnerability
Assessment
Develop a datainformed technical
basis for General
Plan policy
development
Conduct SB 379 required technical Climate
and Hazard Vulnerability Assessment for
planned Safety Element and General Plan
update efforts
Data-informed technical basis
for General Plan and wildfire
resilience policy development
RFP – Findings:

May 2026 – End
of 2026
City Council
Resolution
Codify educational
outreach measures
and signal Town
commitment to
wildfire
preparedness
through home
hardening
measures
Draft and bring forward a City Council
resolution recognizing Title 24 CWUIC Part 7,
including Appendix G Voluntary Home
Hardening Recommendations (Attachment),
as prudent measures to reduce structure
ignition potential and increase Town wildfire
preparedness and resilience
Formal Council policy direction
supporting expanded outreach
and voluntary use of CWUICbased home hardening
measures town-wide
Return to CC:

July 2026
Wildfire
Resilience
Measures and
General Plan
Coordination
Evaluate broader
wildfire mitigation,
resilience, and land
use policy options
informed by
technical findings
Assess vulnerability assessment findings and
determine whether additional wildfire
mitigation and resilience measures should
be pursued
Refined long-term policy
framework and future
implementation options
aligned with required longrange planning efforts and
data-informed technical
findings
Dependent on
VA Findings
-340-
Agenda Staff Report – Hillsborough City Council
April 13, 2026

Page 3 ends

Project Focus Key Activities Anticipated Outcome Anticipated TimeLine
External
Agenda
Monitoring
Track evolving state
and model-code
direction
Monitor OSFM, CBSC, ICC, and legislative
developments relevant to wildfire mitigation
and local implementation
Ability to adapt Town policy
direction in response to
updated findings, emerging
requirements, and evolving
best practices
Ongoing
Building and
Municipal Code
Implementation
and Updates
Continue
evaluation of local
development
activity standards
and code
compliance
amendments
Continue study of local amendment
opportunities, including those
recommended by Firewise, evaluating
appropriate implementation triggers and
applicable fire science to develop targeted
permit-based measures and related nuisance
or property maintenance provisions
Defensible and coordinated
policy concepts and
implementation options for
future City Council
consideration
Ongoing
LEGAL CONSIDERATIONS: While housing budget trailer Assembly Bill 130’s (June 2025) moratorium on amendments to Title 24 residential building standards remains in effect through June 1, 2031, amendments that specifically relate to home hardening are expressly allowed.

Provided however that any Title 24 amendments must still comply with Health and Safety Code sections 17958.5 and 17958.7, which require express findings that Title 24 amendments are reasonably necessary because of local climatic, geological, or topographical conditions.

Town General Plan and Safety Element update work is already planned and is required by state law to address local wildland and urban fire risk, evacuation routes, and related fire-safety infrastructure, and to include wildfire-related information, goals, policies, and feasible implementation measures. SB 379 further requires a Climate and Hazard Vulnerability Assessment, resulting in a technical report that serves as the basis for Safety Element identification and analysis of local hazards, vulnerabilities, and risk mitigation measures.

Coordinating home hardening building code amendments and related policy work with the technical findings identified through the Vulnerability Assessment is an efficient use of Town resources, helps avoid inconsistent or ungrounded policy direction, and provides a defensible basis for any ordinance adoption creating future mandates or increased construction costs imposed on residents.

FISCAL IMPACT: There is no fiscal impact associated with this agenda item.

ENVIRONMENTAL ISSUES: The proposed action is exempt from environmental review under California Environmental Quality Act (CEQA) Guidelines sections 15378(b)(2) and 15378(b)(5) as ongoing administrative or organizational activities that will not result in direct or indirect physical changes in the environment.

ATTACHMENT(S): 2025 Title 24 California Wildland-Urban Interface Code, Part 7, Appendix G, “Voluntary Home Hardening Recommendations”
PREPARED BY: Nicole De Lancie, Management Assistant
-341-
Agenda Staff Report – Hillsborough City Council
April 13, 2026

Page 4 ends

RECOMMENDATION: Receive work plan for town-wide home hardening program and provide input to staff.
-342-

CALIFORNIA BUILDING STANDARDS COMMISSION

CALIFORNIA

WILDLAND-URBAN
) INTERFACE CODE
CALIFORNIA CODE OF REGULATIONS D TITLE 24 PART 7
BASED ON THE 2024 INTERNATIONAL WILDLAND-URBAN INTERFACE CODE ® • I
I

INTERNATIONAL
CODE COUNCIL"
Effective January 1, 2026
For Errata and Supplement effective
dates see the History Note Appendix
◄ I
-343-
-344-
-345-

TOWN OF HILLSBOROUGH
San Mateo County
1600 Floribunda Avenue
Hillsborough, CA 94010
18 DISCUSSION

CITY COUNCIL MEETING
APRIL 13, 2026

AGENDA STAFF REPORT
ITEM SUBJECT: Review Building and Planning Department User Fee Study and Proposed Fee Schedule
SUMMARY: This item summarizes the findings and recommendations of a comprehensive study conducted to evaluate the Building and Planning Department’s Fee Schedule relative to its cost of providing services. The study found that current fees recover approximately 56% of actual service costs (Building-related services at 54% of costs and Planning-related services at 71%), resulting in a significant General Fund subsidy of private property development review and oversight.

Based on the study findings and in accordance with Town Fiscal Policy 409, an updated Fee Schedule (Attachment 1) is presented to provide 100% cost recovery and better align fees with actual service practices. The Draft Report (Attachment 2) details the study’s methodology, findings, and industry best practices for fee setting and cost recovery approaches.

BACKGROUND: On November 10, 2025, the City Council provided direction to pursue increased cost recovery for Building and Planning services following the Long-Range Financial Funding Plan completed earlier in 2025. The Plan identified a growing General Fund subsidy for development services and recommended completion of a fully burdened cost of service study.

In December 2025, the Town issued a Request for Proposals for a comprehensive fee study.

Matrix Consulting Group was selected in January 2026 to conduct the analysis.

Matrix and staff evaluated:
• Current Fee Schedule
• Department staffing and workload
• Service delivery model
• Department budget and revenue
• Fully burdened cost of service
• Legal compliance and industry best practices
STUDY RESULTS: The study identified several key areas contributing to under-recovery:

Building Services
The largest under-represented staff time effort was seen in valuation-based permits. As design complexity and building code requirements have increased over time, so has the staff time needed to review and provide development oversight. Projects valued between $50,000 to $500,000 represent the largest revenue gap as these valuations represent the majority of annual permit workloads.
-346-
Agenda Staff Report – Hillsborough City Council
April 13, 2026

Page 2 ends

An opportunity to better capture Department revenue was identified in the Department’s review and administration of Encroachment permits on behalf of the Public Works and Engineering Department. Building and Planning staff time was being under-captured in existing permit fees, and the revenue not directed towards Building and Planning budget expenditures.

ADU Building Permits are also under-recovered (subsidized) as the Building Permit Fee has long been waived. The increase to general project design and construction complexity paired with the large volume of approximately 50 ADUs permitted in a calendar year has created a fully burdened subsidy of ADU construction oversight of roughly $250,000 each fiscal year. Analysis of the budget impacts of continuing to reduce/waive ADU development review fees was identified as Housing Element Action 2.1(c).

Planning Services
Design Review projects reviewed and approved by staff known as Administrative Level or Type B Projects make up the largest under-recovery for Planning. The underrepresented staff time is connected to the increased use of design-build companies who require more support to navigate the Residential Design Guidelines and Zoning Code than architects. Administrative Level - Addition only and Landscape projects represent the largest fiscal impact as the Town processes a large number of these applications annually.

As the housing stock continues to age, the need for historic evaluation has increased. The administration of these evaluations by staff was not being captured in the current model. The report also finds that appeals are traditionally subsidized activities.

Development Services Surcharges
The study also evaluated two surcharge fees applied to Building Permits: the General Plan Maintenance Fee and the Technology Fee. These surcharges are intended to recover costs associated with broader development services that support permitting and planning activities.

The General Plan Maintenance Fee offsets costs associated with maintaining and implementing the Town’s General Plan and related planning efforts. In 2022, Matrix Consulting Group analyzed this fee and recommended an increase from 0.05% of all permit valuations to 0.51% of permit valuations for projects that impact the footprint of the community. The current study echoed these findings and recommends increasing the fee to 0.61% of permit valuation. The study also identified a strengthened nexus between this fee and projects that affect density, development intensity, and lot coverage.

The Technology Fee offsets costs associated with permitting software procurement, implementation, maintenance, and upgrades. The study recommends lowering the Technology Fee rate, though revenue is expected to increase as permit fees are adjusted to reflect full cost recovery.

Periodic Fee Analysis Best Practices
Matrix recommends establishing an annual fee update mechanism, along with comprehensive fee studies conducted every five to seven years, to ensure the Town’s Fee Schedule remains aligned -347-
Agenda Staff Report – Hillsborough City Council
April 13, 2026

Page 3 ends

with inflation, service delivery costs, organizational changes, and the actual cost of providing services.

Fee Schedule Streamlining
Fees were reorganized, consolidated, and updated to better reflect current service delivery and staff time requirements.

Building Permit trade specific (mechanical, electrical, plumbing) add-on fees were removed and accounted for in all-inclusive permit fees; and additional flat rate permit fees were created for some standardized scopes of work.

Planning Project fees were modified to align more closely with Hillsborough Municipal Code Chapter 2.12 on Design Review and with other zoning processes.

TOWN COST RECOVERY POLICY CONSIDERATIONS: Fees for development review services are user fees as they primarily confer a direct benefit to the applicant requesting the service. While the proposed Fee Schedule identifies 100%-cost fee levels based on the fully burdened cost methodology identified in the study, fee setting remains a City Council policy decision.

Consistent with Government Finance Officers Association guidance and industry best practices, the Town has an adopted cost recovery policy, Fiscal Policy 409, which states: “Cost recovery for [development review] services should be 100% except in instances where a process is clearly intended to serve the broader community as well as the applicant.” Policy 409 outlines considerations when setting user fees and any subsidy to cost recovery:

1. Community-wide versus Special Benefit. This level of user fee cost recovery should consider the community-wide versus special service nature of the program or activity. The use of general fund revenues is appropriate for community-wide services, while user fees are appropriate for services that are of special benefit to easily identified individuals or groups.

2. Service Recipient versus Service Driver. After considering community-wide versus special benefit of the service, the concept of service recipient versus service driver should also be considered. Example: While an applicant may not be the ultimate beneficiary of the Town’s development review efforts (i.e. design review required to ensure development that is consistent with the character of the town), the applicant is the driver of development review costs, and as such, cost recovery from the applicant is appropriate.

NEXT STEPS: Staff will present the proposed Building and Planning Fee Schedule with City Council direction as part of the FY 2026-27 Town Fee Schedule to the Financial Advisory Committee at its April 28 meeting. Staff will then bring the FY 2026-27 Town Fee Schedule forward as part of the FY 2026-27 Budget Study Session on May 11, with formal adoption consideration at the regular City Council meeting following the study session. -348-
Agenda Staff Report – Hillsborough City Council
April 13, 2026

Page 4 ends

As the proposed Fee Schedule for Building and Planning is based on FY 2025-26 staff rates, following adoption of FY 2026-27 staff rates, a revised Building and Planning Fee Schedule will be brought back for City Council adoption after incorporation of the updated rates.

FISCAL IMPACT: There is no fiscal impact associated with this agenda item.

The proposed full cost recovery Fee Schedule would increase revenue by an estimated $1.97 million annually ($1.82 million Building Services, $150,000 Planning Services). Implementation of full cost recovery user fees would significantly reduce the General Fund subsidy for development services.

ATTACHMENT(S):

1. Proposed Building and Planning Fee Schedule

2. Draft Building and Planning Fee Study Report
PREPARED BY: Nicole De Lancie, Management Assistant
RECOMMENDATION: Review the draft Building and Planning Fee Study Report and proposed Fee Schedule and provide direction regarding cost recovery approach. -349-

PROPOSED SCHEDULE OF FEES AND CHARGES
Deposit accounts: Full payment is required before permits issued. Failure to pay additional monies owed under deposit account constitutes an infraction, regardless of permit issuance.

PLANNING DIVISION
Project/Review Type Fee/Task Description Adopted FY 25-26 Proposed FY 26-27

GENERAL PLANNING FEES
Conceptual
Development Feasibility
Review
Actual cost with
$5,000 minimum
deposit
Actual cost with
$5,000 minimum
deposit
Deed Restriction (Simple)
/ Covenant Recordation
& Filing
$902 $868
Restrictive Covenant
(Complex) -
Actual cost with
$2,500 minimum
deposit
General Plan
Amendment Actual cost
Actual cost with
$5,000 minimum
deposit
Annexation: Required Pre-Submittal
Consultation $1,396 $3,426
Annexation Project Review
Actual cost with
$10,000 minimum
deposit
Actual cost with
$10,000 minimum
deposit
Private School Use Permit
to Operate
Actual cost with
$7,500 minimum
deposit
Actual cost with
$7,500 minimum
deposit
Private School Use Permit
Annual Certification: Under 25 Students $431 $770
Over 25 Students $900 $1,206
Ministerial/Zoning Review - $752
Fire Plan Check/Review Refer to CCFD
Fee Schedule
Refer to CCFD
Fee Schedule

ACCESSORY DWELLING UNIT (ADU) REVIEW FEES
Ministerial ADU Review:

Class 1 - Zoning Clearance –
State Allowed By-Right $685 $663
Class 2 – Objective Design &
Zoning Clearance – Locally
Regulated
$685 $1,141
Discretionary ADU
Exception Review Type B Project Design Review $905 $1,723

TYPE A & B PROJECT DESIGN REVIEW PROJECT FEES
Preapplication Meeting
Required prior to application
submittal. A formal discussion of
proposed project scope and
preparation of project specific
submittal checklist.
- $1,003
Public Notification: Type B (when required) $224 $285
Type A $374 Included in
Project fee
Administrative/Staff-Level
- Type B Project:

Architectural Style/Exterior
Material Changes $1,214 $1,003
ATTACHMENT 1
-350-

PLANNING DIVISION
Project/Review Type Fee/Task Description Adopted FY 25-26 Proposed FY 26-27 Addition/Accessory Structure: <
500 sq ft (not including Second
Story Additions visible from the
Right of Way – Type A)
$1,214 $2,029
Substantial Alterations (not
triggering a "Tear Down" – Type A) $1,214 $2,733
Landscaping: > 10,000 sq ft or >
50 cy of Earth Movement (not
associated with a New House or
“Tear Down” – Type A)
$1,060 $1,982
Street Adjacent Fence, Gate, or
Columns $641 $1,109
Tree Removal -
Nonhazardous/Voluntary
(Hazardous/Emergency Tree
Removal, refer to Building Division
Fee Schedule)
$386 $1,076
Architecture & Design
Review Board (ADRB) -
Type A Project:

Preliminary ADRB Review (when
required) $2,476 $2,395
Type B Project referred for ADRB
Review - $3,172

Second Story Addition visible from
Right of Way < 500 sq ft /
Accessory Structures > 500 sq ft
$2,787 $3,643
Addition to Dwelling > 500 sq ft $2,381 $3,862
Substantial Alterations and "Tear
Down" $3,820 $5,739
New Dwelling: Full Demo of
Existing or New on Vacant Lot $4,403 $4,986
Landscaping required for
New Dwelling / "Tear Down"
(submitted with project)
$1,625 $1,998
Tennis Court and/or Landscaping
required for New Dwelling / "Tear
Down" (deferred submittal)
$1,869 $4,134
Continuance of ADRB Review $1,294 $1,351
Appeal of a Staff-Level Decision $2,556 $4,652
Approved Plan Revision: Requiring Staff Review, assessed at an hourly rate $217 $219
Requiring ADRB Review $2,219 $1,610
-351-

PLANNING DIVISION
Project/Review Type Fee/Task Description Adopted FY 25-26 Proposed FY 26-27 Approval Extension: Requiring Staff Review $677 $668
Requiring ADRB Review $1,148 $1,304

CEQA AND RELATED RESOURCE EVALUATION FEES
Historic Resource
Evaluation: Staff Administration - $1,524
Consultant Analysis Actual Cost Actual Cost
Biological /
Archaeological / Tribal
Resource Evaluation
Consultant Analysis & Staff
Administration Actual Cost Actual Cost + 20% Administration fee Categorical Exemption /
Negative Declaration /
Mitigated Neg Dec /
Environmental Impact
Report
Consultant Analysis & Staff
Administration Actual Cost Actual Cost + 20% Administration fee

CITY COUNCIL REVIEW FEES
Dwelling > 8,000 sq ft FAR Staff preparation of item, in addition to Project fee $4,668 $3,300
Appeal of ADRB Decision Staff preparation of item $5,488 $5,793 Variance Staff preparation of item, in
addition to project fee $6,598 $6,389
MINISTERIAL SB 9 PROJECT REVIEW FEES
Optional Pre-Submittal
Consultation - $2,828
SB 9 Lot Split Review
Actual cost with
$20,000 minimum
deposit
Actual cost with
$20,000 minimum
deposit
SB 9 Two-Unit Review
(Building, Grading, and
Encroachment permit
fees applied separately)
Actual cost with
$20,000 minimum
deposit
Actual cost with
$20,000 minimum
deposit

COMMERCIAL FILM USE PERMIT FEES
Application - $1,368
Daily Permit: Private Property $500 $500
Public Property $1,000 $1,000

WIRELESS COMMUNICATION FACILITIES REVIEW FEES
Pre-Application Meeting
Two are recommended for Major.

First at earliest stage of site
location research; second after
site selection and design.
- $1,152
Wireless Project Review: Major
Actual cost with
$20,000 minimum
deposit
Actual cost with
$20,000 minimum
deposit
-352-

PLANNING DIVISION
Project/Review Type Fee/Task Description Adopted FY 25-26 Proposed FY 26-27 Minor
Actual cost with
$10,000 minimum
deposit
Actual cost with
$10,000 minimum
deposit
Appeal of Wireless
Facility Decision
Actual cost with
$5,000 minimum
deposit
Actual cost with
$5,000 minimum
deposit
-353-

CONSTRUCTION PERMIT FEES
The Town of Hillsborough has adopted the 2025 California Building Standards Code, which encompasses all twelve parts under Title 24 of the California Code of Regulations, including the Building, Residential, Electrical, Mechanical, Plumbing, Energy, Fire, Wildland-Urban Interface, Historical, Existing, and CALGreen Codes. In addition, The Town of Hillsborough Municipal Code further regulates the health, life, and safety standards for construction under its authority.

As pursuant to Title 24, as well as pursuant to Division 13 of the California Health and Safety Code and Title 25 of the California Code of Regulations, local jurisdictions have the duty and authority to regulate all construction within its boundaries, to require permits for such construction, and to collect fees for such permits as to reasonably defray costs associated with the administration and enforcement of the law.

A description of permitting fees is found below, followed by an itemized fee schedule. Additional mandated fees and taxes are assessed under current legislation and ordinances.

In instances where the strict application of the fee from this Schedule would constitute a substantial inequity to an applicant or the Town, the Building Official shall be authorized to adjust such fees on a case-by-case basis. If services not included in the fee schedule are required, the Building Official may assess and collect special fees necessary to defray the cost of the service and its administration.

SUMMARY AND DEFINITIONS OF FEES
Building Permit by Valuation
Permit Fees
Building Permit by Valuation are all inclusive permitting fees and follow two methods to determine valuation based on
project scope. Where a project is not tied to structural square footage, staff review the applicant’s submitted valuation compared to fair market value. For structures with measurable floor area, the Town uses a valuation calculation model taking a project’s square footage multiplied by an assigned price of construction value. The Town’s fee per valuation bracket is based on staff time required to review and oversight projects based on size and complexity. Title 24 authorizes the Building Official to set final building permit valuations.

Single Trade & Scope Specific
Permit Fees
When a project generally requires only one construction trade or is generally accepted to entail very standardized levels of review and oversight, a flat rate permit Fee is assessed based on typical number of staff hours spent on that particular project scope.

Plan Check Fee The fee is assessed when plans are required for the issuance of the building permit.

Plan Revision Plan Check Fee This fee is based on the actual time spent reviewing the revised plans.

Building Reinspection Fee When the work for a called inspection is not ready, inaccessible to the inspector, or not on the approved plans, a fee will be assessed and must be paid prior to the next inspection.

Construction Site Compliance
Inspection
When the Town receives multiple complaints about the
management of a construction site and needs to investigate, an hourly fee will be assessed for the time spent by the Town’s Code Compliance Coordinator to evaluate the complaint.
-354-

SUMMARY AND DEFINITIONS OF FEES
Business License Tax A Business License Tax will be applied to each permit based on the Category 1 classification and calculation. For further information, please refer to the Special Tax Fees and HMC §

5.04. Technology Fee The Technology Fee is charged on all permits and helps defray costs associated with the Town’s permitting software
procurement and maintenance required for administration of Title 24.

Construction Vehicle Impact Fee The Town collects the fee to offset the costs associated with street repaving and maintenance projects.

General Plan Maintenance Fee The Town collects the fee to cover reasonable costs associated with maintaining the Town’s General Plan and land use policies, as mandated by the State. It is levied on permits that result in a change to the community's density and footprint, including New and Replacement Dwellings, ADUs, JADUs, Additions, Major Remodels, Creation of New
Bedrooms, and Major Site Development permits.

BSASRF Fee The Building Standards Administration Special Revolving Fund (BSASRF) Fee is a state fee collected on all permits and remitted to the State for the adoption, publication, and educational efforts associated with green building standards.

SMIP Fee The Strong Motion Instrumentation Program (SMIP) fee is a state fee collected on permits for structures intended to support, shelter, or enclosure persons, animals, chattels, or property of any kind. It is remitted to the State to develop recommended changes to seismic provisions of building
codes, to assist local governments in their general plan process, and to aid emergency response personnel in the event of a disaster.

Expired Permit Reinstatement Fee A renewal fee will be assessed for an expired permit based on the value of the remaining work of the original permit.

Stop Work Fee A Stop Work Notice is issued for any violation of the California Building Standards Code or Hillsborough Municipal Code, including work without or beyond the scope of the permit. All work on the site must cease until an investigation and
inspection are carried out. Fees will be assessed and must be paid before permits are reactivated or issued.
-355-

CONSTRUCTION PERMIT FEES – TABLE NO. 1-A
Type of Fee Charged Adopted FY 25-26 Proposed FY 26-27

MANDATED FEES & TAXES
Business License Tax
Category 1
Per
Permit Refer to Special Tax Fees Refer to Special Tax Fees Technology Fee Per
Permit
5% (.05) of the permit fee
(7/1/03)
1% (.01) of the permit fee
(7/1/26)
SMIP Per
Permit
.01% (0.0001) of permit
valuation
.01% (0.0001) of permit
valuation
BSASRF Per
Permit
$1 per $25,000 of permit
valuation
$1 per $25,000 of permit
valuation
General Plan Maintenance Per
Permit
.51% (0.0051) of permit
valuation (8/8/22)
.61% (0.0061) of permit
valuation (7/1/26)
Construction Vehicle Impact Per
Permit
.83% (0.0083) of the job
value (7/1/06)
.83% (0.0083) of the job
value (7/1/06)

BUILDING & COMBINATION OF TRADE SCOPE VALUATION BASED PERMIT FEES Plan Check:

Valuation below $1,000,000 Per
Permit 65% of Building Permit Fee 25% of Building Permit Fee Valuation above $1,000,000 Per
Permit 65% of Building Permit Fee 75% of Building Permit Fee Plan Revision Plan Check Hourly Actual Cost $235
Fire Plan Check/Review Refer to CCFD Fee
Schedule
Refer to CCFD Fee
Schedule
Ministerial Zoning Review Per
Permit - $752
Building Permit by Valuation ($):
$1-$4,000 Valuation Per
Permit $233 $478
$4,001-$25,000 Valuation
First 4,001
Each additional 1,000
Per
Permit $233
$14.30
$478
$23.70
$25,001-$50,000 Valuation
First 25,001
Each additional 1,000
Per
Permit $543.51
$10.21
$976.18
$52.06
$50,001-$100,000 Valuation
First 50,001
Each additional 1,000
Per
Permit $795.90
$7.35
$2,277.77
$30.60
$100,001-$500,000 Valuation
First 100,001
Each additional 1,000
Per
Permit $1,161.95
$5.90
$3,807.96
$11.27
$500,001-$1,000,000 Valuation
First 500,001
Each additional 1,000
Per
Permit $3,521.05
$5.00
$8,314.03
$9.00
$1,000,001-$5,000,000 Valuation
First 1,000,001
Each additional 1,000
Per
Permit $6,019.80
$3.75
$11,026.10
$1.81
-356-

CONSTRUCTION PERMIT FEES – TABLE NO. 1-A
Type of Fee Charged Adopted FY 25-26 Proposed FY 26-27
$5,000,001 and up Valuation
First 5,000,001
Each additional 1,000
Per
Permit $21,019.80
$3.75
$18,253.88
$0.90
Building Completion Deposit
Pursuant to HMC § 15.30.070
Per
permit w/
value
>50K
2% (0.02) of Valuation 2% (0.02) of Valuation

SINGLE TRADE & SCOPE SPECIFIC FLAT RATE PERMIT FEES
ADU Building Permit Per
Permit Subsidized/Waived $5,352
Kitchen / Bathroom Permit
Like for Like - No Wall Changes
Each Additional
Per
Permit
Each
Valuation Based
$382
$1,326
$261
Reroof Permit:

No Architectural Review
Requires Architectural Review
Per
Permit
$244.40, $440.51, 542.61
-
$823
$1,545
Tree Removal Permit Per
Permit Valuation Based $682
Demolition Permit:

Dwelling/Structure Removal
Exploratory
Swimming Pool / Spa
Per
Permit Valuation Based
$1,208
$982
$727
Solar Energy Storage Permit – w/
or w/o BESS
Per
Permit $233 $905
Electrical Vehicle Charger Permit Per
Permit $233 $588
Battery Energy Storage System
(BESS) Permit
Per
Permit $233 $789
Electrical Service Permit Per
Permit $539 $942
Temporary Power Permit Per
Permit $355 $433
Generator Permit Per
Permit $714 $800
Water Heater Permit Per
Permit $352 $421
HVAC System Permits:

Furnace Replacement - Like
for Like Location
Per
Permit $454 $421
HVAC Replacement - Like for
Like Location
Per
Permit $454 $566
HVAC System Upgrade /
Reconfiguration
Per
Permit $651 $834
New or New Location of
Exterior Units
Each - $159
-357-

CONSTRUCTION PERMIT FEES – TABLE NO. 1-A
Type of Fee Charged Adopted FY 25-26 Proposed FY 26-27
Additional M/E/P Appliance/Unit
(in addition to above flat rate
permit fee)
Each $76 + BASE PERMIT FEE $64 + BASE PERMIT FEE
Gas Line Permit Per
Permit $250 $577
Sewer Alterations and Swr/Wtr
Transfer of Title Testing Permits:

Voluntary Sewer Lateral
Alterations Permit (includes
Cleanout or Backwater
device)
Per
Permit $396 $468
Transfer of Title Sewer &
Water Line Testing Permit
Per
Permit $716 $545
With Sewer Lateral
Alterations (includes
Cleanout or Backwater
device)
Each $146 + BASE PERMIT FEE $306 + BASE PERMIT FEE
With Water Line Pressure
Reducing Valve or
Backflow Preventer
Each $37 + BASE PERMIT FEE $35 + BASE PERMIT FEE
Transfer of Title – Water Line
Testing Only Permit
Per
Permit $250 $382
Plumbing Repair Permit Per
Permit $250 $468

ADMINISTRATIVE FEES & PENALTIES
Building Reinspection Each $206 $248
After Hour Inspection
(3-hour minimum) Each
Rate: $210
3 hr min x 1.5 hourly rate
Add’l hours at 1.5 x rate
Sunday = 3 hr min hourly
rate x 2
Rate: $235.58
3 hr min x 1.5 hourly rate
Add’l hours at 1.5 x rate
Sunday = 3 hr min hourly
rate x 2
Construction Site Compliance
Inspection (complaint based) Per Hour - $214
Expired Permit Reinstatement
Staff time + Activation
fees based on a valuation
of the remaining work
$544 + Activation fees
based on a valuation of
the remaining work
Per
Permit
Construction Completion
Penalties
Pursuant to HMC §

15.30.060
Pursuant to HMC §

15.30.060
Stop Work Issued Pursuant to HMC §

15.04.070
Pursuant to HMC §

15.04.070
Stop Work Penalties Pursuant to HMC §

15.04.070
Pursuant to HMC §

15.04.070
Code Enforcement Penalties Pursuant to HMC § 8.16 Pursuant to HMC § 8.16 Recycle Monitoring Cost Pursuant to HMC §

15.18.040
Pursuant to HMC §

15.18.040
Recycle Fines Pursuant to HMC §

15.18.050
Pursuant to HMC §

15.18.050
-358-

HILLSBOROUGH, CA

DRAFT BUILDING AND PLANNING

FEE STUDY REPORT
APRIL 2026
ATTACHMENT 2
-359-
INTRODUCTION AND EXECUTIVE SUMMARY 1
LEGAL FRAMEWORK 4
USER FEE STUDY METHODOLOGY 7
RESULTS OVERVIEW 9
BUILDING 10
PLANNING 14
DEVELOPMENT SERVICES SURCHARGES 17
COST RECOVERY CONSIDERATIONS 21
APPENDIX – COMPARATIVE SURVEY 23

TABLE OF CONTENTS
-360-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 1
The draft report, which follows, presents the results of the Building and Planning Fee study conducted by Matrix Consulting Group for the Town of Hillsborough, California.

PROJECT BACKGROUND AND OVERVIEW
The Town of Hillsborough last conducted an evaluation of its Building and Planning fees over 15 years ago. While the Town does annually update its fees, a comprehensive evaluation of whether the fees are the right categories, capture the appropriate time of effort, and represent the full cost of Building and Planning services has not been evaluated.

The purpose of this study is to evaluate and determine the full cost (direct and indirect) of providing Building and Planning related services. The results of this study provide a tool for understanding current service levels and the costs associated with those services.

GENERAL PROJECT APPROACH AND METHODOLOGY
The methodology employed by Matrix Consulting Group is a widely accepted “bottom up” approach to cost analysis, where time spent per unit of fee activity is determined for each position within a Department or Program. Once the time spent for a fee activity is determined, all applicable Town costs are then considered in the calculation of the “full” cost of providing each service. The following table provides an overview of the types of costs applied in establishing the “full” cost of services provided by the Town:

TABLE 1: OVERVIEW OF COST COMPONENTS
Cost Component Description
Direct Fiscal Year 2025-26 Budgeted salaries, benefits, and allowable expenditures.

Indirect Division, departmental, clerical, and townwide support.

Together, the cost components in the table above comprise the calculation of the total “full” cost of providing a service, regardless of whether a fee for that service is charged. The work accomplished by Matrix Consulting Group in the analysis of the proposed fees for service involved the following steps:
• Department / Program Staff Interviews: The project team interviewed department / program staff regarding their needs for clarification to the structure of existing fee items or for addition of new fee items.
• Data Collection: Data was collected for each permit / service, including time estimates. In addition, all budgeted costs and staffing levels for Fiscal Year (FY) 2025-26 were entered into Matrix Consulting Group’s analytical software model.
• Cost Analysis: The full cost of providing each service included in the analysis was established.

INTRODUCTION AND EXECUTIVE SUMMARY
-361-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 2
• Review and Approval of Results with Town Staff: Department management reviewed and approved these documented results.

A more detailed description of the user fee methodology and legal and policy considerations is provided in subsequent chapters of this report.

SUMMARY OF RESULTS
When comparing fee-related revenue with the calculated total annual cost, the Town is under-recovering its costs by approximately $1.98 million or 56%. The following table shows revenue collected, total annual cost, the difference, and the resulting cost-recovery percentage by major division.

TABLE 2: ANNUAL COST RECOVERY ANALYSIS
Division
Fee-Related
Revenue
Fee-Related
Cost Difference
Current Cost
Recovery %
Building $2,110,631 $3,934,520 ($1,823,889) 54%
Planning $375,996 $529,450 ($153,454) 71%
Total $2,486,627 $4,463,970 ($1,977,343) 56%
The largest deficit is related to Building fees and is due to the valuation-based building permit fees. The Town’s current fees do not adequately capture the level of staff time and effort required to inspect those projects. In Planning, the largest source of the annual deficit is Substantial Alterations for Administrative Design Review.

The differences highlight the disparity between current fees charged and the actual cost of providing services. As such, the Town should closely evaluate and, where appropriate, modify fees to help bridge the cost-recovery gap.

The detailed documentation of this study shows over-collection for some fees (per-unit) and undercharging for most others. The results of this analysis will provide the Department and the Town with guidance on how to right-size their fees to ensure that each service unit is set at an amount that does not exceed the full cost of providing that service. The display of the cost recovery figures in this report is intended to provide a basis for policy development discussions among Town Council Members and Town staff and does not represent a recommendation on where or how the Town Council should act.

The setting of the “rate” or “price” for services, whether at full cost recovery or at a lower level, is a policy decision to be made only by the Town Council, with input from Town staff and the community.

CONSIDERATIONS FOR COST RECOVERY POLICY AND UPDATES
The Matrix Consulting Group recommends that the Town use the information contained in this report to discuss, adopt, and implement a formal Cost Recovery Policy, including a mechanism for the annual update of fees for service.
-362-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 3
ALIGN WITH TOWN’S FORMAL COST RECOVERY POLICY
The Government Finance Officers Association’s (GFOA) best practices for Establishing Government Charges and Fees states that governmental entities should adopt formal policies regarding charges and fees which include the jurisdiction’s intention to recover the full cost or partial costs of providing services, sets forth circumstances under which the jurisdiction might set a charge for fee at less than or more than 100% of full cost, and outlines the considerations that might influence the jurisdiction’s pricing decision.

The Matrix Consulting Group considers a formalized cost-recovery policy for various fees-for-service as an industry Best Management Practice. The Town has already adopted a formalized cost recovery policy.

The Town Council should ensure that the results of this analysis are implemented within the context of the existing formalized cost recovery policy.

CONTINUE AN ANNUAL FEE UPDATE / INCREASE MECHANISM
GFOA best practices for Establishing Government Charges and Fees state that governmental entities should periodically review and update charges and fees based on factors such as inflation, other cost increases, the adequacy of cost recovery, service use, and the competitiveness of current rates, to avoid large, infrequent fee increases.

The purpose of a comprehensive update is to revisit the analytical structure, service-level estimates, and assumptions, and account for any major shifts in cost components or organizational structures since the Town’s previous analysis. It is recommended that the Town establish a practice of conducting comprehensive analyses every five to seven years, as this approach captures changes in organizational structure and processes, as well as new service areas.

Between comprehensive updates, the Town should continue its best practice use of published industry economic factors, such as the Consumer Price Index (CPI), along with other internal or regional factors, to update the cost calculations established in the Study annually. -363-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 4
This section of the report is intended to provide an overview of the legal rules and regulations that govern what is considered a fee for service, how those fees can be calculated, and general principles, philosophies, and policy considerations for setting fees for service.

LEGAL FRAMEWORK
A “user fee” is a charge for service provided by a governmental agency to a public citizen or group.

California has several Government Codes and Propositions that regulate fees for service, with the purpose of ensuring that fees are reasonable and justified. The most prominent and relevant of these include:
• Proposition 26: passed in 2010, specifically outlined the difference between a fee and a tax and dictates that fees must be directly related to a service and cannot exceed the reasonable cost of that service.
• Government Code § 50076: clarifies that fees for service costs are not special taxes and do not need voter approval.
• Government Code § 65104: gives local governments the authority to charge planning and zoning fees to recover processing costs.

When determining fees for service, it is important to ensure there is a direct benefit – the service is provided directly to the payer, and that it is cost-based, and does not exceed the reasonable cost of providing the service.

GENERAL PRINCIPLES AND PHILOSOPHIES REGARDING USER FEES Local governments provide many types of general services to their communities. While all services provided by local government are beneficial to constituents, some are globally beneficial to all citizens, while others provide more direct benefits to a specific group or individual. The following table provides examples of services provided by local government within a continuum of the degree of community benefit received:

TABLE 3: SERVICES IN RELATION TO BENEFIT RECEIVED
"Global" Community
Benefit
•Police
•Park Maintenance
•Fire Suppression
"Global" Benefit and an
Individual or Group
Benefit
•Recreation /
Community Services
•Fire Prevention
Individual or Group
Benefit
•Building Permits
•Planning and Zoning
Approval
•Engineering
Development Review

LEGAL FRAMEWORK
-364-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 5
Funding for local government is obtained from myriad sources, such as taxes, fines, grants, special charges, and user fees. In recent years, alternative tax revenues, which typically offset service subsidies, have become increasingly limited. These limitations have led to increased attention on user fees as a revenue source that can offset costs otherwise subsidized (usually) by the general fund. In Table 3, services in the “global community benefit” section are primarily funded by voter-approved tax revenues.

In the middle of the table, one typically finds a mixture of taxes, user fees, and other funding sources.

Finally, in the “individual or group benefit” section of the table are the services provided by local government that are typically funded almost entirely by user fee revenue.

The following are two central concepts regarding the establishment of user fees:
v Fees should be assessed according to the degree of individual or private benefit gained from services. For example, the processing and approval of a land use or building permit generally result in a monetary gain for the applicant, whereas Police services and Fire Suppression are essential to the safety of the community at large.
v A profit-making objective should not be included in the assessment of user fees. In fact, California law requires that charges for services be in direct proportion to the costs of providing those services.

Once a charge for service exceeds the actual cost of providing the service, the term “user fee” no longer applies. The charge then becomes a tax subject to voter approval, which is why these studies are critical to ensure jurisdictions right-size their fees.

Therefore, it is commonly accepted that user fees are set at a level that recovers, at most, the cost of providing a particular service.

GENERAL POLICY CONSIDERATIONS REGARDING USER FEES
Undoubtedly, there are programs, circumstances, and services that justify a subsidy from a tax-based or alternative revenue source. However, it is essential that jurisdictions prioritize the use of revenue sources for service provision based on the continuum of benefits received.

Within services typically funded by user fees, the Matrix Consulting Group recognizes several reasons why Town staff or Town Council may not advocate full cost recovery. The following factors are key policy considerations in setting fees at less than 100 percent of cost recovery:
• Limitations posed by an external agency. The State or an outside agency will occasionally set a maximum, minimum, or limit on the jurisdiction’s ability to charge a fee. Examples include time spent copying and retrieving public documents.
• Encouragement of desired behaviors. Keeping fees for certain services below full cost recovery may lead to better community compliance. For example, if the cost of a permit to replace a water heater in a residential home exceeds the cost of the water heater itself, many citizens will avoid pulling the permit.
• The benefits received by the service user and the community at large are mutual. Many services that directly benefit a group or individual equally benefit the community. Examples include Planning Design Review, historical dedications, and certain types of special events. -365-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 6
The Matrix Consulting Group recognizes the need for policies that intentionally subsidize certain activities. The primary goals of a User Fee Study are to provide a fair and equitable basis for determining the costs of service provision and to ensure that the Town complies with State law.

SUMMARY OF LEGAL RESTRICTIONS AND POLICY CONSIDERATIONS Once the full cost of providing services is known, the next step is to determine the “rate” or “price” for services at a level not more than the full cost. The Town Council is responsible for this decision, which often involves balancing service levels and funding sources. The placement of a service or activity within the continuum of benefit received may require extensive discussion and, at times, fall into a “grey area.” However, with the resulting cost-of-service information from a User Fee Study, the Town Council can be assured that the adopted fee for service is reasonable, fair, and legal. -366-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 7
The Matrix Consulting Group utilizes a cost allocation methodology commonly known and accepted as the “bottom-up” approach to establishing User Fees. The term means that several cost components are calculated for each fee or service. These components then build upon each other to comprise the total cost for providing the service. The following chart describes the components of a full cost calculation:

The following subsections discuss the two components of the basis of the full cost.

TIME ESTIMATION
The use of time estimates is a reasonable and defensible approach, especially since experienced staff members who understand the Town's service levels and processes developed these estimates. The project team worked closely with Town staff in developing time estimates with the following criteria:
• Estimates represent average times for providing services. Extremely difficult or abnormally simple projects are not factored in the analysis.
• Estimates reflect the time required for the position or positions that typically perform the service. • Estimates are reviewed by the project team for “reasonableness” against their experience with other agencies.
• Estimates were not based on time-in-motion studies, as they are not practical for the scope of services and the time frame of this project.
• Estimates match current or proposed staffing levels to ensure no over-allocation of staff resources to fee- and non-fee-related activities.

The Matrix Consulting Group agrees that while the use of time estimates is not perfect, it is the best alternative available for setting a standard level of service on which to base a jurisdiction’s fees for service, and it meets the requirements of California law.

The alternative to time estimating is actual time tracking, often referred to as billing on a “time and materials” basis. Except in the case of anomalous or very large and complex projects, Matrix Consulting Group believes this approach to not be cost effective or reasonable for the following reasons:
• Accuracy in time tracking is compromised by the additional administrative burden required to track, bill, and collect for services in this manner.

TIME ASSUMPTION
(by position)

FULLY BURDENED
HOURLY RATE Total Cost

USER FEE STUDY METHODOLOGY
-367-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 8
• Additional costs are associated with administrative staff’s billing, refunding, and monitoring deposit accounts.
• Customers often prefer to know the fees for services in advance of applying for permits or participating in programs.
• Departments can better predict revenue streams and staff needs using standardized time estimates and anticipated permit volumes.

Situations arise where the size and complexity of a given project warrant time tracking and billing on a “time and materials” basis. The Matrix Consulting Group has recommended taking a deposit and charging Actual Costs for such fees, as appropriate, and itemizing them within the current fee schedule.

FULLY BURDENED HOURLY RATES
The fully burdened hourly rates calculated through this study include the following components:
• Salaries: FY25-26 Budgeted salaries were utilized and consolidated at the positional level. • Benefits: FY25-26 Budgeted benefits were utilized and consolidated at the positional level. • Productive Hours: Based on Hillsborough’s current personnel system rules, working or productive hours were calculated. This means taking the starting total working hours and reducing the hours by vacation, sick, holidays, training, and administrative leave, based on each bargaining unit. • Departmental / Divisional Overhead: This captures any internal service charges or operating supply costs, such as vehicles, supplies, etc. Additionally, this component includes the cost of support from the Director and the Administrative and Analytical staff, who do not directly work on fees. • Townwide Overhead: This captures support provided by the Town Administrative staff and comes from Town Finance as it is directly incorporated in the department’s budget.

Together, these components result in the generation of fully burdened hourly rates by position / classification and / or department / division. These rates were multiplied by the time assumptions to calculate the full cost of services noted in this report. -368-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 9
The motivation behind a cost of services (User Fee) analysis is for Town Council and Departmental staff to maintain services at a level that is both accepted and effective for the community and to maintain control over the policy and management of these services.

It should be noted that the results presented in this report are not a precise measurement. In general, a cost-of-service analysis takes a “snapshot in time,” where a fiscal year of financial and operational information is utilized. Changes to the structure of fee names, along with the use of time estimates, allow only for a reasonable projection of subsidies and revenue. Consequently, Town Council and Department staff should rely conservatively upon these estimates to gauge the impact of implementation going forward.

Discussion of results in the following chapters is intended as a summary of extensive and voluminous cost allocation documentation produced during the Study. Each chapter will include detailed cost calculation results for each fee including the following:
• Modifications: discussions regarding any proposed revisions to the current fee schedule, including elimination or addition of fees.
• “Per Unit” Results: comparison of the full cost of providing each unit of service to the current fee for each unit of service (where applicable).
• Annualized Results: utilizing volume of activity estimates, annual subsidies, and revenue impacts were projected where workload was available.

The full analytical results were provided to Town staff under separate cover from this summary report.

RESULTS OVERVIEW
-369-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 10
The Building Division within the Building and Planning Department is responsible for reviewing and inspecting private development projects to ensure compliance with the California Building Code. These services include plan review, building inspection, and processing administrative permits. The following subsections discuss fee schedule modifications, detailed per-unit results, and annual revenue impacts for the fee-related services provided by the Building Division.

FEE SCHEDULE PROPOSED MODIFICATIONS
▒

CONSOLIDATED FEES
Staff proposed consolidating the single-trade and combination fees, where appropriate, into either their own standalone fee categories or the valuation-based fee structure. ▲

EXPANDED FEES
The Town considered expanding the valuation structure to add a new category for projects $5 million and above. The previous schedule stopped at $1 million. The new category helps create a more balanced progression for larger projects.
◆

MODIFIED FEES
Re-roof fees were modified from being based on squares / valuation to be based on whether architectural or no architectural review is required.
✖ ELIMINATED FEES
Staff proposed removing a handful of administrative fees, such as photocopies, scans, construction trailers, etc., as these services are covered under the clerk or will be consolidated under valuation. ✖ NEW FEES
New fees were introduced to support encroachment permits and ministerial planning reviews.

These changes aim to simplify the fee structure, improve equity across project types, and reduce administrative burden.

DETAILED RESULTS
The Building Division is responsible for collecting fees for plan check, building permits based on valuation, combination permits, and standalone trade (mechanical, electrical, and plumbing). The Division will continue to utilize a standard multi-pronged approach with some standardized scope permits being assessed based on flat fees and others that vary in complexity being assessed based on project valuation. This method reflects the general principle that larger, more complex, and more costly projects require greater staff time and resources to review and inspect and therefore should be charged a higher fee than smaller, lower-cost projects.

The use of valuation as a basis for building permit fees is a common practice among jurisdictions throughout the Bay Area, State, and across the country, as it provides a straightforward and widely

BUILDING
-370-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 11
understood mechanism for scaling fees to the size and complexity of a project. Under this approach, a project valuation serves as the basis for the Town’s determination of the applicable permit fee. This project did not evaluate the method or approach by which the Town determines the valuation to be used for the permit fee. Title 24 / California Building Standards Code authorizes a jurisdiction to take the applicant/contractor-submitted valuation, compare it to the current market rate, and either reject it and recalculate an appropriate value (based on industry standards and market rate) or accept it.

The Town assesses plan review fees for all projects; however, certain projects are conducted in-house (less than $1,000,000), and others that are above $1,000,000 are outsourced to consultants, as these scopes of work require specialized certifications for compliance review. Rather than maintaining a separate and independent fee schedule for plan review services, these fees are calculated as a percentage of the associated building permit fee, a common practice among jurisdictions throughout the Bay Area and across the country. This approach ties plan review fees directly to project valuation, recognizing that larger and more complex projects generally require a proportionally greater level of plan review effort. Therefore, through this process, the Plan Review fees were set based on the in-houseversus-outsourced threshold.

The total cost calculated for each service includes direct staff costs, as well as Departmental and Townwide overhead. The following table lists the fee name, current fee, total cost, and the difference for each service.

TABLE 4: TOTAL COST PER UNIT RESULTS – BUILDING
Fee Name Current Fee Total Cost Difference
Fees for Building and Combination of Trades
Plan Check
Up to $1,000,000 Valuation 65% 25% 40%
$1,000,000+ Valuation 65% 75% (10%)
Plan Check Revision Fee Actual Cost $235 N/A
Building Permit Base Fee by Valuation ($):
$1 - $4,000 Valuation $233 $478 ($245)
$4,001 - $25,000 Valuation
First 4,001 $233 $478 ($245)
Each additional 1,000 or fraction thereof $14.30 $23.70 ($9) $25,001 - $50,000 Valuation
First 25,001 $543.51 $976.18 ($433)
Each additional 1,000 or fraction thereof $10.21 $52.06 ($42) $50,001 - $100,000 Valuation
First 50,001 $795.90 $2,277.77 ($1,482)
Each additional 1,000 or fraction thereof $7.35 $30.60 ($23) $100,001 - $500,000 Valuation
First 100,001 $1,161.95 $3,807.96 ($2,646)
Each additional 1,000 or fraction thereof $5.90 $11.27 ($5) $500,001 - $1,000,000 Valuation
First 500,001 $3,521.05 $8,314.03 ($4,793)
Each additional 1,000 or fraction thereof $5 $8.66 ($3.66) $1,000,001 to $5,000,000 and up Valuation
First 1,000,001 $6,019.80 $11,026.10 ($5,006)
Each additional 1,000 or fraction thereof $3.75 $1.81 $1.94 $5,000,000 and up Valuation
First $5,000,001 $21,019.80 $18,253.88 $2,766
-371-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 12
Fee Name Current Fee Total Cost Difference
Each additional 1,000 or fraction thereof $3.75 $0.90 $2.85 Combo Permits
ADU Building Permit Modified $5,352 N/A
Kitchen / Bathroom Remodel (No Wall Removal - Like for Like) Valuation $1,326 ($753) Each additional $382 $261 $121
Demolition Permit:

Dwelling Removal Valuation $1,208 N/A
Exploratory Valuation $892 N/A
Swimming Pool / Spa Removal Valuation $727 N/A
Reroof Permit:

No Architectural Review Required Modified $823 ($587)
Requires Architectural Review Modified $1,545 ($1,118)
Tree Removal Permit Valuation $682 N/A
Generator Permit $714 $800 ($86)
ELC Vehicle Charger Permit $573 $588 ($15)
Battery Energy Storage System Permit $471 $789 ($318)
Solar Energy System Permit - Up to 15 kW With or Without BESS $471 $905 ($434) Additional kW >15kW New $106 N/A
Electrical Service Permit $539 $942 ($403)
Temporary Power Permit $355 $433 ($78)
Water Heater Permit $352 $421 ($69)
HVAC System Permits:

Furnace Replacement - Like for Like Location $454 $421 $33 HVAC Replacement - Like for Like Location $454 $566 ($112) Exterior AC/Heat Pump Unit - New Location New $159 N/A
HVAC System Upgrade / Reconfiguration $651 $834 ($183)
Additional M/E/P Appliance $76 $64 $12
Gas Line Permit $250 $577 ($327)
Sewer and Water Line Alterations and Transfer of Title Testing Permits
Voluntary Sewer Lateral Alterations Permits - includes Cleanout or Backwater Device $396 $468 ($72)
Transfer of Title Sewer & Water Line Test Permit $716 $545 $171 With Lateral Alterations Includes Cleanout or Backwater Device $146 $306 ($160)
With Water Line Pressure Reducing Valve or Backflow
Preventer Install $37 $35 $2
Transfer of Title - Water Line Test Only $250 $382 ($132) Plumbing Repair / Install Permit $250 $468 ($218)
Miscellaneous Fees Administrative Fees & Penalties
Ministerial Planning Review New $752 N/A
Building Reinspection Fee $206 $248 ($42)
After Hour Inspection Fee (3-hour minimum)
Base Fee OT Rate $682 N/A
Each Additional Hour OT Rate $227 N/A
Sunday Weekend Rate $263 N/A
Construction Site Compliance Inspection Fee New $214 N/A Expired Permit Reinstatement Staff Time $544 N/A
PW/Eng Fees
Encroachment Permit Administration Fees:

With Engineering Review New $274 N/A
With Engineering Utility Review New $335 N/A
-372-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 13
Fee Name Current Fee Total Cost Difference
Over the Counter New $544 N/A
The Town generally under-recovers for its building-related services. These under-recoveries are most apparent in the valuation-based fees. There are some minor over-recoveries that indicate a need to modify or expand the fee schedule in response to the proposed changes, such as breaking out plan review or separating standalone and miscellaneous permits.

BUILDING FEES — KEY FINDINGS
~49%
of current fees are below actual cost
~16%
of current fees are above actual cost
~35%
are new or restructured fees
Key Takeaway: The cost-of-service analysis found that the Town’s current fee schedule significantly underrecovers the true cost of providing building, permit, and inspection services. The majority of fees fall below actual costs.

ANNUAL REVENUE IMPACT
Based on the prior year’s workload information, the Building Division has a deficit of roughly $1.8 million.

The following table shows the revenue at the current fee, total projected annual cost, and the resulting difference by major fee category.

TABLE 5: ANNUAL RESULTS – BUILDING
Fee Category Revenue at Current Fee Annual Cost Difference Building Plan Check $590,700 $674,579 ($83,879)
Building Valuation-Based Permits $827,647 $2,000,166 ($1,172,518) Combo / Trade Permits $670,014 $1,057,989 ($387,975)
Miscellaneous / Admin Fees $22,270 $9,512 $12,758
PW / Eng Fees $0 $192,275 ($192,275)
Total $2,110,631 $3,934,520 ($1,823,889)
The Building Division has an annual cost recovery of roughly 54%. The largest under-recovery is for Building Valuation-Based Permits at $1.2 million. Within that category, the largest differences are in valuations between $50,000 and $100,000 and between $100,000 and $500,000, as these are the primary types of projects the Town sees. Reviewing and right-sizing these fees will allow the Town to achieve higher cost recovery.
-373-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 14
The Planning Division within the Building and Planning Department is responsible for ensuring development projects are in compliance with the Town’s zoning ordinance and design guidelines. Fees related to these services include administrative staff level design review, discretionary board level design review, environmental and cultural resource reviews, and wireless facilities. The following sections discuss fee schedule modifications and detailed per-unit results for the fee-related services associated with the Planning Division.

FEE SCHEDULE MODIFICATIONS
During discussions with Town staff, the Planning Division’s fee schedule was restructured. Similar types of services were grouped together, new categories were created where appropriate, as such there is no comparison of new, eliminated, or modified fees, as to the numerous verbiage and structural modifications made to the fee structure. The purpose behind this organizational restructuring of the schedule was to more accurately reflect the various project types outlined in the municipal code and different levels of staff effort associated with those activities. The project team aligned the current fee amounts with the most closely aligned new fee categories to better reflect the differences in cost and project revenue.

DETAILED RESULTS
The Planning Division collects fees for Accessory Dwelling Units, Administrative Design Reviews, Architecture Design Review Board (ADRB) Reviews, Project Revisions, Town Council Reviews, Private School Use Permits, and wireless communication facilities, among others. The total cost calculated for each service includes direct staff costs, as well as Departmental and Townwide overhead. The following table lists the fee name, current fee, total cost, and the difference for each service.

TABLE 6: TOTAL COST PER UNIT RESULTS – PLANNING
Fee Name Current Fee Total Cost Difference
Conceptual Development Feasibility Review $5,000 $5,000 $0 Deed Restriction / Covenant Recordation & Filing Fee $296 $868 ($572) Accessory Dwelling Unit Review Fees
Ministerial ADU Zoning Clearance Review - Class 1 $685 $663 $22 Ministerial ADU Locally Regulated Review - Class 2 $685 $1,141 ($456) Discretionary ADU Exception Review - Type B Project $905 $1,723 ($818) Design Review Preapplication Meeting and Checklist
Preparation $1,396 $1,003 $393
Administrative Design Review (Staff-Level) Project Fees - Type B Projects
Type B Project Public Notification $224 $284 ($60)
Architectural Style/Exterior Material Changes $736 $1,003 ($267) Addition/Accessory Structure: < 500 sq ft $1,214 $2,029 ($815) Substantial Alterations (not triggering a "Tear Down") $1,214 $2,733 ($1,519) Landscaping: > 10,000 sq ft or > 50 cy of earth
movement $1,136 $1,982 ($846)

PLANNING
-374-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 15
Fee Name Current Fee Total Cost Difference
Street Adjacent Fence, Gate, or Columns $1,136 $1,109 $27 Tree Removal (nonhazardous) $386 $1,076 ($690)
Architecture and Design Review Board (ADRB) Project
Fees - Type A Projects
Preliminary Board Review $2,476 $2,395 $81
Type B Project Referred for ADRB Review New $3,172 N/A
Second Story Addition visible from Right of Way (<
500 sq ft) or Accessory Structures (> 500 sq ft) $2,787 $3,643 ($856) Addition: > 500 sq ft $2,381 $3,862 ($1,481)
Substantial Alterations and "Tear Down" $3,820 $5,739 ($1,919) New Dwelling: Full Demo of Existing or New on
Vacant Lot $4,403 $4,986 ($583)
Landscaping required for New Dwelling /
"Tear Down" submitted with project $1,469 $1,998 ($529) Tennis Court or Deferred Landscaping required for
New Dwelling / "Tear Down" $3,820 $4,134 ($314)
Continuance of ADRB Review $1,148 $1,351 ($203)
Appeal of a Staff-Level decision $2,556 $4,652 ($2,096) Historic Resource Evaluation
Town Administration Fee Modified $1,524 N/A
Consultant Fee Actual Cost Actual Cost N/A
Biological / Archaeological / Tribal Resources Evaluation Modified Actual Cost
+ 20% N/A
Categorical Exemption / Neg Dec / Mitigated Nec Dec /
Environmental Impact Report Modified
Actual Cost
+ 20% N/A
Project Revision Fees
Revisions reviewed by Staff $217 $219 ($3)
Revisions requiring ADRB review $2,219 $1,610 $609
Project Extension Fees
Extension request requiring staff review $763 $668 $95
Extension request requiring Board review $1,148 $1,304 ($156) City Council Review Fees
Dwelling > 8,000 sq ft FAR $4,668 $3,300 $1,368
Appeal of ADRB decision $5,488 $5,793 ($305)
Variance $6,598 $6,389 $209
SB 9 Projects
Optional Pre-Submittal consultation $1,396 $2,828 ($1,432) SB 9 Lot Split review $20,000 $20,000 $0
SB 9 Two-Unit review $20,000 $20,000 $0
Annexation
Pre-Submittal consultation $1,396 $3,426 ($2,030)
Annexation review $10,000 $10,000 $0
Private School Use Permit
Permit to Operate $7,500 $7,500 $0
Annual Certification: < 25 Students $431 $770 ($339)
Annual Certification: > 25 Students $900 $1,206 ($306)
Wireless Communication Facilities
Optional Pre-Submittal consultation $1,396 $1,152 $244
Minor Wireless Project review $10,000 $10,000 $0
Major Wireless Project review $20,000 $20,000 $0
Appeal $5,000 $5,000 $0
General Plan Amendment Actual Cost $5,000 N/A
Restrictive Covenant (Complex) New $2,500 N/A
-375-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 16
Fee Name Current Fee Total Cost Difference
Film Permit Application Fee New $1,368 N/A
Even though the Planning fee schedule was reorganized, most fees were mapped to the existing fee schedule. Generally, the division is under-recovering for its flat fees. The largest deficit is associated with appeals and pre-application meetings, which are traditionally subsidized activities. There are a handful of over recoveries associated with streamlining fee processes.

PLANNING & ZONING FEES — KEY FINDINGS
50%
of fees are below actual cost
18%
of fees are above actual cost
16%
of fees are already at cost
16%
are new or restructured fees
Key Takeaway: Over half of the Town’s planning and zoning fees currently fall below the true cost of service— meaning the General Fund subsidizes these reviews. The largest gaps are in design review and Architecture and Design Review Board (ADRB) project fees, where current charges recover as little as half the actual cost.

ANNUAL REVENUE IMPACT
Based on the prior year’s workload information, the Planning Division has a deficit of roughly $153,000.

The following table shows the revenue at the current fee, total projected annual cost, and the resulting difference by major fee category.

TABLE 7: ANNUAL RESULTS – PLANNING
Fee Category Revenue at Current Fee Annual Cost Difference Conceptual Development Review $30,000 $30,000 $0
Accessory Dwelling unit Fees $46,970 $74,704 ($27,734)
Administrative Design Review Fees $164,030 $238,990 ($74,960) Architecture Design Review Board Fees $108,908 $139,001 ($30,093) Historical + CEQA Deposits $0 $15,240 ($15,240)
Project Extension $3,815 $3,340 $475
City Council Review $10,156 $9,093 $1,063
SB9 Projects $4,188 $8,484 ($4,296)
Private School Use Permit $2,231 $3,182 ($951)
Wireless Communication Fees $698 $576 $122
Film Permits $5,000 $6,840 ($1,840)
Total $375,996 $529,450 ($153,454)
Planning has an annual cost recovery of roughly 71%. The primary source of this under-recovery is Administrative Design Review fees. Within that category, the greatest impact is from Additions and Landscaping. The Town annually processes a large number of these applications, and the per-unit deficit is approximately $800+, resulting in the large annual fiscal impact. -376-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 17
There are two typical surcharges assessed as part of the development review process – General Plan Maintenance Fee and Technology fee. Currently, Hillsborough assesses both of these fees. The following subsections discuss the calculation and application of the General Plan Maintenance Fee and Technology Fee and provides comparative context to other jurisdictions.

GENERAL PLAN MAINTENANCE FEE
A General Plan Maintenance fee is meant to account for updates to the general plan, zoning ordinance, housing elements, hazard assessments, and other long-range planning activities that are part of the larger General Plan.

The General Plan Maintenance fee is governed by Government Code Section 66014(b), which states that fees “may include the costs reasonably necessary to prepare and revise the plans and policies that a local agency is required to adopt before it can make any necessary findings and recommendations.” This code states that fees can be charged against zoning changes, zoning variances, use permits, building inspections, and filing applications.

The Town applies the General Plan Maintenance fee at the building permit phase so that development projects proceeding to construction bear the associated long-range planning costs. To ensure an appropriate share, the fee is applied only to permits that materially affect density or the community “footprint,” including projects that create a new dwelling unit or substantially increase or replace residential floor area and/or lot coverage (e.g., new dwellings, tear-down/rebuilds, ADUs, substantial additions, and other major site development improvements) —and are most likely to drive Townwide General Plan and Zoning policy work. These types of projects can have broader implications for land-use intensity and compliance with housing mandates and may also entail community-wide hazard and environmental planning considerations (e.g., wildfire risk associated with changes in vegetation and site development patterns). Limiting applicability in this way helps ensure that minor, standalone permits and other small-scale work that do not meaningfully relate to those policy demands are not unfairly burdened.

To further ensure equity across these projects, the Town assesses the fee as a percentage of the construction valuation. Construction valuation serves as a practical proxy for project scale and intensity among the projects subject to the fee. Using valuation to allocate costs helps distribute the fee proportionately, such that larger-scale projects bear a larger share of the long-range planning costs the fee is intended to recover.

The Town previously conducted an in-depth review and update of its General Plan Maintenance fee in 2022. However, after that new fee was adopted, it was revealed that the Town is still consistently undercollecting to cover its annual expenses for long-range activities. Therefore, the project team looked at an average of the three prior years of actual expenses incurred for long-range planning activities, which was estimated at $335,420.

DEVELOPMENT SERVICES SURCHARGES
-377-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 18
The project team calculated the full cost of the General Plan Maintenance fee using the recommended methodology, applying the fee only to the project valuation associated with density-related building permits. The following table shows this calculation:

TABLE 8: GENERAL PLAN MAINTENANCE FEE CALCULATION
Category Amount
Total Annual Cost $335,420
Building Permit Fee Valuation – Major Projects $54,874,945 General Plan Maintenance Fee 0.61%
The full cost of the General Plan Maintenance fee is 0.61% of Project Valuation. The following table compares the Town’s current fee to the full cost fee and associated difference:

TABLE 9: GENERAL PLAN MAINTENANCE FEE – PER UNIT RESULTS Category Current Fee Full Cost Difference
General Plan Maintenance Fee 0.51% 0.61% (0.10%)
The Town is currently under-recovering by approximately 0.10 percentage points for its General Plan Maintenance fee. The following table shows the annual impact associated with the general plan fee:

TABLE 10: GENERAL PLAN MAINTENANCE FEE – ANNUAL RESULTS Category Revenue at Current Fee Annual Cost Difference
General Plan Maintenance Fee $270,560 $335,420 ($64,860) Annually, the Town is under-recovering by approximately $65,000, or recovering 81% of its costs associated with the General Plan Maintenance fee. The increase in the fee percentage and stronger nexus to all density-related project types will help bridge this cost-recovery gap.

As part of this analysis, the project team conducted a comparative survey of other local jurisdictions and their assessment of a General Plan Maintenance fee. Like other comparative efforts, the survey below simply shows the fees charged by the jurisdiction and does not include the basis upon which the other jurisdictions calculated or developed their fee. The following table shows the results of this comparative analysis:

TABLE 11: GENERAL PLAN MAINTENANCE FEE – COMPARATIVE SURVEY Jurisdiction Fee Amount
City of Burlingame 0.20% of Building Valuation
Town of Los Altos Hills N/A
Town of Portola Valley N/A
City of Saratoga 0.285% of Building Valuation
Town of Woodside N/A
Only two comparable jurisdictions charge general plan maintenance fees, and the Town’s current and fullcost fees are higher than those assessed by those jurisdictions. However, it is important to note that the development environment in those jurisdictions is also very different from that of the Town, impacting the Town's ability to apply this fee to specific types of projects and activities. The Town is the only residential development, which results in limited projects upon which this fee can be applied, while both -378-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 19
Burlingame and Saratoga have commercial development, which can also absorb a portion of these updates.

TECHNOLOGY SURCHARGE FEE
The Town’s current Technology fee has been 5% of the building permit fee since 2003. A Technology Fee allows a jurisdiction to cover the costs associated with its permitting system, staff time for managing the system, system acquisition, mobile devices used for permitting, etc. The Town has recently implemented a new permitting system and, as such, has provided updated cost estimates for these activities. The costs included in this estimate are the capital costs for a permitting module, annualized over 51 years.

The following table shows the annual cost by cost category:

TABLE 12: TECHNOLOGY SURCHARGE COST COMPONENTS
Item Total Cost # of Years Annualized Cost
Initial Purchase $151,110 5 $30,222
One-Time Support $100,000 5 $20,000
Total Annual Cost $50,222
To eventually replace the system / module, the Town would need to set aside approximately $50,000 annually. The Town currently calculates this as a percentage of the building permit fees. While Planning uses the system, similar to the General Plan maintenance fee, it is appropriate to recover this during the Building phase, as it represents the full breadth and scope of a project, since those projects have already previously gone through the design review process, or they may only require building permits and therefore would only be assessed this fee at the Building phase. The following table shows this calculation:

TABLE 13: TECHNOLOGY FEE CALCULATION
Category Amount
Total Annual Cost $50,222
Total Building Annual Cost $3,934,520
Technology Fee 1%
Based on this calculation, the Town’s full cost Technology Fee would be 1% of the building permit fee.

Therefore, if a permit fee was $100, the Technology fee collected would be $1; whereas if a permit fee was $1,000, the Technology fee collected would be $10. Application of the Technology fee as a percentage of the building permit fee ties the scope and size of the permit to the greater impact to the system. The following table compares the Town’s current fee to the full cost and provides the associated difference:

TABLE 14: TECHNOLOGY FEE – PER UNIT RESULTS
Category Current Fee Full Cost Difference
Technology Fee 5.00% 1.00% 4.00%
1 5 years is a standard lifecycle, as usually significant changes have occurred that there will be similar upfront expenses incurred by the Town. -379-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 20
The Department is currently over-recovering by about 4 percentage points for its Technology Fee.

However, even with this over-recovery, based on actual revenue collected, it does not appear that this Technology fee is being consistently charged. It should be charged across all building permit types to ensure the appropriate amount is collected. Additionally, with the proposed full cost of building permits, the 1% collects more revenue than the 5%. The following table shows the annual impact associated with the technology fee:

TABLE 15: TECHNOLOGY FEE – ANNUAL RESULTS
Category Revenue at Current Fee Annual Cost Difference
Technology Fee $33,233 $39,345 ($6,112)
Overall, the Technology Fee shows an annual deficit of $6,000. As such, even though the fee is being proposed to be reduced, it would still generate additional revenue due to increased permit fees and more appropriate application of the Technology Fee.

As part of this analysis, the project team conducted a comparative survey of other local jurisdictions and their assessment of a Technology Fee. Like other comparative efforts, the survey below simply shows the fees charged by the jurisdiction and does not include the basis upon which the other jurisdictions calculated or developed their fee. The following table shows the results of this comparative analysis:

TABLE 16: TECHNOLOGY SURCHARGE – COMPARATIVE SURVEY
Jurisdiction Fee Amount
City of Burlingame 2% of Permit Fees
Town of Los Altos Hills N/A
Town of Portola Valley N/A
City of Saratoga 8.10% of Permit Fees
Town of Woodside N/A
The Town’s current fee is lower than the City of Saratoga’s, and its full cost fee is lower than the City of Burlingame’s.

SURCHARGE FUND BEST PRACTICES
It is best practice to collect and account for General Plan Maintenance and Technology surcharges in separate accounts, as this ensures compliance with funding requirements, enables appropriate allocation of funds to general plan or technology-related activities, and mitigates potential issues with commingling funds. The Town already tracks these revenues and separate funds and subaccounts and meets this best practice.
-380-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 21
The following sections provide guidance on how and where to increase fees, determine annual update factors, and develop cost-recovery policies and procedures.

FEE ADJUSTMENTS
This study has documented and outlined on a fee-by-fee basis where the Town is under- and overcollecting for its fee-related services. Town and Department management will now need to review the study results and adjust fees in accordance with the Department's and Town’s philosophies and policies.

The following graphic outlines the major options the Town has in adjusting its fees:
▼
REDUCE
▲

FULL COST
▶

PHASE IN
Fees above cost must be reduced to
match actual cost of service to be in
compliance.

Fees below cost can be increased
immediately to full recovery.

Large gaps can be closed gradually
over a set period.

The Town will need to review the results of the fee study and the associated cost-recovery levels and determine how best to adjust fees. While decisions regarding fees that currently show an over-recovery are straightforward, the Town can choose to either adopt fees at full cost immediately or phase in any large increases.

ANNUAL ADJUSTMENTS
Conducting an annual comprehensive analysis of fee-related services and costs would be quite cumbersome and costly. The general recommendation is to conduct a comprehensive fee analysis every 5 to 7 years. This allows jurisdictions to ensure they account for organizational changes, such as staffing levels and merit increases, as well as process efficiencies, code or rule changes, or technology improvements. Developing annual update mechanisms enables jurisdictions to maintain current costrecovery levels while accounting for increases in staffing or permit-service expenditures. The following graphic provides insight into two options.

COLA / Personnel Cost Factor
Annual salary adjustments (typically 2–3%) to offset rising cost of living. Not tied to merit or seniority.

CPI / ECI Factor
Regional cost indicators calculated by the Bureau of
Labor Statistics. Released at various intervals, specific to states and regions.

The Town of Hillsborough should continue its practice of implementing annual fee increases.

POLICIES AND PROCEDURES
This study has identified areas where the Town is under-collecting the costs associated with providing services. This known funding gap is therefore being subsidized by other Town revenue sources.

COST RECOVERY CONSIDERATIONS
-381-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 22
The Town should review and implement the results of this analysis, in line with its existing cost recovery policies, to ensure that current and future decision-makers understand how and why fees were determined and set.

The Matrix Consulting Group has extensive experience analyzing local government operations across the United States and has calculated typical cost-recovery ranges. The following table outlines cost recovery ranges by major service area.

TABLE 17: TYPICAL COST RECOVERY RANGES BY MAJOR SERVICE AREA Service Areas Typical Cost Recovery Ranges
Building 80-100%
Planning 50-80%
The following graph shows how Hillsborough compares with industry cost-recovery range standards.

Building is below the typical cost-recovery range, while Planning is within it. Additionally, the Town’s current cost recovery policy aims to keep these two service areas as close to 100% as possible, with key exceptions for community-based services and impacts. As such, these two service areas are also below the Town’s internal cost recovery policy goals.
54%
71%
0%
20%
40%
60%
80%
100%
Building Planning
Cost Recovery %
Current Revenue Cost Recovery vs. Typical Revenue Cost Recovery Typical Cost Recovery Current Cost Recovery
-382-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 23
As part of the Building and Planning fee study for the Town of Hillsborough, Matrix Consulting Group conducted a comparative survey of user fees. The Town identified five municipalities for inclusion in the comparative survey: the City of Burlingame, the Town of Los Altos Hills, the Town of Portola Valley, the City of Saratoga, and the Town of Woodside. The project team then reviewed public documents (e.g., agenda items, staff reports, budgets, fee schedules, and ordinances) and/or contacted jurisdictions to obtain comparative information.

While this full report provides the Town with a reasonable estimate and understanding of the true costs of providing services, many jurisdictions also wish to benchmark themselves against other comparable jurisdictions to understand the local “rates” for comparable services. This type of comparative analysis allows the Town to assess what types of changes in fee levels its community can bear. However, benchmarking does not provide adequate information on the relationship between other jurisdictions’ costs and their fees (e.g., policy decisions to subsidize, cost-recovery goals, etc.). To contextualize this portion of the analysis, the project team provided economic and recency factors for the comparable jurisdictions.

The following sections detail various factors to consider when reviewing comparative survey results, as well as graphical comparisons of current fees and total calculated costs for various permits issued or services provided by the Town.

ECONOMIC FACTORS
To provide additional context to the comparative survey information, the project team collected economic factors for the jurisdictions included. Three important economic factors to consider when comparing fees across multiple jurisdictions are: population, budget, and workforce size. These factors can impact how and when fees are administered, as a jurisdiction with a smaller population may choose to not charge a fee, or a smaller workforce size may inhibit their ability to administer a fee.

The following tables rank each jurisdiction from smallest to largest for each of these economic factors:

TABLE 18: RANKING OF JURISDICTIONS BY POPULATION
Jurisdiction Population2
Town of Portola Valley 4,285
Town of Woodside 5,206
Town of Los Altos Hills 8,548
Town of Hillsborough 11,254
City of Saratoga 31,110
City of Burlingame 31,552
2 California Department of Finance estimates as of 1/1/2025 were used to determine each jurisdiction’s population.

APPENDIX – COMPARATIVE SURVEY
-383-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 24
TABLE 19: RANKING OF JURISDICTIONS BY TOTAL BUDGET
Jurisdiction FY25-26 Budget3
Town of Portola Valley $9,405,159
Town of Woodside $14,920,390
Town of Los Altos Hills $27,961,848
City of Saratoga $52,702,710
Town of Hillsborough $85,572,464
City of Burlingame $162,150,000
TABLE 20: RANKING OF JURISDICTIONS BY FTE
Jurisdiction FY25-26 Authorized FTE
Town of Portola Valley 15.87
Town of Woodside 24.75
Town of Los Altos Hills 30.00
City of Saratoga 56.60
Town of Hillsborough 98.00
City of Burlingame 240.40
Compared with the surveyed jurisdictions, the Town of Hillsborough ranks near the middle to higher end for population, budget, and staffing.

RECENCY FACTOR
While the above comparative information can provide some perspective when comparing Hillsborough’s fees with those of surveyed jurisdictions, other key factors to consider include when a jurisdiction’s fee schedule was last updated and when the last comprehensive analysis was undertaken. It is important to note that even when jurisdictions have conducted recent fee studies, their fees are not always set at full cost recovery. The comparative results show only the adopted fee for the surveyed jurisdiction, not necessarily the full cost of the comparable service.

The following tables detail when each surveyed jurisdiction last conducted a fee analysis and when they last updated their fee schedule:

TABLE 21: LAST FEE SCHEDULE UPDATE
Jurisdiction Response
Town of Portola Valley 2024
Town of Woodside 2025
Town of Los Altos Hills 2025
City of Saratoga 2026
City of Burlingame 2025
3 To ensure appropriate comparisons, full operating budget (all funds) has been used for all jurisdictions. -384-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 25
TABLE 22: LAST FEE STUDY CONDUCTED
Jurisdiction Response
Town of Portola Valley Currently ongoing
Town of Woodside 2020
Town of Los Altos Hills 2020
City of Saratoga 2023
City of Burlingame 2024
Most of the surveyed jurisdictions have published an updated fee schedule within the last year. Other than Portola Valley, most jurisdictions have conducted a fee study within the past six years.

ADDITIONAL FACTORS
Along with keeping the statistics outlined in the previous sections in mind, the following issues should also be noted regarding the use of market surveys in the setting of fees for service:
• Cost Recovery Factors: Each jurisdiction and its fees are different, and many are not based on the actual cost of providing services, as various policy decisions may subsidize services. • Fee Variance Factors: A fee with the same name may encompass different types of services or activities across jurisdictions. Variability may stem from differences in service delivery models (e.g., in-house vs. contracted), the scope of work included under the fee, and staffing configurations, all of which can influence how indirect and overhead costs are allocated.

In addition to the issues noted, market surveys can also risk creating a confusing excess of data that obscures rather than clarifies policy issues. Because each jurisdiction is different, the Matrix Consulting Group recommends using the market comparison of fees as a secondary decision-making tool rather than the primary method for determining an acceptable price point for services.

COMPARATIVE SURVEY RESULTS
As part of this study, the project team conducted a survey of how the Town’s current user fees and calculated full costs compare to those of other identified jurisdictions. The following subsections provide a comparative look at several fee-related services offered by the Town and the surveyed jurisdictions.

BUILDING
To compare the Town’s current building-related fees with those of other jurisdictions, the following graphics were developed. These graphics include permit and plan check fees for both the Town of Hillsborough and other comparable jurisdictions.
-385-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 26
# Jurisdiction Fee Amount
1 Burlingame $27,575
2 Saratoga $13,189
3 Hillsborough - Full Cost $13,099
4 Woodside $12,614
5 Los Altos Hills $11,534
6 Hillsborough - Current Fee $7,872
7 Portola Valley $4,312
Red line = Average Fee $13,845
New SFR $750,000 Valuation
# Jurisdiction Fee Amount
1 Burlingame $9,743
2 Hillsborough - Full Cost $5,816
3 Woodside $4,977
4 Saratoga $3,889
5 Portola Valley $3,434
6 Los Altos Hills $2,995
7 Hillsborough - Current Fee $2,647
Red line = Average Fee $5,007
Residential Addition Valuation $175,000
# Jurisdiction Fee Amount
1 Burlingame $1,868
2 Hillsborough - Full Cost $1,326
3 Portola Valley $1,204
4 Woodside $883
5 Saratoga $632
6 Los Altos Hills $619
7 Hillsborough - Current Fee $573
Red line = Average Fee $1,041
Kitchen Remodel
# Jurisdiction Fee Amount
1 Hillsborough - Full Cost $823
2 Saratoga $771
3 Portola Valley $643
4 Los Altos Hills $619
5 Burlingame $563
6 Woodside $532
7 Hillsborough - Current Fee $244
Red line = Average Fee $625
Residential Reroof (Without Architectural Review)
-386-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 27
The following graphic summarizes the overall comparison for the different scenarios chosen:

Scenario Current Fee Full Cost
Fee Average Fee Current vs Avg
Full Cost vs
Avg
New SFR $750,000 Valuation $7,872 $13,099 $13,845 -43.1% -5.4% Residential Addition $2,647 $5,816 $5,007 -47.1% 16.2%
Kitchen Remodel $573 $1,326 $1,041 -45.0% 27.4%
Residential Reroof $244 $823 $625 -60.9% 31.6%
Water Heater Permit $250 $421 $144 143.7% 191.4%
Residential EV Charger $573 $588 $232 146.9% 153.3%
Re-inspection Fee $206 $248 $200 3.1% 24.1%
Based on this comparative information, Hillsborough’s current fees are generally on the lower end, whereas its full cost is above the average but aligns with other jurisdictions that have recently conducted fee studies, such as the City of Burlingame and Saratoga.

PLANNING
To compare the Town’s current planning-related fees with those of other jurisdictions, the following graphics were developed. These graphics only show the fees published in the fee schedule and do not reflect the full fees a particular project would pay.
# Jurisdiction Fee Amount
1 Hillsborough - Full Cost $421
2 Hillsborough - Current Fee $352
3 Burlingame $275
4 Los Altos Hills $135
5 Woodside $132
6 Portola Valley $90
7 Saratoga $90
Red line = Average Fee $144
Water Heater Permit
# Jurisdiction Fee Amount
1 Hillsborough - Full Cost $588
2 Hillsborough - Current Fee $573
3 Saratoga $369
4 Woodside $266
5 Los Altos Hills $230
6 Burlingame $200
7 Portola Valley $96
Red line = Average Fee $232
Residential EV Charger
-387-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 28
# Jurisdiction Fee Amount
1 Hillsborough - Current Fee $685
2 Hillsborough - Full Cost $663
3 Portola Valley $431
4 Los Altos Hills $410
5 Woodside $300
6 Burlingame $217
7 Saratoga $118
Red line = Average Fee $295
ADU — Zoning Clearance
# Jurisdiction Fee Amount
1 Saratoga $4,424
2 Woodside $4,000
3 Hillsborough - Full Cost $2,733
4 Los Altos Hills $1,560
5 Hillsborough - Current Fee $1,214
6 Portola Valley $944
7 Burlingame $822
Red line = Average Fee $2,350
Admin Design Review Addition
# Jurisdiction Fee Amount
1 Saratoga $7,776
2 Los Altos Hills $7,125
3 Hillsborough - Full Cost $4,986
4 Hillsborough - Current Fee $4,403
5 Woodside $4,000
6 Burlingame $3,141
7 Portola Valley $1,594
Red line = Average Fee $4,727
Design Review — New SFR
# Jurisdiction Fee Amount
1 Portola Valley $7,358
2 Hillsborough - Full Cost $4,652
3 Hillsborough - Current Fee $2,556
4 Woodside $1,000
5 Los Altos Hills $900
6 Burlingame $770
7 Saratoga $568
Red line = Average Fee $2,119
Appeal
# Jurisdiction Fee Amount
1 Hillsborough - Full Cost $1,368
2 Woodside $400
3 Saratoga $388
4 Burlingame $379
Red line = Average Fee $389
Film Permit Application Fee
-388-

DRAFT BUILDING AND PLANNING FEE STUDY REPORT FOR THE TOWN OF HILLSBOROUGH MATRIX CONSULTING GROUP 29
The following graphic summarizes the planning comparative scenarios for the Town of Hillsborough.

Scenario Current Fee Full Cost
Fee Average Fee Current vs Avg
Full Cost vs
Avg
ADU — Zoning Clearance $685 $663 $295 132.0% 124.6%
Admin Design Review -
Addition $1,214 $2,733 $2,350 -48.3% 16.3%
Design Review — New SFR $4,403 $4,986 $4,727 -6.9% 5.5% Appeal $2,556 $4,652 $2,119 20.6% 119.5%
Film Permit Application
Fee $0 $1,368 $389 -100.0% 251.7%
Tree Removal $386 $1,076 $214 80.7% 403.7%
Overall, based on the comparative survey, the Town’s current fees are generally on the lower end, whereas its full cost is on the higher end compared to other jurisdictions. It is important to note that many of these services require a deposit in other jurisdictions, so the actual amount assessed could exceed the Town’s full cost fee.

SUMMARY
Overall, Hillsborough generally has current fees that are lower than those of the other surveyed jurisdictions in most categories. Of the surveyed jurisdictions, Hillsborough’s current fees are most comparable to those of the Los Altos Hills and Woodside, while the Town’s calculated full cost is most comparable to those of the Cities of Burlingame and Saratoga. The results of this survey show only the fees adopted by the council, not the cost-recovery policy decisions for departments or the jurisdiction. As such, the results of this survey should be used as a secondary decision-making tool. # Jurisdiction Fee Amount
1 Hillsborough - Full Cost $1,076
2 Burlingame $451
3 Hillsborough - Current Fee $386
4 Los Altos Hills $250
5 Saratoga $146
6 Woodside $125
7 Portola Valley $96
Red line = Average Fee $214
Tree Removal
-389-

Hillsborough City CouncilApril 13, 2026

Hillsborough City Council
April 13, 2026