Development
Services Fund
Centralized Fund Management Will Better Capture Citywide Costs Presentation to the Finance & Management Committee
October 8, 2024
Photo: Greg Linhares, City of Oakland
Table of Contents
Audit Team
Background
Audit Objective & Scope
Audit Finding & Recommendations
Questions
Audit Team
ACTING CITY AUDITOR
Michael C. Houston
PERFORMANCE AUDIT MANAGER
Stephanie Noble
SENIOR PERFORMANCE AUDITOR
Mark Carnes
Background
The City of Oakland regulates new development in the City to ensure compliance with State Building Code, City amendments to the Building Code, and City planning codes.
The City permits development projects based on reviews of plans and inspections of the projects.
Background
● Applicants pay fees to cover the reasonable cost of the City’s development services.
● The City’s master fee schedule outlines specific development services administered by the City, and their corresponding fees and charges.
● State law restricts development service fees to cover only the reasonable cost of providing the service.
Background
● The Development Services Fund (or Fund 2415) collects money from development service fees.
● The Development Services Fund was created in 2006 to
ensure revenues and expenditures followed state law.
Background
● Development fees pay for staff in 11
departments.
● The Budget Bureau and the City
Attorney’s Office are responsible for
interpreting which department
functions may use the Fund based on
restrictions within City ordinances,
the Oakland Municipal Code, and
State law.
Audit Objective
To identify reasons for the high year-end balances of the Development Services Fund.
Audit Scope
FY 2016-17 through FY 2022-23
Centralizing Development
Services Fund Management will
Help Ensure it is Appropriately
Recovering Costs
FINDING 1
The City is Working to Complete a Planning and
Building Fee Study in 2024, With a Follow Up
Study on Other Departments Within the Next
Year
● Fee studies ensure fees are limited to the “estimated reasonable cost of providing a service” and appropriately recover costs.
● Best practice to conduct a fee study every two to five years. ● Governments should update fees periodically based on factors such as the impact of inflation, other cost increases (like cost -of-living adjustments), adequacy of cost recovery, and the use of services.
The City Administrator’s Office should issue a policy to have periodic development service fee studies to cover all departments that contribute to and draw from the Development Services Fund to ensure the fees meet cost recovery goals and the expenses it covers are reasonably related.
Recommendation 2
Recommendation 1
The City Administrator should coordinate with the City Attorney to establish criteria for what types of staff may be funded by the Development Services Fund, review the appropriateness of using the Development Services Fund to pay for positions, and identify alternative funding sources for any positions that do not provide direct services for development permitting, or are disallowed under the ordinance establishing the Development Services Fund.
Questions?
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