CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
9/11/2023
1 SUBJECT:
Discussion of Tree Permit Fee
RECOMMENDED ACTION:
Receive presentation and provide direction to the City Manager about whether or not permits for substantial trimming, encroachment, or removal of private trees should be subsidized by the General Fund.
STAFF CONTACT:
Christian Murdock, AICP, Planning Director
(650) 738-7341
[email protected]
Lisa Petersen, P.E., Public Works Director
(650) 738-3770
[email protected]
BACKGROUND/DISCUSSION:
The City Council adopted the master fee schedule (MFS) for Fiscal Year (FY) 2023-2024 on June 10, 2023. The MFS included a fee in the amount of $1,000 for review and issuance of a Tree Permit1that is not associated with either a building permit or discretionary permit application (in other words, a “standalone” Tree Permit). Issuance of a Tree Permit for removal, encroachment, or substantial trimming of a protected tree is required pursuant to Pacifica Municipal Code Title 4, Chapter 12 (the “Tree Preservation Ordinance” or “TPO”). A single Tree Permit application may authorize such activities for one or more trees.
Following adoption of the MFS, members of Tree City Pacifica expressed concern that the fee was too high and would create an incentive for tree owners to perform illegal pruning or removal of trees (Attachment 1). It should be noted that the TPO includes steep penalties for unpermitted tree activity. Potential costs for noncompliance2include a fine of up to $1,000 per violation, nuisance abatement costs, and payment of the replacement value of the mature tree(s) minus the cost of any required replacement plantings (Pacifica Municipal Code section 4-
12.14). Tree replacement costs alone can total thousands to tens of thousands of dollars per tree. Thus, the costs associated with noncompliance far outweigh the cost to obtain a Tree Permit. Following Tree City Pacifica’s communication, Councilmembers Boles and Bier requested that the Tree Permit Fee be brought back to the Council for consideration of whether it should be reduced.
The TPO became effective on October 12, 2022. It repealed and replaced the prior Heritage Tree Ordinance enacted in 1990. In general, the TPO expanded the criteria for identification of protected trees beyond those in the Heritage Tree Ordinance and imposed additional administrative and substantive requirements for review and issuance of a Tree Permit. The Public Works and Planning Departments have coordinated closely since enactment of the TPO to implement its provisions and modify past procedures used to issue Heritage Tree Permits. 1 The permit fee for issuance of a Heritage Tree Permit in the FY 2022-2023 MFS was $238.00 2 Violations of the TPO can also be enforced criminally with up to six months in the county jail as a nonfinancial penalty for failure to obtain a Tree Permit.
Pacifica City Council 2
September 11, 2023
This has included the engagement of consultants to provide expert arborist services/staff augmentation to manage the many administrative tasks associated with the TPO.
For many years as part of the City’s effort to be more financially sustainable, which also aligns with the City Council’s Strategic Plan, the City has been striving to ensure full cost recovery for permit processing. This includes charging the full staff and consultant time for review and processing of applications for building permits, encroachment permits, and permits requiring Planning Commission approval. The fee for a standalone Tree Permit (not associated with a building permit) adopted in the FY 2023-2024 MFS reflects the estimated staff and consultant time associated with review and issuance of Tree Permits, as follows: 0.5 hours initial intake and routing + 1 hour average initial arborist review + 0.25 hours routing comments to applicant + 0.25 hours routing applicant response + 0.25 hours arborist second review + 1.5 hours notice of approval posting and mailing + 0.25 hours final permit issuance/admin = 4 hours X $250/hr. = $1,000.
The time associated with Tree Permit review is much more substantial than permits issued under the old ordinance. Tasks associated with each round of Tree Permit processing include, but are not limited to, application intake and routing, reviews of site plan, arborist report and International Society of Arboriculture (ISA) basic risk assessment, site visit, comment memo preparation, and transmittal of comments to applicants (see Figure 1 for a simplified comparison of prior and current tree permit review processes). These tasks are variously performed by City staff and consultants. Multiple rounds of review can be required to receive all necessary information and verify compliance.
Figure 1 – Prior and Current Tree Permit Review Process Summary To assist the Council’s deliberation about whether or not the fee should be reduced, the City Manager recommends the Council first consider the broader policy factors related to whether tree permits pertaining to private property matters should be subsidized by the City’s General Fund. If this direction is supported by a majority of the Council, then the City Manager recommends the Council consider the various options developed by staff for how to handle such a subsidy.
Policy Considerations for Private Property Tree Permit Subsidy Before deliberating about options for handling a General Fund subsidy for tree permits, the Council may wish to consider the following factors related to whether tree permits pertaining to private property matters should be subsidized by the City’s General Fund:
1. Does a reduced permit fee help achieve the policy outcomes intended by the new TPO such that a subsidy is warranted?
• One objective of the new ordinance is to help preserve healthy trees. Tree City Pacifica members have posited that a high permit fee will incentivize unpermitted tree activities. However, staff rarely receives complaints about unpermitted tree removal and does not have any evidence that this is occurring with any Pacifica City Council 3
September 11, 2023
regularity, especially since the ordinance provides for significant financial and other penalties for unpermitted tree activities.
• The new fee took effect on August 12, 2023. Since then, the City has received three standalone Tree Permit applications. Although a very small sample, extrapolating and annualizing this one datapoint based on the three weeks of permit activity projects an estimated 52 Tree Permit applications per year. This figure is consistent with levels of activity under the prior Heritage Tree Ordinance and TPO prior to the new fee taking effect as discussed later in this report. • The pre- and post-fee increase permit activity observed by staff suggests that applicants are applying for Tree Permits when necessary, and that cost is not currently a deterrent to obtaining a Tree Permit when needed.
2. Does subsidizing this fee call into question why other private property permit fees are not also subsidized?
• With the exception of certain sewer lateral replacements, staff has not identified any Planning Department or Public Works Department permit review fees associated with private development activities that are intentionally reduced below a cost recovery level. To the contrary, property owners must pay the full cost of City staff and consultant reviews for applications such as building permits, encroachment permits, and applications requiring Planning Commission approval.
• As the only exception identified by staff, the City does subsidize certain sewer lateral replacement fees to encourage the replacement of aged sewer laterals.
This subsidy stems from a cease and desist order (CDO) issued to the City by the San Francisco Regional Water Quality Control Board and is intended to reduce the occurrence of sanitary sewer overflows that are exacerbated by old, leaky sewer laterals that allow inflow and infiltration of stormwater into the sewer system. Although the City has fulfilled the requirements of the CDO, it has also continued the Sewer Lateral Replacement Program to encourage continued improvement of the sewer collection system by reducing inflow and infiltration of stormwater. In FY 2023-2024, the City allocated $200,000 (Wastewater Enterprise Fund, not General Fund) to provide up to 100 qualified home owners grants of up to $2,000 each to replace their sewer laterals.
At this juncture in the Council’s deliberation, if there is majority support for subsidizing the Tree Permit fee then the Council should proceed to consider options for doing so. Several options are outlined below.
Options for Subsidizing Tree Permit Processing Costs
Option 1: Subsidize Tree Permit Processing Costs on an Ongoing Basis The City Council could direct a General Fund subsidy of some or all of the Tree Permit processing costs on an ongoing basis. Staff has identified one option for subsidization of Tree Permit fees, described further below, although the Council may discuss and select other variations. Currently, the Tree Permit fee includes cost recovery for staff and consultant costs as more fully described above. However, the salary and benefits expenses of City staff whose costs are recovered in the Tree Permit fee are budgeted in the General Fund irrespective of what projects or permit processing are handled by staff. By contrast, the consultant expenses require a direct payment from the General Fund to the respective consultants, resulting in a more direct fiscal impact.
Pacifica City Council 4
September 11, 2023
The variation of Option 1 presented here would provide a General Fund subsidy for the City staff expenses associated with Tree Permit processing. This would result in the smallest direct fiscal impact of the subsidy options identified by staff. However, while this option would reduce the Tree Permit fee paid by applicants, it would not reduce the cost to process Tree Permit applications and would have a direct fiscal impact to the City’s General Fund.
The current Tree Permit fee includes $187.50 for City staff salary and benefits based on the MFS’s standardized hourly rate for Planning Department permit processing ($250 hourly rate X
0.75 hours of City staff time). The fiscal impact of this option is dependent on the number of permits the City issues during the current FY. Staff is unable to provide a precise prediction of the number of Tree Permits that will be issued in FY 2023-2024. However, staff has evaluated past permit issuance activity for Heritage Tree permits and year-to-date Tree Permit applications received to provide relevant data points for estimation:
• Heritage Tree Permit Issuance: The table below demonstrates the number of Heritage Tree permits issued in the previous four complete calendar years prior to enactment of the TPO:
Calendar Year Heritage Tree
Permits Issued
2019 53
20203 32
20212 68
2022 41
Average 48.5
• Tree Permit Applications: Between January 1 and July 31, 2023, staff received 32 Tree Permit applications. Annualizing this activity based on the monthly average would result in 55 Tree Permit applications per year. The limited data set (three permits in three weeks as noted above) for Tree Permit issuance (under the new ordinance) presents challenges for drawing inferences about future permit activity. But s noted above, extrapolating and annualizing this one datapoint based on the three weeks of permit activity projects an estimated 52 Tree Permit applications per year.
Based on the data above, staff estimates it will receive 50-60 Tree Permit applications per year.
This estimate relies on past Heritage Tree permit activity as a baseline with an upward adjustment in activity to reflect the broader range of trees protected by the TPO as compared to the Heritage Tree Ordinance as well as the expanded types of covered activities that require a Tree Permit.
The direct fiscal impact to subsidize City staff costs based on the assumed level of Tree Permit activity would be $9,375-11,250 per year ($187.50 per application).
Option 2: Phase-in the New Tree Permit Fee
The new Tree Permit fee, based on the permit processing time, is nearly four times greater than the prior Heritage Tree Permit fee. The City Council may desire to provide more time for residents to adjust to the new ordinance and increased permit fee. This option would achieve 3 The impact of the shelter-in-place order during the COVID-19 pandemic likely depressed Heritage Tree permit issuance activity in 2020. Similarly, rebound activity in 2021 may have inflated Heritage Tree permit issuance activity in 2021. The average of these two years is within the historical range of activity.
Pacifica City Council 5
September 11, 2023
that goal. In addition, it may incentivize residents to undertake deferred tree work in order to benefit from the reduced fee before it is scheduled to increase.
This option would also keep the fee lower than it is currently during the period in which staff is working to select a long-term consulting arborist to support the TPO. The current arborist contracted by the City was intended to provide immediate services until a more comprehensive request for proposals (RFP) could be drafted and released. Staff has released an RFP for arborist services and expects the process will determine the best value in terms of cost and service for the TPO. A reduced consultant cost could support a reduced Tree Permit fee in the future.
Based on the Tree Permit activity estimate used in Option 1 (50-60 permits per year), the direct fiscal impact to subsidize City staff costs based on the assumed level of Tree Permit activity would be as follows:
Fiscal Year Amount of Fee
Increase Applied
Tree Permit Fee General Fund
Subsidy4
2023-2024 25% $428.50 $37,500-45,000
2024-2025 50% $619 $25,000-30,000
2025-2026 75% $809.50 $12,500-15,000
2026-2027 100% $1,000 $0
Total $75,000-90,000
This is a costlier option than Option 1, and the City Manager does not recommend this option due to its fiscal impact.
Option 3: Subsidize permits for Tree Pruning, but not Tree Removal The TPO includes three types of regulated activity: removal, encroachment, and substantial trimming. Removal of protected trees undermines the stated purposes of the TPO in Pacifica Municipal Code section 4-12.01 which include but are not limited to protecting the attractiveness, aesthetics and scenic beauty and historic atmosphere of the City of Pacifica.
However, the TPO acknowledges that sometimes tree removal is necessary such as to allow for economic use of property, or for other reasons.
In light of the TPO’s recognition of the importance of tree preservation, the City Council may desire to subsidize only Tree Permits for substantial trimming. A subsidy for only this type of Tree Permit would reduce the cost to property owners seeking to undertake important maintenance to reduce or eliminate hazards, and to improve the health of the trees(s) in question.
Of the Tree Permit applications submitted between January 1 and July 31, 2023, approximately 10 percent involved substantial trimming of a protected tree. Based on this observed share of substantial trimming applications among overall Tree Permit applications, the direct fiscal impact of this subsidy would be $938-1,125 per year (aligned with a full subsidy as in Option 1) or $7,500-9,000 over three fiscal years (aligned with a phase-in subsidy as in Option 2).
Next Steps:
If the Council were to direct implementation of a subsidy program for the tree permit fee according to any of the above options, or another option identified by the Council, the City 4 Figures utilize FY 2023-2024 Tree Permit fee ($1,000.00) for simplicity of explanation. Actual fees are expected to increase due to inflation and other cost factors each FY, and may result in a greater General Fund subsidy.
Pacifica City Council 6
September 11, 2023
Manager would return to Council at a future date with the recommended Master Fee Schedule revision and budget recommendations for appropriating General Fund funds to the subsidy program.
ALTERNATIVE ACTION:
The Council may wish to direct the City Manager to evaluate other alternatives or a combination of the options outlined above.
One potential alternative is to amend the TPO rather than subsidizing the fee. The major contributing factor to the Tree Permit fee cost is the TPO’s provisions. The inclusive definition of protected trees, the types of regulated activities that trigger the requirement for a Tree Permit, the detailed technical reviews, and notification/administrative requirements for the Tree Permit issuance process, collectively result in a time-intensive review and issuance process. The City Council could reconsider whether this level of complexity is required in the TPO in order to achieve the desired level of protection for trees in Pacifica.
If Council is interested in amending the TPO rather than subsidizing the fee, then the Council needs to consider two versions of this alternative: 91) amend the TPO during FY 2023-24; or (2) amend the TPO during FY 2024-25.
(1) Preparation of the TPO and review and approval by the City Council was a major undertaking. Considering revisions to the TPO of the sort described above would be a similarly major undertaking. Adding this unanticipated work into FY 2023-24 would affect the ability of staff in the Public Works and Planning Departments to undertake other priority Strategic Plan work already anticipated for the current FY. Furthermore, the City Manager does not recommend undertaking TPO revisions until staff gains additional experience with implementing the existing TPO, as that experience could lead to other substantive or process improvements that should be incorporated into TPO amendments. Additionally, the City Manager recommends concluding the RFP process for contract arborist services first to determine if greater cost efficiency can be achieved in that manner. (2) Should the City Council want to consider revisions to the TPO, the City Manager recommends delaying consideration of TPO amendments to a later time based on the concerns outlined in Alternative 1. The FY 2023-2024 work plan to implement the City Council’s FY 2023-2030 Strategic Plan already includes process improvements to streamline implementation of the TPO. Based on staff’s experience gained with further implementation of the existing TPO over the remainder of FY 2023-2024, the work plan for FY 2024-2025 includes staff preparation of potential TPO amendments for City Council consideration. While this work plan item was initially envisioned to include “clean-up” amendments to improve the functioning of the TPO’s underlying provisions, staff could expand consideration of potential TPO amendments to also include items that may directly relate to the costs of administration, which in turn could support a reduced Tree Permit fee in the future. The major advantage of this alternative is that it would allow time to identify opportunities for increased efficiencies and to complete the ongoing RFP for long-term contract arborist services, as well as collection of additional data on TPO administration and incidences of noncompliance. Considering potential TPO amendments and Tree Permit fee revisions as part of a broader report on implementation of the TPO will allow a more comprehensive consideration of the various interrelated issues associated with the Ordinance.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
Consideration of the Tree Permit fee relates to the following goals contained in the City Council’s FY 2023-2030 Strategic Plan:
Pacifica City Council 7
September 11, 2023
• Goal 1 – Enhance organizational and fiscal stability. • Goal 2 – Improve and steward City infrastructure, streets and facilities. • Goal 4 – Pursue climate change adaptation and mitigation.
The FY 2023-2024 work plan includes a strategy to “Work on process improvements for streamlined implementation of the Tree Preservation Ordinance.” The FY 2024-2025 work plan includes a strategy to “Bring Tree Preservation Ordinance Back to the City Council for modifications as necessary.”
FISCAL IMPACT:
Staff estimates in FY 2023-2024 it will receive $50,000-60,000 in revenue as part of the cost recovery structure of the Tree Permit fee (in other words, revenue will roughly match expenses).
The direct fiscal impact to the General Fund from a Tree Permit subsidy would range from an estimated $938-1,125 per year or $7,500-9,000 over three fiscal years (Option 3), to $9,375 per fiscal year (Option 1), to $90,000 over three fiscal years (Option 2). Other options, such as an Alternative Action to amend the TPO, could have different fiscal impacts that have not yet been evaluated by staff.
ORIGINATED BY:
Planning Department
ATTACHMENT LIST:
Email from Tree City Pacifica - June 19, 2023 (PDF)