City of Sacramento
Budget and Audit Committee Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-01566 9/6/2022 Discussion Item 4.
Amending the Master Fees and Charges Schedule to Authorize Fees for Staff Review and Appeals Concerning the Infeasibility Waiver of the Building Electrification Ordinance File ID: 2022-01566
Location: Citywide
Recommendation: 1) Review the proposed amendment to the Master Fees and Charges Schedule to establish Building Electrification Infeasibility Waiver Fees, including an appeal fee; and 2) pass a Motion forwarding the proposed amendment to the City Council for approval.
Contact: Bob Latz, Interim Chief Building Official, (209) 304-4603, [email protected], Community Development Department; Bridgette Williams, Principal Project Manager, (916) 808- 8053, [email protected], Community Development Department Presenter: Bob Latz, Interim Chief Building Official, (209) 304-4603, [email protected], Community Development Department
Attachments:
1-Description/Analysis
2-Fees
3-Proposition 26
Description/Analysis
Issue Detail: On June 1, 2021, City Council adopted the New Building Electrification Ordinance which adopted local amendments to the California Building Standards Code and added to and amended various provisions of Title 15 (Buildings and Construction) of the Sacramento City Code.
The New Building Electrification Ordinance requires that City staff develop guidelines to consider infeasibility waivers.
There may be instances where it is infeasible to comply with the all-electric building requirements in accordance with the New Building Electrification Ordinance. The New Building Electrification Ordinance specifies the following reasons for infeasibility: type of building, physical site conditions, commercial availability of electric appliances or equipment, necessary operational requirements, City of Sacramento Page 1 of 4
File ID: 2022-01566 9/6/2022 Discussion Item 4.
electrical infrastructure requirements, or the public health, safety, or economic welfare in the event of an electric grid outage. Under the newly established guidelines, the Building Official can waive the requirements.
The guidelines will include a process for city building staff with support from a technical consultant to meet with the building permit applicant to review documentation to support the applicant’s claim of infeasibility. The guidelines include a process for a written decision granting or denying the infeasibility waiver, including the reasons for the decision; timelines for processing and administering the infeasibility application; and an appeal process. The Community Development Department (CDD) will serve as the point of contact for the applicant and will administer the Infeasibility Waiver Guidelines, and the waiver request submitted by the building permit applicant. CDD expects to develop the Infeasibility Waiver Application, appeal form, and make the Accela permit software
system changes to automate the process by the end of February 2023.
Staff recommends the Budget and Audit committee to review the proposed Infeasibility Waiver application fee, consultant fee, and appeal fee and forward the recommendation to the City Council for approval.
City Council will be requested to approve the New Building Electrification Ordinance, Infeasibility Waiver Guidelines Document and proposed fees in November 2022.
Policy Considerations:
The proposed fee is consistent with Council’s adopted Fees and Charges Policy and supports the City’s goals of budget sustainability and fiscal responsibility.
Proposition 26 (Attachment 3) was passed by voters on November 2, 2010. The intent of the measure was to ensure the effectiveness of Propositions 13 and 218 by providing a definition of a “tax” for state and local purposes. Specifically, it states “that neither the Legislature nor local governments can circumvent these restrictions on increasing taxes by simply defining new or expanded taxes as ‘fees.’” Thus, under Proposition 26, a tax has been defined broadly to include any levy, change, or exaction of any kind imposed by a local government. Therefore, the City bears the burden of proving that a fee or a charge is not a tax. The proposed administrative and appeal fees are not a tax under Proposition 26 because of exception 3 (licenses and permits).
The proposed fees are established to cover city administrative cost and application processing, consultation and review by the technical consultant, and the appeal process.
Economic Impacts: The economic impacts of passing a Building Electrification Ordinance are anticipated to be a reduced construction costs for residential development and increased demand for climate-friendly appliances. Cost-effectiveness studies for the 2019 Building Standards Code indicate that all-electric construction is cost-effective for all low-rise and midrise construction prototypes City of Sacramento Page 2 of 4
File ID: 2022-01566 9/6/2022 Discussion Item 4.
studied. Cost-effectiveness of high-rise residential construction up to eight stories is cost effective, but above eight stories cost effectiveness varies depending on project design. All residential new construction building types are cost-effective when SMUD incentives are considered. Cost effectiveness studies for the 2022 Building Standards Code were not available at the time this report was prepared.
Environmental Considerations:
California Environmental Quality Act (CEQA): This action is not a project subject to the California Environmental Quality Act (CEQA) because it involves the establishment and approval of charges by public agencies which the public agency finds are for the purpose of meeting operating expenses and the creation of government funding mechanisms or other government fiscal activities that do not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment. (Pub. Res. Code §21080; CEQA Guidelines § 15378(b)(4).)
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation:
The New Building Electrification Infeasibility Waiver Guidance Document provides developers with a process, framework, and criteria to demonstrate when it is infeasible to develop an all-electric building. It is also important that the City administers the infeasibility waiver program and process; including use of a technical consultant to review waiver requests; to ensure the waiver process is seamless, fair, and equitable. The proposed fees are therefore necessary for full cost recovery for staff and consultant costs; and ensure a high level of customer service.
Financial Considerations: The new administrative-processing fee for each infeasibility waiver application, consultant fee and appeal fee for the infeasibility waiver will not affect the dollar amount of development fees associated with a project. Nonetheless, processing an infeasibility waiver application will incur costs in staff time to process the application, engage with a technical consultant, and process appeals if requested by the applicant. To recover these costs, applicants requesting an infeasibility waiver will be required to pay the fees, at the time an infeasibility waiver application is submitted, a non-refundable $492 application-administrative processing fee, and a non-refundable $1,500 consultant services fee. The city fee is based on a fully burdened rate of $164 per hour at 3 hours. Consultant’s fee is based on an hourly rate of $250 per hour at 6 hours. In addition, staff recommends a non-refundable $1,640 appeal fee be established to recover City costs when an appeal is filed. The city fee is based on $164 per hour at 10 hours.
No adjustments to the budget are anticipated at this time as it is expected that the city will receive full City of Sacramento Page 3 of 4
File ID: 2022-01566 9/6/2022 Discussion Item 4.
cost recovery.
Local Business Enterprise (LBE): Not applicable.
City of Sacramento Printed on 8/31/2022Page 4 of 4
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Attachment 2
BUILDING ELECTRIFICATION INFEASIBILITY WAIVER FEES
Fee Name: Infeasibility Waiver Application Fee
Current Fee $0.00
Proposed Fee: $492.00
Justification for Fee: Recover costs associated with administrative processing fee for the infeasibility waiver application. This fee also covers engagement with the technical consultant.
Proposition 26: This charge is not a tax under Proposition 26, as it falls under Exception 3, a regulatory fee. The proposed fee will cover the department’s cost to administer the program.
F
ee Name: Infeasibility Waiver Consultant Fee
Current Fee $0.00
Proposed Fee: $1,500.00
Justification for Fee: Recover costs associated with consulting services.
Proposition 26: This charge is not a tax under Proposition 26, as it falls under Exception 3, a regulatory fee. The proposed fee will cover the department’s cost to administer the program.
F
ee Name: Infeasibility Waiver Appeal Fee
Current Fee $0.00
Proposed Fee: $1,640.00
Justification for Fee: Recover costs associated with applicant appeal process. This cost covers processing, report writing, consultation with City Council, and presentation to City Council.
Proposition 26: This charge is not a tax under Proposition 26, as it falls under Exception 3, a regulatory fee. The proposed fee will cover the department’s cost to administer the program.
Proposition 26
Attachment 3
Proposition 26, the “Stop Hidden Taxes Initiative,” was passed by the voters on November 2, 2010, to amend Article XIII C of the State Constitution. According to the ballot measure, the intent of the measure is to ensure the effectiveness of Propositions 13 and 218 by providing a definition of a “tax” for state and local purposes “so that neither the Legislature nor local governments can circumvent these restrictions on increasing taxes by simply defining new or expanded taxes as ‘fees.” Accordingly, under Proposition 26 a tax has been very broadly defined.
Tax Defined:
“Tax” now means “any levy, charge, or exaction of any kind imposed by a local government, except for the following seven categories of charges:
Exception 1 – Benefit Conferred or Privilege Granted
A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege
Examples:
o Residential parking permit fees
o Professional licenses
o Business improvement assessments
Exception 2 – Government Service or Product
A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product Examples:
o User fees for park and recreation programs
o Weed abatement fees
o Sidewalk curb repairs
Exception 3 – Licenses and Permits
A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations, inspections and audits, enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof
Examples:
o Building inspections
o Cardroom license
o Business licenses
Exception 4 – Use of City property
A charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property
Examples:
o City-owned parking lots
o Swimming pools
o Convention Center rentals
o Golf green fees
Exception 5 – Fines and Penalties
A fine, penalty, or other monetary charge imposed by the judicial branch of government or a local government as a result of a violation of law Examples:
o City Code fines and penalties (e.g., 1.28.020)
o Parking fines
Exception 6 – Property Development Charges
A charge imposed as a condition of property development Examples:
o Development impact fees
Exception 7 – Proposition 218 Fees
Assessments and property related fees imposed in accordance with the provisions of Proposition 218, Article XIII D
Examples:
o Utility fees for water, sewer, drainage, and solid waste o Street lighting assessments
Burden of Proof:
The paragraph following the seven enumerated exceptions states:
“The local government bears the burden of proving by a preponderance of the evidence [1] that a levy, charge, or other exaction is not a tax, [2] that the amount is no more than necessary to cover the reasonable costs of the government activity, and [3] that the manner in which those costs are allocated to a payor bears a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” The latter two requirements only apply to the first three exceptions.
Thus, with the burden of proof now shifted to the City, that requires each department to take into consideration how it aims to prove that a proposed fee or fee increase is not a tax. The following analytical framework can assist in this regard.
Burden of Proof: A 3-step Analysis
1. The City must make a threshold determination whether one of the exceptions applies.
If none apply, it is a tax subject to voter approval.
2. If Exceptions 1, 2, or 3 apply, the City must also show that the fee revenue will not exceed the reasonable costs of providing the related governmental activity (at the aggregate level).
3. Finally, the City must show that the costs are fairly allocated to the individual payors.