City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: December 15, 2025
Report #:2511-5561
TITLE
Adoption of an Ordinance Amending the Fiscal Year 2026 Municipal Fee Schedule to Implement Technical Corrections. CEQA Status: Not a Project
RECOMMENDATION
Staff recommends that the City Council adopt an ordinance amending the Fiscal Year 2026 Municipal Fee Schedule to reflect the following technical corrections:
1) Implementing Council-directed subsidies for Day Care Centers, 2) Reinstating authority to the Chief Building Official to establish alternative fee arrangements for appropriate Development Services permits, 3) Reinstating the Noise Exception permit, and
4) Amending the title of the Building Demolition Permit to Demolition Permit.
BACKGROUND
As part of the adoption of the FY 2026 Operating Budget, the City Council voted to adopt the municipal fee schedule, which brought FY 2026 fees for services into alignment with a fee study presented to the Finance Committee on March 4, 2025. However, the Finance Committee recommended that the City continue to subsidize the cost of a conditional use permit for Day Care Centers as well as certain sustainability programs. These were not reflected in the final fee schedule as adopted. Additionally, a few sections were inadvertently omitted that need correction.
ANALYSIS
The recommended action of this report brings the FY 2026 Municipal Fee Schedule into alignment with the Finance Committee’s recommendation regarding Day Care Centers. Staff anticipate returning to the Finance Committee in early 2026 to further discuss subsidies for activities that support sustainability initiatives. This report also recommends reinstating, and slightly broadening, language that appeared in previous fee schedules related to alternative fee arrangements that was inadvertently excluded in the adopted resolution.
Day Care Center Subsidy
Day Care Centers require a conditional use permit and this permit cost was subsidized in previous years. The Finance Committee unanimously recommended continuation of this subsidy in the FY 2026 Municipal Fee schedule as part of its March 4, 2025, discussion. The subsidy was inadvertently omitted from the final schedule of fee changes for FY 2026. Table 1 shows the FY 2025 Fee for Day Care Use Centers as well as its actual cost to the City along with the current and revised FY 2026 fees for this Conditional Use Permit.
Table 1. Day Care Center Subsidy Analysis
Fee Title Category
FY 2025
Fee* Actual Cost
FY 2025 Cost
Recovery % FY 2026 Fee
Cost Recovery
Level to Apply
Revised FY 2026
Fee
Day Care
Center
Conditional
Use Permit
$218.59 $ 8,429.94 2.6% $ 9,280 2.6% $241
As seen in Table 1, if the FY 2025 subsidy was applied to the current FY 2026 Municipal Fee, it would generate a new fee of $241 representing a subsidy (discount) of $9,039 or 97.4% of the total cost. This supports the Finance Committee’s recommendation to continue subsidizing this important aspect of community development. Although this is a substantial subsidy, this subsidy would not have significant impacts on the department’s cost recovery levels based on the average annual volume of applications.
Alternative Fee Arrangements
As part of the Planning and Development Fee Services study, a new fee model was proposed and adopted for building permits. These costs are largely based on the construction value (cost) of the project for commercial or multi-family projects, and on square footage for residential projects, and stand-alone fees are applied for miscellaneous permits. Construction value and square footage are used in commercial and residential costing since they each represent proximate indicators for the complexity of the project. Previous fiscal years’ fee schedules included additional language for building permit fees that conferred authority to the Chief Building Official to establish alternative fee arrangements. They previously stated:
“...if project is out of scope from a traditional building structure and/or additional services are required then an alternative fee arrangement may be established by the Chief Building Official to achieve cost recovery.”
This language was inadvertently omitted when the list of proposed FY 2026 Municipal Fees was presented to City Council for adoption.
Although construction value is an industry standard for determining building permit fees, indicating the approximate complexity of the project and thereby time needed to review, there are instances when an alternative fee arrangement would be warranted. For example, when a permit fee exceeds the project construction cost, or the provided construction cost valuation disproportionately creates an unreasonable permit fee for a project scope, an alternative fee arrangement could be used.
There are also additional instances that may warrant an alternative fee arrangement, such as if someone is pursuing a project that includes multiple standalone permit scopes simultaneously.
The standalone permit fees were refined as part of the fee study and accurately represent the cost of an individual permit. However, if multiple stand-alone permits were pursued simultaneously, there could be some streamlined review depending on the permits being sought. Allowing the Chief Building Official to establish an alternative fee arrangement in appropriate situations would confer greater flexibility and could better align cost-recovery levels.
Reinstating the authority to the Chief Building Official to establish an alternative fee arrangement to achieve cost recovery, and slightly broadening it to include appropriate streamlined stand-alone permit reviews, would enable greater flexibility, promote fee equity, and increase customer satisfaction by reducing the administrative burden on customers.
Language is included in Attachment A to confer this authority to the Chief Building Official and allow alternative fee arrangements to be used when appropriate. Internal processes will be developed to monitor and document the use of this authority.
Technical Clean-Up Actions
The Police Department section of the municipal fee schedule previously included a ‘Noise Exception’ fee under the Special Events section of their fee which should have been moved to the Development Services section. This fee is collected by Development Services and most frequently associated with various construction projects. It was inadvertently deleted. Staff recommends reinstating this fee in the Development Services section under Planning and Development Services Department.
Additionally, staff recommends retitling the ‘Building Demolition Permit’ fee to ‘Demolition Permit’ for clarity.
FISCAL/RESOURCE IMPACT
The recommended changes in this report are not anticipated to impact cost-recovery levels for the Planning and Development Services Department. Although the subsidy for the Conditional Use Permit for Day Care Centers is significant, the number of applications received each year is minimal. The other changes to the FY 2026 Municipal Fee Schedule are similarly not expected to materially impact revenues.
STAKEHOLDER ENGAGEMENT
Extensive stakeholder engagement was conducted as part of the March 4, 2025, conversation with the Finance Committee about the Planning and Development Services Fee Study as referenced in CMR 2501-4019.1 No additional stakeholder engagement was conducted for this report since it aligns FY 2026 Municipal Fees with previous feedback and intent and implements technical corrections.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act (CEQA) because the proposed amendment to the 2026 Municipal Fee Schedule is a government funding mechanism which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).
ATTACHMENTS
Attachment A: Ordinance Amending the FY 2026 Municipal Fee Schedule to Update Fees for Service in the Planning and Development Services Department APPROVED BY:
Jonathan Lait, Planning and Development Services Director 1 https://portal.laserfiche.com/Portal/DocView.aspx?id=146000&repo=r-704298fc