CITY COUNCIL
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Planning and Development Services
Meeting Date: October 26, 2026
Report #: 2608-6707
TITLE
Adoption of an Ordinance amending the FY 2027 Municipal Fee Schedule and Making Findings Regarding the Reasonable Cost to Issue Permits for Solar Energy Systems. CEQA Status: Not a project.
RECOMMENDATION
Staff and the Finance Committee recommend that the City Council adopt the attached ordinance amending the FY 2027 Municipal Fee Schedule to reduce fees for Electric Vehicle Charging Station permits and making findings, supported by substantial evidence, that the reasonable cost to issue permits for solar energy systems exceeds the limits set forth in Government Code section 66015.
EXECUTIVE SUMMARY
This action implements new streamlined review process for Electrical Vehicle Charging Stations permits (EVCS) and the corresponding Municipal Fee reductions and fixes an omission in the adopted budget ordinance, authorizing the City to exceed state caps on Photovoltaic (Solar)/Energy Storage System fees, as reflected in the published FY 2027 Municipal Fee Schedule. Finance Committee unanimously voted to reach full cost-recovery for fees related to Photovoltaic (Solar) and Energy Storage Systems as well as other fees related to electrification, and recommended that City Council direct staff to develop rebates for these fees using eligible non-rate revenue from utilities - the findings were not included.
BACKGROUND
On March 4, 2025 the Finance Committee discussed the Planning and Development Services fee study, conducted by Matrix Consulting.1 This study calculated fees for Development Services to ensure that it reached full cost-recovery and that development applications were not subsidized by the General Fund. Through this discussion, Finance Committee wanted to strongly recommend subsidies for electrification.
1https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=1367b 915-8c05-4f24-ae1c-ea6a6149e805
Staff brought forward options for discussion with the Finance Committee for balancing policy goals related to fiscal sustainability and electrification. On April 7, 2026 the Finance Committee voted unanimously to adopt full cost-recovery for fees that would otherwise be subject to state caps (limits), specifically those related to Solar (Photovoltaic) systems and Energy Storage Systems (ESS).3 And, the Finance Committee also voted unanimously to establish a rebate program using eligible non-rate revenue from Utilities to offset the difference between state caps and the full cost-recovery rate for these fees. For an additional subset of fees related to electrification, Finance Committee voted unanimously to use eligible non-rate revenues from Utilities to establish a rebate program that would discount a portion of those fees (the ‘base’ fee). Staff also presented a streamlined process for permits associated with Electric Vehicle Charging Stations; this process that would lower the cost for these permits and Finance Committee endorsed the streamlined process.
ANALYSIS
This action includes a recommendation to amend the FY 2027 Municipal Fee Schedule charges for Electric Vehicle Charging Stations in alignment with a new more streamlined permit process, previously supported by the Finance Committee. In addition, on April 7, 2026 Finance Committee, recommended fee adjustments be incorporated into the FY 2027 Budget Adoption Ordinance for Solar (Photovoltaic) systems and Energy Storage Systems (ESS). The fees and financial assumptions were included, however the necessary findings and rebates were omitted in the ordinance language. The written finding and corresponding ordinance from the City Council is required to allow the City to exceed state caps for cost-recovery levels - this action fixes this omission.
Recognizing many cities charge the state cap for these fees, the rebate process that will be implemented effectively represents an ‘instant’ rebate, where the applicant will only pay the remaining balance of the fee after the subsidy is applied. This significantly streamlines an otherwise cumbersome process, and is anticipated to enhance applicant satisfaction with the process.
Electric Vehicle Charging Stations Streamlined Permits
Table 1 shows the cost / fee of Electrical Vehicle Charging Stations permits, inclusive of the base fee. Staff are implementing a streamlined process, significantly lowering the cost for each type of EVCS permit. The streamlined process reflects that the building inspectors will perform more of the inspection function for lower-level installations, reducing the cost and time, by reducing the time spent by fire inspectors. The current process involves a separate inspection by building and fire for each EVCS permit. Fire inspections will be conducted by exception, when a building inspector escalates, rather than by rule.
3https://cityofpaloalto.primegov.com/api/compilemeetingattachmenthistory/historyattachment/?historyId=3f916 2f0-a2c5-4baf-942e-cf17727675e1
Table 1. FY 2027 EVCS Charges Streamlined inclusive of Base Fee ($) Fee Name
Current
Cost/Permit Fee
FY 2027 Fee
Recommended Change
EVCS: Single-Family (Level 1 and 2) $1,705 $640 $1,065
EVCS: Single-Family (Level 3) 1,915 830 1,085
EVCS: Multi-Family / Commercial (Level 1 and 2):
1-6 Stations
4,842 3,810 1,032
EVCS: Multi-Family / Commercial (Level 1 and 2):
Each addl 6 stations 1,504 1,402 102
EVCS: Multi-Family / Commercial (Level 3 and 4):
1-6 Stations
5,796 4,299 1,497
EVCS: Multi-Family / Commercial (Level 3 and 4):
Each addl 6 stations 1,504 1,402 102
Solar (Photovoltaic) systems and Energy Storage Systems (ESS) As a reminder of what was previously approved and what the findings and ordinance enables, the tables below reflect the approved fee levels from the FY 2027 Adopted Budget and the rebates that will be applied in alignment with the April 2026 Finance Committee direction for Solar (Photovoltaic) systems and Energy Storage Systems (ESS) fees.
Table 2. State Capped Fees – FY 2027 Adopted Fees and Utilities Non-Rate Revenue Rebates ($) Fee Title
FY 2027 Fee
(Permit and Base Fee)
Rebate
(variance between
FY27 Fee & state cap)
Multi-Family / Commercial System (10kW or less) $2,344 $1,344 Multi-Family / Commercial System (11kW-49kW) 3,050 2,050 Multi-Family / Commercial System (50kW or greater) 3,948 2,948 Single-Family Systems (10kW or less) 1,866 1,416
Single-Family Systems (greater than 10kW) 2,271 1,821
Single-Family Systems (Reinstallation) 1,365 915
Single-Family System (ESS) 2,262 1,812
Multi-Family / Commercial System (ESS) 3,722 2,722
SolarAPP+PV and ESS 1,392 942
SolarAPP+PV 685 235
Solar Hot Water System 1,013 563
For additional electrification fees that are not subject to state caps, the Finance Committee expressed their unanimous support for rebating the ‘base’ fee amount using utilities non-rate revenues. These additional discretionary subsidies are listed below in Table 3. This effectively represents a discount of $318 on each of the permits in this category. After the rebate is applied, permit fees range between $562 and $1,771 for these activities.
Table 3. Additional Discretionary Electrification Subsidies –Committee’s Recommended NonRate Revenue Rebates ($) Fee Name
FY 2027 Fee
(Permit and Base Fee) Rebate
Electrical Service - New or Replacement: Less than 400 amp $967 $318 HVAC Systems (i.e., Air Conditioners, Heat Pumps, Air Handling Unit):
Multi-Family / Commercial (Groups of 5): Direct replacements 1,355 318
HVAC Systems (i.e., Air Conditioners, Heat Pumps, Air Handling Unit):
Multi-Family / Commercial (Groups of 5): New - with curb 2,089 318
HVAC Systems (i.e., Air Conditioners, Heat Pumps, Air Handling Unit):
Multi-Family / Commercial (Groups of 5): New - without curb 1,737 318
HVAC Systems (i.e., Air Conditioners, Heat Pumps, Air Handling Unit):
Single-Family
880 318
FISCAL/RESOURCE IMPACT
The fiscal impacts of these fee levels and rebates were factored into the FY 2027 Adopted budget. This item enables implementation of those adopted levels. For fees listed in Tables 2 and 3 above, the effective difference between full cost-recovery and the state cap will be paid by non-rate revenues, such as Renewable Energy Certificate (REC) exchange program revenues, in the Utilities department enterprise funds. Administratively the Utilities enterprise funds will transfer the offsetting revenue to the Development Services department (general fund).
To develop a funding plan for FY 2028 and beyond, staff will return to the City Council within FY 2027 to review the Electric Supply Portfolio Carbon Neutral Plan and the potential use and regulatory requirements for revenues derived from the Renewable Energy Certificate Exchange program, Electric Public Benefit Fund, and the Electric Cap and Invest (C&I) program. This review will include a discussion on existing customer incentive levels for HVAC, EV charging, and other electrification related work, including consideration of financial offsets to lower the cost of related work such as panel upgrades, electric utility service upgrades, and building permit fees.
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. There were a number of meetings with internal stakeholders, including the Utilities Department and Planning and Development Services to align on approaches for incorporating Finance Committee’s Spring 2025 feedback. No additional external stakeholder engagement was conducted for this report since it aligns FY 2027 Municipal Fees with previous feedback and intent from Finance Committee.
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 2027 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: Draft Ordinance
APPROVED BY:
Jonathan Lait, Planning and Development Services Director