Morgan Hill City Council
September 4, 2024

8 Updated February 2024

19. No Assignment. Neither this Agreement nor any portion shall be assigned by CONSULTANT, without prior written consent of CITY. Any attempted assignment not first approved by CITY shall be void and, at CITY'S option, shall terminate this Agreement effective as of the date of such attempted assignment.

20. Attorney Fees. In any legal action, dispute or arbitration arising out of or relating to this Agreement, the prevailing party shall be entitled to an award of its reasonable attorney fees, costs and expenses incurred.

21. Defense and Indemnification.

21.1. Defense and Indemnification for Design Professional Services. Consistent with California Civil Code Section 2782.8, for design professional services to be performed under this agreement by a design professional, as that term is defined under said Section 2782.8, CONSULTANT shall, to the fullest extent permitted by law, indemnify, defend and hold harmless CITY, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers (“INDEMNITEES”) from and against any and all claims, liabilities, expenses, liens, or damages of any nature, including liability for bodily injury, property damage or personal injury, and including reasonable attorneys' fees and expenses, that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of CONSULTANT, and/or its agents, officers, employees, subcontractors, or independent contractors in performance of work hereunder or its failure to comply with any of its obligations contained in this Agreement (“CLAIM”) to the extent of CONSULTANT’S proportionate percentage of fault.

21.2. Defense and Indemnification for Non-Design Professional Services. For all services performed under this agreement not covered by Section 21.1 above, CONSULTANT shall, to the fullest extent permitted by law, indemnify, defend and hold harmless CITY, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers (“INDEMNITEES”) from and against any and all claims, liabilities, expenses, liens, or damages of any nature, including liability for bodily injury, property damage or personal injury, and including reasonable attorneys' fees and expenses, that arise out of, pertain to, or relate to the performance of this Agreement or the failure to comply with any obligations contained in this Agreement by CONSULTANT, and/or its agents, officers, employees, subcontractors, or independent contractors (“CLAIM”).

21.3. Exceptions. CONSULTANT is not required to indemnify INDEMNITEES against liability for bodily injury, property damage or personal injury, or any other loss, damage or expense arising from the sole negligence, active negligence, or willful misconduct of the CITY.

21.4. Not limited by insurance. The indemnity, defense and hold harmless provisions of this Agreement apply to all CLAIMS alleged against an INDEMNITEE, regardless of whether any insurance policies are applicable. Policy limits do not act as a limitation upon the amount of indemnification or defense to be provided by CONSULTANT.

21.5. Right to Offset. CITY shall have the right to offset against any compensation due CONSULTANT under this Agreement any amount due CITY from CONSULTANT as a result of CONSULTANT’S failure to pay CITY promptly any indemnification arising under this Section (21) and any amount due CITY from CONSULTANT arising from

9 Updated February 2024
CONSULTANT’S failure either to (i) pay taxes on amounts received pursuant to this Agreement or (ii) comply with applicable workers' compensation laws.

21.6. Interpretation. This Section shall constitute an agreement or contract of indemnity, incorporating the interpretations under California Civil Code Section 2778. It is expressly understood and agreed that the obligation of the CONSULTANT to indemnify the INDEMNITEE shall be as broad and inclusive as permitted by the laws of the State of California and shall survive termination of this Agreement.

22. Entire Agreement; Modification; Conflicting Provisions. This Agreement constitutes the entire Agreement between the Parties and supersedes any previous agreements, oral or written. This Agreement may be modified, or provisions waived, only by a subsequent mutual written agreement executed by CITY and CONSULTANT. If the provisions contained in the main body of this Agreement conflict with any provision contained in an exhibit to this Agreement, the provisions of the main body of this Agreement shall govern and control over any provision contained in an exhibit to this Agreement.

23. Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of California. This Agreement was entered into and is to be performed in the County of Santa Clara. Any action or dispute arising out of this Agreement shall only be brought in Santa Clara County.

24. Interpretation. This Agreement is a negotiated document and shall be deemed to have been drafted jointly by the Parties, and no rule of construction or interpretation shall apply against any particular Party based on a contention that the Agreement was drafted by one of the Parties including, but not limited to, California Civil Code § 1654, the provisions of which are hereby waived. This Agreement shall be construed and interpreted in a neutral manner.

25. Notice of Security and/or Privacy Incident. If CONSULTANT, or its subconsultant, suspect, discover or are notified of a data security incident or potential breach of security and/or privacy relating to CITY PII, PHI and/or PCI, CONSULTANT shall immediately, but in no event later than forty-eight (48) hours from suspicion, discovery or notification of the incident or potential breach, notify CITY of such incident or potential breach. CONSULTANT shall, upon CITY’s request, investigate such incident or potential breach, inform the CITY of the results of any such investigation, and assist the CITY in maintaining the confidentiality of such information. In addition to the foregoing, CONSULTANT shall provide CITY with any assistance necessary to comply with any state and/or federal laws requiring the provision of notice of any privacy incident or security breach with respect to any CITY PII, PHI and/or PCI to the affected or impacted individuals and/or organizations, in addition to any notification to applicable state and federal agencies. CONSULTANT agrees that it shall reimburse CITY for all expenses, costs, attorneys’ fees, and resulting fines, penalties, and damages associated with such incident, breach, investigation and/or notification.

26. Preservation of Agreement. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the rest of the Agreement shall remain in full force and effect and shall in no way be affected or invalidated.

27. Binding Agreement. Notwithstanding the provisions of Section 19 above, this Agreement shall bind any and all successors in interest, legal representatives and/or other permitted assignees or transferees of CONSULTANT in the same manner as if those successors in interest, legal representatives or other permitted assignees or transferees had entered into this Agreement originally.

28. ☐ Data Sharing. This Agreement requires access by CONSULTANT to CITY’S Geographic Information System (GIS) DATA for CONSULTANT to perform the work. CITY agrees to provide the

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GIS DATA to CONSULTANT solely for the purpose of performance of contracted work with the CITY upon the terms and conditions specified in Exhibit D, incorporated herein by this reference.

29. Electronic Signatures. Unless otherwise prohibited by law or CITY policy, the Parties agree that an electronic copy of a signed contract, or an electronically signed contract, has the same force and legal effect as a contract executed with an original ink signature. The term “electronic copy of a signed contract” refers to a transmission by facsimile, electronic mail, or other electronic means of a copy of an original signed contract in a portable document format. The term “electronically signed contract” means a contract that is executed by applying an electronic signature using technology approved by the CITY.
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30. Authority to Execute. Those individuals who are signing this Agreement on behalf of entities represent and warrant that they are, respectively, duly authorized to sign on behalf of the entities and to bind the entities fully to each and all of the obligations set forth in this Agreement.

IN WITNESS THEREOF, these Parties have executed this Agreement on the day and year shown below.

AS SET FORTH IN CA. CORP. CODE § 313, TWO SIGNATURES ARE REQUIRED FOR CALIFORNIA CORPORATIONS:
(1) CHAIRPERSON OF THE BOARD, PRESIDENT, OR VICE PRESIDENT; AND (2) SECRETARY, ASSISTANT SECRETARY, CHIEF FINANCIAL OFFICER OR ASSISTANT TREASURER.

ATTEST: CITY OF MORGAN HILL
City Clerk/Deputy City Clerk City Manager
Michelle Bigelow Christina J. Turner
Print Name Print Name
Date: Date:

APPROVED AS TO FORM: Jayson Architecture
City Attorney By:

Donald A. Larkin
Print Name
Date:

Print Name and Title of Signer.

If Corporate: Chairman, President or Vice
President
Date:

By:

Date:

Print Name and Title of Signer.

If Corporate: Secretary, Assistant
Secretary, Chief Financial Officer or
Assistant Treasurer
U:\Legal Forms\Consultant Agreements\City Services Agreement For Design Professionals.Docx Abraham Jayson, Principal, CEO
Abraham Jayson, Principal, CFO
8/26/24
8/26/24

EXHIBIT A

SCOPE OF SERVICES
A. Design Development Phase
Based on the approved Schematic Design Drawings, Jayson Architecture will prepare Design Development Drawings for Phase 1 of the project. In addition to the plans, sections, elevations, and preliminary details prepared in the Schematic Design Phase, the Architecture and Engineering team will prepare typical & critical construction details and material and finish schedules for the exterior and interior of the project, update all drawings from the Schematic Design Phase, and coordinate with the engineering consultants to produce a Design Development set of Architecture and Engineering drawings. At phase completion, the Architecture and Engineering documents will be submitted to the cost estimator to refine the budget for construction.

B. Construction Documents Phase
Based on the approved Design Development Drawings, Jayson Architecture will prepare Construction Documents for the project, including architectural and engineering plans and specifications. In addition to the drawings prepared in the Design Development Phase, the Architecture and Engineering team will prepare complete and bid-ready Construction Documents, including construction details and 3-part Technical Specifications in CSI Masterformat. At phase completion the Architecture and Engineering documents will be submitted to the cost estimator to confirm the budget for construction.

During the design phases, the Architecture and Engineering team will complete applicable code research to determine limitations and permit considerations for the project. At the completion of the Construction Documents phase, Jayson Architecture will submit the project to the Planning, Building, and Fire Departments for review and approval, as well as the other agencies as deemed required for the project scope. The Architecture and Engineering team will respond to all comments from each respective department or agency with a clear and concise response letter corresponding to any/all drawing revisions required for approval.

C. Bid Phase
Jayson Architecture will review the City’s front-end specifications (General and Special Conditions) to determine they are appropriate for the scale and type of project. Jayson Architecture will attend a pre-bid meeting at the project site to introduce prospective bidders to the project and answer questions. The Architecture and Engineering team will respond to bidder’s questions and prepare an addendum to the Bid Documents. Jayson

Architecture will assist the City with evaluation of submitted bids and selection of the General Contractor.

D. Construction Administration Phase
Jayson Architecture will attend Owner/Architect/Contractor (OAC) meetings on a bi-weekly basis for the duration of construction. The Engineering sub-consultants will visit the site at intervals appropriate to their specific scope of work. The Architecture and Engineering team will respond to Contractor Requests for Information (RFIs), review project submittals and shop drawings, prepare ASIs and bulletins, and review contractor pay applications. In addition, Jayson Architecture will review and assist the City with responding to Contractor Change Orders.

Jayson Architecture will attend one punchlist site walk with the contractor at substantial completion to review work remaining to be completed. The Architecture and Engineering team will review the Contractor prepared punchlist and amend as required to capture the scope of work remaining to complete the project. We will attend one final walkthrough confirming all items on the punchlist have been completed. At project closeout the Architecture and Engineering team will review contractor provided warranties, manuals, and as-built drawings.

EXHIBIT B

SCHEDULE OF COMPENSATION RATES

1. Base Service Costs of $350,355 shall be billed based on the below costs.

2. Contingency Funds of $24,645 shall billed for additional costs outside the base scope of work. Use of contingency funds shall be approved by the City Project Manager prior to work being performed.

EXHIBIT C

SCHEDULE OF PERFORMANCE

5 CITY COUNCIL STAFF REPORT
MEETING DATE: September 4, 2024
PREPARED BY:

Chris Ghione, Public Services Director
APPROVED BY: City Manager

APPROVE COST SHARE AGREEMENT WITH THE CITY OF GILROY

FOR JOINT WASTEWATER TRUNK LINE REPAIRS

RECOMMENDATION(S)
Authorize the City Manager to execute and administer a cost sharing agreement with the City of Gilroy for the design and repairs to the jointly owned wastewater trunk line for $1,814,455.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Enhancing Public Safety
Protecting the Environment and Preserving Open Space and Agricultural Land Maintaining and Enhancing Infrastructure
Guiding Documents
Wastewater System Master Plan
REPORT NARRATIVE:

The City of Morgan Hill jointly owns a wastewater trunk line with the City of Gilroy. Coownership begins in San Martin and stretches to the South County Regional Wastewater Authority's (SCRWA) treatment plant in south Gilroy. In 2021, the City of Morgan Hill partnered with Gilroy to perform a complete assessment of the line. This assessment provided detailed information on the condition of the line and identified repair needs.

The City of Gilroy will take the lead on repairs of the line and, per the SCRWA Joint Powers Agreement, the City of Morgan Hill is responsible for reimbursing the costs of repairs to the line to the City of Gilroy for the City of Morgan Hill's share of ownership.

The attached Cost Share Agreement (Attachment 1) has been developed to support these repairs and reimbursement. The work consists of rehab and replacement of sections of the aging line, along with repairs to manholes along the line. The repairs outlined in the agreement will eliminate the most significant issues within the joint trunk line and support continued smooth conveyance of Morgan Hill's wastewater through Gilroy to the SCRWA treatment plant.

COMMUNITY ENGAGEMENT:

5 Not Applicable
Maintenance of the City's wastewater system is an expected service by residents. The City's 2024 Wastewater Collection System Master Plan update and the current Capital Improvement Program Budget include these repairs and costs.

The City of Gilroy will be the lead on communications regarding project impacts as all repairs are outside the City of Morgan Hill and the City of Gilroy will be directly managing the project.

ALTERNATIVE ACTIONS:

The City Council could choose not to approve the agreement at this time and provide staff with alternate direction. This is not recommended as the repairs are necessary and budgeted.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

The City Council approved the 2024 Wastewater Collection System Master Plan on May 15, 2024 and the FY 2024-25 through 2029-30 Capital Improvement Program Budget on June 19, 2024.

FISCAL AND RESOURCE IMPACT:

Funding for this project has been planned and is available in the Capital Improvement Program within the Sewer Capital Fund (643).

CEQA (California Environmental Quality Act):

Categorical Exemption
The planned maintenance and management of city facilities falls within the CEQA categorical exemption of Class 1, Existing Facilities.

COST SHARING AGREEMENT BETWEEN THE CITY OF GILROY AND THE

CITY OF MORGAN HILL FOR THE DESIGN AND CONSTRUCTION OF THE

JOINT MORGAN HILL-GILROY SEWER TRUNK LINE REPAIR PROJECT This Cost Sharing Agreement ("Agreement") is made and entered into this ___th day of September, 2024, by and between the City of Gilroy, California, a chartered municipal corporation of the State of California ("Gilroy''), and the City of Morgan Hill, California, a general law municipal corporation of the State of California ("Morgan Hill"), collectively referred to herein as the "Parties'' and sometimes individually as a "Party”.

RECITALS
WHEREAS, the parties share ownership of a joint trunk line for the disposal of sewage to the South County Regional Wastewater Authority facility; and WHEREAS, the Parties desire to contract with experienced service providers for the design and construction of necessary repairs along the joint trunk line as identified in the Joint Trunk Pipeline Condition Assessment Report completed by Water Works Engineers on behalf of the City of Morgan Hill in January 2021 (the "Report"); and WHEREAS, the Report recommended certain repairs such as structural cured-inplace-pipe (CIPP) lining and open cut replacement of pipelines found to be in need of point repairs, spray coating of various pipelines, and manhole repairs. In particular, a set of recommended repairs characterized as "Recommended Emergency/Immediate Projects" is listed in Table 49 on pages 87-88 of the Report (pages 86-88 of the Report are attached hereto as Exhibit A-1 and incorporated herein by this reference); and WHEREAS, the referenced Table 49 lists five reaches of pipeline requiring repair as well as 40 manholes. These pipeline segments and manholes are shown on the aerial photograph attached hereto as Exhibit A-2 and incorporated herein by this reference. The pipeline repairs and manhole locations along with the designations on Exhibit A-2 of locations for pipeline spray coating collectively comprise the "Project" that is the subject of this Agreement; and
WHEREAS, the Parties have determined to share all costs described in this Agreement for the design, construction, and construction management of the Project; and
WHEREAS, the Parties have identified capacity shares for separate sections of the trunk line. For the purpose of this Project, the responsibility of the cost of the Project has been determined to be 50% Gilroy and 50% Morgan Hill, and each of the Parties has indicated its willingness to fund these shares of the costs; and WHEREAS, on January 19, 2024, Gilroy issued a Request for Proposals (RFP) for the design of the Project, evaluated, and selected a consultant to prepare the contract documents, and is prepared to award a contract to the selected consultant subsequent to the execution of this Agreement; and
WHEREAS, the Parties agree that it is imperative that the Project, once started, shall be completed to a fully functioning and safe condition.

NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING RECITALS

AND OF THE MUTUAL COVENANTS AND CONDITIONS CONTAINED HEREIN, THE PARTIES HEREBY AGREE AS FOLLOWS:

AGREEMENT

1. Gilroy Rights and Responsibilities
In addition to all other rights and obligations applicable to Gilroy under this Agreement, Gilroy shall:
a) Select and hire consultant(s) and/or contractor(s) required to design the Project. b) Select and hire consultant(s) and/or contractor(s) required to construct the Project. c) Select and hire consultant(s) required for construction management to oversee the construction of the Project.
d) Coordinate with said consultant(s) and contractor(s) as needed. e) Provide project management, engineering, and construction management for the Project.
f) Prior to authorizing any consultant to proceed with any optional tasks, as identified in consultant’s agreement to provide services performed by the consultant or the consultant’s subconsultant(s), request and obtain written approval of the cost and scope of such optional tasks from Morgan Hill.
g) Prior to agreeing to any change orders that, either alone or in combination with any and all prior change orders, would increase the Total Project Costs (defined in Section 1(h), below) chargeable to Morgan Hill to an amount that would likely exceed the amount of Morgan Hill's estimated proportional share of the Total Project Costs shown in Table 2 of Section 3B below, notify Morgan Hill of the requested change order(s), and request and obtain written approval of such change order(s) from Morgan Hill.
h) Pay all costs associated with the Project, expressly excluding any and all costs and fees, including legal fees, related to the preparation, review, negotiation, processing and execution of this Agreement, but including the following: design, engineering, project management, preparation of bid documents, printing costs, construction, construction management, inspections, environmental review, cost of land acquisition, permit fees, legal fees, administrative costs, and advertising costs (collectively, "Project Costs" and, in total, "Total Project Costs"). Total Project Costs shall include Project Costs already incurred by Gilroy. i) At least ten (10) business days prior to awarding and entering into any Projectrelated agreement, disclose any such agreement, including the maximum Project Costs encumbered thereby, to Morgan Hill and notify Morgan Hill of Gilroy's intent to enter into such agreement.
j) Provide Morgan Hill with an itemized invoice for Morgan Hill's share of Project Costs as set forth in this Agreement and provide Morgan Hill with documentation

for all Project Costs incurred.
k) Meet with Morgan Hill to address any optional tasks that Morgan Hill disapproves pursuant to Sections 1(f) and 2(c) of this Agreement, below, and consult with Morgan Hill in a good faith effort to reduce the costs of any such optional tasks and to otherwise reconcile and resolve any related disputes between Gilroy and Morgan Hill.
l) Meet with Morgan Hill to address any change order that Morgan Hill disapproves pursuant to Sections 1(g) and 2(d) of this Agreement, below, and consult with Morgan Hill in a good faith effort to reduce the costs of any such change order and to otherwise reconcile and resolve any related disputes between Gilroy and Morgan Hill.

2. Morgan Hill Rights and Responsibilities
In addition to all other rights and obligations applicable to Morgan Hill under this Agreement, Morgan Hill shall:
a) Pay to Gilroy Morgan Hill's proportional share of the Project Costs pursuant to this Agreement as set forth in invoices provided by Gilroy related to the Project pursuant to Section 1(j) above, or any part thereof, which Gilroy shall issue in the proportional amounts set forth in Section 3 of this Agreement, below, within thirty (30) days after receipt thereof. Morgan Hill acknowledges that Gilroy has disclosed to Morgan Hill, and Morgan Hill has reviewed and accepted, all Project Costs incurred by Gilroy to date, and Morgan Hill agrees to reimburse Gilroy for its proportional share of those Project Costs in accordance with Section 3 of this Agreement.
b) Notify Gilroy of any problems with any invoice received from Gilroy within twentyone (21) days after receipt thereof. c) Review and decide regarding optional tasks pursuant to Section 1(f), above, within ten (10) days after receipt of a written request for such approval. Any submitted disapproval shall contain a statement of Morgan Hill's reasons for such disapproval.
d) Review and decide regarding change orders associated with Project Costs that would exceed the Total Project Costs amount shown in Table 2 of Section 3B, below, pursuant to Section 1(g), above, within ten (10) days after receipt of a written request for such approval. Any submitted disapproval shall contain a statement of Morgan Hill's reasons for such disapproval. Morgan Hill shall not unreasonably withhold or deny approval of a change order, provided that Gilroy shall have informed Morgan Hill of the change order. Morgan Hill shall meet with Gilroy and work in good faith to address the reason leading to any such disapproval and attempt to resolve and reconcile any disputes related thereto. Morgan Hill shall have no rights to approve or deny change orders that, cumulatively, when added to all other Project Costs, do not exceed the Total Project Costs shown in Table 2 of Section 3B, below.
e) Support the construction management phase of the Project by agreeing to provide proportional funding for, as a Project Cost, a part-time Engineer employed by Gilroy who will help oversee the work and prepare written status reports to Morgan

Hill regarding construction status and pending change orders.

3. Cost Sharing
A. Subject to the provisions of this Agreement, the Parties shall share all Project Costs for or related to the completion of the design, construction, and construction management of the Joint Morgan Hill-Gilroy Sewer Trunk Line Repair Project (Project) in the proportional amounts set forth in Table 1.

Table 1: Proportional Share of Cost
Gilroy 50%
Morgan Hill 50%
B. The Total Project Costs are estimated as follows:

Table 2: Estimated Total Project Costs
Design Cost*
Construction
Cost
Construction
Management
Cost
Total Project
Cost
Gilroy $370,342 $1,255,750 $188,363 $1,814,455
Morgan Hill $370,342 $1,255,750 $188,363 $1,814,455
Total $740,684 $2,511,500 $376,726 $3,628,910
*Design cost includes $201,115 in optional tasks and $67,335 (10%) in contingency.

The Project’s construction cost estimate is based on the estimates in the Joint Trunk Pipeline Condition Assessment Report, WaterWorks Engineers, January 2021 with the unit costs escalated per the Engineering News Record Construction Cost Index (CCI) and a review of recent unit prices for similar projects. The detailed Estimated Total Project Costs are attached hereto and incorporated herein as Exhibit B.

The Parties agree that the Estimated Total Project Costs are only estimates.

Gilroy makes no representations or warranties that the Project can be completed for the amount of these Estimated Total Project Costs, and neither Gilroy nor Morgan Hill shall be obligated to pay more than its proportionate share of the Actual Total Project Costs of the Project, or any part thereof, in the event the Actual Total Project Costs exceed the Estimated Total Project Costs.

Furthermore, Gilroy makes no representations or warranties that the Project can be completed within a certain number of days or by a certain date. All Project Costs, whether foreseen or unforeseen and regardless of cause, including but

not limited to Project Cost overruns, approved or allowed change orders, and/or delays, shall be shared by the Parties in the contribution percentages set forth in this Agreement.

C. Representatives from both Parties shall review the construction bids, and if the lowest responsible, responsive bid is less than or equal to the estimated total construction cost shown in Table 2, consistent with the definition of Total Project Costs herein, and has a reasonable contingency as determined by both Parties, each Party shall present such bid for approval to its respective City Council. The bids will be reviewed first by the Morgan Hill City Council and then by the Gilroy City Council. Should the Morgan Hill City Council not approve the bid, Morgan Hill shall provide written legal documentation explaining the reason, which will be presented as legal justification for the rejection of the bids by the Gilroy City Council. If the Parties elect to terminate this Agreement due to failure to obtain acceptable construction bids, then such termination shall not relieve Morgan Hill of its obligation to pay its proportionate share of Project Costs incurred by Gilroy prior to and including the date of the termination. In addition, the obligations of Sections 4 and 5 hereof shall survive such termination.

D. Morgan Hill and Gilroy agree to appropriate sufficient amounts of funds to complete the Project in accordance with the Estimated Total Project Costs shown in Section 3B, above, in the contribution percentages set forth in this Agreement.

E. Should the Actual Total Project Costs exceed the agreed to participation amounts set forth in Section 3B above, due to an unforeseen construction condition or due to an accumulation of change orders as defined in the contract specifications, and, in the professional opinion of the Gilroy Public Works Director/City Engineer, awaiting City Council authorization from both Parties will make for an unsafe condition and/or result in extraordinary costs due to a delay in waiting for such authorization from the City Councils of both Parties, Gilroy's Public Works Director/City Engineer shall have the authority to execute a change order necessary to address the unsafe condition or avoid the extraordinary costs of the Project within the original intent of the scope of the Project. Should this occur, Gilroy's Public Works Director/City Engineer shall provide written documentation to Morgan Hill explaining the situation and the reason(s) that Gilroy's Public Works Director/City Engineer directed the contractor to proceed and the designated representatives from each Party will report to their respective City Council the scope of the work exceeding the original authorization and why Gilroy's Public Works Director/City Engineer provided such direction to the contractor. Those representatives for each Party shall request further funding authorization for such additional work, provided the additional work is necessary to complete the Project as intended in the original scope.

F. In the event the Actual Total Project Costs exceed the amounts stated above in Section 3B and if either Party, upon consideration of the need for a change order, chooses through an official action of its respective City Council to not participate, that Party shall pay the full costs to terminate the Project and restore the Project site to a safe and functioning condition.

4. Legal Challenges to the Project
Gilroy shall immediately notify Morgan Hill of any legal challenges to any element of the Project or Project approvals or any related claims. If Gilroy and Morgan Hill are both named parties in any lawsuit or claim, then the Parties shall consult and, where appropriate coordinate, on appropriate defenses, including the retention of any attorneys or consultants, to any such challenges or claims. Whether or not Gilroy and Morgan Hill have separate or joint legal counsel, and whether or not Morgan Hill is a named party, Morgan Hill shall reimburse Gilroy for its proportional share of any attorneys' fees, consultants' fees, and other fees and costs incurred by Gilroy related to its defense of any legal challenges to any element of the Project or Project approvals or to any Project-related claim involving any administrative and/or judicial proceedings and related appeals, excepting only, and to the extent that, the underlying allegations giving rise to the legal challenge or claim allege gross negligence or willful misconduct solely on the part of Gilroy. If Morgan Hill is not a named party to any legal challenge or claim, then Gilroy shall have sole discretion to choose its own legal counsel, to control its legal defense, and to settle or otherwise resolve any such challenge or claim. If Gilroy and Morgan Hill are both named parties, then each Party reserves the right to have separate counsel.

5. Indemnification
Pursuant to Government Code Section 895.4, each of the Parties hereto shall fully indemnify, defend with counsel reasonably acceptable to the other Party and hold the other Party, its officers, employees, and agents, harmless from any damage or liability imposed for injury (as defined in Government Code Section 810.8) which occurred or is occurring by reason of the negligent acts or omissions or willful misconduct of the indemnifying Party, its officers, employees, contractors, subcontractors, material suppliers, or agents, under, or in connection with, any work, authority, or jurisdiction delegated to such Party under this Agreement. Neither Party, nor any officer, employee, or agent thereof shall be responsible for any damage or liability occurring by reason of the negligent acts or omissions or willful misconduct of the other Party hereto, its officers, employees, contractors, subcontractors, material suppliers, or agents, under or in connection with any work, authority, or jurisdiction delegated to such other Party under this Agreement.

6. Notices
Notices given under this Agreement may be hand delivered or delivered by email, with an additional copy sent by first class mail, postage prepaid, and addressed to the appropriate party at the following addresses:

To Gilroy: City of Gilroy
7351 Rosanna Street
Gilroy, CA 95020
Attn: Heath McMahon, Utilities Director
[email protected]; and
Attn: Saeid Vaziry, Senior Civil Engineer
[email protected]

To Morgan Hill: City of Morgan Hill
17575 Peak Avenue
Morgan Hill, CA 95037
Attn: Chris Ghione, Public Services Director
[email protected]; and
Attn: James F. Sylvain, Deputy Director for Utilities Services [email protected]

7. Additional Provisions
The Parties further agree as follows:
a) One or both Parties' waiver of any term, condition or covenant of this Agreement shall not be construed as a waiver of any other term, condition, or covenant of this Agreement.
b) This Agreement contains the entire Agreement between the Parties relating to the Project. Any prior agreements, promises, negotiations, or representations not expressly set forth in this Agreement are of no force or effect. c) The Exhibits attached to this Agreement are a part of this Agreement and are incorporated into this Agreement by reference.
d) This Agreement shall be governed and construed in accordance with the laws of the State of California.
e) This Agreement may be executed in counterparts, each of which shall be deemed an original but both of which, together shall constitute one and the same document. f) This Agreement shall remain in effect until the Project is complete, and for a period of two (2) years thereafter, unless earlier terminated or extended by written agreement of the Parties. All amendments to this Agreement must be approved in writing by both Parties to be effective. The provisions of Sections 4 and 5 hereof shall survive the expiration or termination of this Agreement. g) The Parties agree that they shall endeavor to resolve any dispute about this Agreement in good faith. The Parties further agree that should such dispute remain unresolved, they shall engage in mediation and, if no agreement between the Parties can be reached through mediation, by binding arbitration to resolve such disputes, instead of resorting to court action.
h) The designated project manager for Gilroy for the duration of the construction project is Gilroy's Senior Civil Engineer or his or her designee. Gilroy's project manager shall have all the necessary authority to direct technical and professional work within the scope of this Agreement and shall serve as the principal point of contact with Gilroy. Morgan Hill's Public Services Director/City, or his or her designee, shall serve as the principal point of contact for Morgan Hill. i) Time is of the essence of each and every term, provision, and obligation hereof. j) This Agreement is not intended, and shall not be construed, to create any thirdparty beneficiary rights in any person or entity who is not a party, unless expressly provided herein.

k) Each party hereto declares and represents that in entering into this Agreement, it has relied and is relying solely upon its own judgment, belief, and knowledge of the nature, extent, effect, and consequence relating thereto. Each party further declares and represents that this Agreement is made without reliance upon any statement or representation not contained herein of any other party or any representative, agent, or attorney of the other party. The parties are aware that they have the right to be advised by counsel with respect to the negotiations, terms, and conditions of this Agreement and the decision of whether or not to seek the advice of counsel with respect to this Agreement is a decision which is the sole responsibility of each of the parties. Accordingly, no party shall be deemed to have been the drafter hereof, and the principle of law set forth in Civil Code §1654 that contracts are construed against the drafter shall not apply.

IN WITNESS WHEREOF, THE PARTIES HAVE ENTERED INTO THIS AGREEMENT AS OF THE DATE FIRST ABOVE WRITTEN.

CITY OF MORGAN HILL

City Manager
Date:

ATTEST:

City Clerk
Date:

APPROVED AS TO FORM:

City Attorney

CITY OF GILROY

City Administrator
Date:

ATTEST:

City Clerk
Date:

APPROVED AS TO FORM:

City Attorney

EXHIBITS LOCATED AT:
https://www.morganhill.ca.gov/DocumentCenter/View/49795/GilroyCostShareAgrExhibit s-TrunkLineAssessment

City Council
Meeting Minutes
Mark Turner - Mayor
Marilyn Librers - Mayor Pro Tem
Gino Borgioli - Council Member
Rene Spring - Council Member
Yvonne Martinez Beltran - Council Member
Wednesday, August 28, 2024 5:00 PM
Council Chamber Building
17555 Peak Avenue, Morgan Hill, CA 95037

SPECIAL/REGULAR MEETING
A special meeting of the City Council was called at 5:00 p.m. for the purpose of conducting a closed session.

SPECIAL MEETING
5:00 p.m. Closed Session

August 28, 2024
2 CALL TO ORDER
Mayor Turner called the City Council meeting to order at 5:00 p.m.

ROLL CALL ATTENDANCE
City Clerk Michelle Bigelow called the roll.

PRESENT Rene Spring, Gino Borgioli, Yvonne Martinez Beltran, Mark Turner ABSENT Marilyn Librers

DECLARATION OF POSTING AGENDA
City Clerk Michelle Bigelow declared the posting of the agenda.

SILENT INVOCATION

PLEDGE OF ALLEGIANCE

CLOSED SESSION
City Attorney Larkin announced the closed session item.

CONFERENCE WITH LEGAL COUNSEL-ANTICIPATED LITIGATION
Initiation of litigation pursuant to § 54956.9(c)
Two Cases

OPPORTUNITY FOR PUBLIC COMMENT
Public comment opened at 5:00 p.m. There being no requests to speak, public comment closed.

ADJOURN TO CLOSED SESSION
The meeting adjourned to closed session at 5:01 p.m.

REGULAR MEETING
The regular meeting was convened at 6:00 p.m.

CITY COUNCIL REPORTS
Council Member Spring had no report.

August 28, 2024
3 CITY MANAGER'S REPORT
City Manager Christina Turner shared that the long-awaited opening of the Hale Avenue Extension between Main and Dunne happened this past Saturday, significantly improving north-south traffic circulation. She announced that on Monday, U.S.

Congresswoman Zoe Lofgren (CA-18) presented four checks appropriated by Congress for community projects totaling $2.1M for public safety and infrastructure projects in Morgan Hill. Morgan Hill’s four projects are $1,000,000 for the Morgan Hill grade separations project, $500,000 for the Morgan Hill quiet zones project, $500,000 for the Morgan Hill 101 expansion project, and $100,000 for the Morgan Hill police sobriety campaign. The transportation funding will help us start the studies for the much-needed projects. She concluded by sharing that the next council meeting will take place on Wednesday, September 4 at 5:00 p.m. and will start with commission interviews and a closed session. The following meeting will be the Mid-Year Goal Check-In on Wednesday, September 18 starting at 5:00 p.m.

CITY ATTORNEY'S REPORT
City Attorney Larkin announced that the City Council met in a closed session at 5:00 p.m., and there was no reportable action from that closed session.

OTHER REPORTS
Council Member Martinez Beltran reported that on August 26, 2024 Women's Equality Day, they celebrated the 104th anniversary of the ratification of the 19th Amendment, which gave women the right to vote. There was an event in Downtown Morgan Hill and Congresswoman Zoe Lofgren joined them for the walk. She mentioned that she has been invited by California Superintendent Tom Thurman to attend an anti-bullying event for youth. She would like youth to join her and speak out about bullying.

PUBLIC COMMENT
Public comment opened at 6:10 p.m.

Kathy Chavez Napoli was called to speak.

There being no further requests to speak, public comment closed.

ADOPTION OF AGENDA
MOTION:

Adopting the agenda as posted.

RESULT: Passed
MOVER: Council Member Borgioli
SECONDER: Council Member Spring
AYES: Council Member Spring, Council Member Borgioli, Council Member Martinez

August 28, 2024
4 Beltran, Mayor Turner
NAYS: None
ABSTAIN: None
ABSENT: Mayor Pro Tem Librers

CONSENT CALENDAR
Items appearing on the Consent Calendar are considered routine and may be approved by one motion. Pursuant to City Council Policies and Procedures (CP 97-01), any member of the Council or public may request to have an item removed from the Consent Calendar for comment and action.

MOTION:

Approving the consent calendar.

RESULT: Passed
MOVER: Council Member Borgioli
SECONDER: Council Member Martinez Beltran
AYES: Council Member Spring, Council Member Borgioli, Council Member Martinez Beltran, Mayor Turner
NAYS: None
ABSTAIN: None
ABSENT: Mayor Pro Tem Librers

1. ACCEPT ANNUAL EVALUATION REPORT FOR THE SANTA CLARA

COUNTY MULTI-JURISDICTIONAL PROGRAM FOR PUBLIC INFORMATION (PPI) FOR FY 2023-24 (YEAR 3) RELATING TO THE FEDERAL EMERGENCY MANAGEMENT AGENCY’S NATIONAL FLOOD INSURANCE PROGRAM’S

COMMUNITY RATING SYSTEM PROGRAM
Recommendation:

Accept the Annual Evaluation Report for FY 2023-24 (Year 3) for the 2021 Santa Clara County Multi-Jurisdictional Program for Public Information (PPI).

2. ACCEPT COMMUNITY LAW ENFORCEMENT FOUNDATION (CLEF)

DONATION
Recommendation:

1. Authorize the City Manager to accept a donation from the Community Law Enforcement Foundation in the amount of $53,123 for the reimbursement of protection plates; and

2. Amend the adopted Fiscal Year (FY) 2024-25 budget in the General Fund

August 28, 2024
5 (010) to recognize the CLEF donation as revenue, and appropriate $53,123 in the Police Department Field Operation budget.

3. APPROVE A REIMBURSEMENT AGREEMENT WITH VCBLA NIDO, LLC FOR

THE VOICES CHARTER SCHOOL PROJECT (NORTHWEST CORNER OF

MONTEREY ROAD AND COSMO AVENUE)
Recommendation:

1. Approve a Reimbursement Agreement with VCBLA NIDO, LLC for the Voices Charter School; and

2. Authorize the City Manager to execute the Reimbursement Agreement.

4. APPROVE CHANGE ORDER #1 WITH IRISH EXCAVATION FOR
WOODLAND BOOSTER RETAINING WALLS IN THE AMOUNT OF $27,838 Recommendation:

1. Approve and authorize the City Manager to execute Change Order #1 with Irish Excavation in the amount of $27,838 for two retaining walls at the Woodland Booster Station; and

2. Approve and authorize the City Manager to add a 10% Contingency to the project in the amount of $10,262.

5. APPROVE FINAL MAP FOR CROSSWINDS PHASE 1 - TRACT NO. 10618

AND RELATED SUBDIVISION IMPROVEMENTS AGREEMENT
Recommendation:

1. Approve the Final Map;

2. Authorize the City Manager to execute the Subdivision Improvements Agreement with THE CROSSWINDS AT MORGAN HILL LLC
(“Subdivider”), and KB HOME SOUTH BAY INC. (“Developer”); and

3. Authorize the recordation of the Final Map and Subdivision Improvements Agreement.

6. APPROVE THE JUNE 26, 2024 CITY COUNCIL MEETING MINUTES Recommendation:

Approve minutes.

7. AWARD CONTRACT TO MOUNTAIN CASCADE, INC. FOR THE SANITARY

SEWER LIFT STATIONS K & F REHABILITATION PROJECT IN THE

August 28, 2024
6 AMOUNT OF $3,042,500 AND CONTINGENCY FUNDS NOT TO EXCEED $304,250
Recommendation:

1. Approve Sanitary Sewer Lift Stations K & F Rehabilitation Project plans and specifications;

2. Award contract to Mountain Cascade, Inc. for the Sanitary Sewer Lift Stations K & F Rehabilitation Project in the amount of $3,042,500;

3. Authorize expenditure of construction contingency funds not to exceed $304,250; and

4. Authorize the City Manager to execute and administer the construction contract with Mountain Cascade, Inc.

8. APPROVE PROFESSIONAL SERVICES AGREEMENT WITH
HYDROSCIENCE ENGINEERS FOR THE EAGLE VIEW WELL #1 PROJECT FOR A TOTAL AMOUNT NOT TO EXCEED $429,590
Recommendation:

1. Approve Service Agreement for Design Professionals with HydroScience Engineers, Inc. for a total not to exceed contract amount of $429,590 to design the Eagle View Well #1 project; and

2. Authorize the City Manager to execute and administer the Service Agreement for Design Professionals with HydroScience Engineers, Inc. for the Eagle View Well #1 project.

9. APPROVE SECOND AMENDMENT TO THE WEST COAST ARBORISTS, INC.

MAINTENANCE SERVICE AGREEMENT TO INCREASE THE NOT TO
EXCEED AMOUNT BY $540,728 FOR A TOTAL AGREEMENT AMOUNT OF $1,392,728
Recommendation:

1. Approve the Second Amendment to the Maintenance Service Agreement with West Coast Arborists, Inc. for $540,728, for a total agreement amount of $1,392,728, which includes increasing the annual amount of extra services to $300,000;

2. Authorize the City Manager to execute and administer the Second Amendment to the Maintenance Service Agreement with West Coast Arborists, Inc; and

3. Authorize the City Manager to extend the term of the Agreement with West Coast Arborists, Inc. for up to two additional one-year terms.

10. RATIFY CITY POSITION ON PENDING LEGISLATION, ASSEMBLY BILL 2557

August 28, 2024
7 (ORTEGA): LOCAL AGENCIES: CONTRACTS FOR SPECIAL SERVICES AND TEMPORARY HELP: PERFORMANCE REPORTS
Recommendation:

Ratify the City’s opposing position on pending legislation, Assembly Bill 2557 (Ortega): Local Agencies: Contracts for Special Services and Temporary Help:

Performance Reports.

11. RATIFY THE CITY MANAGER'S EXECUTION OF THE FIRST AMENDMENT

TO AGREEMENT WITH THE COUNTY OF SANTA CLARA TO PROVIDE THE

CITY WITH FUNDING FOR EMERGENCY MEDICAL SERVICES
Recommendation:

Ratify the City Manager's execution of the first amendment to the agreement with the County of Santa Clara to provide funding for the City of Morgan Hill to purchase Emergency Medical Services supplies and equipment.

PUBLIC HEARINGS

12. APPEAL (AAE2024-0004) OF DEVELOPMENT SERVICES DIRECTOR DECISION ON SR2024-0007 (MONTEREY-GLENROCK): EXPIRATION OF PRELIMINARY APPLICATION UNDER SB330 DUE TO EXPIRATION OF THE 180-DAY PRELIMINARY APPLICATION PERIOD
Recommendation:

1. Grant a hearing de novo;

2. Open/close public hearing; and

3. Adopt resolution denying the appeal and reaffirming the decision of the Development Services Director.

Development Services Director Jennifer Carman provided the report.

The public hearing opened at 6:26 p.m. The following people were called to speak:

The applicant's attorney, Robin Baral, provided a presentation.

There being no further requests to speak, the public hearing closed.

The meeting recessed at 7:18 p.m. and reconvened at 7:22 p.m.

MOTION:

Adopting resolution denying the appeal and reaffirming the decision of the Development Services Director.

RESULT: Passed
MOVER: Council Member Martinez Beltran

August 28, 2024
8 SECONDER: Council Member Spring
AYES: Council Member Spring, Council Member Borgioli, Council Member Martinez Beltran, Mayor Turner
NAYS: None
ABSTAIN: None
ABSENT: Mayor Pro Tem Librers

13. HOLD PUBLIC HEARING REGARDING ADJUSTMENTS TO WASTEWATER RATES
Recommendation:

1. Receive and adopt final 2024 Wastewater Rate Study Report prepared by NBS;

2. Open public hearing and receive public comment;

3. Request submission or withdrawal of proposition 218 protest letters from the public/audience;

4. Suspend public hearing and allow City Clerk, or designee, to tabulate the final Proposition 218 protest letter count;

5. Reconvene meeting and reopen public hearing;

6. Receive and accept verbal report from City Clerk, or designee, on ballot tabulation results;

7. Close public hearing; and

8. Adopt resolution approving wastewater rate adjustments.

Finance Director Dat Nguyen provided a presentation and report.

The public hearing opened at 7:39 p.m.

Beverly Borbon was called to speak.

The meeting recessed to tabulate the ballots at 7:41 p.m. and reconvened at 7:51 p.m.

The City Clerk announced that 43 protest ballots were received.

There being no further requests to speak, the public hearing closed.

MOTION:

Adopting resolution approving wastewater rate adjustments.

RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member Borgioli
AYES: Council Member Spring, Council Member Borgioli, Council Member Martinez Beltran, Mayor Turner

August 28, 2024
9 NAYS: None
ABSTAIN: None
ABSENT: Mayor Pro Tem Librers

OTHER BUSINESS

14. APPOINT VOTING DELEGATES FOR THE 2024 CALCITIES (LEAGUE)

ANNUAL CONFERENCE
Recommendation:

1. Appoint a voting delegate and up to two (2) alternate voting delegates to the CalCities Annual Conference; and

2. Direct staff to complete and forward the voting delegate form to CalCities.

MOTION:

Appointing Mayor Turner as the primary voting delegate and Mayor Pro Tem Librers and Council Member Martinez Beltran as alternate voting delegates and directing staff to complete and forward the voting delegate form to CalCities.

RESULT: Passed
MOVER: Council Member Borgioli
SECONDER: Council Member Spring
AYES: Council Member Spring, Council Member Borgioli, Council Member Martinez Beltran, Mayor Turner
NAYS: None
ABSTAIN: None
ABSENT: Mayor Pro Tem Librers

15. RECEIVE MONTHLY BUDGET UPDATE; PRELIMINARY FY 2023-24 FINANCIAL AND INVESTMENT REPORTS; AND CITY MANAGER

AUTHORITY REPORT
Recommendation:

Accept and file report.

Finance Director Dat Nguyen provided a presentation and report.

Public comment opened at 8:20 p.m. There being no requests to speak, public comment closed.

Report received.

August 28, 2024
10 FUTURE COUNCIL INITIATED AGENDA ITEMS
None.

ADJOURNMENT
There being no further business, Mayor Turner adjourned the meeting in honor of Rich Firato at 8:21 p.m.

Minutes Prepared by:

Michelle Bigelow, City Clerk

7 CITY COUNCIL STAFF REPORT
MEETING DATE: September 4, 2024
PREPARED BY:

Chris Ghione, Public Services Director
APPROVED BY: City Manager

APPROVE CONSULTANT AGREEMENT WITH SCHAAF & WHEELER
CONSULTING CIVIL ENGINEERS IN THE AMOUNT OF $74,472 FOR

BUTTERFIELD BASIN FEASIBILITY STUDY

RECOMMENDATION(S)
Authorize the City Manager to execute and administer a consultant agreement in the amount of $74,472 with Schaaf & Wheeler Consulting Civil Engineers for feasibility design work at the Butterfield Basin.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Protecting the Environment and Preserving Open Space and Agricultural Land Maintaining and Enhancing Infrastructure
2024-2025 Strategic Priorities
Fiscal Sustainability
Healthy Community
Guiding Documents
Storm Drain Master Plan
REPORT NARRATIVE:

The City of Morgan Hill has previously received $2 million in competitive funding from the State of California to upgrade the Butterfield Basin and support groundwater recharge. The project is currently in the approved FY 24-30 Capital Improvement Budget. The intent of the project is to convert the Butterfield Basin, currently used as a flood protection facility, to a multi-use basin that will support groundwater recharge, storm water trash capture requirements, and flood protection. The storm water trash capture requirements for the City are State-mandated infrastructure improvements and the multi-use basin construction has been identified by staff as a means to meet requirements without significant general fund cost impacts.

The proposed agreement with Schaaf & Wheeler Consulting Civil Engineers is the first step in moving forward with this project to identify feasible design alternatives for the multi-use basin. Following this initial feasibility work, specific design work for the project could begin.

7 A request for proposals was issued on May 29, 2024. Proposals for the work were received by two firms. The proposals were reviewed and scored by a team of City staff from the Public Services Department (see attachment).

COMMUNITY ENGAGEMENT:

Not Applicable
Providing improved flood protection and meeting state-mandated storm water requirements are expected municipal services provided by the City. When the project reaches the construction phase, the City will work to inform adjacent community members of any potential impacts.

ALTERNATIVE ACTIONS:

The City Council could choose not to move forward with this feasibility study and provide alternate direction to staff. Staff do not believe reissuing the request for proposals will result in any cost savings and would delay the project by at least 3 months.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

The Council previously approved the FY24-30 Capital Improvement Program Budget on June 19, 2024.

FISCAL AND RESOURCE IMPACT:

Funding for this agreement is available within the approved FY24-30 Capital Improvement Program within the Local Drainage Impact Fund under the Fisher/Butterfield Storm System Expansion Project. Grant funds of $2 million will reimburse the project funds for approximately 61% of project costs.

CEQA (California Environmental Quality Act):

Categorical Exemption 15262:

A project involving only feasibility or planning studies for possible future actions which the agency, board, or commission has not approved, adopted, or funded does not require the preparation of an EIR or negative declaration but does require consideration of environmental factors. This feasibility study is necessary to provide details for future environmental review.

8/30/24 $(
3XEOLF6HUYLFHV'HSDUWPHQW Butterfield Basin
1 1

8 CITY COUNCIL STAFF REPORT
MEETING DATE: September 4, 2024
PREPARED BY:

Andrew Crabtree, Development Services Consultant
APPROVED BY: City Manager

ADOPT RESOLUTION TO ESTABLISH NEW AND UPDATED FEES FOR

PLANNING, BUILDING, AND LAND DEVELOPMENT ENGINEERING

RECOMMENDATION(S)

1. Open/Close Public Hearing; and

2. Adopt resolution to establish new and updated Planning, Building, and Land Development Engineering fees as proposed.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Preserving and Cultivating Public Trust
2024-2025 Strategic Priorities
Fiscal Sustainability
Guiding Documents
General Plan
Municipal Code
REPORT NARRATIVE:

The City of Morgan Hill is proposing to update the City’s fees for land development permits issued by Planning, Engineering Land Development (a part of the Public Services Department), and Building programs. The California Government Code allows cities to recover all or a portion of the cost of providing exchange-based services through the application of fees. The City of Morgan Hill accordingly requires the payment of a fee as part of the application for Planning, Building and Land Development Engineering permits administered through the City's Development Services program.

These fees reflect the cost to review and process applications required for new construction. The fees collected include compensation for time by City teammates on activities such as technical review, stakeholder meetings, communication and public hearings, as well as costs incurred by the City such as noticing and general overhead expenses. These activities are intended to be 100% cost recovery, and therefore must be periodically reviewed to account for changes in personnel costs, overhead, internal service charges, and costs for supplies, technology, and services. Prior to the current

8 analysis, planning and land development engineering permit fees were last reviewed in 2021 and building permit fees were last reviewed in 2017. The City Council finds that providing these services is of special benefit to applicants both separate and apart from the general benefit to the public; and therefore, in the interests of fairness to the general public, the City desires to better recover the costs of providing these services from applicants who have sought the City's services by revising its schedule of development fees
Analysis
City fees are adjusted on an annual basis through a general cost of living percentage increase. Building permit fees are mostly based on project valuation, which increased due to increasing costs within the construction industry. However, it has been three years for Planning and Land Development Engineering and seven years for Building since the fees have been updated. The current fee study provides an opportunity to more accurately connect fees to actual operating costs, address changes in staffing since the last fee study, and reassess assumptions made in previous studies. The current fee study relies upon an analysis of the actual costs of service delivery for a typical permit using the established methodology previously employed by the City and the City's consultants.

The current fee study addresses the following:
1) updated staffing model
2) updated costs for salaries, benefits and overhead
3) adjustments to the number of hours required to deliver a particular service 4) updated public information staffing costs (counter service) Based on the Fee Study, staff is proposing to update the City’s fees for land development permits issued by Planning, Engineering Land Development (a part of the Public Services Department), and Building programs. Fees for service are determined based upon two primary variables:
• Fully Burdened Hourly Rate (FBHR)
• Number of hours to perform the service (Hours per Service) This study indicates that both the FBHR and the Hours per Service should be increased to implement a 100% cost recovery fee program. The FBHR is proposed to be adjusted based on changes to the current staffing composition, employee pay rates, program administrative costs, and Citywide overhead rates. The Hours per Service for each permit have been reviewed by staff and adjusted in this study to align with the amount of time currently spent by staff hours in the review and issuance of these permits.

In summary:
• Proposed FBHR increases are 53% for Planning, 49% for Engineering Land Development and 9% for the Building programs. (The Building Program includes

8 Fire code permits.)
• Average permit fees increase by various amounts, ranging from 8% for Electrical permits issued by the Building Department up to 119% for Planning permits. • Based upon projected activity levels by permit type, fees collected are expected to increase on average by program from between 9% for Mechanical, Electrical and Plumbing permits to 131% for Planning permits.
• The proposed increases to the FBHR and permit fees correspond to a 100% cost recovery model as established in the following analysis.

Proposed Change to FBHR 2024
Current
2024
Proposed
%
Increase
Planning $253 $387 53%
Engineering Land
Development
$248 $370 49%
Building / Fire $234 $256 9%
Average Permit Fee Increase Unweighted Weighted
by Volume
Planning 119% 131%
Engineering Land
Development
62% 51%
Building Permits 27% 33%
Building Plan Check 110% 92%
Building - Mechanical 9% 9%
Building - Electrical 8% 9%
Building - Plumbing 9% 9%
Fire 40% 14%
Planning permit fees increase by the greatest margin due to the increased Planning program FBHR and a significant increase in Hours per Service for most planning permits. Planning staff carefully reviewed the Hours per Service used in the two prior Fee Studies and determined that they significantly underrepresented the actual amount of time spent by staff to process each permit. Engineering Land Development fees also increased significantly, due in large part to the increased Engineering Land Development FBHR, along with more modest increases in the standard Hours per Service.

8 Building Permit fees have a less significant increase, correlating mostly with the modest increase in the Building program FBHR. However, plan check fees have increased more significantly, particularly for projects that include review by Engineering Land Development and Planning, due to increased FBHR for both programs and increased Hours per Service for Engineering Land Development. Fire reviews have also increased more significantly, due to increased Hours per Service.

The proposed fee update proposes to continue subsidizing fees for six planning permit types and recover less than 100% cost recovery, as adopted in 2022. These planning permits are Appeals, Temporary Use for Non-Profits, Tree Removals, Administrative Use Permits, Temporary Use Amendments, and Residential Private Livestock. The cost to process an Appeal is kept at less than cost recovery so that the fee will not become a potential obstacle to public participation in the planning process. Similarly, costs for the other identified permits are set at less than 100% cost recovery so that permit fees do not become an obstacle to code compliance and/or desirable land use activities for which the full cost recovery fee would be cost prohibitive. Providing these permit activities at less than 100% cost recovery requires that the City supplement the planning permit program with a General Fund contribution equivalent to the average amount of revenue lost with the reduced fees.

Proposed Fee Modifications
The City compared the proposed fees with the fees for comparable permit processes in Gilroy, San Jose, Campbell, and Sunnyvale. Based upon the input received from stakeholder outreach, and the comparison with other cities, the proposed fee structure was modified to create a reduced fee for an SB 330 Preliminary Application and to reduce the rate of escalation in fees for multifamily residential projects based on the number of units. The SB330 Preliminary Application vests residential applications with current fees and regulations in existence on the day fees are received for the application and starts a 180-day clock where that vesting will expire if a formal application is not filed. For the SB330 Preliminary Application Fee, it is recommended to create a tier system with one small fee equal to three (3) hours of review that vests the application with no staff feedback and the standard fee that includes detailed analysis of the proposal and a meeting with a departmental team as shown below:

Permit Type Proposed Fee Tiered Proposed Fee Approach
SB330 Preliminary
Application
$26,666 Vesting Only fee: $1,161
Preliminary Review with
department wide review and
comment meeting: $26,666
Implementation
The proposed fee schedule positions the City to recover as close to 100% cost recovery as feasible. Council may choose to adopt the fee schedule as proposed or may consider phased implementation over time until 100% cost recovery is met. For example, 50% of the proposed fee increase could take effect upon adoption, with an additional 25% increase at the end of the next two fiscal years. Staff have observed two,

8 three and five year phased-in implementation of new fees in different Bay Area municipalities. It is important to note that a phased approach will require General Fund subsidies until 100% cost recovery is met.

COMMUNITY ENGAGEMENT:

Public Notices related to development fee consideration by the City Council have been distributed and advertised in accordance with the provisions of Sections 66016 through 66018 of the California Government Code.

Two public meetings with developers and community members, one in person and one virtual, were held on August 13th and 14th, 2024. No one attended the in-person meeting, but the virtual meeting held on August 14th was attended by six (6) individuals representing the development community, including a participant from the Builder's Industry Association (BIA). A detailed summary of that meeting is included on Page 21 of the Fee Study.

Communication regarding the proposed fees was also received outside of the outreach meetings. For example, an email from Pete Larko of JP DiNapoli Companies, Inc. expressed concern about the fee increase, but further clarified that relative to the cost of the City’s impact fees, permit fees are not significant. The mention of impact fees was also a common point made in the development meeting on August 14th and represent a separate conversation. Impact fees do not follow the same formula as development application fees and are charged much later in the development process. Impact fees are a one-time charge to new development imposed under the Mitigation Fee Act.

These fees are charged to mitigate impacts resulting from the development activity and cannot be used to fund existing deficiencies.

ALTERNATIVE ACTIONS:

City Council can choose to maintain existing permit fees, adopt fees at a less than full cost recovery level, or implement a phased-in approach for the fees as proposed.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

No prior City Council actions have been taken on this proposed fee update. Planning and Land Development Engineering permit fees were last updated by the City Council in January 2022. Building permit fees were last updated in October 2017.

FISCAL AND RESOURCE IMPACT:

The annual impact on the Development Services Special Revenue Fund is anticipated to be an increase in revenue that will recoup more of the reasonable costs for providing a given service. If revenues fall short of operating expenses for any of the planning, building, and/or land development engineering programs, the General Fund will have to provide subsidies for the program.

Should the Council adopt the proposed updated fee schedule on September 4, 2024,

8 the new and updated fees would go into effect on November 4, 2024.

CEQA (California Environmental Quality Act):

Not a Project.

The creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment.

RESOLUTION NO. 24-xxx

A RESOLUTION OF THE CITY COUNCIL OF THE

CITY OF MORGAN HILL ESTABLISHING NEW AND

UPDATED PLANNING, LAND DEVELOPMENT

ENGINEERING, AND BUILDING FEES
WHEREAS, the City Council, pursuant to Section 3.50.010 of the Morgan Hill Municipal Code (“Code”), requires the recovery of costs reasonably born from fees and charges levied in providing the regulation, products or services enumerated in Code Chapter

3.50 – Fee and Service Charge Revenue/Cost Comparison System; and WHEREAS, the City of Morgan Hill has conducted a fee analysis to calculate the costs reasonably borne to provide the specified Planning, Land Development Engineering, and Building services, which study has been available to the public for at least ten (10) days prior to the adoption of this Resolution; and
WHEREAS, an in-person public meeting and a virtual public meeting were held with members of the development community and other interested parties on August 13, 2024 and August 14, 2024 respectively; and
WHEREAS, the proposed establishment of the fees that are the subject of this Resolution was agendized for consideration by the City Council of the City of Morgan Hill at a duly noticed public hearing of the Council held on September 4, 2024 at which hearing all interested persons were afforded an opportunity to be heard on said proposed fees; and WHEREAS, the Council heard all relevant testimony and reviewed all written materials submitted in connection with its hearing on this Resolution.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORGAN HILL DOES HEREBY FIND, DETERMINE, RESOLVE, AND ORDER AS FOLLOWS:

1. The City Council has conducted an extensive analysis of its Planning, Land Development Engineering, and Building Fees, including the cost to the City for special services and development applications and the revenues produced by those paying Planning, Land Development Engineering, and Building Fees; and

2. Current Planning, Land Development Engineering, and Building Fees charged for the City's Services do not adequately recoup the City's costs of providing certain Services; and

3. The City Council finds that providing these Services is of special benefit to Applicants both separate and apart from the general benefit to the public; and therefore, in the interests of fairness to the general public, the City desires to better recover the costs of providing these Services from Applicants who have sought the City's Services by revising its schedule of City-Wide Fees; and

City of Morgan Hill
Resolution No. 24-XXX

4. The proposed Planning, Land Development Engineering, and Building Fees are initially based upon the information contained in a document prepared by City staff entitled "City of Morgan Hill Development Services Fund 206 Analysis", dated August 16, 2024; and

5. Based upon the analysis and the provided information, the City (i) identifies the purpose of the proposed fees, (ii) identifies the use to which the fees will be put, (iii) demonstrates a reasonable relationship between the fees’ use and the types of services on which the fees are imposed, and (iv) demonstrates a reasonable relationship between the amount of the fees and the cost of the City's services attributable to the applications on which the fees are imposed; and

6. The City Council finds and determines the fees calculations utilized to establish new and updated Planning, Land Development Engineering and Building fees will not cause fee revenues to exceed the estimated cost reasonably borne of providing the services which the fees are levied; and

7. The City Council hereby adopts and approves the establishment of new and updated Planning, Land Development Engineering and Building fees as set forth in attached Exhibit A and incorporated by this reference; and

8. The City Council finds and determines that it is reasonable to continue to annually adjust the fees set forth in Schedule by the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco, Oakland and San Jose Area, and hereby instructs, authorizes and directs the City Manager or his/her designee to so annually adjust the applicable fees as set forth Resolution 6503 adopted January 18, 2012; and

9. The City Manager or his/her designee is hereby authorized and directed to amend the City Fee Schedule to reflect the fees as set forth in Exhibit A.

10. Effective Date. This Resolution shall take effect upon its adoption; provided, however, that the New and Updated Planning, Land Development Engineering and Building Fees established hereunder shall first be imposed and collected sixty (60) days from the date of adoption of this Resolution.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Morgan Hill at a regular meeting held on the 4th day of September, 2024.

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

City of Morgan Hill
Resolution No. 24-XXX

APPROVED: ATTEST:
____________________________ ___________________________ MARK TURNER, Mayor MICHELLE BIGELOW, City Clerk
 CERTIFICATION 
I, Michelle Bigelow, City Clerk of the City of Morgan Hill, California, do hereby certify that the foregoing is a true and correct copy of Resolution No. ________, adopted by the City Council at a regular meeting held on September 4, 2024.

WITNESS MY HAND AND THE SEAL OF THE CITY OF MORGAN HILL.

DATE: _____________________ ___________________________________ Michelle Bigelow, City Clerk

August 16, 2024
City of Morgan Hill
Development Services
Fund 206 Analysis

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Table of Contents
Executive Summary 3
Background 5
Land Use Permitting / Development Services
Cost Recovery Model
Best Practices
Objectives 8
Methodology 9
Prior Fee Studies
Budget Alignment
Key Elements 10
Staff Team Composition
Fully Burdened Hourly Rate
Hours per Service
Conclusions 20
Cost Recovery Revenue Projections
Stakeholder Input
City Comparisons
Policy Considerations

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Executive Summary
Based on the analysis summarized in this report, the City of Morgan Hill is proposing to update the City’s fees for land development permits issued by Planning, Engineering Land Development (a part of the Public Services Department), and Building programs. Fees for service are determined based upon two primary variables:
• Fully Burdened Hourly Rate (FBHR)
• Number of hours to perform the service (Hours per Service) This analysis indicates that both the FBHR and the Hours per Service should be increased to implement a 100% cost recovery fee program. The FBHR is proposed to be adjusted based on changes to the current staffing composition, employee pay rates, program administrative costs, and Citywide overhead rates. The Hours per Service for each permit have been reviewed by staff and adjusted in this study to align with the amount of time currently spent by staff in the review and issuance of these permits.

In summary:
• Proposed FBHR increases are 53% for Planning, 49% for Engineering Land Development and 9% for the Building programs. (The Building Program includes Fire code permits.) • Average permit fees increase by various amounts, ranging from 8% for Electrical permits issued by the Building Department up to 119% for Planning permits. • Based upon projected activity levels by permit type, fees collected are expected to increase on average by program from between 9% for Mechanical, Electrical and Plumbing permits to 131% for Planning permits.
• The proposed increases to the FBHR and permit fees correspond to a 100% cost recovery model as established in the following analysis.

Proposed Change to FBHR 2024
Current
2024
Proposed % Increase
Planning $253 $387 53%
Engineering Land Development $248 $370 49%
Building / Fire $234 $256 9%
Average Permit Fee Increase Unweighted Weighted by
Volume
Planning 119% 131%
Engineering Land Development 62% 51%
Building Permits 27% 33%
Building Plan Check 110% 92%
Building - Mechanical 9% 9%
Building - Electrical 8% 9%
Building - Plumbing 9% 9%
Fire 40% 14%

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Planning permit fees increase by the greatest margin due to the increased Planning program FBHR and a significant increase in Hours per Service for most planning permits. Planning staff carefully reviewed the Hours per Service used in the two prior Fee Studies and determined that they significantly underrepresented the actual amount of time spent by staff to process each permit.

Engineering Land Development fees also increase significantly, due in large part to the increased Engineering Land Development FBHR, along with more modest increases in the standard Hours per Service.

Building Permit fees have a less significant increase, correlating mostly with the modest increase in the Building program FBHR. However, plan check fees have increased more significantly, particularly for projects that include review by Engineering Land Development and Planning, due to increased FBHR for both programs and increased Hours per Service for Engineering Land Development. Fire reviews have also increased more significantly, due to increased Hours per Service.

In mid-August, the City conducted outreach to development stakeholders to gather input on the proposed fee increases. Five members of the public attended a virtual meeting and three spoke expressing opposition to fee increases as they would cause a barrier to development.

The City also compared the proposed fees with the fees for comparable permit processes in Gilroy, San Jose, Campbell, and Sunnyvale.

Based upon the input received from stakeholders, and the comparison with other cities, the proposed fee structure was modified to create a reduced fee for an SB 330 Preliminary Application and to reduce the rate of escalation in fees for multi-family residential projects based on the number of units.

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Background
Land Use Permitting / Development Services
The City of Morgan Hill exercises regulative authority over land use activities within the City, including new construction, alterations to existing structures, and new land uses. This authority is implemented through the issuance of land use permits that ensure construction and land use activities conform to local, regional, and state policies and regulations. Permits are issued by different departments or discipline areas within the City, focused on planning (land use policy and zoning requirements), building (Building Code) and engineering (interface with public infrastructure). These three programs are referred to as Planning, Building and Engineering Land Development respectively. Collectively, they may be referred to as Development Services.

Per the City’s website, these three programs have the following purposes:
• The Planning Division performs a variety of services intended to protect, maintain and develop an attractive, safe, and healthy environment. The Planning Division is responsible for review/approval of Design Permits, Use Permits, Zoning changes, etc., including fulfilment of environmental review as required under the California Environmental Quality Act (CEQA). Many of these approvals are discretionary in nature and may require action to be taken by the City Council or Planning Commission.
• The Building Division serves the residents and developers within the City by answering general questions, providing plan review services, issuing grading and building permits, and much more.

The Building Division is responsible for the issuance of Building Permits and Fire Permits and inspection of construction activities.
• Engineering Land Development provides development review/inspection services. It oversees all construction activities that pertain to the infrastructure constructed by developers within the City.

Engineering Land Development is responsible for review/approval of Improvement Plans, Street Vacations, Final Subdivision Maps, etc. Engineering Land Development further reviews and inspects all onsite privately owned storm water treatment and detention/retention facilities in compliance with State mandates.

Cost Recovery Model
According to State law, local municipalities like the City of Morgan Hill, are allowed to establish fees for services such as the issuance of land use permits. The fee charged to an individual applicant should correspond to the general cost of delivering the corresponding service. For example, a Building Permit fee can be charged to pay for the work required to review and issue a Building Permit, including administrative activities for the permit, review of the proposed construction for consistency with the Building Code (plan check) and subsequent inspections by a Building Inspector to verify that construction is taking place consistent with the plans approved for the Permit.

Best Practices
In general, the City may choose to pass 100% of the costs for permitting services on to the applicants who are required to obtain a permit for a proposed land use. The costs for these services include front line staff costs (a proportional share of the salary and benefit costs for staff working directly on the issuance of permits), supplies and equipment (e.g., computers, stationary, vehicles, etc.), administrative staff costs (proportional share of management or support staff who enable the productivity of the front-line staff), and citywide overhead (e.g., building maintenance, IT, etc.). The City may elect to bear some of the costs of permitting through the use of other revenue sources, such as the City’s General Fund, which may consist of

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
monies collected from property, sales and hotel taxes. Attempting to fully fund permitting program costs through permit fees is referred to as a 100% cost recovery fee model.

To operate a 100% cost recovery fee program, the City must conduct periodic studies to quantify the exact cost of service delivery. These studies include an analysis of the Fully Burdened Hourly Rate (FBHR) as well as the typical number of hours (Hours per Service) required to process a permit. For the Hours per Service, it is permissible to utilize averages based on typical procedures in terms of hours spent in review, number of meetings or public hearings, number of inspections, etc. The FBHR is determined by calculating the true cost for an employee’s hour of work. The Hours per Service are based on the experiences of City staff in processing recent permits. The product of the FBHR and Hours per Service is the standard fee for a particular permit. The permit fees are listed by type on a Fee Schedule so that applicants may know anticipated fees to process an application for a land use permit.

Like many cities, Morgan Hill typically increases fees annually using a generic inflationary rate. However, actual employee costs can change significantly independent of the general economy due to changes in staff team composition, salary rates, and other factors. Periodic review allows the fee levels to be set more accurately at the actual service cost.

Permit fees should not exceed the typical cost for the corresponding type of permit, or else they may be considered a form of taxation. On the other hand, if fees are less than 100% cost recovery, the cost of the permitting activity is being born (or subsidized) by some other funding source. A municipality may elect to charge a fee less than the amount required to fully cover the cost of the service (e.g., a cost recovery rate less than 100%), but should do so through a decision-making process that accounts for an alternative funding source to replace any fees not collected. If some fees are disproportionately high while others are low, the permittees paying the higher fees are subsidizing those paying the lower fees.

A 100% cost recovery program should generate a positive revenue balance for fee revenue when considered on an annual basis. In particular, the review and inspection of Building permit projects can take place over multiple fiscal years while fees are collected only at the beginning of either the plan check or building permit process. It is thus necessary for the City to maintain a positive balance across multiple fiscal years to cover the costs of work performed in a fiscal year subsequent to the fiscal year in which the corresponding revenue was collected. Planning and Engineering Land Development reviews may also cover multiple fiscal years, but to a lesser degree. Further, there may be fluctuations in the fund balance that are a result of the unpredictable increases and decreases in the demand for land use permits.

Maintaining this slight buffer allows the City to retain experienced staff and overall productivity levels when construction activity and associated permit revenue drop.

While a time and materials fee could be the most precise means of tracking and collecting fees for full cost recovery, this approach creates significant administrative overhead. As a result, municipalities typically set fees based on the average cost of processing a type of permit, with time and materials fees only used for more unusual circumstances.

A 100% cost recovery approach may include limited exceptions for either legal or practical reasons. For example, if the City provides an appeal process for community members to challenge land use decisions, a substantial fee to file the appeal could be considered an undue burden on due process. As another example, the City may elect to subsidize a particular permit where a fee set at 100% cost recovery would discourage compliance with City regulations or unfavorably discourage land use activity. Typical examples

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
of Planning permits subsidized by cities include use permits for non-profit entities conducting a community event or a tree removal permit for a single-family homeowner.

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Objectives
The City of Morgan Hill undertook this analysis to specifically review and propose updates to the permit fees for the City’s Development Services activities and to align with the requirements for a 100% cost recovery fee program. Previously the City contracted with a consulting firm to conduct fee studies in 2021 (Planning and Engineering Land Development) and 2017 (Planning, Building and Engineering Land Development).

Since 2021, Planning and Engineering Land Development fees were increased annually based on a standardized inflationary adjustment. While Building Permit fees were not adjusted in the same manner, this was offset by the use of project valuation as an input to the Building Permit Fee. Project valuation, an estimated cost of construction for the project, increases periodically based on data collected by the construction industry on actual construction costs. Because Building Permit fees are calculated as a percentage of the expected construction costs (referred to as project valuation), they automatically increase as construction prices increase.

In addition to a desire to follow the best practice of periodic permit fee updates, the City was motivated by a desire to improve the fiscal stability of the Development Services Fund programs by better aligning revenues with actual costs. Fund 206 is used in the City’s budget to track revenues and costs for Development Services, including Planning, Engineering Land Development and Building programs. Through the City’s 2024-2025 budget process, it was noted that Fund 206 was continuing to operate in a deficit situation such that the City was forced to use General Fund money to cover some portion of the cost of Development Services.

Furthermore, as a best practice, the City has the objective of addressing changes in staffing composition, overhead costs, and permit procedures that had been implemented since the most recent fee studies and which could affect the cost of the Development Services permit program. Changes to staffing and overhead costs occur through the biennial adoption of the City’s operating budget. Changes to permit procedures result from changes in State law as well as local land use regulations, and include the suspension of Morgan Hill’s Residential Development Control System (RDCS) and a new preliminary review process brought on by the adoption of SB 330.

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Methodology
Prior Fee Studies
Cities routinely conduct Fee Studies to support cost recovery fee programs, often with the assistance of an outside consultant. The nature of these studies is fairly routine, although their structure can vary significantly in terms of approach and detail. This particular analysis directly relies upon the methodology established in the City’s two most recent Development Services Fee Studies, both of which were prepared by the same consultant and used the same methodology to determine an aggregate Fully Burdened Hourly Rate (FBHR) for each of the three main programs (Planning, Engineering Land Development and Building) and then to apply that rate to an aggregate of the number of hours for each enumerated permit included on the City’s Fee Schedule. The following report provides a more detailed description of each step in this process.

Budget Alignment
As noted above, the City is using an aggregate FBHR for each program within Fund 206. This approach aligns well with the structure of the City’s budget, which assigns staff on a proportionate basis to each program. For example, a portion of the funding for several positions (e.g., City Manager, Development Services Director, Assistant City Attorney, Management Analyst, etc.) are assigned within the City’s budget to each of these programs. These positions or portions of these positions then become an administrative cost within the overall staffing cost for each program, rather than a specifically enumerated cost that is considered when determining the Hours per Service. An alternative approach would be to separate out one or more of these positions, calculate a separate FBHR specific to the position, and then allocate time specifically to that position at the specific FBHR. This approach would add both complexity and specificity, and may be desirable for the latter reason, but would not align well with the structure of the City’s budget which allocates costs for materials, supplies, overhead, etc., as well as staffing, as an aggregate for each program.

Materials and supplies are included in the City’s budget as a line item specific for each program. The Citywide overhead may also include materials and supplies, but in a generalized fashion where each program pays a proportionate share of the City’s total costs. Some of the increase in Citywide overhead and corresponding decrease in materials and supplies costs for each program between 2021 and 2024 is attributed to a shift of materials and supplies cost from individual programs to the Citywide overhead.

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Key Elements
Staff Team Composition
The following analysis begins with a quantification of the staff resources for each of the three programs.

The following tables present the City’s staffing for each of the three Fund 206 programs as set forth in the City’s budget.

The key pieces of information for the fee analysis are the total number of hours spent on each activity and the percentage of those hours spent on each activity for each program. The first table summarizes the distribution between administrative, public information and permit processing for each program.

Administrative activities include staff meetings, training, and administrative work such as contract management and supervision. Public information includes time spent in communication with the general public and/or applicants and other stakeholders, either in person, by phone, email or other means. Permit processing time is time available to work directly on the review and issuance of a land use permit. Notably, the Planning program has the greatest share of public information activity, while Engineering Land Development and Building have more hours dedicated to permit processing.

The allocation of hours to these different activities are further broken down in the following table. The table identifies staffing by position title and the percentage of that position assigned in the budget to the referenced Fund 206 program (% FTE or % Full Time Equivalent). The percentage of FTE assigned to the program determines how many productive hours are available for the work of the program by the indicated individual. The productive hours for each position, (productive hours being the total number of work hours in a year after subtraction of vacation, sick leave and break time), have been distributed between administrative, public information (counter) and permit processing activities as an indication of how much time is spent by each individual on each.

Distribution of Hours
Planning 3,978 39% 2,261 22% 4,026 39%
Land Development 3,023 37% 525 6% 4,703 57%
Building 3,514 22% 564 3% 12,176 75%
Administrative Public Information Permit Processing

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
City of Morgan Hill: Fund 206 Fee Study
FY 2024-2025
Fund 206 Employee Time Resources
Position FTE Admin Public Info Permits Admin Public Info Permits City Manager 0.04 100% - - - 64 -
Asst City Manager Development Services 0.30 64% 21% 15% 314 105 73 Development Services Director 0.30 54% 7% 39% 266 35 191 Senior Planner 1.00 22% 7% 71% 353 120 1,167
Associate Planner 0.80 25% 29% 46% 352 400 643
Assistant Planner 0.80 25% 28% 47% 354 400 673
Development Services Technician 0.05 6% 94% - 5 81 -
Development Services Technician 0.90 13% 70% 17% 206 1,080 255 Part-Time / Temp 0.50 12% 3% 85% 123 25 852
Economic Development Coordinator 0.10 100% - - 168 - -
Assistant City Attorney 0.17 33% 5% 62% 92 15 172
Business Assistant 0.10 100% - - 174 - -
Municipal Service Assistant 0.80 100% - - 1,382 - -
Management Analyst 0.07 100% - - 125 - -
Total 5.93 39% 22% 39% 3,978 2,261 4,026
Position FTE Admin Public Info Permits Admin Public Info Permits City Manager 0.02 100% - - - 32 -
Public Services Director 0.03 33% - 67% 16 - 33
Development Services Director 0.10 87% - 13% 143 - 21
Deputy Director for Engineering 0.15 33% - 67% 80 - 166 Senior Civil Engineer 0.75 43% 2% 55% 527 30 673
Supervising Civil Engineer 1.00 31% 7% 62% 503 120 1,017 Assistant Engineer 0.50 23% 17% 60% 206 150 540
Junior Engineer 0.75 23% 17% 60% 309 225 810
Senior Public Works Inspector 0.35 16% - 84% 97 - 502
Senior Public Works Inspector 0.35 16% - 84% 98 - 510
Environmental Programs Coordinator 0.45 56% - 44% 453 - 353 Assistant City Attorney 0.07 32% - 68% 37 - 78
Business Assistant 0.25 100% - - 436 - -
Municipal Service Assistant 0.05 100% - - - 86 -
Management Analyst - - - - - - -
Total 4.82 37% 6% 57% 3,023 525 4,703
Position FTE Admin Public Info Permits Admin Public Info Permits City Manager 0.02 100% - - - 32 -
Asst City Manager Development Services 0.05 100% - - - 82 - Development Services Director 0.20 100% - - 328 - -
Building Official 1.00 40% 2% 58% 663 25 952
Building Division Manager 1.00 24% - 76% 393 - 1,247
Development Services Technician 0.75 13% 11% 76% 172 140 972 Development Services Technician 0.10 12% 40% 47% 21 69 81 Development Services Technician 1.00 12% 9% 79% 217 165 1,410 Development Services Technician 1.00 12% 10% 78% 212 165 1,335 Biulding Inspector II 1.00 12% - 88% 214 - 1,522
Biulding Inspector II 1.00 12% - 88% 214 - 1,530
Biulding Inspector II 1.00 12% - 88% 217 - 1,575
Plan Check Engineer 1.00 12% - 88% 216 - 1,552
Assistant City Attorney 0.16 100% - - 262 - -
Business Assistant 0.10 100% - - 174 - -
Municipal Service Assistant 0.05 100% - - - 86 -
Management Analyst 0.07 100% - - 125 - -
Total 9.50 22% 3% 75% 3,514 564 12,176
Notes
DPW Admin hours include floodplain and special projects Fund 206 - Planning
Fund 206 - Building
Fund 206 - Land Development
Distribution of Work (%)
Distribution of Work (%)
Distribution of Work (%)
Distribution of Work (Hours)
Distribution of Work (Hours)
Distribution of Work (Hours)

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Fully Burdened Hourly Rate
The next step in the analysis process was to calculate a FBHR for each of the three programs based on staff team composition and the associated budget. The FBHR reflects the full cost, including all forms of overhead, for one hour of staff work on a permit. The FBHR is calculated by adding up all of the costs required to conduct the permit program, including salary, benefits, administration, public information, equipment and supplies and dividing the total costs by the total number of hours available. Based on this calculation, the analysis supports significant increases to the current FBHR for the Planning and Engineering Land Development programs, and a modest increase for the Building program as shown.

Proposed Change to FBHR 2024
Current
2024
Proposed Increase % Increase
Planning $253 $387 $134 53%
Engineering Land Development $248 $370 $122 49%
Building $234 $256 $22 9%
The calculation of the FBHR is the most complex part of this analysis and was carefully reviewed prior to making this recommendation as it will have a significant impact on the fees the City will be charging for new land use permits, and thus make new construction and land use activities more expensive.

The proposed increases reflect changes to:
• Cost of salary and benefits
• Proportion of staff time dedicated to administrative activities • Availability of productive hours
• Equipment and supplies
• Citywide overhead
• Incorporation of public information costs within the permit program The relative effect of each of these factors varies by program as discussed below.

Planning Program
The Planning Program FBHR is proposed to increase substantially from $253 to $387 per hour for the following reasons.
1) Public Information – the biggest factor increasing the FBHR for Planning is the allocation of 50% of the staff time spent on public information activities to the permit fee program. While it is not uncommon for a city to assume that the majority of public information time spent by Development Services staff (e.g., answering questions from potential applicants and/or community members during the workday at the counter, by email or by phone) is directly related to the issuance of permits, the previous two Studies assumed only 10% of this time would be allocated to the permit program based upon a rough estimation made by City staff. For this analysis, the City monitored public information over a two-week period and determined that 52% of the time spent on public information was in direct support of the conduct of the City’s land use permit program. To align with common practice, and with the support of the collected data, the City is proposing to increase the percentage of public information activities covered by permit fees from 10% to 50%. This adds administrative costs to the Planning fee program and thus increases the Planning FBHR.

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
2) Productive Hours – the second largest factor increasing the Planning FBHR is the loss of productive hours from the most recent Fee Study. Administrative costs and overhead are distributed over the total number of productive hours, so that when the number of productive hours is reduced, the FBHR is increased. The drop in productive hours is most notably the result of a reduction in staffing at the Senior Planner level. In the 2021 study the Planning program included two Senior Planner positions with a total of 3,288 productive hours. One position was removed and work duties reassigned so that in the current analysis, the remaining Senior Planner provides only 1,167 hours of productive time for permit processing. This reduction reflects increasing demand upon the Senior Planner to perform administrative tasks related to State Housing and Community Development requirements, the growing complexity of legal and procedural requirements placed upon local land use permitting, and other factors contributing to greater administrative workload. 3) Citywide Overhead – The third contributing factor to the increased Planning FBHR is an increase in Citywide overhead assigned to the Planning program. Increased administrative activity contributes as well. The potential increase in the Planning FBHR is somewhat offset by a decrease in the budget for supplies and equipment, but this decrease is also related to a shift in some of these expenses from a direct program specific line item in the budget to incorporation into the Citywide overhead.

Engineering Land Development
The Engineering Land Development Program FBHR is proposed to increase substantially from $248 to $370 per hour for the following reasons.
1) Citywide Overhead – The most significant factor increasing the Engineering Land Development FBHR is an increase in Citywide overhead for this program, due to a change in methodology for overhead allocation.
2) Productive Hours – The second factor for Engineering Land Development is a loss of productive hours.

Due to changes in workload and revenue, Engineering Land Development staff were reassigned from Engineering Land Development to the City’s Capital Improvement Program, reducing the productive hours available within the Engineering Land Development program. As with Planning, this results in administrative and overhead costs being borne by a reduced number of productive hours, thereby resulting in a higher FBHR.
3) Public Information – The Engineering Land Development FBHR is also increased by a shift in public information hours to the fee program from 30% to 100%. Under current work assignments, all of the public information activities conducted by Engineering Land Development program staff are related to the permit program. This shift in public information has a lesser impact on Engineering Land Development than on the Planning program as the total number of hours for public information is considerably less (525 hours compared to 2,261 hours).
4) Labor Costs – The increase in the Engineering Land Development FBHR would be larger except that it is offset by reductions in the overall cost of labor and a reduction in administrative hours.

Building
By comparison to Planning and Engineering Land Development, the Building program has a modest proposed increase in FBHR from $234 to $256. While the Planning and Engineering Land Development programs were addressed in the 2021 Fee Study, the Building program was excluded and thus this analysis uses the 2017 Fee Study as a point of refence. This increase is a result of the following factors.

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
1) Labor Costs – The total labor cost for the Building program has increased substantially from the 2017 Study with the addition of new positions in the program. 2) Citywide Overhead – Citywide overhead has increased for the Building program and is the second largest factor increasing the Building FBHR.
3) Productive Hours – Factors causing increases to the FBHR are significantly offset by an increase in productive hours. The positions added within the program are focused on productive hours rather than administrative activities and thus have a much lesser effect on increasing the FBHR. 4) Public Information – Counter hour cost recovery is proposed to increase from 10% to 100% but this has a very minor impact on the FBHR as it is a small part of the Building program workload.

Calculation of FBHR
The following three tables present the calculation of the FBHR for each of the three programs. The FBHR is calculated by distributing program costs (salary, benefits, materials and supplies, and Citywide overhead) proportionately between work hours for administrative, public information, and permit processing activities.

The first category, Employee Services, includes the total cost of salary and benefits budgeted for each program. Overtime costs are subtracted from this total as any time spent as overtime should not be a factor in determining the FBHR for a regular work hour.

Non-Labor / Overhead includes the costs for supplies and materials and the general citywide overhead costs for each program as set in the budget.

The Total for Labor and Non-Labor is a calculation of the proportional cost for each of the three work activities including labor, supplies and materials and citywide overhead.

The fully burdened cost for administrative work hours is then distributed between the public information and permit processing time, so that each bears a proportional cost of the administrative activity. 50% of the public information hourly cost is added to 100% of the permit processing hourly cost to establish the Fully Burdened Hourly Rate (FBHR) for the Planning program. For Engineering Land Development and Building programs 100% of the public information costs are added to the FBHR.

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Fund 206 - Planning
FY 24-25 Adjustment
24-25 Net
Expenditures Admin
General
Public Permits Total
Allocation of Labor Factor 39% 22% 39% 100%
Labor Hours 3,978 2,261 4,026 10,265
Employee Services
Salaries-General $ 805,205 - $ 805,205 312,041$ 177,357$ $ 315,807 Salaries-Part-Time Temp $ 97,000 - $ 97,000 37,590$ 21,366$ $ 38,044 Salaries-Earned leave $ 25,758 - $ 25,758 9,982$ 5,674$ $ 10,102 Overtime-General $ 2,500 (2,500) $ - $ - $ - $ -
Benefits (sum) $ 377,596 - $ 377,596 146,330$ 83,170$ $ 148,095 Total Labor Cost $ 1,308,059 $ (2,500) $ 1,305,559 505,944$ 287,566$ 512,049$ $ 1,305,559 Non-Labor / Overhead
Supplies & Services Total $ 131,440 (8,600) $ 122,840 47,604$ 27,057$ $ 48,179 Capital Outlay Total $ - - $ - $ - $ - $ -
Internal Services Total $ 469,490 - $ 469,490 181,942$ 103,411$ $ 184,137 Total Non-Labor / Overhead Cost $ 600,930 $ (8,600) $ 592,330 229,546$ 130,468$ $ 232,316 $ 592,330 Total Labor and Non-Labor $ 1,908,988 $ (11,100) $ 1,897,888 735,490$ 418,035$ $ 744,364 $ 1,897,888 Allocation of Administrative Costs
Administrative 735,490$ 735,490$
Productive 418,035$ 744,364$ $ 1,162,399
Productive (%) 36% 64%
Proportional Admin 264,505$ $ 470,985 735,490$
Productive + Proportional Admin 682,539$ $ 1,215,349 $ 1,897,888 Calculation of Billing Rate
Cost Recovery Target 50% 100%
Targeted Fee Revenue 341,270$ $ 1,215,349 $ 1,556,619
Funding from Alternative Source 341,270$ $ - 341,270$
Productive Hours Available 4,026
Productive Hour Cost (Billing Rate) 85$ 302$ 387$
Budgeted Program Cost Allocation to Activity

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Fund 206 - Land Development
FY 24-25 Adjustment
24-25 Net
Expenditures Admin
General
Public Permits Total
Allocation of Labor Factor 37% 6% 57% 100%
Labor Hours 3,023 525 4,703 8,251
Employee Services
Salaries-General $ 761,819 $ (11,819) $ 750,000 274,785$ 47,721$ $ 427,493 Salaries-Part-Time Temp $ 15,300 - $ 15,300 5,606$ 974$ $ 8,721 Salaries-Earned leave $ 44,265 - $ 44,265 16,218$ 2,817$ $ 25,231 Overtime-General $ 2,500 (2,500) $ - $ - $ - $ -
Benefits (sum) $ 344,090 - $ 344,090 126,067$ 21,894$ $ 196,128 Total Labor Cost $ 1,167,974 $ (14,319) $ 1,153,654 422,676$ 73,405$ $ 657,573 $ 1,153,654 Non-Labor / Overhead
Supplies & Services Total $ 253,295 (1,250) $ 252,045 92,344$ 16,037$ $ 143,664 Capital Outlay Total $ - - $ - $ - $ - $ -
Internal Services Total $ 336,235 - $ 336,235 123,190$ 21,394$ $ 191,651 Total Non-Labor / Overhead Cost $ 589,530 $ (1,250) $ 588,280 215,534$ 37,431$ $ 335,315 $ 588,280 Total Labor and Non-Labor $ 1,757,504 $ (15,569) $ 1,741,934 638,210$ 110,837$ $ 992,888 $ 1,741,934 Allocation of Administrative Costs
Administrative 638,210$ $ 638,210
Productive 110,837$ $ 992,888 $ 1,103,725
Productive (%) 10% 90%
Proportional Admin 64,090$ $ 574,120 $ 638,210
Productive + Proportional Admin 174,926$ $ 1,567,008 $ 1,741,934 Calculation of Billing Rate
Cost Recovery Target 100% 100%
Targeted Fee Revenue 174,926$ $ 1,567,008 $ 1,741,934
Funding from Alternative Source $ - $ - $ -
Productive Hours Available 4,703
Productive Hour Cost (Billing Rate) 37$ $ 333 $ 370
Budgeted Program Cost Allocation to Activity

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Fund 206 - Building
FY 24-25 Adjustment
24-25 Net
Expenditures Admin
General
Public Permits Total
Allocation of Labor Factor 22% 3% 75% 100%
Labor Hours 3,514 564 12,176 16,254
Employee Services
Salaries-General $ 1,471,302 - $ 1,471,302 318,085$ 51,053$ $ 1,102,164 Salaries-Part-Time Temp $ 15,300 - $ 15,300 3,308$ 531$ $ 11,461 Salaries-Earned leave $ 58,569 - $ 58,569 12,662$ 2,032$ $ 43,875 Overtime-General $ 5,000 (5,000) $ - $ - $ - $ -
Benefits (sum) $ 728,805 - $ 728,805 157,562$ 25,289$ $ 545,953 Total Labor Cost $ 2,278,976 $ (5,000) $ 2,273,976 491,618$ 78,905$ $ 1,703,453 $ 2,273,976 Non-Labor / Overhead
Supplies & Services Total $ 334,440 (45,500) $ 288,940 62,467$ 10,026$ $ 216,447 Capital Outlay Total $ - - $ - $ - $ - $ -
Internal Services Total $ 552,546 - $ 552,546 119,457$ 19,173$ $ 413,917 Total Non-Labor / Overhead Cost $ 886,986 $ (45,500) $ 841,486 181,923$ 29,199$ $ 630,364 $ 841,486 Total Labor and Non-Labor $ 3,165,962 $ (50,500) $ 3,115,462 673,541$ 108,104$ $ 2,333,817 $ 3,115,462 Allocation of Administrative Costs
Administrative 673,541$ $ 673,541
Productive 108,104$ $ 2,333,817 $ 2,441,921
Productive (%) 4% 96%
Proportional Admin 29,818$ $ 643,723 $ 673,541
Productive + Proportional Admin 137,922$ $ 2,977,540 $ 3,115,462 Calculation of Billing Rate
Cost Recovery Target 100% 100%
Targeted Fee Revenue 137,922$ $ 2,977,540 $ 3,115,462
Funding from Alternative Source $ - $ - $ -
Productive Hours Available 12,176
Productive Hour Cost (Billing Rate) 11$ $ 245 $ 256
Budgeted Program Cost Allocation to Activity

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Hours per Service
The second step in calculating individual permit fees is to determine the number of work hours needed for staff to process the permit. This number of work hours (referred to as Hours per Service) includes activities such as application intake, creation of permit records, review of application materials for consistency with applicable policies and regulations, communications between staff and applicants, conduct of public hearings, writing staff reports and creation of permit documents. This calculation is performed for each permit type the City issues. The Hours per Service for a particular permit is the average number of hours required for these activities to complete the City’s processing and issuance of that permit type.

While some Fee Studies calculate the Hours per Service based on time spent for individual positions to process a permit (e.g., hours spent by a Permit Technician, Associate Planner, etc.), the City of Morgan Hill, in prior Fee Studies and this analysis, uses an aggregate approach where hours are grouped or aggregated for multiple positions within each program (Planning, Engineering Land Development and Building) as applicable. This total number of hours for each program is then multiplied by the FBHR for that program to determine the 100% cost recover amount for each program. The resulting numbers for each program are added together to determine the full cost for the City to process and issue the permit.

The City may elect to charge a fee equivalent to the full cost (100% cost recovery) or to charge less than the full cost consistent with other City goals. For any permit where the City decides to set a fee at less than 100% cost recovery, the City should budget alternative funding for the cost of work not being recovered by permit fees.

Hours per Service Tables
The attached tables present the calculations to determine the current full cost for issuance of permits within Planning, Engineering Land Development and Building programs. Building program permits are presented in multiple tables including Building Permits, Building Plan Check, Mechanical, Electrical, Plumbing and Fire. These tables indicate the updated Hours per Service for each permit, using the same methodology as used in the previous Fee Studies, with an updated FBHR and adjustments to the particular hours per service based on current staff experience. The Tables also indicate the proposed permit fee for each permit, in most cases based on 100% cost recovery.

Multi-Department Plan Check
One notable change was made to the Building program Plan Check fee for multi-department review.

Previously, Building Plan Check was broken into two categories, Building-only review and multi-department review. In this approach, any permit that required referral to another department was charged the same fee regardless of whether it was referred to one, two or three other departments. For the current analysis, the multi-departmental referral fees have been calculated to provide separate cost-recovery fees for Planning, Engineering Land Development and Building-Fire Marshall. By identifying separate cost-recovery fees for each of these disciplines, the City will be able to assess fees more precisely, where an applicant will only pay for the cost of referrals relevant to their permit.

Summary
Other changes made to the Fee per Service analysis are minor in nature, reflecting changes in permit processes (e.g., the suspension of the Residential Development Control System or RDCS) or other procedural changes. In a few cases the fee has been dropped as no longer needed or replaced with an actual time and services fee given the unpredictability of the Hours per Service for that particular activity.

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
The resulting FBHR will then be applied for each permit activity (shown in the Fees per Service tables).

In summary, the increased FBHR and an average increase in the Hours per Service for each permit type result in significant increases to the proposed 100% cost-recovery fee for each permit type. The average increase for permit type by program is summarized in the following table. The “Unweighted” increase represents the average increase in the permit fee for all permits in the corresponding program. The “Weighted” increase is a calculation of the average increase in fees weighted according to the projected volume of permits by permit type. An increase in the fee for a commonly used permit type will thus have a greater impact on the weighted average than a permit type that is seldom used.

Average Permit Fee Increase Unweighted Weighted
Planning 119% 131%
Engineering Land Development 62% 51%
Building Permits 27% 33%
Building Plan Check 110% 92%
Building - Mechanical 9% 9%
Building - Electrical 8% 9%
Building - Plumbing 9% 9%
Fire 40% 14%
*Revised based on FY24-25 Fees, effective July 1, 2024
Planning permit fees increase by the greatest margin due to the increased Planning program FBHR and a significant increase in Hours per Service for most planning permits. Planning staff carefully reviewed the Hours per Service used in the two prior Fee Studies and determined that they significantly underrepresented the actual amount of time spent by staff to process each permit.

Engineering Land Development fees also increase significantly, due in large part to the increased Engineering Land Development FBHR, along with more modest increases in the standard Hours per Service.

Building Permit fees have a less significant increase, correlating mostly with the modest increase in the Building program FBHR. However, plan check fees have increased more significantly, particularly for projects that include review by Engineering Land Development and Planning, due to increased FBHR for both programs and increased Hours per Service for Engineering Land Development. Fire reviews have also increased more significantly, due to increased Hours per Service. (Hours per Service tables attached as a separate document.)

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Conclusions
Cost Recovery Revenue Projections
A key objective for this analysis is to provide an opportunity for the City of Morgan Hill to improve the performance of Fund 206 in alignment with a 100% cost recovery model. The City has consistently needed to use General Fund money to cover the costs of operating and is not meeting the best practice objective of carrying a positive balance from fiscal year to fiscal year. This analysis determined that the City is undercharging for land use permits and thus the current fees are not at a 100% cost recovery level.

As shown in the following table, the City’s fees are currently set at a range between 47% of cost-recovery for Planning up to 92% cost recovery for Building-Mechanical and Building-Plumbing. When projected permit activity levels by permit type are taken into consideration, using the City’s current fees, the Planning program would only collect 42% of the full cost of reviewing and issuing permits. Data for other programs is shown in the table below.

Current Cost Recovery Unweighted Weighted
Planning 47% 43%
Engineering Land Development 62% 66%
Building Permits 83% 75%
Building Plan Check 53% 52%
Building - Mechanical 92% 92%
Building - Electrical 82% 91%
Building - Plumbing 92% 92%
Fire 75% 86%
*Revised based on FY24-25 Fees, effective July 1, 2024
With the proposed update to 100% cost recovery (with limited exceptions in the Planning program), the projected revenue for Fund 206 more closely aligns with the City’s budget projections as shown in the following table. Forecast revenue depends on the level of permit activity. With the proposed fee increases and anticipated number of permits for each type, Fund 206 would slightly exceed the Fund 206 revenue forecast ($ 5.9M) included within the City’s adopted Operating Budget for FY 2024-25. Actual revenues could be more or less depending upon actual activity levels. Without the proposed fee change, revenues are projected to fall significantly short of the Budget forecast.

Revenue Projections Current Fee Proposed Fee
Planning $ 823,180 $ 1,899,989
Engineering Land Development 846,681 1,281,824
Building Permits 1,455,674 1,940,175
Building Plan Check 447,495 858,628
Building - Mechanical 41,543 45,210
Building - Electrical 218,147 238,502
Building - Plumbing 49,156 53,517
Fire 199,338 232,768
Fund 206 Total $ 4,081,214 $ 6,550,614
*Revised based on FY24-25 Fees, effective July 1, 2024

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Implementing the proposed fee increases will thus improve the condition of Fund 206 to reduce the need for General Fund subsidy and allow the Fund to carry a positive balance from fiscal year to fiscal year, in keeping with 100% cost recovery model best practices.

Stakeholder Input
City staff conducted outreach to development industry stakeholders through an in-person meeting on Tuesday, August 13, 2024 and an on-line meeting on Wednesday, August 14, 2024. There were no attendees at the in-person meeting, but five members of the public attended the August 14 meeting. The City invited an established contact list of development industry representatives (developers, architects, engineers, consultants, etc.) that the City typically uses to invite stakeholders to this type of meeting. This list includes representatives of the Building Industry Association (BIA) and trade unions, as well as local developers and builders. Information for the meetings was also posted on the City’s website and both meetings were open to the general public.

Three of the attendees at the August 14 meeting provided feedback to the City on the proposed fee increases. Two other community members attended the meeting but did not make any comments.

Dennis Martin of the Building Industry Association (BIA) provided a significant number of comments objecting to the proposed fee increases and the process for adoption of the new fees. He requested that Council consideration of the fees be delayed for several months so that the BIA could prepare an analysis of the proposed fees. He questioned the need for a fee update when fees were studied in 2021 and are adjusted annually based on price indices. He objected to the timing (outreach in August and consideration right after Labor Day) as inconvenient for stakeholder participation, and the lack of early outreach in the process. He noted the benefits of new development to the community and suggested that General Fund subsidy is warranted, if necessary to avoid fee increases or reduce fees so that desirable development may move forward. He questioned that premise that growing complexity of State regulations adds to administrative costs for the City, noting that State laws are intended to streamline the development process and reduce the amount of staff work required. He said that fee increases if adopted should be phased in over a longer time-period than 18 months.

Rogg Collins, of Evergreen DevCo, also emphatically opposed a proposed fee increase, stating that current fees are already too high. He gave a specific example that they were unable to bring a grocery store into one of their retail spaces because of the City’s impact fees. He added that high construction costs and interest rates, along with high fees, are making development infeasible. He stated that if the government wants development to occur, fees will need to be lowered.

A third speaker, Alejandra, echoed the concerns from the BIA that developer stakeholders had not been included earlier in the fee analysis process.

City Comparisons
To provide context for this analysis, a survey was conducted of five neighboring cities (Gilroy, San Jose, Santa Clara, Sunnyvale, and Palo Alto) to compare the proposed permit fees with those charged by other cities. Such comparisons are complicated by the varying approaches taken by different jurisdictions in how to regulate land development, organize City departments and conduct permitting activities. The comparison was limited to the types of permits included in the analysis (Planning, Engineering Land Development and Building) and did not take into account impact fees or other costs of development that

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
could affect future development activity. Results from the survey will be provided, along with stakeholder input, when these fees are brought forward for potential adoption.

Policy Considerations
This analysis is being provided as the basis for the City to implement a 100% cost recovery model for services provided through the City’s Fund 206 land use permitting programs (Planning, Engineering Land Development and Building). The City may elect to adopt new fees in accordance with the 100% cost recovery fees identified in this analysis.

Alternatives to 100% Cost Recovery
Alternatively, the City may elect to set some fees at less than 100% cost recovery fee levels. In this case the City should identify an alternative source of funding for the staff time required to process the subject permit.

The analysis assumes that the fee for four permits will not be at 100% cost recovery. The first two are appeals:
• Commission/Board Decision - Public Appeal
• Staff Decision - Public Appeal
Setting the fee for an appeal by a member of the public at 100% cost-recovery would contradict City objectives in that It could create an undue burden upon the intended due process. Other appeals, made by an applicant, can be set at 100% cost recovery and accounted for as a cost of development.

In addition, the following two permits were also considered at less than 100% cost recovery, based on well-established practice in Morgan Hill:
• Tree Removal Permit
• Temporary Use Permit (Non-Profit)
In the case of a Tree Removal Permit, a full cost recovery fee would discourage compliance as these permits are for homeowners who would find a full cost recovery fee too expensive. The Temporary Use Permit for Non-Profits are typically issued for special events hosted by community groups, typically funded through donations or community fund raising and a full cost recovery fee would exceed the practical ability of these types of organizations to pay for services.

Based on projected permit volumes, collectively, to subsidize these four permit types will require approximately $47,000 annually of alternative revenue.

Public Information
If the City implements the proposed FBHR and resulting fees as identified in this analysis, a greater percentage of public information activities will be funded through the permit program. The analysis is based on 50% cost-recovery for Planning public information activity and 100% for Engineering Land Development and Building. Because of the significantly greater amount of time spent by Planning on public information, this increase most significantly affects the Planning FBHR. The City could alternatively utilize the General Fund to pay for a greater share of the public information work and thereby reduce the Planning FBHR and planning permit fees.

Phased Implementation

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City of Morgan Hill –Development Services: Fund 206 Analysis August 16, 2024
Because the proposed permit fee increases are substantial, the City may consider implementing them in a delayed manner with a portion of the increase effective in the near-term and additional increases scheduled over a period of time until they reach 100% cost recovery. For example, 50% of the proposed fee increase could take effect upon adoption, with an additional 25% increase at the end of the next two fiscal years.

City of Morgan Hill: Fund 206 Fee Study
FY 2024-2025
Calculation of Fully Burdened Hourly Rate (FBHR)
Fund 206 - Planning
FY 24-25 Adjustment
24-25 Net
Expenditures Admin
General
Public Permits Total
Allocation of Labor Factor 39% 22% 39% 100%
Labor Hours 3,978 2,261 4,026 10,265
Employee Services
Salaries-General $ 805,205.00 - $ 805,205 312,041$ 177,357$ $ 315,807 Salaries-Part-Time Temp $ 97,000.00 - $ 97,000 37,590$ 21,366$ $ 38,044 Salaries-Earned leave $ 25,758.00 - $ 25,758 9,982$ 5,674$ $ 10,102 Overtime-General $ 2,500.00 (2,500) $ - -$ -$ -$
Benefits (sum) $ 377,595.69 - $ 377,596 146,330$ 83,170$ $ 148,095 Total Labor Cost $ 1,308,059 $ (2,500) $ 1,305,559 505,944$ 287,566$ $ 512,049 $ 1,305,559 Non-Labor / Overhead
Supplies & Services Total $ 131,440 (8,600) $ 122,840 47,604$ 27,057$ $ 48,179 Capital Outlay Total $ - - $ - -$ -$ -$
Internal Services Total $ 469,490 - $ 469,490 181,942$ 103,411$ $ 184,137 Total Non-Labor / Overhead Cost $ 600,930 $ (8,600) $ 592,330 229,546$ 130,468$ $ 232,316 $ 592,330 Total Labor and Non-Labor $ 1,908,988 $ (11,100) $ 1,897,888 735,490$ 418,035$ $ 744,364 $ 1,897,888 Allocation of Administrative Costs
Administrative 735,490$ $ 735,490
Productive 418,035$ $ 744,364 $ 1,162,399
Productive (%) 36% 64%
Proportional Admin 264,505$ $ 470,985 $ 735,490
Productive + Proportional Admin 682,539$ $ 1,215,349 $ 1,897,888 Calculation of Billing Rate
Cost Recovery Target 50% 100%
Targeted Fee Revenue 341,270$ $ 1,215,349 $ 1,556,619
Funding from Alternative Source 341,270$ -$ 341,270 $
Productive Hours Available 4,026
Productive Hour Cost (Billing Rate) 85$ $ 302 $ 387
Fund 206 - Land Development
FY 24-25 Adjustment
24-25 Net
Expenditures Admin
General
Public Permits Total
Allocation of Labor Factor 37% 6% 57% 100%
Labor Hours 3,023 525 4,703 8,251
Employee Services
Salaries-General $ 761,819 $ (11,819.34) $ 750,000 274,785$ 47,721$ $ 427,493 Salaries-Part-Time Temp $ 15,300 - $ 15,300 5,606$ 974$ $ 8,721 Salaries-Earned leave $ 44,265 - $ 44,265 16,218$ 2,817$ $ 25,231 Overtime-General $ 2,500 (2,500) $ - -$ -$ -$
Benefits (sum) $ 344,089.61 - $ 344,090 126,067$ 21,894$ $ 196,128 Total Labor Cost $ 1,167,974 $ (14,319) $ 1,153,654 422,676$ 73,405$ $ 657,573 $ 1,153,654 Non-Labor / Overhead
Supplies & Services Total $ 253,295 (1,250) $ 252,045 92,344$ 16,037$ $ 143,664 Capital Outlay Total $ - - $ - -$ -$ -$
Internal Services Total $ 336,235 - $ 336,235 123,190$ 21,394$ $ 191,651 Total Non-Labor / Overhead Cost $ 589,530 $ (1,250) $ 588,280 215,534$ 37,431$ $ 335,315 $ 588,280 Total Labor and Non-Labor $ 1,757,504 $ (15,569) $ 1,741,934 638,210$ 110,837$ $ 992,888 $ 1,741,934 Allocation of Administrative Costs
Administrative 638,210$ $ 638,210
Productive 110,837$ $ 992,888 $ 1,103,725
Productive (%) 10% 90%
Budgeted Program Cost
Allocation to Activity
Allocation to Activity
Budgeted Program Cost

Proportional Admin 64,090$ 574,120$ 638,210$
Productive + Proportional Admin 174,926$ 1,567,008$ 1,741,934$ Calculation of Billing Rate
Cost Recovery Target 100% 100%
Targeted Fee Revenue 174,926$ 1,567,008$ 1,741,934$
Funding from Alternative Source -$ -$ -$
Productive Hours Available 4,703
Productive Hour Cost (Billing Rate) 37$ 333$ 370$
Fund 206 - Building
FY 24-25 Adjustment
24-25 Net
Expenditures Admin
General
Public Permits Total
Allocation of Labor Factor 22% 3% 75% 100%
Labor Hours 3,514 564 12,176 16,254
Employee Services
Salaries-General 1,471,302.00$ - 1,471,302$ 318,085$ 51,053$ 1,102,164$ Salaries-Part-Time Temp 15,300.00$ - 15,300$ 3,308$ 531$ 11,461$ Salaries-Earned leave 58,569.00$ - 58,569$ 12,662$ 2,032$ 43,875$ Overtime-General 5,000.00$ (5,000) - $ -$ -$ -$
Benefits (sum) 728,804.79$ - 728,805$ 157,562$ 25,289$ 545,953$ Total Labor Cost 2,278,976$ (5,000)$ 2,273,976$ 491,618$ 78,905$ 1,703,453$ 2,273,976$ Non-Labor / Overhead
Supplies & Services Total 334,440$ (45,500) 288,940$ 62,467$ 10,026$ 216,447$ Capital Outlay Total -$ - -$ -$ -$ -$
Internal Services Total 552,546$ - 552,546$ 119,457$ 19,173$ 413,917$ Total Non-Labor / Overhead Cost 886,986$ (45,500)$ 841,486$ 181,923$ 29,199$ 630,364$ 841,486$ Total Labor and Non-Labor 3,165,962$ (50,500)$ 3,115,462$ 673,541$ 108,104$ 2,333,817$ 3,115,462$ Allocation of Administrative Costs
Administrative 673,541$ 673,541$
Productive 108,104$ 2,333,817$ 2,441,921$
Productive (%) 4% 96%
Proportional Admin 29,818$ 643,723$ 673,541$
Productive + Proportional Admin 137,922$ 2,977,540$ 3,115,462$ Calculation of Billing Rate
Cost Recovery Target 100% 100%
Targeted Fee Revenue 137,922$ 2,977,540$ 3,115,462$
Funding from Alternative Source -$ -$ -$
Productive Hours Available 12,176
Productive Hour Cost (Billing Rate) 11$ 245$ 256$
Budgeted Program Cost Allocation to Activity

City of Morgan Hill: Fund 206 Fee Study
FY 2024-2025
Fund 206 Employee Time Resources
Position FTE Admin Public Info Permits Admin Public Info Permits City Manager 0.04 100% 0% 0% 64 - -
Asst City Mgr. For Comm Dev 0.30 64% 21% 15% 314 105 73 Comm Development Director 0.30 54% 7% 39% 266 35 191
Senior Planner 1.00 22% 7% 71% 353 120 1,167
Associate Planner 0.80 25% 29% 46% 352 400 643
Assistant Planner 0.80 25% 28% 47% 354 400 673
Development Services Technician 0.05 6% 94% 0% 5 81 -
Development Services Technician 0.90 13% 70% 17% 206 1,080 255 Part-Time / Temp 0.50 12% 3% 85% 123 25 852
Economic Development Coordinator 0.10 100% 0% 0% 168 - - Assistant City Attorney 0.17 33% 5% 62% 92 15 172
Business Assistant 0.10 100% 0% 0% 174 - -
Municipal Service Assistant 0.80 100% 0% 0% 1,382 - -
Management Analyst 0.07 100% 0% 0% 125 - -
Total 5.93 39% 22% 39% 3,978 2,261 4,026
Position FTE Admin Public Info Permits Admin Public Info Permits City Manager 0.02 100% 0% 0% 32 - -
Public Services Director 0.03 33% 0% 67% 16 - 33
Comm Development Director 0.10 87% 0% 13% 143 - 21
Deputy Director for Engineering 0.15 33% 0% 67% 80 - 166 Senior Civil Engineer 0.75 43% 2% 55% 527 30 673
Supervising Civil Engineer 1.00 31% 7% 62% 503 120 1,017 Assistant Engineer 0.50 23% 17% 60% 206 150 540
Junior Engineer 0.75 23% 17% 60% 309 225 810
Senior Public Works Inspector 0.70 16% 0% 84% 97 - 502
Senior Public Works Inspector 0.70 16% 0% 84% 98 - 510
Environmental Programs Coordinator 0.45 56% 0% 44% 453 - 353 Assistant City Attorney 0.07 32% 0% 68% 37 - 78
Business Assistant 0.25 100% 0% 0% 436 - -
Municipal Service Assistant 0.05 100% 0% 0% 86 - -
Management Analyst 0.00 0% 0% 0% - - -
Total 5.52 37% 6% 57% 3,023 525 4,703
Position FTE Admin Public Info Permits Admin Public Info Permits City Manager 0.02 100% 0% 0% 32 - -
Asst City Mgr. For Comm Dev 0.05 100% 0% 0% 82 - -
Comm Development Director 0.20 100% 0% 0% 328 - -
Building Official 1.00 40% 2% 58% 663 25 952
Building Division Manager 1.00 24% 0% 76% 393 - 1,247
Development Services Technician 0.75 13% 11% 76% 172 140 972 Development Services Technician 0.10 12% 40% 47% 21 69 81 Development Services Technician 1.00 12% 9% 79% 217 165 1,410 Development Services Technician 1.00 12% 10% 78% 212 165 1,335 Biulding Inspector II 1.00 12% 0% 88% 214 - 1,522
Biulding Inspector II 1.00 12% 0% 88% 214 - 1,530
Biulding Inspector II 1.00 12% 0% 88% 217 - 1,575
Plan Check Engineer 1.00 12% 0% 88% 216 - 1,552
Assistant City Attorney 0.16 100% 0% 0% 262 - -
Business Assistant 0.10 100% 0% 0% 174 - -
Municipal Service Assistant 0.05 100% 0% 0% 86 - -
Management Analyst 0.07 100% 0% 0% 125 - -
Total 9.50 22% 3% 75% 3,514 564 12,176
Notes
DPW Admin hours include floodplain and special projects Fund 206 - Planning
Fund 206 - Building
Fund 206 - Land Development
Distribution of Work (%)
Distribution of Work (%)
Distribution of Work (%)
Distribution of Work (Hours)
Distribution of Work (Hours)
Distribution of Work (Hours)

City of Morgan Hill: Fund 206 Fee Analysis
FY 2024-2025
Building Permit Cost of Service
Building Program - Building Permits Hours per Service Detail Permit Type
Hours
per
Service
Proposed
Fee
Proposed
% Cost
Recovery
Current Fee
Current %
Cost
Recovery
Proposed %
Increase
Permit
Tech
Plan
Check
Fire Plan
Check
Building
Inspector
Building
Total
(FBHR) 256.00
Building Permit (Not Combination) Valuation Based Fees
$1 - $500
Any Valuation 0.75 192$ 100% 141$ 73% 36% 0.25 0.00 0.00 0.50 0.75 $501 to $2,000
first $500 1.00 256$ 100% 188$ 73% 36% 0.50 0.00 0.00 0.50 1.00 each additional $100 (round up) 0.03 8$ 100% 11$ -30% 0.03 $2,001 - $25,000
first $2,000 1.50 384$ 100% 376$ 98% 2% 0.75 0.00 0.00 0.75 1.50 each additional $1000 (round-up) 0.06 15$ 100% 9$ 71% 0.06 $25,001 to $50,000
first $25,000 3.00 768$ 100% 611$ 80% 26% 1.50 0.00 0.00 1.50 3.00 each additional $1000 (round-up) 0.07 18$ 100% 11$ 63% 0.07 $50,001 to $100,000
first $50,000 4.75 1,216$ 100% 893$ 73% 36% 2.00 0.00 0.00 2.75 4.75 each additional $1000 (round-up) 0.06 15$ 100% 11$ 40% 0.06 $100,001 to $500,000
first $100,000 8.00 2,048$ 100% 1,504$ 73% 36% 3.00 0.00 0.00 5.00 8.00 each additional $1000 (round-up) 0.02 5$ 100% 6$ -15% 0.02 $500,001 to $1,000,000
first $500,000 19.00 4,864$ 100% 3,760$ 77% 29% 5.00 0.00 0.00 14.00 19.00 each additional $1000 (round-up) 0.01 3$ 100% 4$ -36% 0.01 $1,000,000 and up
first $1,000,000 28.00 7,168$ 100% 5,640$ 79% 27% 6.00 0.00 0.00 22.00 28.00 each additional $1000 (round-up) 0.03 8$ 100% 6$ 28% 0.03 Cost Recovery Analysis

Combination Builiding Permits Valuation Based Fees
$1 - $500
Any Valuation 1.00 256$ 100% 141$ 55% 82% 0.50 0.00 0.00 0.50 1.00 -$
$501 to $2,000
first $500 1.25 320$ 100% 188$ 59% 70% 0.50 0.00 0.00 0.75 1.25 each additional $100 (round up) 0.03 8$ 100% 9$ -15% 0.03 $2,001 - $25,000
first $2,000 1.75 448$ 100% 329$ 73% 36% 0.75 0.00 0.00 1.00 1.75 each additional $1000 (round-up) 0.09 23$ 100% 13$ 77% 0.09 $25,001 to $50,000
first $25,000 4.00 1,024$ 100% 658$ 64% 56% 1.50 0.00 0.00 2.50 4.00 each additional $1000 (round-up) 0.08 20$ 100% 19$ 8% 0.08 $50,001 to $100,000
first $50,000 6.00 1,536$ 100% 1,128$ 73% 36% 2.00 0.00 0.00 4.00 6.00 each additional $1000 (round-up) 0.12 31$ 100% 23$ 34% 0.12 $100,001 to $500,000
first $100,000 12.00 3,072$ 100% 2,256$ 73% 36% 4.00 0.00 0.00 8.00 12.00 each additional $1000 (round-up) 0.03 8$ 100% 6$ 28% 0.03 $500,001 to $1,000,000
first $500,000 26.00 6,656$ 100% 4,700$ 71% 42% 6.00 0.00 0.00 20.00 26.00 each additional $1000 (round-up) 0.04 10$ 100% 8$ 28% 0.04 $1,000,000 and up
first $1,000,000 48.00 12,288$ 100% 8,460$ 69% 45% 10.00 0.00 0.00 38.00 48.00 each additional $1000 (round-up) 0.05 13$ 100% 8$ 60% 0.05 Grading - Permit Fees
50 cubic yards or less
Any Amount up to and including 50 cubic yards 1.50 384$ 100% 225$ 59% 71% 0.50 0.00 0.00 1.00 1.50 51 to 100 cubic yards
first 50 cubic yards 1.50 384$ 100% 282$ 73% 36% 0.50 0.00 0.00 1.00 1.50 each additional cubic yard 0.02 5$ 100% 5$ 2% 0.02
101 to 1,000 cubic yards
first 100 cubic yards 2.50 640$ 100% 451$ 70% 42% 1.00 0.00 0.00 1.50 2.50 each additional 100 cubic yards 0.13 33$ 100% 25$ 33% 0.13 1,001 to 10,000 cubic yards
First 1,000 cubic yards 3.75 960$ 100% 676$ 70% 42% 1.75 0.00 0.00 2.00 3.75

each additional hundred cubic yards 0.04 10$ 100% 7$ 46% 0.04 10,001 to 100,000 cubic yards
1st 10,000 cubic yards 8.00 2,048$ 100% 1,353$ 66% 51% 3.00 0.00 0.00 5.00 8.00 each additional 10,000 cubic yards or fraction thereof 0.33 84$ 100% 88$ -4% 0.33 100,001 to 200,000 cubic yards
1st 100,000 cubic yards 11.00 2,816$ 100% 2,142$ 76% 31% 4.00 0.00 0.00 7.00 11.00 each additional 10,000 cubic yards or fraction thereof 0.10 26$ 100% 23$ 11% 0.10 Roofs
Re-Roofs: Comp/Tile/Shake (Includes new roof sheath)
1 - 15 SQUARES 1.00 256$ 100% 297$ 116% -14% 0.50 0.00 0.00 0.50 1.00 16-30 SQUARES 1.50 384$ 100% 469$ 122% -18% 0.75 0.00 0.00 0.75 1.50 31 and more SQUARES 1.75 448$ 100% 587$ 131% -24% 0.75 0.00 0.00 1.00 1.75 Steel Roof System
Any Size 2.00 512$ 100% 587$ 115% -13% 1.00 0.00 0.00 1.00 2.00 100% Overlay
Residential Composition Overlay - Lifetime 1.25 320 $ 100% 469$ 147% -32% 0.50 0.00 0.00 0.75 1.25 Miscellaneous Roof
Single-ply Roof System 1-30 SQUARES 2.00 512$ 100% 469$ 92% 9% 1.00 0.00 0.00 1.00 2.00 Single-ply Roof System 31 and more SQUARES 2.50 640 $ 100% 587$ 92% 9% 1.00 0.00 0.00 1.50 2.50 Tar & Gravel (Built-Up/BUR) 2.00 512$ 100% 469$ 92% 9% 1.00 0.00 0.00 1.00 2.00

City of Morgan Hill: Fund 206 Fee Analysis
FY 2024-2025
Building Plan Check Fee Cost of Service
Building Permit Program - Plan Check
Permit Type Permit
Tech
Plan
Check
Fire Plan
Check
Building
Inspector
Building
Total Land Dev Planning Fire Plan Check
Base
Buildig Fee
Land Dev
Surcharge
Planning
Surcharge
Fire
Inspection
Surcharge
Total (Max)
$ 256 $ 370 $ 387 $ 204
Multi-Department Plan Check Valuation Based Fees
$1 - $500
Any Valuation 0.75 0.25 0.00 0.00 1.00 0.25 0.25 0.25 256$ 93$ 97$ 51$ 496$ -$ -$ -$ -$ -$
$501 - $2,000
first $500 1.25 0.25 0.00 0.00 1.50 0.50 0.50 0.50 384$ 185$ 194$ 102$ 865$ each additional $100 (round-up) 0.03 0.03 0.00 0.00 8$ 11$ -$ -$ 19$ $2,001 - $25,000
first $2,000 1.50 0.50 0.00 0.00 2.00 1.00 0.50 0.50 512$ 370$ 194$ 102$ 1,178$ each additional $1,000 (round-up) 0.05 0.04 0.01 0.01 13$ 15$ 4$ 2$ 34$ $25,001 - $50,000
first $25,000 1.75 1.50 0.00 0.00 3.25 2.00 0.75 0.75 832$ 740$ 290$ 153$ 2,015$ each additional $1,000 (round-up) 0.02 0.04 0.01 0.01 5$ 15$ 4$ 2$ 26$ $50,001 - $100,000
first $50,000 2.25 1.50 0.00 0.00 3.75 3.00 1.00 1.00 960$ 1,110$ 387$ 204$ 2,661$ each additional $1,000 (round-up) 0.08 0.02 0.00 0.00 20$ 7$ -$ -$ 28$ $100,001 - $500,000
first $100,000.00 3.00 5.00 0.00 0.00 8.00 4.00 1.25 1.25 2,048$ 1,480$ 484$ 255$ 4,267$ each additional $1,000 (round-up) 0.02 0.00 0.00 0.00 5$ -$ -$ -$ 5$ $500,001 - $1,000,000
first $500,000.00 5.00 11.00 0.00 0.00 16.00 5.00 3.00 3.00 4,096$ 1,850$ 1,161$ 612$ 7,719$ each additional $1,000 (round-up) 0.02 0.00 0.00 0.00 5$ -$ -$ -$ 5$ $1,000,001 and up
first $1,000,000.00 8.00 18.00 0.00 0.00 26.00 6.00 5.00 5.00 6,656$ 2,220$ 1,935$ 1,020$ 11,831$ each additional $1,000 (round-up) 0.03 0.01 0.01 0.01 8$ 4$ 4$ 2$ 17$ Grading - Plan Review Fees
50 cubic yards or less
Building Avg. Review/Inspection Time Fee Calculation Referral Review Time

Any Amount up to and including 50 cubic yards 0.50 0.75 0.00 0.00 1.25 0.50 0.50 0.00 320$ 185$ 194$ -$ 699$ 51 to 100 cubic yards
first 50 cubic yards 0.50 0.75 0.00 0.00 1.25 0.50 0.50 0.00 320$ 185$ 194$ -$ 699$ each additional cubic yard 0.02 5$ -$ -$ -$ 5$
101 to 1,000 cubic yards
first 100 cubic yards 1.00 1.25 0.00 0.00 2.25 0.50 0.50 0.00 576$ 185$ 194$ -$ 955$ each additional 100 cubic yards 0.05 13$ -$ -$ -$ 13$
1,001 to 10,000 cubic yards
First 1,000 cubic yards 1.25 1.50 0.00 0.00 2.75 0.50 0.50 0.00 704$ 185$ 194$ -$ 1,083$ each additional hundred cubic yards 0.03 8$ -$ -$ -$ 8$ 10,001 to 100,000 cubic yards
1st 10,000 cubic yards 2.50 3.50 0.00 0.00 6.00 0.50 0.50 0.00 1,536$ 185$ 194$ -$ 1,915$ each additional 10,000 cubic yards or fraction thereof 0.25 64$ -$ -$ - $ 64$ 100,001 to 200,000 cubic yards
1st 100,000 cubic yards 3.25 5.00 0.00 0.00 8.25 0.50 0.50 0.00 2,112$ 185$ 194$ -$ 2,491$ each additional 10,000 cubic yards or fraction thereof 0.42 108$ -$ -$ -$ 108$ 200,001 cubic yards or more
1st 200,000 cubic yards 4.50 8.00 0.00 0.00 12.50 0.50 0.50 0.00 3,200$ 185$ 194$ -$ 3,579$ each additional 10,000 cubic yards or fraction thereof 0.10 26$ -$ -$ - $ 26$ Standard Plan Check (Not Routed) Valuation Based Fees
$1 - $500
Any Valuation 0.50 0.25 0.00 0.00 0.75 192$ 192$
$501 - $2,000
first $500 0.75 0.25 0.00 0.00 1.00 256$ 256$
each additional $100 (round-up) 0.03 8$ 8$
$2,001 - $25,000
first $2000.00 1.00 0.50 0.00 0.00 1.50 384$ 384$
each additional $1,000 (round-up) 0.06 15$ 15$
$25,001 - $50,000
first $25,000.00 1.50 1.50 0.00 0.00 3.00 768$ 768$
each additional $1,000 (round-up) 0.03 8$ 8$
$50,001 - $100,000
first $50,000.00 2.25 1.50 0.00 0.00 3.75 960$ 960$
each additional $1,000 (round-up) 0.08 20$ 20$
$100,001 - $500,000
first $100,000.00 3.00 5.00 0.00 0.00 8.00 2,048$ 2,048$

each additional $1,000 (round-up) 0.02 5$ 5$
$500,001 - $1,000,000
first $500,000.00 5.00 11.00 1.00 0.00 17.00 4,352$ 4,352$ each additional $1,000 (round-up) 0.02 5$ 5$
$1,000,001 and up
first $1,000,000.00 8.00 18.00 2.00 0.00 28.00 7,168$ 7,168$ each additional $1,000 (round-up) 0.03 8$ 8$

City of Morgan Hill: Fund 206 Fee Analysis
FY 2024-2025
Building - Mechanical Permit Cost of Service
Building Permit Program - Mechanical Cost Recovery Analysis Permit Type Estimated
Time
Proposed
Fee Current Fee
Current
Cost
Recovery %
Proposed %
Increase
(FBHR) $ 256
Permit Issuance 0.45 $ 115 106$ 92% 9%
Furnaces Installation
Residential: Installation or relocation of forced air or gravity-type furnace or burner, each 0.50 128$ 118$ 92% 8%
Commercial: Installation or relocation of forced air or gravity-type furnace or burner, each 1.00 256$ 234$ 91% 9%
Installation or relocation of suspended heater, recessed wall heater, floor furnace, or floor mounted unit heater including flue vent, each 0.75 192$ 176$ 92% 9% Appliance Vents and Ducts
Installation, relocation or replacement of appliance vent, ducts, per system 0.75 $ 192 176$ 92% 9% Condensing units (AC), each 0.50 $ 128 118$ 92% 8%
Boilers, Compressors & Absorption Systems
Installation or relocation of each boiler, compressors 1-15 horsepower, or absorption system 0 - 500,000 Btu/h, each 0.75 192$ 176$ 92% 9% Installation or relocation of each boiler, compressors 16-50 horsepower, or absorption system 500,001 - 1,750,000 Btu/h, each 1.00 256$ 234$ 91% 9% Installation or relocation of each boiler, compressors 51 and over horsepower, or absorption system 500,001 - 1,750,001 and over Btu/h, each 1.25 320$ 293$ 92% 9% Air Handlers
Installation or relocation of air-handling unit, each 0.75 192$ 176$ 92% 9% Evaporative Coolers
Each non-residential evaporative cooler other than portable type, each 1.00 $ 256 234$ 91% 9% Ventilation & Exhaust
Residential: Ventilation fan or hoods connected to a single duct, exhaust fan for bathrooms, kitchens, or laundry rooms, each 0.75 192$ 176$ 92% 9% Commercial: Installation of kitchen hood each which is served by mechanical exhaust, including the ducts for such hood, each 2.00 512$ 469$ 92% 9% Ventilation system which is not a portion of any heating or air-conditioning, each 1.00 256$ 233$ 91% 10%
Repairs or Additions
The repair, alteration, or addition to each heating appliance, refrigeration unit, cooling unit, absorption unit, or evaporative cooling system, including installation of controls, each

0.75 192$ 176$ 92% 9%
Incinerators
Installation or relocation of commercial or industrial-type incinerator, each 3.00 $ 768 703$ 92% 9% Miscellaneous
Each appliance or piece of equipment regulated by this code but not classed in other appliance categories, or for which no other fee is listed, each 1.00 256$ 234$ 91% 9% Fee Calculation

City of Morgan Hill: Fund 206 Fee Analysis
FY 2024-2025
Building - Electrical Permit Cost of Service
Building Permit Program - Electrical
Permit Type Estimated
Time
Proposed
Fee Current Fee
Current
Cost
Recovery %
Proposed %
Increase
(FBHR) $ 256
Permit Issuance 0.45 $ 115 106$ 92% 9%
Unit Fee Schedule
Receptacle, switch, lighting outlets, lighting fixtures, sockets or other lamp holding devices, per system 0.50 128$ 118$ 92% 8%
Pole or platform-mounted lighting fixtures (up to 5), each 1.00 256$ 234$ 91% 9% Theatrical-type lighting fixtures or assemblies, per system 2.50 640$ 587$ 92% 9% Kitchen circuits - remodels 0.75 192$ 176$ 92% 9%
Bathroom circuits - remodels 0.50 $ 128 118$ 92% 8%
Non-Residential Appliances, and Receptacle Outlets 1.25 $ 320 293$ 92% 9% Power Apparatus
1 to 100 - HP or KW, each 1.00 256$ 234$ 91% 9%
101 and over - HP or KW, each 1.50 384$ 352$ 92% 9%
Services
Services of 600 volts or less and not over 200 amperes in rating, each 1.00 256$ 234$ 91% 9% Services of 600 volts or less and over 200 amperes and over, each 1.50 384$ 352$ 92% 9% Photovoltaic
Residential 1.20 307$ 280$ 91% 10%
Commercial <10kW 1.45 371$ 338$ 91% 10%
Commercial greater than or equal to 10kW - 49kW 1.95 499$ 454$ 91% 10% Commercial >49kW 2.70 691$ 629$ 91% 10%
Solar Structure (0-50kW) 3.00 768$ -$ 0% 0%
Each kW over 50kW 0.02 5$ -$ 0% 0%
Residential: Repair of photovoltaic electrical systems, each 1.00 256$ 234$ 91% 9% Commercial and Industrial: Repair of photovoltaic electrical systems, each 1.25 $ 320 293$ 92% 9% Miscellaneous Apparatus, Conduits, and Conductors
Electrical apparatus, conduits and conductors for which a permit is required 0.75 $ 192 176$ 92% 9% Busways 2.00 $ 512 469$ 92% 9%
Temporary Power Service
Temporary metered service power pole or pedestal including pole or pedestal-mounted receptacle outlets, each 1.00 256$ 234$ 91% 9% Temporary distribution system (up to 5) poles including temporary lighting and receptacle outlets for construction sites, decorative light, Christmas tree sales lots, firework stands, each

1.00 256$ 234$ 91% 9%
Each additional distribution system 1.00 256$ 234$ 91% 9% Private Swimming Pools - Repairs/Replacement
For private, residential in-ground, swimming pools for single-family occupancies including a complete system of necessary branch circuit wiring, bonding, grounding, underwater lighting, water pumping and other similar electrical equipment directly related to the operation of a swimming pool, each pool

1.00 $ 256 234$ 91% 9%
Carnivals and Circuses
For electric generators, electrically driven rides, mechanically driven rides and walk through attractions or displays having electric lighting 2.00 $ 512 469$ 92% 9% Carnivals and circuses booth and pathway lighting 2.00 $ 512 469$ 92% 9% Signs, Outline Lighting, Marquees
Signs, outline lighting systems or marquees supplies from one branch circuit 1.25 320$ 293$ 92% 9%
Additional branch circuits (up to 5) within the same sign, outline lighting system or marquee 1.00 256$ 234$ 91% 9%
Fee Calculation Cost Recovery Analysis

City of Morgan Hill: Fund 206 Fee Analysis
FY 2024-2025
Building - Plumbing Permit Cost of Service
Building Permit Program - Plumbing
Permit Type Estimated
Time
Proposed
Fee Current Fee
Current
Cost
Recovery %
Proposed %
Increase
(FBHR) $ 256
Permit Issuance 0.45 115$ 106$ 92% 9%
-$
Fixtures and Vents
Installation or repair plumbing fixture, trap or set of fixtures on one trap, backflow device, including condensate lines 0.50 128$ 118$ 92% 8% For repairs or alterations of drainage or vents piping, each 0.75 192$ 176$ 92% 9% Sewers, Disposal Systems and Interceptors
Building Sewer Lateral, each 1.00 256$ 234 $ 91% 9%
Private sewage or disposal system, each 1.00 256$ 234$ 91% 9% Industrial water pretreatment interceptor, each 2.00 512$ 469$ 92% 9% Non-residential rainwater systems, up to 5 per drain 1.50 384$ 352$ 92% 9% Water Piping and Water Heaters
Installation, alteration or repair of water piping and/or water treating equipment, including pressure regulator, per system 1.00 256$ 234$ 91% 9% For installation and replacement of water heater including vent, each 0.45 115$ 106$ 92% 9% Gas Piping Systems
Gas piping system, 1-10 outlets 0.45 115$ 106$ 92% 9%
Gas piping system, over 10 outlets 1.50 384$ 352$ 92% 9% Lawn Sprinklers, Vacuum Breakers, Backflow Protections Devices Installation of lawn sprinkler systems including backflow protection device, and atmospheric-type vacuum breakers, per system 1.00 256$ 234$ 91% 9% Swimming Pools and Spas - Plumbing Repair / Replacement Public pool including anti-entrapment device 1.25 320$ 293$ 92% 9% Private pool including anti-entrapment device 1.00 256$ 234$ 91% 9% Public spa including anti-entrapment device 1.25 320$ 293$ 92% 9% Private spa including anti-entrapment device 1.00 256$ 234$ 91% 9% Installation or replacement of anti-entrapment device 1.25 320$ 293$ 92% 9% Thermal Solar Water Heating 1.00 256$ 234$ 91% 9%
Miscellaneous
Each additional or piece of equipment regulated by the Plumbing Code but not classed in other appliance categories, or for which no other fee is listed in this code

0.75 192$ 176$ 92% 9%
Fee Calculation Cost Recovery Analysis

City of Morgan Hill: Fund 206 Fee Analysis
FY 2024-2025
Fire Permit Fee Cost of Service
Fire Permit Program Cost Recovery Analysis
Permit Type Estimated
Time
Proposed
Fee Current Fee
Current
Cost
Recovery %
Proposed %
Increase
(FBHR) $ 256
Fire Alarm
1-15 Devices 3.00 768$ 704$ 92% 9%
16-50 Devices 4.00 1,024$ 937$ 92% 9%
51-100 Devices 5.00 1,280$ 1,171$ 91% 9%
101-500 Devices 6.00 1,536$ 1,407$ 92% 9%
Each additional 50 devices over 500 devices 0.04 10$ 9$ 88% 14% Fire Sprinklers
Residential Single Family/Townhouse 13D System 3.00 768$ 704$ 92% 9% Apartment/Condo 4.00 1,024$ 704$ 69% 45%
Additional time per unit 0.75 192$ 118$ 61% 63%
Master Plan Review $ - 677$ Actual Time
Commercial - New Construction
1-20 Appliances 3.50 896$ 704$ 79% 27%
21-100 Appliances 4.50 1,152$ 937$ 81% 23%
101-200 Appliances 5.25 1,344$ 1,113$ 83% 21%
201-350 Appliances 6.25 1,600$ 1,348$ 84% 19%
351-500 Appliances 7.50 1,920$ 1,642$ 86% 17%
Each additional 100 appliances over 500 appliances 0.75 192$ 34$ 18% 465% Commercial - Tenant Improvements
1-20 Appliances 3.25 832$ 646$ 78% 29%
21-100 Appliances 3.75 960$ 761$ 79% 26%
101-200 Appliances 4.25 1,088$ 879$ 81% 24%
201-350 Appliances 4.75 1,216$ 996$ 82% 22%
351-500 Appliances 5.25 1,344$ 1,113$ 83% 21%
Each additional 100 appliances over 500 appliances 0.75 192$ -$ 0% High Piled Storage 3.00 $ 768 704$ 92% 9%
Suppression System 2.75 $ 704 704$ 100% 0%
Underground Piping / Hydrant System / Backflow 4.00 $ 1,024 761$ 74% 35% Each Additional Hydrant or Backflow 0.75 $ 192 -$ 0%
Medical Gas Systems 3.00 $ 768 704$ 92% 9%
Fee Calculation

City of Morgan Hill: Fund 206 Fee Analysis
FY 2024-2025
Land Development Program Cost of Service
Land Development Program
Fee Description Hours per
Service
Proposed
Fee
Proposed
% Cost
Recovery
Current
Fee
Proposed
% Increase Eng Plng Bldg Eng Plng Bldg
Cost of
Service for
Activity
$ 370 $ 387 $ 256 FBHR
Public Improvement - Plan Check
$1 - $100,000 67.25 24,826$ 100% 16,335$ 52% 66.75 0.00 0.50 $ 24,698 $ - $ 128 $ 24,826 Any Valuation
$100,001 to $200,000
first $100,000 67.25 24,826$ 100% 16,335$ 52% 66.75 0.00 0.50 $ 24,698 $ - $ 128 $ 24,826 each additional $1,000 (round-up) 0.26 97$ 100% 62$ 57% 0.263 0.000 0.000 $ 97 $ - $ - $ 97.13 $200,001 to $500,000
first $200,000 93.50 34,538$ 100% 22,520$ 53% 93.00 0.00 0.50 $ 34,410 $ - $ 128 $ 34,538 each additional $1,000 (round-up) 0.09 32$ 100% 20$ 58% 0.084 0.000 0.002 $ 31 $ - $ 0 $ 31.57 $500,001 to $1,000,000
first $500,000 119.25 44,009$ 100% 28,508$ 54% 118.25 0.00 1.00 $ 43,753 $ - $ 256 $ 44,009 each additional $1,000 (round-up) 0.05 17$ 100% 11$ 58% 0.047 0.000 0.000 $ 17 $ - $ - $ 17.39 $1,000,001 to $5,000,000
first $1,000,000 142.75 52,704$ 100% 34,013$ 55% 141.75 0.00 1.00 $ 52,448 $ - $ 256 $ 52,704 each additional $1,000 (round-up) 0.013 5$ 100% 3$ 50% 0.013 0.000 0.000 $ 5 $ - $ - $ 4.69 $5,000,000 and up
first $5,000,000 193.50 71,481$ 100% 46,529$ 54% 192.50 0.00 1.00 $ 71,225 $ - $ 256 $ 71,481 each additional $1,000 (round-up) 0.04 14$ 100% 9$ 54% 0.04 0.00 0.00 $ 14 $ - $ 0 $ 14.30 Public Improvement - Inspection
$1 - $100,000
Any Valuation 87.50 32,375$ 100% 21,688$ 49% 87.50 $ 32,375 $ 32,375 $100,001 to $200,000
first $100,000 87.50 32,375$ 100% 21,688$ 49% 87.50 $ 32,375 $ 32,375 each additional $1,000 (round-up) 0.54 200$ 100% 134$ 49% 0.540 $ 200 $ 199.80 $200,001 to $500,000
first $200,000 141.50 52,355$ 100% 35,072$ 49% 141.50 $ 52,355 $ 52,355 each additional $1,000 (round-up) 0.52 191$ 100% 128$ 49% 0.517 $ 191 $ 191.17 Cost Recovery Analysis Hours per Service Detail Activity/Service Cost Analysis

$500,001 to $1,000,000
first $500,000 296.50 109,705$ 100% 73,488$ 49% 296.50 $ 109,705 $ 109,705 each additional $1,000 (round-up) 0.46 169$ 100% 114$ 49% 0.458 $ 169 $ 169.46 $1,000,001 to $5,000,000
first $1,000,000 525.50 194,435$ 100% 130,248$ 49% 525.50 $ 194,435 $ 194,435 each additional $1,000 (round-up) 0.07 27$ 100% 18$ 49% 0.073 $ 27 $ 27.10 $5,000,000 and up
first $5,000,000 818.50 302,845$ 100% 202,869$ 49% 818.50 $ 302,845 $ 302,845 each additional $1,000 (round-up) 0.16 61$ 100% 41$ 49% 0.16 $ 61 $ 60.57 Plan Revision (after approval of Public Improvement
Plans) 3.00 1,110$ 100% 248$ 348% 3.00 $ 1,110 $ 1,110.00 Map Check
Parcel Map 42.00 15,511$ 100% 9,401$ 65% 36.00 5.00 1.00 $ 13,320 $ 1,935 $ 256 $ 15,511 Tract Map/Subdivision Map (Service #149) 50.00 18,357$ 100% 11,107$ 65% 43.00 5.00 2.00 $ 15,910 $ 1,935 $ 512 $ 18,357 Certificate of Compliance - Lot Line Adjustment / Lot
Merger 32.00 11,743$ 100% 7,408$ 59% 30.00 1.00 1.00 $ 11,100 $ 387 $ 256 $ 11,743 Parcel Map - Lot Line Adjustment / Lot Merger 34.50 12,685$ 100% 7,968$ 59% 31.50 2.00 1.00 $ 11,655 $ 774 $ 256 $ 12,685.00 Streets/Easements
Public Easement Review 13.50 4,995$ 100% 3,347$ 49% 13.50 $ 4,995 $ 4,995.00 Street Vacation 43.50 16,095$ 100% 9,667$ 66% 43.50 $ 16,095 $ 16,095.00 Easement Abandonment 39.00 14,430$ 100% 9,667$ 49% 39.00 $ 14,430 $ 14,430.00 Reimbursement Agreement 21.50 7,955$ 100% 5,329$ 49% 21.50 $ 7,955 $ 7,955.00 FEMA Compliance
Base Fee
New Structure 4.75 1,701$ 100% 1,040$ 64% 4.25 0.00 0.50 $ 1,573 $ - $ 128 $ 1,700.50 New Accessory Structure and New ADU 3.75 1,331$ 100% 791$ 68% 3.25 0.00 0.50 $ 1,203 $ - $ 128 $ 1,330.50 Improvement of Existing Structure:

Non-Substantial Improvement w/o Detailed Review 3.50 1,181$ 100% 592$ 99% 2.50 0.00 1.00 $ 925 $ - $ 256 $ 1,181.00 Non-Substantial Improvement with Detailed Review 4.50 1,551$ 100% 839$ 85% 3.50 0.00 1.00 $ 1,295 $ - $ 256 $ 1,551.00 Substantial Improvement (not Accessory Structure) 6.00 2,163$ 100% 1,349$ 60% 5.50 0.00 0.50 $ 2,035 $ - $ 128 $ 2,163.00 Substantial Improvement of Accessory Structure/ADU 4.25 1,516$ 100% 916$ 65% 3.75 0.00 0.50 $ 1,388 $ - $ 128 $ 1,515.50 Additional Review Fees
Elevation Certificate Review 2.75 1,018$ 100% 682$ 49% 2.75 $ 1,018 $ 1,017.50 Flood Field Inspection 2.50 925$ 100% 620$ 49% 2.50 $ 925 $ 925.00 Flood Study Review with Valley Water Coordination 6.50 2,405$ 100% 1,611$ 49% 6.50 $ 2,405 $ 2,405.00 Review of CLOMR/CLOMR-F/LOMR/LOMR-F 4.00 1,480$ 100% 991$ 49% 4.00 $ 1,480 $ 1,480.00 Public Outreach for LOMR/LOMR-F 6.00 2,220$ 100% 1,487$ 49% 6.00 $ 2,220 $ 2,220.00 Review of BFE Determination for Zone A w/o a BFE or
Zone D 2.00 740$ 100% 496$ 49% 2.00 $ 740 $ 740.00
Stormwater Runoff Management Plan Review
Tier 1 Project 11.50 4,255$ 100% 2,850$ 49% 11.50 $ 4,255 $ 4,255.00

Tier 2 Project 34.00 12,580$ 100% 7,435$ 69% 34.00 $ 12,580 $ 12,580.00 Tier 3 Project 48.00 17,760$ 100% 10,658$ 67% 48.00 $ 17,760 $ 17,760.00 Tier 4 Project 54.00 19,980$ 100% 12,889$ 55% 54.00 $ 19,980 $ 19,980.00 Erosion & Sediment Control/Stormwater Pollution
Prevention Plan (SWPPP) Review & Compliance
Type 1 & Type 2 Projects:
< 1 Acre in Soil Disturbance 2.25 833$ 100% 558$ 49% 2.25 $ 833 $ 832.50 1+ Acre in Soil Disturbance 3.75 1,388$ 100% 930$ 49% 3.75 $ 1,388 $ 1,387.50 Type 3 Projects 1.75 648$ 100% 435$ 49% 1.75 $ 648 $ 647.50 Type 4 Projects 1.25 463$ 100% 310$ 49% 1.25 $ 463 $ 462.50 Stormwater BMP Operations & Maintenance
Agreement 9.00 3,330$ 100% 2,231$ 49% 9.00 $ 3,330 $ 3,330.00 Private Sanitary Sewer Agreement 11.50 4,255$ 100% 2,850$ 49% 11.50 $ 4,255 $ 4,255.00 Assessment District Reapportionment
City Staff Only (Contractor Costs Additional) 18.00 6,660$ 100% 2,973$ 124% 18.00 $ 6,660 $ 6,660.00 Preliminary Review on Projects / Engineering
Services 10.00 3,700$ 100% 2,478$ 49% 10.00 $ 3,700 $ 3,700.00 Additional Plan Review (after 3rd submittal) 1.00 370$ 100% 248$ 49% 1.00 $ 370 $ 370.00 Re-Inspection Fee 1.00 370$ 100% 248$ 49% 1.00 $ 370 $ 370.00 Complexity Fee 12.00 4,440$ 100% 2,973$ 49% 12.00 $ 4,440 $ 4,440.00 Agreement Extensions / Improvement Agreement
Amendments
With City Manager Approval 12.50 4,625$ 100% 3,099$ 49% 12.50 $ 4,625 $ 4,625.00 With City Council Approval 19.00 7,030$ 100% 4,709$ 49% 19.00 $ 7,030 $ 7,030.00 Preliminary Fee Estimate 1.50 555$ 100% 371$ 50% 1.50 $ 555 $ 555.00 GIS / Technology Fee
5% of Public
Improvement
Fee 100%
5% of Public
Improvement
Fee
Notes
[1] Activity related to Public Improvement Plan Check & Inspection is based on the number of valuation increments, rather than number of projects.

City of Morgan Hill: Fund 206 Fee Analysis
FY 2024-2025
Planning Program Cost of Service
Planning Permit Program
Permit Type
Hours
per
Service
Proposed
Fee
Proposed
% Cost
Recovery
Current
Fee
Proposed
% Increase Plng Eng Bldg Fire Housing Police (Captain) Plng Eng Bldg Fire Housing Police
(Captain)
Total
$ 387 $ 370 $ 256 $ 225 $ 178 $ 282 FBHR
Agreements
Development Agreement, Non-Residential 60.00 23,220$ 100% 14,415$ 61% 60.00 0.00 0.00 0.00 0.00 0.00 23,220$ -$ - $ -$ -$ -$ 23,220$ Development Agreement, Residential 60.00 23,220$ 100% 14,415$ 61% 60.00 0.00 0.00 0.00 0.00 0.00 23,220$ -$ - $ -$ -$ -$ 23,220$ CC&Rs (Plus City Attorney Fees) 7.00 2,658$ 100% 1,250$ 113% 4.00 3.00 0.00 0.00 0.00 0.00 1,548$ 1,110$ - $ -$ -$ -$ 2,658$ Other Agreements / Documents Review (Plus City Attorney Fees) 4.00 1,548$ 100% 505$ 207% 4.00 0.00 0.00 0.00 0.00 0.00 1,548$ -$ - $ -$ -$ -$ 1,548$ Appeals
Commision/Board Decision - Applicant Appeal 45.00 17,330$ 100% 8,960$ 93% 40.00 5.00 0.00 0.00 0.00 0.00 15,480$ 1,850$ - $ -$ -$ -$ 17,330$ Commission/Board Decision - Public Appeal 45.00 600$ 3% 624$ -4% 40.00 5.00 0.00 0.00 0.00 0.00 15,480$ 1,850$ - $ -$ -$ -$ 17,330$ Staff Decision - Applicant Appeal 42.00 16,220$ 100% 7,329$ 121% 40.00 2.00 0.00 0.00 0.00 0.00 15,480$ 740$ -$ -$ -$ -$ 16,220$ Staff Decision - Public Appeal 42.00 600$ 4% 624$ -4% 40.00 2.00 0.00 0.00 0.00 0.00 15,480$ 740$ -$ -$ -$ -$ 16,220$ Approval Amendments
Minor Amendment (per Code Section 17.20.190) 37.00 13,699$ 100% 7,651$ 79% 24.00 10.00 1.00 1.00 0.50 0.50 9,288$ 3,700$ 256$ 225$ 89$ 141$ 13,699$ Major Approval Amendment (Non Admin - s/b Major) 80.00 29,737$ 100% 13,665$ 118% 55.00 19.00 2.00 2.00 1.00 1.00 21,285$ 7,030$ 512$ 450$ 178$ 282$ 29,737$ Boundary Adjustments
Annexation City Process 334 Actual Cost 100% 26,491$ 320.00 8.00 2.00 2.00 1.00 1.00 123,840$ 2,960$ 512$ 450$ 178$ 282$ 128,222$ Annexation LAFCO Process 220 85,140$ 100% 30,348$ 181% 220.00 0.00 0.00 0.00 0.00 0.00 85,140$ -$ -$ -$ -$ -$ 85,140$ Out of Agency Contract for Services 68.00 26,316$ 100% 10,559$ 149% 68.00 0.00 0.00 0.00 0.00 0.00 26,316$ -$ - $ -$ -$ -$ 26,316$ Urban Service Area Amendment City Process 328.00 Actual Cost 100% 16,399$ 320.00 8.00 0.00 0.00 0.00 0.00 123,840$ 2,960$ -$ -$ -$ -$ 126,800$ Urban Service Area Amendment LAFCO Process 220.00 85,140$ 100% 30,348$ 181% 220.00 0.00 0.00 0.00 0.00 0.00 85,140$ -$ -$ -$ -$ -$ 85,140$ (Plus additional fees collected by LAFCO/Other agencies) Design Permits
Landscape Plan Review Only 10.00 3,870$ 100% 2,528$ 53% 10.00 0.00 0.00 0.00 0.00 0.00 3,870$ -$ -$ -$ -$ -$ 3,870$ Non-Residential Design Permit (Major, >10,000 SF in floor area) 134.50 50,563$ 100% 18,767$ 169% 80.00 50.00 2.00 2.00 0.00 0.50 30,960$ 18,500$ 512$ 450$ -$ 141$ 50,563$ Non-Residential Design Permit (Minor) 69.50 26,024$ 100% 10,316$ 152% 36.00 31.00 1.00 1.00 0.00 0.50 13,932$ 11,470$ 256$ 225$ -$ 141$ 26,024$ Plan Detail Review (misc. site details, e.g., lighting, trash encl.) 8.00 3,096$ 100% 2,129$ 45% 8.00 0.00 0.00 0.00 0.00 0.00 3,096$ -$ - $ -$ -$ -$ 3,096$ Residential Design Permit - 6 units or less 67.50 25,160$ 100% 12,524$ 101% 40.00 24.00 1.00 1.00 1.00 0.50 15,480$ 8,880$ 256$ 225$ 178$ 141$ 25,160$ Residential Design Permit - 7 units to 15 units 75.50 28,222$ 100% 15,528$ 82% 46.00 26.00 1.00 1.00 1.00 0.50 17,802$ 9,620$ 256$ 225$ 178$ 141$ 28,222$ Residential Design Permit - 16 -50 142.00 52,910$ 100% 19,509$ 171% 80.00 55.00 2.00 2.00 2.00 1.00 30,960$ 20,350$ 512$ 450$ 356$ 282$ 52,910$ Projects with horizontal subdivision: Each Additional 10 units 54.00 20,121$ 100% 40.00 10.00 1.00 1.00 1.00 1.00 15,480$ 3,700$ 256$ 225$ 178$ 282$ 20,121$ Single-lot/condo projects: Each Additional 10 units 19.00 6,661$ 100% 10.00 5.00 1.00 1.00 1.00 1.00 3,870$ 1,850$ 256 $ 225$ 178$ 282$ 6,661$ Site Plan Only (no new square footage) 35.00 13,358$ 6,772$ 97% 24.00 11.00 0.00 0.00 0.00 0.00 9,288$ 4,070$ -$ -$ -$ -$ 13,358$ Design Review (Preliminary Review)
(Includes one Planning Commission hearing)
Conceptual Plan Review (Staff) Non-Residential (Major >10,000 SF) Preliminary Plan 40.00 14,737$ 100% 6,714$ 120% 28.00 8.00 1.00 1.00 1.00 1.00 10,836$ 2,960$ 256$ 225$ 178$ 282$ 14,737$ Review to PC 63.00 23,813$ 100% 10,682$ 123% 50.00 10.00 1.00 1.00 0.00 1.00 19,350$ 3,700$ 256$ 225$ -$ 282$ 23,813$ Non-Residential (Minor) Preliminary Plan Review to PC 45.00 16,898$ 100% 7,410$ 128% 35.00 7.00 1.00 1.00 0.00 1.00 13,545$ 2,590$ 256$ 225$ -$ 282$ 16,898$ Residential SB330 Preliminary Application Review (staff) 71.00 26,666$ 100% 13,654$ 95% 55.00 12.00 1.00 1.00 1.00 1.00 21,285$ 4,440$ 256$ 225$ 178$ 282$ 26,666$ Residential - 6 units or less Preliminary Plan Review to PC 48.00 17,816$ 100% 8,090$ 120% 35.00 9.00 1.00 1.00 1.00 1.00 13,545$ 3,330$ 256$ 225$ 178$ 282$ 17,816$ Residential - 7 units or more Preliminary Plan Review to PC 67.00 25,101$ 100% 11,611$ 116% 50.00 13.00 1.00 1.00 1.00 1.00 19,350$ 4,810$ 256$ 225$ 178$ 282$ 25,101$ Projects with horizontal subdivision: Each Additional 10 units 35.00 12,836$ 100% 25.00 6.00 1.00 1.00 1.00 1.00 9,675$ 2,220$ 256 $ 225$ 178$ 282$ 12,836$ Single-lot/condo projects: Each Additional 10 units 13.00 4,373$ 100% 6.00 3.00 1.00 1.00 1.00 1.00 2,322$ 1,110$ 256$ 225$ 178$ 282$ 4,373$ Environmental Review (CEQA)
Expanded Initial Study (Internal Prep) 172.00 66,360$ 100% 16,125$ 312% 160.00 12.00 0.00 0.00 0.00 0.00 61,920$ 4,440$ -$ -$ -$ -$ 66,360$ Historic Assessments - Historical Consultant (Deposit)
Cost Recovery Analysis Hours per Service Detail Activity/Service Cost Analysis

Historic Assessments - Staff-level 42.00 16,084$ 100% 5,008$ 221% 32.00 10.00 0.00 0.00 0.00 0.00 12,384$ 3,700$ -$ -$ -$ -$ 16,084$ Initial Environmental Assessment (Plus outside agency fees) 10.00 3,836$ 100% 2,271$ 69% 8.00 2.00 0.00 0.00 0.00 0.00 3,096$ 740$ -$ -$ -$ -$ 3,836$ Mitigation Monitoring and Reporting Program (Long-term Mitigation Annual Monitoring) 5.00 1,935$ 100% 1,265$ 53% 5.00 0.00 0.00 0.00 0.00 0.00 1,935$ -$ - $ -$ -$ -$ 1,935$ SC County Habitat Plan Review 2.00 774$ 100% 505$ 53% 2.00 0.00 0.00 0.00 0.00 0.00 774$ -$ -$ -$ -$ -$ 774$ Exceptions
Minor Exception 16.50 6,377$ 100% 3,222$ 98% 16.00 0.50 0.00 0.00 0.00 0.00 6,192$ 185$ -$ -$ -$ -$ 6,377$ Variance 65.25 24,894$ 100% 10,831$ 130% 62.00 0.75 1.00 1.00 0.00 0.50 23,994$ 278$ 256$ 225$ -$ 141$ 24,894$ Administrative Extension of Time for Approvals 17.00 6,579$ 100% 2,150$ 206% 17.00 0.00 0.00 0.00 0.00 0.00 6,579$ -$ -$ -$ -$ -$ 6,579$ Non Administrative Extension of Time for Approvals 32.00 12,384$ 100% 3,857$ 221% 32.00 0.00 0.00 0.00 0.00 0.00 12,384$ -$ - $ -$ -$ -$ 12,384$ General Plan Amendment
Land Use Diagram Amendment 128.00 49,400$ 100% 17,789$ 178% 120.00 8.00 0.00 0.00 0.00 0.00 46,440$ 2,960$ -$ -$ -$ -$ 49,400$ Text Amendment 88.00 33,920$ 100% 10,077$ 237% 80.00 8.00 0.00 0.00 0.00 0.00 30,960$ 2,960$ - $ -$ -$ -$ 33,920$ Historic/Cultural Resources
Alteration-Minor - per 18.60.070B2a under $10,000 valuation (plus additional fees if Planning Commission hearing is required) 3.00 1,161$ 100% 380$ 206% 3.00 0.00 0.00 0.00 0.00 0.00 1,161$ -$ - $ -$ -$ -$ 1,161$ Alteration-Major - per Section 18.60.070B2b $10,000+ valuation (plus additional fees if Planning Commission hearing is required) 35.00 13,545$ 100% $ 5,438 149% 35.00 0.00 0.00 0.00 0.00 0.00 13,545$ -$ - $ -$ -$ -$ 13,545$ Demolition or Relocation (Formerly Alteration) 38.00 14,655$ 100% 6,182$ 137% 35.00 3.00 0.00 0.00 0.00 0.00 13,545$ 1,110$ - $ -$ -$ -$ 14,655$ Designation 32.00 12,384$ 100% $ 8,092 53% 32.00 0.00 0.00 0.00 0.00 0.00 12,384$ -$ - $ -$ -$ -$ 12,384$ Miscellaneous
Residential Private Livestock Permit 9.00 1,045$ 100% 873$ 20% 9.00 0.00 0.00 0.00 0.00 0.00 3,483$ -$ - $ -$ -$ -$ 3,483$ Reversion to Acreage Processing 12.50 4,838$ 100% 3,162$ 53% 12.50 0.00 0.00 0.00 0.00 0.00 4,838$ -$ -$ -$ -$ -$ 4,838$ Transfer of Development Credit (Per Hillside Combining District -

18.44 MHMC) 42.00 16,254$ 100% 8,978$ 81% 42.00 0.00 0.00 0.00 0.00 0.00 16,254$ -$ - $ -$ -$ -$ 16,254$ Williamson Act Cancelation 80.00 30,960$ 100% 12,140$ 155% 80.00 0.00 0.00 0.00 0.00 0.00 30,960$ -$ - $ -$ -$ -$ 30,960$ Williamson Act New Contract 45.00 17,415$ 100% 6,576$ 165% 45.00 0.00 0.00 0.00 0.00 0.00 17,415$ -$ - $ -$ -$ -$ 17,415$ Williamson Act Non-Renewal 20.00 7,740$ 100% 1,012$ 665% 20.00 0.00 0.00 0.00 0.00 0.00 7,740$ -$ -$ -$ -$ -$ 7,740$ Sign Review
Alteration to Existing Sign (Limited Scope) 0.75 290$ 100% 189$ 54% 0.75 0.00 0.00 0.00 0.00 0.00 290$ -$ -$ -$ -$ -$ 290$ Sign Review Over the Counter - Copy Change 1.00 387$ 100% 253$ 53% 1.00 0.00 0.00 0.00 0.00 0.00 387$ -$ -$ -$ -$ -$ 387$ New Sign Permit - First Sign 1.50 581$ 100% 380$ 53% 1.50 0.00 0.00 0.00 0.00 0.00 581$ -$ -$ -$ -$ -$ 581$ Each additional Sign 0.50 194$ 100% 126$ 54% 0.50 0.00 0.00 0.00 0.00 0.00 194$ -$ -$ -$ -$ -$ 194$ New Sign within a Master Sign Program 0.75 290$ 100% 189$ 54% 0.75 0.00 0.00 0.00 0.00 0.00 290$ -$ -$ -$ -$ -$ 290$ Subdivision/Real Estate Tract Signs (on and/or off-site) 3.00 1,161$ 100% 758$ 53% 3.00 0.00 0.00 0.00 0.00 0.00 1,161$ -$ - $ -$ -$ -$ 1,161$ Temporary/Promotional Signs 0.75 290$ 100% 63$ 361% 0.75 0.00 0.00 0.00 0.00 0.00 290$ -$ -$ -$ -$ -$ 290$ Uniform Sign Program 28.00 10,836$ 100% 3,668$ 195% 28.00 0.00 0.00 0.00 0.00 0.00 10,836$ -$ - $ -$ -$ -$ 10,836$ Subdivision
Tentative Parcel Map Review - 4 lots or less 31.00 11,878$ 100% 7,299$ 63% 24.00 7.00 0.00 0.00 0.00 0.00 9,288$ 2,590$ -$ -$ -$ -$ 11,878$ Tentative Subdivision Map Review (5-15 lots) 41.00 15,646$ 100% 9,797$ 60% 28.00 13.00 0.00 0.00 0.00 0.00 10,836$ 4,810$ -$ -$ -$ -$ 15,646$ Tentative Subdivision Map Review (16-25 lots) 51.00 19,482$ 100% 12,317$ 58% 36.00 15.00 0.00 0.00 0.00 0.00 13,932$ 5,550$ -$ -$ -$ -$ 19,482$ Tentative Subdivision Map Review (26+ Lots per each 25 lots) 63.00 24,058$ 100% 15,331$ 57% 44.00 19.00 0.00 0.00 0.00 0.00 17,028$ 7,030$ -$ -$ -$ -$ 24,058$ Tree Removals
Tree Removal Permit 8.00 124$ 4% 125$ -1% 8.00 0.00 0.00 0.00 0.00 0.00 3,096$ -$ - $ -$ -$ -$ 3,096$ Use Permits
Administrative Use Permit 45.00 8,449$ 50% 7,682$ 10% 38.00 4.00 1.00 1.00 0.50 0.50 14,706$ 1,480$ 256$ 225$ 89$ 141$ 16,897$ Conditional Use Permit - New Construction 71.00 26,666$ 100% 12,168$ 119% 62.00 4.00 2.00 2.00 0.50 0.50 23,994$ 1,480$ 512$ 450$ 89$ 141$ 26,666$ Conditional Use Permit - No New Construction 69.00 25,926$ 100% 11,672$ 122% 62.00 2.00 2.00 2.00 0.50 0.50 23,994$ 740$ 512$ 450$ 89$ 141$ 25,926$ Temporary Use Permit 36.50 13,644$ 100% 6,178$ 121% 26.00 8.00 1.00 1.00 0.00 0.50 10,062$ 2,960$ 256$ 225$ -$ 141$ 13,644$ Temporary Use Permit (Non-Profit) 29.50 101$ 1% 100$ 1% 26.00 1.00 1.00 1.00 0.00 0.50 10,062$ 370$ 256$ 225$ -$ 141$ 11,054$ Temporary Use Permit Amendment 18.50 3,399$ 50% 3,304$ 3% 15.00 1.00 1.00 1.00 0.00 0.50 5,805$ 370$ 256$ 225$ -$ 141$ 6,797$ Zoning Requests (Includes one PC and one CC Hearing)

Planned Development 138.00 52,871$ 100% 18,046$ 193% 130.00 5.00 1.00 1.00 0.50 0.50 50,310$ 1,850$ 256$ 225$ 89$ 141$ 52,871$ Residential Planned Development Review 136.50 52,220$ 100% 17,644$ 196% 130.00 3.00 1.00 1.00 1.00 0.50 50,310$ 1,110$ 256$ 225$ 178$ 141$ 52,220$ Residential Planned Development (concurrent with subdivision) 118.00 45,615$ 100% 11,112$ 311% 115.00 3.00 0.00 0.00 0.00 0.00 44,505$ 1,110$ -$ -$ -$ -$ 45,615$ Zoning Map Amendment Review 124.00 47,920$ 100% 11,877$ 303% 120.00 4.00 0.00 0.00 0.00 0.00 46,440$ 1,480$ -$ -$ -$ -$ 47,920$ Zoning Map Amendment Review (concurrent with GPA or ANX) 62.00 23,960$ 100% 9,600$ 150% 60.00 2.00 0.00 0.00 0.00 0.00 23,220$ 740$ -$ -$ -$ -$ 23,960$ Zoning Text Amendment Review 82.00 31,700$ 100% 12,635$ 151% 80.00 2.00 0.00 0.00 0.00 0.00 30,960$ 740$ -$ -$ -$ -$ 31,700$ Zoning Confirmation Letter (designation only, additional info: T&M) 2.00 774$ 100% 1,644$ -53% 2.00 0.00 0.00 0.00 0.00 0.00 774$ -$ -$ -$ -$ -$ 774$ Fees for Additional Services
City Council Meeting / Additional Meeting 8.00 3,062$ 100% 2,266$ 35% 6.00 2.00 0.00 0.00 0.00 0.00 2,322$ 740$ -$ -$ -$ -$ 3,062$ LAFCO Meeting / Additional Meeting 6.00 2,322$ 100% 1,770$ 31% 6.00 0.00 0.00 0.00 0.00 0.00 2,322$ -$ - $ -$ -$ -$ 2,322$ Planning Commission Meeting / Additional Meeting 8.00 3,062$ 100% 2,393$ 28% 6.00 2.00 0.00 0.00 0.00 0.00 2,322$ 740$ -$ -$ -$ -$ 3,062$ Planning Consultation (Hourly) 1.00 387$ 100% 253$ 53% 1.00 0.00 0.00 0.00 0.00 0.00 387$ -$ -$ -$ -$ -$ 387$

9 CITY COUNCIL STAFF REPORT
MEETING DATE: September 4, 2024
PREPARED BY:

Patricia Pretell
APPROVED BY: City Manager

ADOPT RESOLUTION TO ESTABLISH NEW CARRY CONCEALED

WEAPON (CCW) LICENSE RENEWAL FEE, FINGERPRINT ROLL AND

LIVE SCAN FEE, AND UPDATE LIVE ENTERTAINMENT ANNUAL

PERMIT FEE

RECOMMENDATION(S)
Adopt resolution to establish new CCW license renewal fee, Fingerprint Roll and Live Scan fee, and update Live Entertainment Annual Permit fee.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Enhancing Public Safety
Maintaining and Enhancing Infrastructure
Preserving and Cultivating Public Trust
2024-2025 Strategic Priorities
Fiscal Sustainability
Community Engagement
Guiding Documents
Morgan Hill 2035 General Plan
Public Safety Master Plan
REPORT NARRATIVE:

To ensure the City's fiscal sustainability, staff regularly reviews the City's Fee Schedule to establish and or update fees to recover the cost of providing services. City policy dictates that fees should, whenever feasible, cover the expenses associated with providing services. The proposed updates are determined based on the time required to perform the service. Any fees that fail to generate enough revenue to cover service costs are subsidized by the General Fund.

Establish a carry concealed weapon (CCW) license renewal fee:

The City Council adopted a Carrying Concealed Weapons (CCW) License fee schedule on April 5, 2023. A subsequent update was presented to the City Council on October 4, 2023, providing the City Council with a comparison of the estimated time and the actual time it takes to process a CCW license application as well as information to establish a

9 fee for the renewal process.

A time study was conducted to establish the processing fee for renewing a CCW application at $540. Half of this fee ($270) is paid when submitting the application through Permitium, and the remaining balance will be collected for those approved applications.

Establish Fingerprint Roll and Live Scan fee:

Live Scan fingerprinting is a procedure designed to electronically capture an individual's fingerprints and transmit them to the California Department of Justice and the Federal Bureau of Investigation for the purpose of conducting criminal background checks. The Fingerprint Rolling Fee is levied to account for the time and labor involved in the fingerprinting process and is collected at the time of fingerprinting. A recent time and fee study was conducted to calculate the cost and found it to be $18 for City services plus pass-through fees from third party federal agencies, currently at $49. Fingerprinting Rolling Fee was originally established by the City Council on September 28, 1988, per Resolution 4217. However, since the Covid-19 pandemic, the City has not been providing this service and the fee was not on the City's master user fee schedule for a while.

Update Live Entertainment Annual Permit Fee:

The Live Entertainment fees were established by the City Council on July 17, 2002, by Resolution 5591. Following an extensive analysis, the Morgan Hill Police Department has found that the current fee does not accurately reflect the time and resources required to issue the Live Entertainment Permit. In order for a permit to be approved as listed in Morgan Hill Municipal Code, Chapter 5.28, the following areas are reviewed by staff to determine the validity of the required documentation:
* Alcoholic Beverage Control (ABC) License
* Background Investigation
* Security Guard - State of California Research
* Floor Plan Review
In fiscal year 2024, the City processed 13 Live Entertainment Permits. Based on the analysis of staff time required, the current fee, whether for initial permit or renewal, needs to be increased to $330 to be full cost recovered.

COMMUNITY ENGAGEMENT:

The public hearing was noticed in the local newspaper 10 days prior to today's public hearing. In addition, an email blast was sent to the known current CCW license and live entertainment permit holders 10 days prior to the public hearing.

ALTERNATIVE ACTIONS:

The Council has the discretion not to adopt the proposed fees or adopt them at a lower amount.

9 PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

The Live Entertainment fees were established by the City Council on July 17, 2002.

The Fingerprint fee was established by the City Council on September 28, 1988.

FISCAL AND RESOURCE IMPACT:

CCW License renewal fee: Assuming approximately 15 constituents renew with the Morgan Hill Police Department and qualify, approving the proposed fee would generate approximately $8,100 for the general fund every two years. No net impact to the General Fund.

Fingerprint Rolling and Live Scan fee: Assuming approximately 50 constituents utilize the Fingerprint Rolling service, approving the proposed fee would generate approximately $900 for the General Fund annually. No net impact to the General Fund.

Live Entertainment Permit fees: Approving the updated fee would generate approximately $4,290 for the General Fund annually. No net impact to the General Fund.

CEQA (California Environmental Quality Act):

Not a CEQA Project. Organizational or administrative activities of governments will not result in direct or indirect physical changes in the environment.

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE

CITY OF MORGAN HILL ESTABLISHING CARRY

CONCEALED WEAPON LICENSE RENEWAL FEE,

FINGERPRINT ROLL AND LIVE SCAN FEE, AND

UPDATING LIVE ENTERTAINMENT ANNUAL

PERMIT FEE
WHEREAS, the City Council, pursuant to Section 3.50.010 of the Morgan Hill Municipal Code (“Code”), requires the recovery of costs reasonably born from fees and charges levied in providing the regulation, products or services enumerated in Code Chapter

3.50 – Fee and Service Charge Revenue/Cost Comparison System; and WHEREAS, the City of Morgan Hill has conducted a fee study to calculate the costs reasonably borne to provide carry concealed weapon license renewal, fingerprint roll and live scan service, and live entertainment annual permit, which study has been available to the public for at least ten (10) days prior to the adoption of this Resolution; and WHEREAS, the proposed establishment and updating of the fees that are the subject of this Resolution was agendized for consideration by the City Council of the City of Morgan Hill at a duly noticed public hearing of the Council held on September 4, 2024 at which hearing all interested persons were afforded an opportunity to be heard on said proposed fees; and
WHEREAS, the Council heard all relevant testimony and reviewed all written materials submitted in connection with its hearing on this Resolution.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORGAN HILL DOES HEREBY FIND, DETERMINE, RESOLVE, AND ORDER AS FOLLOWS:

1. The City Council has conducted an extensive analysis of its carry concealed weapon license renewal, fingerprint roll and live scan, and live entertainment annual permit fees, including the cost to the City for providing the services for carry concealed weapon license renewal, fingerprint roll and live scan, and live entertainment annual permit; and

2. Based upon the analysis and the provided information, the City (i) identifies the purpose of the proposed fees, (ii) identifies the use to which the fees will be put, (iii) demonstrates a reasonable relationship between the fees’ use and the types of services on which the fees are imposed, and (iv) demonstrates a reasonable relationship between the amount of the fees and the cost of the City's services attributable to the applications on which the fees are imposed; and

3. The City Council finds and determines the fees calculations utilized to establish new carry concealed weapon license renewal, fingerprint roll and live scan fees, and updated live entertainment annual permit will not cause fee revenues to exceed the

City of Morgan Hill
Resolution No. 23-015

estimated cost reasonably borne of providing the services which the fees are levied; and

4. The City Council hereby adopts and approves the establishment of a new carry concealed weapon license renewal fee, fingerprint roll and live scan fee, and updating live entertainment annual permit fee as set forth in attached Exhibit A and incorporated by this reference; and

5. The City Council finds and determines that it is reasonable to continue to annually adjust the fees set forth in Schedule by the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco, Oakland and San Jose Area, and hereby instructs, authorizes and directs the City Manager or his/her designee to so annually adjust the carry concealed weapon license renewal, fingerprint roll and live scan, and live entertainment annual permit fees as set forth Resolution 6503 adopted January 18, 2012; and

6. The City Manager or his/her designee is hereby authorized and directed to amend the City Fee Schedule to reflect the fees as set forth in Exhibit A.

7. Effective Date. This Resolution shall take effect upon its adoption; provided, however, that the New and Updated Fees established hereunder shall first be imposed and collected sixty (60) days from the date of adoption of this Resolution.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Morgan Hill at a regular meeting held on the 4th day of September 2024.

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED: ATTEST:
____________________________ ___________________________ MARK TURNER, Mayor MICHELLE BIGELOW, City Clerk

 CERTIFICATION 
I, Michelle Bigelow, City Clerk of the City of Morgan Hill, California, do hereby certify that the foregoing is a true and correct copy of Resolution No. 23-015, adopted by the City Council at a regular meeting held on September 4, 2024.

WITNESS MY HAND AND THE SEAL OF THE CITY OF MORGAN HILL.

DATE: _____________________ ___________________________________ Michelle Bigelow, City Clerk
City of Morgan Hill
Resolution No. 23-015

EXHIBIT A
Fingerprint Roll and Live Scan Fee (NEW)
HR Rate # of FTE # of HR per FTE Total
Cadet/Records Specialist $51.70 1 0.35 $ 18.09
Sub-Total City Cost: 18.09
Plus pass-through fees:

Department of Justice (DOJ) 32.00
Federal Bureau of
Investigation (FBI) 17.00
Sub-Total Pass-Through Cost: $ 49.00
Total Cost: $ 67.09
Proposed Fee: $18 plus Pass-Through
Carry Concealed Weapon (CCW) License Renewal Fee (NEW)
HR Rate # of FTE # of HR per FTE Total
Community Services Officer $85.27 1 3.50 298.45
Captain $237.83 1 1.00 237.83
Total Personnel: $ 536.28
Permit Tracker: $ 10.00
Total Cost: $ 546.28
Proposed Fee: $ 540.00
Live Entertainment Annual Permit Fee (UPDATED)
HR Rate # of FTE # of HR per FTE Total
PD Sergeant $193.01 1 1.50 289.52
Accounting Assistant I/II $86.47 1 0.50 43.24
Total Cost: $ 332.75
Current Fee
New: $ 131.00
Renewal: $ 69.00
Proposed Fee: $ 330.00
City of Morgan Hill
Resolution No. 23-015

10 CITY COUNCIL STAFF REPORT
MEETING DATE: September 4, 2024
PREPARED BY:

Donald Larkin, City Attorney
APPROVED BY: City Manager

INTRODUCE ORDINANCE PROHIBITING SMOKING IN MULTIUNIT

RESIDENTIAL BUILDINGS

RECOMMENDATION(S)

1. Waive first and second reading of the Ordinance; and

2. Introduce new Ordinance prohibiting smoking in multiunit residential buildings.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Supporting Our Youth, Seniors, and Entire Community
Enhancing Public Safety and Quality of Life
2024-2025 Strategic Priorities
Healthy Community
REPORT NARRATIVE:

POLICY CONSIDERATION:

Should the City support public health and safety by prohibiting smoking in multiunit/family buildings?
REPORT NARRATIVE:

The health risks of tobacco use and exposure to secondhand smoke are well documented. More than 40,000 Californians die each year from smoking-related disease, making tobacco use the number one cause of preventable death. In Santa Clara County, one in eight deaths annually is attributed to smoking-related illness or diseases, such as cancer, heart disease, and respiratory diseases.

The U.S. Surgeon General has concluded that there is no safe level of exposure to secondhand smoke and the California Air Resources Board has classified secondhand smoke as a toxic air contaminant. Secondhand smoke is responsible for more than 4,000 heart disease-related and lung cancer deaths each year in California. According to the Centers for Disease Control (CDC), the only way to fully protect nonsmokers is to eliminate smoking in homes, worksites, and public places. Not only does prohibiting

10 smoking in such locations decrease exposure to harmful secondhand smoke, it also decreases fire risk and reduces the amount of cigarette butt litter.

The Santa Clara County’s Healthy Cities Program seeks to address tobacco-related health concerns by promoting policies and practices to provide tobacco-free and smokefree communities. As part of this funding, the City of Morgan Hill was awarded a $38,164 grant from Santa Clara County’s Public Health Department (PHD) to implement tobacco prevention policies that have been shown to reduce exposure to secondhand smoke.

The American Lung Association evaluates local tobacco control policies. As of 2024, Morgan Hill received an overall grade of “C” for the city’s tobacco control policies but an “F” grade for smoke-free housing policies. The Santa Clara County Healthy Cities program gives the city a bronze medal for its policies to reduce exposure to secondhand smoke. A policy to prohibit smoking in multiunit residences is required to receive a silver medal.

Based on research on best practices to reduce exposure to secondhand smoke, the draft ordinance amends the Morgan Hill Municipal Code to include the following components for the Council’s consideration:

Require smoke-free multiunit housing:

1. Defined as two or more attached residences, which may include apartments, condominiums, townhomes, attached single-family homes, duplexes, triplexes, etc.

2. Prohibit smoking inside units in multiunit housing.

3. Prohibit smoking in outdoor common areas (allows owners the option to create designated smoking areas that meet certain criteria).

4. “Smoking” includes the use of cigarettes, cigars, cigarillos, hookahs, pipes, electronic smoking devices, and marijuana.

Based on data from the Santa Clara County Public Health Department, 33% of Santa Clara County households live in multiunit housing. Santa Clara County residents who live in multiunit housing are twice as likely to be exposed to secondhand smoke (51%) compared with those living in single-family homes. Several studies on drifting secondhand smoke in multiunit housing have confirmed that secondhand smoke can and does transfer between units, creeping under doorways and through wall cracks.

Because people spend a considerable amount of time at home, smoke-free policies in residential settings can significantly protect residents from second-hand smoke.

Increasingly, landlords are choosing to adopt smoking restrictions in properties they own or manage for a number of reasons, including: (1) to reduce cleaning costs from a unit with a smoker; (2) to lower the fire risk and related insurance costs; and (3) in response to tenant demand. The California Apartment Association’s sample lease form contains a provision indicating that smoking is prohibited everywhere on the property,

10 unless the owner has adopted a different policy.

Under California law, indoor common areas of multiunit housing are required to be smoke-free if any employees enter the premises. However, there is no law prohibiting smoking in individual units or in outdoor common areas, such as walkways, courtyards, playgrounds, and pool areas. In Santa Clara County, 10 cities and Santa Clara County have adopted laws to require smoke-free units in multiunit residences; 11 cities and Santa Clara County require smoke-free outdoor common areas in multi-family housing.

Implementation and Enforcement
To aid in the implementation of smoke-free multiunit housing requirements, the following elements are incorporated into the draft ordinance:

1. A phase-in period – The smoke-free housing requirements would become operative six months after the ordinance's adoption to allow time to notify residents and property owners/managers of the new requirements.

2. Lease requirements - The ordinance requires landlords to provide notice of the smoking restrictions to tenants and to incorporate the requirements into a tenant’s lease. This means that a violation involving a person smoking inside their unit could be enforced by the landlord as a lease violation and/or by the City. New tenants who move in after the ordinance’s effective date would sign the updated lease agreement including the smoking restrictions. Existing tenants would have their leases updated on a rolling basis as the leases are renewed.

3. Common interest developments, such as condominiums, would be required to provide notice of the smoking restrictions to owners and to prospective buyers or renters.

4. Signage – The ordinance requires “No Smoking” signs to be posted where smoking is prohibited. Grant funds from the PHD will cover the cost of providing “No Smoking” signs to multiunit housing properties and to local businesses, which will aid in implementation of the ordinance.

Following the education period about the new ordinance, enforcement will be complaintdriven. In general, communities that have adopted smoke-free multiunit housing laws have not been overwhelmed by complaints. Most have found education and warnings about the new law to be sufficient. As a last resort, the City of Morgan Hill can cite an individual for smoking in violation of the law. The ordinance also provides for private rights of enforcement by civil action. However, as a practice, education will be the first step to encourage compliance.

COMMUNITY ENGAGEMENT:

As described above, the City has been awarded grant funds that will be used to assist in education efforts with landlords, property managers, and tenants. The ordinance has a built-in implementation period, which will provide ample time to perform outreach to multiunit buildings within the City.

ALTERNATIVE ACTIONS:

10 The Council could choose not to prohibit smoking in multiunit buildings, or could recommend modifications to the ordinance as drafted.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

On April 5, 2023, Councilmember Borgioli identified smoking in multiunit buildings as a future agenda item. On May 3, 2023, the Council voted 5-0 to direct the City Attorney to come back with an ordinance prohibiting smoking in multiunit buildings.

The City has regulated exposure to secondhand smoke through its Smoking Pollution Control ordinance, adopted in 1985. This ordinance was updated in 2012. Consistent with state law, the City prohibits smoking in indoor workplaces. Additionally, smoking is prohibited in recreational areas, outdoor dining areas, building entryways, service areas (e.g., bus stops, ATMS), and public events (Chapter 8.44).

Additionally, the City requires a license to sell tobacco products; prohibits the sale of flavored tobacco products; and prohibits the sale of electronic cigarette products. (See Chapter 5.64).

FISCAL AND RESOURCE IMPACT:

Fiscal:

The City has received a grant from County Public Health that covers $38,164. Staff does not anticipate any other significant costs.

Resource:

The County grant will reimburse the City for staff time implementing this ordinance. Staff work on the ordinance is not expected to significantly interfere with other priorities.

CEQA (California Environmental Quality Act):

This Ordinance is not a project under the requirements of the California Quality Act of 1970, together with related State CEQA Guidelines (collectively, “CEQA”) because it has no potential for resulting in physical change in the environment, either directly or ultimately.

ORDINANCE NO. xxxx, NEW SERIES

AN ORDINANCE OF THE CITY OF MORGAN HILL
ADDING CHAPTER 8.42 (“SMOKING IN MULTIUNIT
BUILDINGS”) OF TITLE 8 (“HEALTH AND SAFETY”) TO

THE MORGAN HILL MUNICIPAL CODE TO PROHIBIT

SMOKNG IN AND AROUND MULTIUNIT RESIDENCES
THE CITY COUNCIL OF THE CITY OF MORGAN HILL DOES ORDAIN AS FOLLOWS:

Section 1. Chapter 8.42 (“Smoking in Multiunit Buildings” of Title 8 (“Health and Safety”) is hereby established to read as follows:

8.42.010 Definitions
For the purpose of this chapter, unless the context clearly requires a different meaning, the words, terms, and phrases set forth in this section or another portion of the Morgan Hill Municipal Code, shall have the meanings that are given them in this section:

A. “Adjacent Unenclosed Property” means any unenclosed area of a property—publicly or privately owned –that is next to or has a common boundary with a multi-unit residence. This does not include a single-family home.

B. “Common Area” means every enclosed and every unenclosed area of a multiunit residence that residents of more than one unit are entitled to enter or use, including, but not limited to, halls, pathways, lobbies, courtyards, elevators, stairs, community rooms, playgrounds, gym facilities, swimming pools, parking garages, parking lots, grassy or landscaped areas, recreational area, restrooms, laundry rooms, cooking areas, and eating areas.

C. “Common Interest Development” as defined:

1. A community apartment project as defined in California Civil Code section 4105, in this code, or any successor legislation;

2. A condominium project as defined in California Civil Code section 4125, in this code, or any successor legislation;

3. A planned development as defined in California Civil Code section 4175, in this code, or any successor legislation;

4. A real property development as defined in California Civil Code section 1351(c), in this code; or any successor legislation;

5. A stock cooperative as defined in California Civil Code section 4190, in this code, or any successor legislation;
D. “Enclosed Area” means an area closed in by a roof and four walls with appropriate openings for air to enter and exit with appropriate ventilation. It encompasses all the space between a floor and a ceiling that is bounded by walls, doorways, or windows—

City of Morgan Hill
Ordinance No. xxxx, New Series

whether open or closed—covering more than 50 percent of the combined surface area of the vertical planes constituting the perimeter of the area. It can additionally include an area that has:

1. Overhead cover, regardless of whether the area includes vents or other overhead openings, or at least 3 walls or vertical constraints; or

2. 4 walls or other vertical wall constraints to airflow, regardless of composition; or as defined in the Code.

E. “Electronic smoking device” means any device that may be used to deliver any aerosolized or vaporized substance to the person inhaling from the device, including, but not limited to, an e-cigarette, e-cigar, e-pipe, vape pen, or e-hookah.

F. “Existing Unit” means any unit that is not a new unit by the effective date of this code.

G. “Homeowners’ association” or “HOA” means a nonprofit or unincorporated organization, or entity established for the purpose of managing or maintaining a common interest development. A homeowners’ association shall also mean “association” as defined in California Civil Code section 4080, in this code, or any successor legislation.

H. "Hotel" as defined by California Civil Code Section 1940 or elsewhere in this Code. It can but is not limited to meaning a similar establishment in which the operator has the status of an innkeeper (e.g. a motel, motor inn, bed and breakfast, boarding house, etc.) I. “Landlord” means any person or agent of a person who owns, manages, or is otherwise legally responsible for a unit in a multiunit residence that is leased to a residential tenant. For purposes of this ordinance, a tenant who sublets their unit (e.g., a sublessor) is not a landlord.

J. “Lot” means a separate parcel of land shown and identified as such on the record of the county recorder, or in the final map of an approved and recorded subdivision.

K. “Marijuana” or “Cannabis” as defined pursuant to Business and Professions Code Section 26001(f), in Section 9.16.020 of this Code, and by other state law. However, in all parts of this code is shall mean all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, or any other strain or varietal of the genus Cannabis that may exist or hereafter be discovered or developed that has psychoactive or medicinal properties, whether growing or not, including the seeds of such plants. “Cannabis” does not mean “industrial hemp” as defined by Health and Safety Code Section 11018.5.

L. “Marijuana or Cannabis product” means a product where the cannabis plant has undergone a process and been turned into a concentrate for the purpose of smoking.

City of Morgan Hill
Ordinance No. xxxx, New Series

M. “Multiunit Residence” means a property containing two or more attached units, including, but not limited to, apartment buildings, common interest developments, senior and assisted living facilities, and long-term health care facilities.

1. Multiunit Residences do not include the following:
a. a hotel or motel that meets the requirements of California Civil Code section 1940, established under our code, or other applicable state and local law;
b. mobile home park;
c. a campground;
d. a marina or port;
e. a single-family home with a detached or attached in law, except if used as a health care facility subject to licensing requirements; and f. a single-family home with an accessory dwelling unit or second unit permitted pursuant to California Government Code sections 65852.1, 65852.2, or 65852.22; or an ordinance of the municipal code of Morgan Hill adopted pursuant to those sections, except where the accessory dwelling unit or second unit is rented or is used as a health care facility subject to licensing requirements.

N. “New Unit” means a unit that is issued a certificate of occupancy more than 180 days after the effective date of this ordinance, or one that is now available for residential use 180 days for the first time more than 180 days after the effective date of this ordinance.

O. “Nonsmoking Area” means any enclosed or unenclosed area that has been designated as an area in which smoking is prohibited in this chapter, elsewhere in this code, or by other applicable law.

P. “Person” means any natural person, firm, partnership, corporation, cooperative association, corporation, personal representative, receiver, trustee, assignee, or any other legal entity, including government agencies.

Q. “Reasonable distance" as defined in this code, means twenty-five feet in any direction from an area in which smoking is prohibited.

R. “Rental Complex” means a property where 50% of the units are rented by or on behalf of the same landlord.

S. “Smoke” as defined in this code, but also means inhaling, exhaling, or burning, any tobacco, nicotine, marijuana, marijuana plant product, whether natural or synthetic.

T. “Smoking” as previously enumerated by Section 8.44 of this Code, but also can mean:

1. carrying any lighted, heated, or activated tobacco, nicotine, marijuana, or plant product, whether natural or synthetic, intended for inhalation; or

2. using an “electronic smoking device,” that delivers nicotine or other substances; or

City of Morgan Hill
Ordinance No. xxxx, New Series

3. For purposes of this Code, smoking does not include the use of traditional, sacred tobacco as part of an Indigenous practice or a lawfully recognized religious, spiritual, or cultural ceremony or practice.

U. “Unenclosed area” means any area that is not in an enclosed area as defined by this Code, including but not limited to a balcony, terrace, patios, or porch.

V. “Unit” means a personal dwelling space, even one lacking cooking facilities or private plumbing facilities, and includes any associated exclusive use, enclosed or unenclosed area, such as a private balcony, porch, deck, or patio. “Unit” includes, without limitation, an apartment unit; a condominium unit; a townhouse; a room in a senior facility; a room in a long-term health care facility, assisted living facility, community care facility, or hospital; a room in a hotel or motel; a dormitory room; a room in a single-room occupancy facility; a room in a homeless shelter; a mobile home; a camper vehicle or tent; a single-family home; and an accessory dwelling unit or second unit.

W. “Wall” means any retractable divider, garage door, or other physical barrier, whether temporary or permanent.

8.42.020 Smoking Restrictions.

A. Effective 180 days from the effective date of this ordinance, smoking is prohibited in new and existing multi-unit residences.

B. No person shall smoke inside any new or existing unit of a multi-unit residence including any associated or unassociated common area, with the exception of it being within a designated smoking area as defined by this code below.

1. Designated smoking area is defined by this code in Morgan Hill Code Section

8.44.030, but it is defined as:
a. an unenclosed area;
b. at least twenty-five (25) feet from an adjacent or an unenclosed area primarily used by children, unenclosed areas of K-12 school campuses, or unenclosed areas with improvements that facilitate physical activity including, for example, playgrounds, tennis courts, and swimming pools; c. has been clearly marked and with defined perimeter;
d. has conspicuous signage as defined in this chapter that includes text not less than one inch in height and with imagery relating to the international “no smoking” sign with the red circle and bar across it as defined in this chapter and elsewhere in this code;
e. located a reasonable distance from any enclosed area that is in a multiunit residence, including an operable doorway, window, opening or vent that has been designated by this chapter;
f. shall have ashtrays, ashcans, or other receptacles designed for or primarily used for disposal of smoking waste within the area;
g. not more than 10% total of the outdoor area of designated property; and

City of Morgan Hill
Ordinance No. xxxx, New Series

h. not within any enclosed or unenclosed area where smoking is otherwise prohibited by this chapter, state, or other law;
C. The landlord will maintain and ensure that the designated smoking area remain free of smoking and tobacco waste by providing ash trays, trash cans, or other receptacles.

D. The prohibitions contained in this Section do not apply to a person who is smoking while actively passing on the way to another destination.

E. No person shall intimidate, harass, harm, threaten, or otherwise retaliate against any person who seeks compliance with this ordinance.

F. Violation of this subsection shall effectuate penalties and relevant criminal charges.

8.42.030 Requirements for Rental Properties.

The following requirements apply to multiunit residences other than units in a common interest development that are not being rented:

A. Within one hundred eighty (180) days of the effective date of this ordinance codified in this chapter, every landlord shall deliver to each unit a copy of this chapter and a written notice clearly stating:

1. All units are designated nonsmoking units and smoking is prohibited in a unit, including any associated private balcony, porch, deck, or patio, as of the effective date; and

2. Smoking in all common areas or outdoor areas except for specifically designated smoking areas, is a violation of chapter as of the effective date.

B. Within one hundred eighty (180) days of the effective date of this ordinance codified in this chapter, every landlord shall provide prospective tenants with written notice clearly stating that:

1. Smoking is prohibited in units, including any associated unenclosed area including a private balcony, porch, deck, or patio, as of the effective date; and

2. Smoking is prohibited in all common areas and outdoor areas, except for specifically designated smoking areas as defined above or by the Morgan Hill municipal code previously, as of the effective date.

C. As of the effective date, the person or persons with legal control over common areas shall post and maintain clear and unambiguous “No Smoking” signs at entrances and exits, in common areas, and in conspicuous places adjoining the property grounds.

1. In addition, as of the effective date, the person or persons with legal control over the multiunit residence shall post and maintain signs in sufficient numbers and locations in the multiunit residence to indicate that smoking is prohibited in all units.

City of Morgan Hill
Ordinance No. xxxx, New Series

2. The absence of signs shall not be a defense to a violation of any provision of this chapter.

3. “No Smoking” signs shall be clearly, sufficiently, and conspicuously posted on the building or other places where smoking is regulated by this chapter by the owner, operator, manager or other person having control of such building or other places. (i) They are not required inside or on doorways of units except for hotels or motels that meet the criteria listed in California Civil Code section 1940, subdivision (b)(2)

4. As defined in this code, and this chapter, “No Smoking" signage shall include:
(i) letters not less than one inch in height and
(ii) the international "No Smoking" symbol (consisting of a pictorial representation of a burning cigarette enclosed in a red circle with a red bar across it)
D. Landlords with knowledge of violations shall take reasonable steps to investigate and enforce the regulations, including a written notice to the resident of the landlord’s knowledge of the violation, a request to cease the violation, and the course of action to be taken if the violation is not corrected.

8.42.040. Requirements for Common Requirements for Common Interest Developments.

The following requirements apply to common interest developments:

A. As of the effective date, the HOA shall provide to all owners of units a copy of this chapter and written notice clearly stating that:

1. Smoking is prohibited in units, including any associated private balcony, porch, deck, or patio; and

2. Smoking is prohibited in all common areas and outdoor areas except for specifically designated smoking areas as designated by this code or the persons with legal control over the property as defined by this Code.

B. As of the effective date, every seller of a unit shall provide prospective buyers or renters, a copy of this chapter and written notice clearly stating that:

1. Smoking is prohibited in units, including any associated private balcony, porch, deck, or patio; and

2. Smoking is prohibited in all common areas and outdoor areas except for specifically designated smoking areas as designated by this code and/or the persons with legal control over the property as defined by this ordinance.

C. As of the effective date, the HOA, or any person having legal ownership or control over common areas, shall post and maintain clear and unambiguous “No Smoking” signs in sufficient numbers and locations in the common interest development to make it obvious to a reasonable person that smoking is prohibited throughout the common interest

City of Morgan Hill
Ordinance No. xxxx, New Series

development. The absence of signs shall not be a defense to a violation of any provision of this chapter.

D. HOAs with knowledge of violations shall take reasonable steps to investigate and enforce the regulations, including a written notice to the resident of the HOA’s knowledge of the violation, a request to cease the violation, and the course of action to be taken if the violation is not corrected.

E. The HOA shall also distribute resources provided for free by the City of Morgan Hill and/or the County of Santa Clara to assist with nicotine dependence, such as referrals to quitline or any other educational online resources.

18.24.050 Interpretation.

A. The provisions of this chapter shall be liberally construed to protect the public health to the maximum effect possible.

B. Notwithstanding (1) any provision of this chapter or of this code, (2) any failure by any person to restrict smoking under this chapter, or (3) any explicit or implicit provision of this code that allows smoking in any place—nothing in this code shall be interpreted to limit any person’s legal rights under other laws with regard to smoking, including rights in nuisance, trespass, property damage, and personal injury or other legal or equitable principles.

C. Any violation of this chapter is hereby declared to be a public nuisance. Nonconsensual exposure to smoke from smoking occurring on or drifting into residential property is a nuisance.

18.24.060 Violations and Penalties.

A. No landlord, his or her designee, or person with legal control over any multiunit residence shall permit smoking anywhere on the premises of the multiunit residence outside of the designated smoking areas as stated in this code.

B. Any person who violates any provision of this chapter shall be guilty of an infraction punishable by:

1. A fine, not exceeding one hundred dollars ($100), for the first violation;

2. A fine, not exceeding two hundred fifty dollars ($250), for a second violation of this chapter;

3. A fine, not exceeding five hundred dollars ($500), for each additional violation of this chapter.

C. Every violation of this ordinance that occurs shall be considered a separate violation.

D. If three violations occur in one calendar year, the person shall be found guilty of a misdemeanor. However, Title 1 of the Morgan Hill Municipal Code allows for the City Attorney and/or his designee to exercise discretionary authority.

City of Morgan Hill
Ordinance No. xxxx, New Series

E. No person shall intentionally or recklessly expose another person to smoke in response to that person’s effort to achieve compliance of this chapter. Causing, permitting, aiding, abetting, or supporting the actions of any person in this code shall also constitute a violation of this chapter.

F. Any person may bring a civil action to enforce this article to prevent future violations and may sue to recover actual or statutory damages, including court costs, and attorney fees.

Section 2. Severability. Should any provision of this ordinance be deemed unconstitutional or unenforceable by a court of competent jurisdiction, such provision shall be severed from the ordinance, and such severance shall not affect the remainder of the ordinance.

Section 3. Effective Date; Posting. This Ordinance shall take effect on ____ ______, 20__.

The City Clerk is hereby directed to publish this Ordinance or a summary thereof pursuant to Government Code Section 36933.

THE FOREGOING ORDINANCE WAS INTRODUCED AT A MEETING OF THE CITY COUNCIL HELD ON THE 4th DAY OF SEPTEMBER, 2024, AND WAS FINALLY ADOPTED AT A MEETING OF THE CITY COUNCIL HELD ON THE _____ DAY OF ________, 20__, AND SAID ORDINANCE WAS DULY PASSES AND ADOPTED IN ACCORDANCE WITH LAW BY THE FOLLOWING VOTE:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED: ATTEST:

MARK TURNER, Mayor MICHELLE BIGELOW, City Clerk

City of Morgan Hill
Ordinance No. xxxx, New Series

CERTIFICATE OF THE CITY CLERK

I, MICHELLE BIGELOW, CITY CLERK OF THE CITY OF MORGAN HILL, CALIFORNIA, do hereby certify that the foregoing is a true and correct copy of Ordinance No.

XXXX, New Series, adopted by the City Council of the City of Morgan Hill, California at their regular meeting held on the XX day of XX, 2024.

WITNESS MY HAND AND THE SEAL OF THE CITY OF MORGAN HILL.

DATE:

MICHELLE BIGELOW, City Clerk

11 CITY COUNCIL STAFF REPORT
MEETING DATE: September 4, 2024
PREPARED BY:

Michelle Bigelow, City Clerk
APPROVED BY: City Manager

APPROVE SUPPORT OF THE CAL CITIES RESOLUTION TO BE
CONSIDERED AT THE 2024 ANNUAL CONFERENCE

RECOMMENDATION(S)

1. Confirm "support" for the resolution to be considered on "Fair and Equal Treatment of All Government Officials at All Levels of Government"; and

2. Authorize the City's voting delegate(s) to vote on the resolution to be considered at the Cal Cities annual conference.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Fostering a Positive Organizational Culture
Preserving and Cultivating Public Trust
REPORT NARRATIVE:

Cal Cities is holding its Annual Conference on October 16 - 18, 2024. At the Annual Conference, Cal Cities will conduct its General Assembly Meeting, at which members vote on resolutions from member cities and elected officials. These resolutions help guide cities and Cal Cities in their efforts to improve the quality, responsiveness, and vitality of local government in California. This year, one resolution has been introduced for consideration at the conference. Cal Cities bylaws provide that each city is entitled to one vote on matters affecting municipal or League policy. The voting delegate and/or alternate(s) must be registered for the conference and present to vote. At the August 28, 2024, City Council meeting, the Council appointed Mayor Mark Turner as the primary voting delegate and Mayor Pro Tem Marilyn Librers and Council Member Yvonne Martinez Beltran as alternate voting delegates.

The General Assembly Meeting will be held on Friday, October 18 at 8:30 a.m. to consider the resolution that has been brought forward:

A RESOLUTION OF THE GENERAL ASSEMBLY OF THE LEAGUE OF CALIFORNIA

CITIES CALLING FOR THE CALIFORNIA LEGISLATURE TO ENACT LAWS THAT ENSURE THAT “WHAT APPLIES TO ONE, APPLIES TO ALL” IN THE FAIR AND

EQUAL TREATMENT OF ALL GOVERNMENTAL OFFICIALS AT ALL LEVELS IN THE

11 STATE OF CALIFORNIA
By approving the recommendation, our Cal Cities representatives will have the Council’s general guidance for the resolution vote and are authorized to vote on amendments in the manner they deem to be in the best interest of the City.

COMMUNITY ENGAGEMENT:

This report serves to inform the community of the Cal Cities business item for consideration.

ALTERNATIVE ACTIONS:

Council could decide to not support the recommended actions.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

Each year, the City Council appoints voting delegates to attend and vote at Cal Cities Annual Conference. When Cal Cities has resolutions for consideration, the City Council takes a position on those resolutions.

FISCAL AND RESOURCE IMPACT:

The cost of the conference registration is included in the adopted FY 2024-25 City Council budget
CEQA (California Environmental Quality Act):

Not a project.

Proposals for state legislation are not projects, as defined in Section 15378 of the State CEQA guidelines

2023-2024

CAL CITIES OFFICERS
President
Daniel T. Parra
Mayor
Fowler
First Vice President
Lynne Kennedy
Mayor Pro Tem,
Rancho Cucamonga
Second Vice President
Gabe Quinto
Council Member,
El Cerrito
Immediate Past President
Ali Sajjad Taj
Mayor Pro Tem,
Artesia
Executive Director
and CEO
Carolyn M. Coleman
1400 K Street, Suite 400, Sacramento, CA 95814 • 916.658.8200 • calcities.org August 28, 2024
TO: Mayors, Council Members, City Managers, and City Clerks RE: Cal Cities 2024 Resolution Packet
Sixty days before the Cal Cities Annual Conference and Expo, Cal Cities members may submit resolutions on issues of importance to cities. This year, Cal Cities received one resolution by the Aug. 17 deadline.

The attached packet contains the proposed resolution, supporting letters from city officials, and an analysis of the resolution by Cal Cities. The packet includes detailed information on the resolution process.

We encourage each city council to consider the resolution and determine a city position so your voting delegate can represent your city’s position on the resolution.

Voting Delegates: City councils must appoint a voting delegate to vote during the General Assembly. Each city may also appoint up to two alternate delegates. If your city has not already done so, please appoint your voting delegate by Sept. 25. The voting delegate packet contains more information.

The Cal Cities 2024 General Assembly will be held Oct. 18 at 8:30 a.m. in the Long Beach Convention Center during the Annual Conference and Expo.

For questions about resolutions, voting delegates, or the General Assembly, please contact Zach Seals.

2024
Resolutions
Packet

2024 Resolutions Packet
Information on 2024 Resolutions Process
Consideration by Policy Committee (pre-conference)
Per the Cal Cities bylaws, the Cal Cities President has referred the submitted resolution to the Governance, Transparency, and Labor Relations Policy Committee. The committee will meet on Oct. 3 at 10 a.m. via Zoom to review the resolution and make a recommendation that will be sent to the Resolutions Committee. A public comment period will be held during the meeting. Register for the meeting here.

A list of recommendations the policy committee may make during its meeting are on page three of this packet.

Consideration by Resolutions Committee (during conference) On Oct. 17 at 1:30 p.m. the Resolutions Committee will meet to review the resolution and the recommendation of the policy committee.

The Resolutions Committee consists of one representative from each of Cal Cities caucuses, departments, divisions, and policy committees, as well as up to ten additional appointments made by the Cal Cities President. A public comment period will be held during the meeting. Refer to the onsite conference program for the location.

A list of recommendations the Resolutions Committee may make during its meeting are on page three of this packet.

Consideration by the General Assembly (during conference) The General Assembly will convene on Oct. 18 at 8:30 a.m. to consider any qualified resolutions. To vote during the General Assembly, voting delegates must have checked-in at the voting delegate booth.

Conference attendees will receive materials for the General Assembly on the evening of Oct. 17. For more information on voting and discussion procedures during the General Assembly, see page four of this packet.

Petitioned Resolutions (during conference)
The petitioned resolution is an alternate method to introduce policy proposals during the annual conference. To initiate a petitioned resolution, voting delegates from 10% of member cities must sign the petition. The resolution and signatures are due at least 24 hours before the beginning of the General Assembly. Voting delegates who have checked-in at the voting delegate booth can receive more information on petitioned resolutions at the booth onsite. 1

Sixty days before the
Annual Conference
and Expo, Cal Cities
members may submit
policy proposals on
issues of importance
to cities. The resolution must
have the concurrence of at least
five additional member cities or
individual members.

How it works: Cal Cities
Resolutions and the General Assembly
General Assembly
General Resolutions Policy Committees
Developing League of California Cities policy is a dynamic process that engages a wide range of members to ensure Cal Cities represents cities with one voice. These policies directly guide Cal Cities’ advocacy to promote local decision-making, and lobby against statewide policies that erode local control.

The resolutions process and General Assembly is one way that city officials can directly participate in the development of Cal Cities policy. If a resolution is approved at the General Assembly, it becomes official Cal Cities policy. Here’s how resolutions and the General Assembly work.

The petitioned
resolution is an
alternate method
to introduce policy
proposals during
the annual conference. The
petition must be signed by
voting delegates from 10% of
member cities, and submitted to
the Cal Cities President at least
24 hours before the beginning
of the General Assembly.

Petitioned Resolutions
The Cal Cities
President assigns
general resolutions
to policy committees
where members
review, debate, and recommend
positions for each policy proposal.

Recommendations are forwarded
to the Resolutions Committee.

Who’s who
The Resolutions Committee
includes representatives
from each Cal Cities
diversity caucus, regional
division, municipal
department, and policy
committee, as well as
individuals appointed by
the Cal Cities president.

Voting delegates
are appointed by each
member city; every city
has one voting delegate.

The General Assembly is a
meeting of the collective
body of all voting
delegates —one from
every member city.

Seven policy committees
meet throughout the year
to review and recommend
positions to take on bills
and regulatory proposals.

Policy committees include
members from each Cal
Cities diversity caucus,
regional division, and
municipal department,
as well as individuals
appointed by the Cal
Cities president.

During the General Assembly, voting delegates
debate and consider general and petitioned
resolutions forwarded by the Resolutions
Committee. Potential Cal Cities bylaws
amendments are also considered at this meeting.

Cal Cities policy
development is a memberinformed process,
grounded in the voices and
experiences of city officials
throughout the state.

For more information visit www.calcities.org/general-assembly Prior to the Annual Conference and Expo
Resolutions Committee
The Resolutions
Committee considers
all resolutions. General
Resolutions approved1 by
either a policy committee
or the Resolutions Committee are next
considered by the General Assembly.

General resolutions not approved, or
referred for further study by both a
policy committee and the Resolutions
Committee do not go to the General
Assembly. All Petitioned Resolutions
are considered by the General
Assembly, unless disqualified.2
During the Annual Conference and Expo
1 The Resolution Committee can amend a general resolution prior to sending it to the General Assembly. 2 Petitioned Resolutions may be disqualified by the Resolutions Committee according to Cal Cities Bylaws Article VI. Sec. 5(f). 2

2024 Resolutions Packet
Policy Committee and Resolutions Committee Actions
The submitted resolution will be heard by the policy committee to which it was assigned, and the Resolutions Committee. The below table shows what recommendations these bodies may make on the resolution.

Policy Committee Actions Resolutions Committee Actions
Approve Approve
Disapprove* Disapprove*
No Action No Action
Amend and approve Amend and approve
Refer to appropriate policy committee
for further study*
Approve as amended
Refer as amended to appropriate
policy committee for further study*
Refer to appropriate policy committee
for further study*
Refer as amended to appropriate
policy committee for further study*
Approve with additional
amendment(s)
Additional amendments and refer to
appropriate policy committee for
further study*
*If a resolution is disapproved or referred for further study by all policy committees to which it is assigned and the Resolutions Committee, it will not proceed to the General Assembly. 3

2024 Resolutions Packet
General Assembly Voting and Discussion Procedures
Discussion Procedures:

Discussion procedures during the General Assembly are guided by two calendars:
the Consent Calendar and the Regular Calendar. As seen below, resolutions are calendared by the recommendations they receive from policy committees and the Resolutions Committee.

For General Resolutions:

Policy Committee
Recommendation
Resolutions Committee
Recommendation Calendar
Approve Approve Consent Calendar
Approve Disapprove or refer Regular Calendar
Disapprove or refer Approve Regular Calendar
Disapprove or refer Disapprove or refer Does not proceed to General Assembly
For Petitioned Resolutions:

Policy Committee
Recommendation Resolutions Committee Action Calendar
N/A
Approve Regular Calendar
Disapprove or Refer Regular Calendar
Disqualified Does not proceed to General
Assembly
Items on the Consent Calendar will be presented as one motion during the General Assembly from the Resolutions Committee chair. Unless an item on the Consent Calendar is set aside by the majority of the General Assembly, a vote will be taken on the whole calendar. It an item is set aside, it will be opened for discussion, followed by a vote.

Items on the Regular Calendar will be presented individually by the Resolutions Committee chair. After a recommendation is presented by the Resolutions Committee chair, the resolution will be opened for discussion by the General Assembly. A vote will take place following discussion.

Voting Procedures:

Per Cal Cities Bylaws Article XII, Sec. 2, all votes will be conducted by voice vote first. If the presiding official cannot determine the outcome a vote will be taken by an alternative method, typically a raise of voting cards by voting delegates. A roll call vote may be called for by delegates of ten percent or more of the General Assembly.
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2024 Resolutions Packet
2024 Resolution

1. Resolution on Fair and Equal Treatment of All Governmental Officials at All Levels submitted by City of Glendora
• Letters of concurrence submitted by:
i. April A. Verlato, Mayor, City of Arcadia
ii. Robert Gonzales, Mayor, City of Azusa
iii. Tim Hepburn, Mayor, City of La Verne
iv. Bill Uphoff, Mayor, City of Lomita
v. John M. Cruikshank, Mayor, City of Rancho Palos Verdes • Referred to Governance, Transparency, and Labor Relations Policy Committee
• Policy Committee Recommendation:
• Resolutions Committee Recommendation:
5

2024 Resolutions Packet
Resolution No. 1: Fair and Equal
Treatment of All Governmental
Officials at All Levels submitted by
City of Glendora
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2024 Resolutions Packet

1. A RESOLUTION OF THE GENERAL ASSEMBLY OF THE LEAGUE OF

CALIFORNIA CITIES CALLING FOR THE CALIFORNIA LEGISLATURE TO ENACT LAWS THAT ENSURE THAT “WHAT APPLIES TO ONE, APPLIES TO ALL” IN THE

FAIR AND EQUAL TREATMENT OF ALL GOVERNMENTAL OFFICIALS AT ALL

LEVELS IN THE STATE OF CALIFORNIA
Source: City of Glendora
Concurrence of five or more cities/city officials
City Officials: April A. Verlato, Mayor, City of Arcadia; Robert Gonzales, Mayor, City of Azusa; Tim Hepburn, Mayor, City of La Verne; Bill Uphoff, Mayor, City of Lomita; John M. Cruikshank, Mayor, City of Rancho Palos Verdes
Referred to: Governance, Transparency and Labor Relations Policy Committee
WHEREAS, the General Assembly of the League of California Cities objects to the practice of the California Legislature of imposing rules limiting authority or regulating the conduct of local municipal officials that do not also apply to elected officials of the State of California; and WHEREAS, examples of such rules or regulations that apply to local city elected officials that do not otherwise apply to the elected officials of the State of California include, but are not limited to:

California’s open meeting rules, codified in the Ralph M. Brown Act, Government Code, Chapter 9, §§ 54950 et seq., which purport to “declare[] that the public commissions, boards and councils and the other public agencies in this State exist to aid in the conduct of the people’s business. It is the intent of the law that their actions be taken openly and that their deliberations be conducted openly,” but which limits its application to “local agencies,” but not including elected officials of the State of California; Creating “one-off” exemptions, in the form of Senate Bill No. 174, from the California Environmental Quality Act (“CEQA”) which purportedly requires all government agencies to consider the environmental consequences of their actions before approving plans and policies or committing to a course of action on a project in order to demolish and then rebuild State offices for the Governor and other State officials; 7

2024 Resolutions Packet
Adopting rules, in the form of Senate Bill No. 1439, amending the Political Reform Act (the “Act”), by removing the exception for local elected officers from contribution limits requiring disqualification on development project decisions,” but not including elected officials of the State of California;
Adopting rules, in the form of Assembly Bill No. 571, that apply to city and county candidates for local elected office, but not to candidates for state-wide office, including, but not limited to: prohibiting the making a contribution over the AB 571 limit to another candidate in jurisdictions subject to the AB 571; requiring a candidate that has qualified as a committee to establish a separate controlled committee and campaign bank account for each specific office; prohibiting a candidate from redesignating a committee for one election for another election.

WHEREAS, the General Assembly of the League of California Cities now calls upon the Governor and the California Legislature to adopt a policy, practice, and procedure requiring, in their legislative activities, that “what applies to one applies to all.”
NOW, THEREFORE, BE IT RESOLVED at the League General Assembly, assembled at the League Annual Conference on October 18, 2024 in Long Beach, California, that the League calls upon the Governor of the State of California and the elected members of the California Legislature, including all members of the Senate and Assembly to adopt the following policy:
“The California State Legislature shall not enact, and the Governor shall not sign into law, any law or regulation that applies solely to elected officials of California cities and counties, unless such law or regulation also applies equally to members of the California State Assembly and Senate. This prohibition shall not apply to laws or regulations affecting the inherent powers of the legislative branch under the California Constitution.” 8

2024 Resolutions Packet
Resolution No. 1: Letters of
Concurrence
9

July 10, 2024
The City Council of Glendora
is proposing the following resolution for consideration at the California League of Cities annual conference
on
October 18, 2024
Proposed Resolution: (“To ensure fairness and equal treatment for all government officials in California”)
“The California State Legislature shall not enact, and the Governor shall not approve, any law or regulation that applies solely to elected officials of California cities and counties, unless such law or regulation also applies equally to members of the California State Assembly and Senate. This prohibition shall not apply to laws or regulations affecting the inherent powers of the legislative branch under the California Constitution.”
The following five city council members are in concurrence with their letters of support (attached):
✓ Mayor John Cruikshank, City of Rancho Palos Verdes
✓ Mayor Bill Uphoff, City of Lomita
✓ Mayor Robert Gonzales, City of Azusa
✓ Mayor April Verlato, City of Arcadia
✓ Mayor Tim Hepburn, City of La Verne
Please confirm receipt of this request.

Sincerely,
Michael Allawos
Council Member
City of Glendora
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2024 Resolutions Packet
Resolution No. 1: Staff Analysis
16

League of California Cities Staff Analysis on Resolution No. 1 Staff: Johnnie Pina, Legislative Affairs, Lobbyist
Committee: Governance, Transparency, and Labor Relations Summary:

This Resolution states that the League of California Cities shall call upon the Governor of the State of California and the elected members of the California Legislature, including all members of the Senate and Assembly to adopt the following policy:
“The California State Legislature shall not enact, and the Governor shall not sign into law, any law or regulation that applies solely to elected officials of California cities and counties, unless such law or regulation also applies equally to members of the California State Assembly and Senate. This prohibition shall not apply to laws or regulations affecting the inherent powers of the legislative branch under the California Constitution.”
Background:

This resolution states that examples of the California Legislature imposing rules limiting authority or regulating the conduct of local municipal officials that do not also apply to elected officials of the State of California include, but are not limited to:
• California’s open meeting rules, codified in the Ralph M. Brown Act, Government Code, Chapter 9, §§ 54950 et seq.;
• “One-off” exemptions, in the form of Senate Bill No. 174, from the California Environmental Quality Act (“CEQA”);
• Rules, in the form of Senate Bill No. 1439, amending the Political Reform Act (the “Act”); and
• Rules, in the form of Assembly Bill No. 571, that apply to city and county candidates for local elected office, but not to candidates for state-wide office.

Ralph M. Brown Act
The California Attorney General’s (AG) Office defines The Ralph M. Brown Act (Brown Act) as what governs meetings conducted by local legislative bodies, such as boards of supervisors, city councils and school boards. The AG’s office states the Act represents the Legislature’s determination of how the balance should be struck between public access to meetings of multi-member public bodies on the one hand and the need for confidential candor, debate, and information gathering on the other.

The Ralph M. Brown Act governs local agencies, the Bagley-Keene Open Meeting Act covers all state boards and commissions, and Government code 17

9027 governs the state Legislature. The California Constitution also mandates open meetings for state agencies, boards, and commissions. Specifically, the Constitution requires that each local agency comply with the Brown Act (Article I, section 3(b)(7)): and that the proceedings of each house of the Legislature be open and public (with exceptions for employment matters; matters affecting security; confer with legal counsel; and to meet as a caucus (Article IV, section 7).

Although fairly detailed requirements apply to state agencies and other state bodies, they do not apply to the Legislature. The Legislature has Constitutional authority to adopt rules for its proceedings that are consistent with the requirement that the proceedings of each house and the committees be open and public.

Another notable difference between the Legislature and a city council is the ability for Legislators to have a caucus to discuss a bill, express how they will vote, and to count votes. This is not allowed under the Brown Act. One other difference is that the laws governing teleconferencing for members of the state Legislature is far less flexible than it is for local bodies. However, state agencies have more flexibility than locals in that regard.

California Environmental Quality Act (“CEQA”)
The Resolution cites the Legislature's action in exempting from CEQA the reconstruction of the State Capitol Annex building. The State Legislature enacted the California Environmental Quality Act (CEQA) in 1970, establishing it as a public disclosure law for the environmental review of discretionary projects and a process for mitigating or avoiding potential environmental impacts.

SB 174 (Committee on Budget and Fiscal Review) Chaptered by Secretary of State. Chapter 74, Statutes of 2024 was signed into law July 2, 2024. This bill exempts the work performed under the State Capitol Building Annex Act of 2016 from the California Environmental Quality Act (CEQA). In this example the Legislature exempted themselves as not being considered a “public agency,” “state agency,” or “lead agency” under CEQA. A lead agency under CEQA is the public agency that has the principal responsibility for carrying out or approving a project that is subject to CEQA.

Over the years, the Legislature has also created many CEQA exceptions and exemptions for local projects involving local agencies as well.

The Political Reform Act (PRA) - Senate Bill No. 1439
SB 1439 (Glazer) Chaptered by Secretary of State. Chapter 848, Statutes of 2022 amends section 84308 and is aimed at preventing "pay-to-play" practices, in part by prohibiting parties, participants, and their respective agents in a 18

proceeding involving a license, permit, or other entitlement for use from contributing more than $250 to an officer of an agency during a 12 month period. When the Levine Act was first enacted in 1982, Section 84308 applied to appointed members of boards and commissions who were running for elective office. SB 1439 expended this law to now apply to local elected officials. Since it is focused on permits and licenses, it now applies to State agencies and local agencies that approve permits and licenses. Section 84308 does not apply to the Legislature or the Courts. It is important to note that unlike local governments, neither issue permits and licenses.

The Political Reform Act (PRA) - Assembly Bill No. 571
AB 571 (Mullin) Chaptered by Secretary of State. Chapter 556, Statutes of 2019 established default campaign contribution limits for county and city office at the same level as the limit on contributions from individuals to candidates for Senate and Assembly, effective January 1, 2021. This bill permitted a county or city to establish its own contribution limits, which would prevail over these default limits.

The Resolution cites AB 571 as an example of treating cities differently than the State. The Fair Political Practices Commission clarifies in their AB 571 fact sheet that under AB 571 a city may elect to have "no" contribution limit in which case the state contribution limit will not apply as a default for that jurisdiction. A city or county can set contribution limits higher than the default state limit, AB 571 sets a default in line with contributions Assembly Members and Senators if a city or county is silent on contribution limits.

Fiscal Impact:

Unknown.

Existing Cal Cities Policy:

Mission Statement
To expand and protect local control for cities through education and advocacy to enhance the quality of life for all Californians.

We Believe:
• Local self-governance is the cornerstone of democracy. • In the involvement of all stakeholders in establishing goals and in solving problems.
• In conducting the business of government with transparency, openness, respect, and civility. The spirit of honest public service is what builds communities.
• Open decision-making that is of the highest ethical standards honors the public trust.
• The vitality of cities is dependent upon their fiscal stability and local autonomy. The active participation of all city officials increases Cal Cities’ effectiveness.
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• Partnerships and collaborations are essential elements of focused advocacy and lobbying.
• Ethical and well-informed city officials are essential for responsive, visionary leadership and effective and efficient city operations.

Comments:

Additional Examples
The Legislature has passed and the Governor has signed many laws that apply to local governments and do not apply to the state or the state Legislature. This year AB 2561(McKinnor) was introduced, which requires local governments to present in a public meeting a detailed report about their vacancy rates and detailed information about their hiring practices. This is an attempt to address public sector vacancy rates. This bill does not apply to the state in a time when they are also dealing with high vacancy rates.

Additionally, there were several bills that aim to amend the Levine Act, which now applies to local elected officials, to make changes to SB 1439, referenced previously in the analysis. None of the bills would amend the law to be applicable to Assembly Members or Senators.

AB 817 (Pacheco), co-sponsored by Cal Cities tried to bring parity to the Brown Act by making the teleconference rules for state advisory bodies the same for local advisory bodies but the Legislature struck the bill down.

Applying to elected officials or to the legislative body? Legislature or the State? The resolution also states, “… applies solely to elected officials of California cities and counties, unless such law or regulation also applies equally to members of the California State Assembly and Senate.”
This portion of the resolve clause is specifically speaking to local elected officials and State Assembly Members and Senators. However, many of the “where as” clauses are in reference to laws that apply to cities, the state and the Legislature as government agencies and not specifically to the elected officials on the governing bodies. For example, the Brown Act applies rules to the Legislative body and not the individual council member. Additionally, the city council as a whole is the lead agency under CEQA and not the individual council members.

Inherent Powers of the Legislative Branch
The resolution also states, “This prohibition shall not apply to laws or regulations affecting the inherent powers of the legislative branch under the California Constitution.”
It is unclear what inherent powers of the legislate branch under the California Constitution means in this context. The legislative branch does have the power 20

of preemption over cities and can state that a change in law is a matter of state wide concern. This allows the legislative branch to apply new laws or amend existing laws to apply to general law and charter cities. It seems like the last sentence of the resolve clause could negate the rest of the resolve clause if not clarified.

Support:

The following letters of concurrence were received:

April A. Verlato, Mayor, City of Arcadia
Robert Gonzales, Mayor, City of Azusa
Tim Hepburn, Mayor, City of La Verne
Bill Uphoff, Mayor, City of Lomita
John M. Cruikshank, Mayor, City of Rancho Palos Verdes
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