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HomeMy WebLinkAbout1999-03-16 City Council (8)City of Palo Alto C ty Manager’s Report TO:HONORABLE CITY COUNCIL ATTENTION: FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE:MARCH 16, 1999 CMR:175:99 SUBJEC~ ,AMENDMENT TO THE MUNICIPAL FEE SCHEDULE TO INCREASE FEES BY $294,552 TO COVER COSTS ASSOCIATED WITH THE DEVELOPMENT CENTER, INCLUDING IMPLEMENTING FEE TABLE 1A OF THE 1997 UNIFORM BUILDING CODE AND APPROVAL OF A BUDGET AMENDMENT ORDINANCE REPORT IN BRIEF ~n CMR: ! 35:99, and in response to earlier Council direction, staff proposed implementing ~ee changes to increase revenue associated with the Development Center by $294,552. At that time, the City Council directed staff to return with information as to how the full amount ~f the ongoing costs associated with the Development Center could be recovered (an .~dditional $63,408). This report responds to that direction. It contains proposed revisions to the Municipal Fee Schedule to increase the revenues associated with the Development Center by $294,552 and identifies additional fee changes which could be implemented to generate the additional revenues needed to fully cover the ongoing costs of the Development Center. CMR:175:99 Page I of 5 RECOMMENDATION: Staff recommends that the City Council Approve revisions to the Municipal Fee Schedule to implement the changes detailed below. (The impact of these changes to individuals using the Development Center is shown on Attachment A.) mo Implement the Fee Table 1A in the 1997 Uniform Building Code (UBC), which is projected to increaseDevelopment Center revenues by 12 percent or $228,552 in 1999-00. (UBC fee increases were last implemented in January 1996.) Implement a change in the minimum permit fee from $25.00 to $40.00, which is projected to increase revenues by $22,000 in 1999-00. Implement an increase for new residential construction for electrical, plumbing, and mechanical permits, from a per-unit charge to a fiat rate of five cents per square foot for each. This is projected to increase revenues by $44,000 in 1999-00. Approve the-Budget Amendment Ordinance (Attachment B), which amends the Municipal Fee Schedule to increase revenue by $294,552. The proposed changes to the Municipal Fee Schedule are shown on Attachment C. Provide staff with feedback regarding any additional fee changes, as detailed in Attachment D, the Committee would like to be forwarded to the Council for action. BACKGROUND In CMR: 135:99, Council approved several fee increases which would increase Development Center revenues by $294,552, covering 82 percent of the ongoing Development Center costs. Council directed staff to retum with revisions to the Municipal Fee Schedule with the 1998- 99 Midyear Report to implement these fee increases. At that time, staff proposed undertaking an update of the 1990 User Fee Study in 1999-00, specifically for the fees that will be charged at the Development Center, prior to making the additional fee increases needed to fully cover the ongoing costs of the Development Center. In addition, staff recommended revisiting the issue of cost recovery levels citywide, returning to Council with revised cost recovery proposals, which would include the appropriate level at which cost recovery should be sought (by major activity, functional area, department, or citywide), and an improved methodology for calculating cost recovery for all fees charged by the General Fund. The Council directed staff to return with the 1998-99 Midyear Report, instead of in 1999-00, with a plan as to how additional revenue of $63,408 could be generated to fully cover the ongoing costs of the Development Center. CMR:175:99 Page 2 of 5 DISCUSSION This report includes the revisions to the Municipal Fee schedule which are necessary to increase fees by $294,552. In addition, as directed by the City Council, staff has identified ways to raise additional revenues associated with the Development Center, which are discussed below. The total estimated additional revenue projected to be raised by the changes discussed below would be $74,965 in 1999-00, which is slightly more than the shortfall of $63,408. The fee changes themselves are shown in an amended Municipal Fee Schedule, Attachment D. Change the charge for new commercial construction for electrical, plumbing and mechanical permits from a per-unit charge to a fiat rate of four cents per square foot for each. In addition, change the charge for tenant improvement reconstruction for electrical and mechanical permits, and for laboratory, medical, and restaurant plumbing permits from a per-unit charge to a fiat rate of four cents per square foot for each. These changes are projected to increase revenue by $55,000 in 1999-00. This approach mirrors the change being recommended for new residential construction. The per square foot charge is less because commercial projects tend to be much larger in terms of square footage, and thus each project would be expected to raise more revenue than residential projects. Increase the fees for excavating, grading and fill permits as shown on Attachment D. This is projected to increase revenue by $5,000 in 1999-00. Based upon a preliminary survey of the fees other communities charge for excavation, grading, and fill permits, the City of Palo Alto’s fees are considerably lower. This change would make Palo Alto’s fees more consistent with those of other communities. Increase the Certificate of Compliance fee from $335 to $600. This is projected to increase revenue by $6,625 in 1999-00. Based upon a preliminary survey of the fees charged by other communities for certificates of compliance~ Palo Alto’s fee is on the low end of the scale. This adjustment would place Palo Alto closer to the middle, and would allow staff’to more closely cover the costs of such certificates. Adjust encroachment permit fees as shown on Attachment D. This is projected to increase revenue by $8,340 in 1999-00. CMR:175:99 Page 3 of 5 Based upon a preliminary survey of the fees charged by other communities, Palo Alto’s fees for encroachment permits are generally consistent with those charged in other communities. The increases shown on Attachment D are therefore not dramatic. ALTERNATIVES TO STAFF RECOMMENDATION As an alternative to increasing the fees above immediately, Council could consider delaying these increases. By deferring further.fee changes, staff would be able to hire a consultant to more completely analyze the current levels of cost recovery at the Center, examine how Palo Alto development fees compare to those in other communities, and analyze the allocation of citywide overhead to the Development Center. As can be seen on Attachment E, staff is confident that none of the proposals will put the Development Center in the position of recovering more than the cost of services provided. However, conducting a study would allow staff to spend more time ensuring that the City’s Development Center fees remain competitive. Funding is already available to hire a consultant to do this analysis associated with the Development Center, and staff could return to Council next winter with further recommendations regarding cost recovery. Initial estimates indicate that the cost of the study would be under $25,000. RESOURCE IMPACT The implementation of the proposed revisions to the Municipal Fee Schedule would result in annual revenue increases to the City of $294,552, covering 82 percent of the ongoing Development Center costs. POLICY IMPLICATIONS The revenue from these fee changes, if implemented, would be consistent with the current Council direction with regards to cost recovery. TIMELINE Upon approval of these recommendations by the City Council, the fee adjustments will take effect after a 60-day period, on July 1, 1999, to coincide with the implementation of the California Model Codes, as required by State law. ENVIRONMENTAL REVIEW This is not a project for the purposes of California Environmental Quality Act Review. CMR:175:99 Page 4 of 5 ATTACHMENTS Attachment A: Attachment B: Attachment C: Attachment D: Attachment E: Attachment F: The Effect of Increasing the UBC and Selected Fees on Users Budget Amendment Ordinance Proposed Revisions to the Municipal Fee Schedule Possible Other Revisions to the Municipal Fee Schedule Cost Recovery at the Development Center Budget Amendment Ordinances Impacting General Fund Approved To Date in 1998-99 Reserves PREPARED BY: Shannon Gaffney, Senior Financial Analyst DEPARTMENT HEAD APPROVAL:, CARL YEAT[ Director,Services CITY MANAGER APPROVAL: cc:Susan Frank, Palo Alto Carl Guardino, Silicon Valley Manufacturing Group Randy Okamura, Pacific Bell Hal Micketson, Hewlett-Packard John Northway, Stoecker & Northway Architects Kathleen Gwynn, Senior Coordinating Council Tony Carrasco, Carrasco & Associates Katherine Strehl, Lockheed Martin Mark Johnson, Varian Associates Brad Lopacinski, Varian Associates CMR:175:99 Page 5 of 5 ATTACHMENT B ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO TO AMEND THE 1998-99 MUNICIPAL FEE SCHEDULE FOR SERVICES PROVIDED AT THE DEVELOPMENT CENTER WHEREAS, pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 22, 1998 did adopt a budget for fiscal year 1998-99; and WHEREAS, the City Council has directed staff to implement fee increases for services offered at the Development Center; and WHEREAS, the Municipal Fee Schedule needs to be amended to implement these changes; and WHEREAS,. City Council authorization is needed to amend the 1998-99 Municipal Fee Schedule as hereinafter set forth. NOW, THEREFORE, the Council of the City of Palo Alto does ORDAIN as follows: SECTION io The Municipal Fee Schedule is hereby amended to reflect the changes shown in Attachment C, which is attached hereto and incorporated herein by reference. SECTION 2. In accordance with Section 66016 of the California Government Code, this ordinance was considered by the Council at a noticed public hearing, and at least I0 days prior to the hearing, data indicating the amount of the cost, or estimated cost, required to provide the services for which these fees were proposed, and the revenue sources anticipated to provide the services, were made available to the public. SECTION 3. reserves. This transaction will have no impact on 1998-99 SECTION 4. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 5. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. SECTION 6. As provided in Section 2.04.350 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption; provided, that the fees herein adopted, shall be effective July i, 1999. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST:APPROVED: City Clerk Mayor APPROVED AS TO FORM:City Manager Senior Asst. City Attorney Director of Services Administrative oo o o 00 o o ~ "8 "i I! 00 o g o~ ATTACHMENT F Budget Amendment Ordinances Impacting General Fund Reserves Approved To Date in 1998-99 Estimated Beginning Budget Stabilization Reserve (BSR) Balance Net Cost Placeholders Impact on the Already in the 1998- General Fund 99 Adopted Budget BSR $19,050,000 Estimated Future Year Ongoing Costs Reduction in Rental Income from Utilities Due to Relocation of Utilities Engineering and Creation of Capital Improvement Project 19921, Relocation / Consolidation of Level A Storage Increase in the City’s Annual Rental Payment to the Palo Alto Unified School District for Lease and Covenant Not to Develop for an Extended Day Care Center at the New Hoover School Site Salary and Benefit Increases Retroactive to May 1, 1998 for Classified Personnel (SEIU) * Salary and Benefit Increase Retroactive to July 1, 1998 for Police Personnel Addition of Five Full-Time Positions and Associated Resources to the Planning and Community Environment Department Interim Historic Inventory Consultant Interim Historic Regulations Administrati?n Phase 1 - San Francisquito Creek Bank Stabilization and Revegitation Study Reclassification of CDBG Position to Senior Planner Position Acquire Leased Space and Cover Associated Support Costs for a One-Stop Development Center at 285 Hamilton Avenue Recruitment Assistance Formation of Library Advisory Commission Golf Course Clubhouse and Related Improvements Salary and Benefit Increases Retroactive to July 1, 1998 for Management and Confidential Employees Emergency Repairs (Basements, Creek, Arastradero Pres.) Council Chambers Refurbishing Capital Project Number 19625 Emergency Management Plan Implementation Automatic Public Toilets ($231,700)($231,700)($221,000) ($34,792)($34,792)($36,000) ($260,000)($260,000)($702,000) ($182,200)($182,200)($265,000) ($488,364)$300,000 ($188,364)($410,743) ($437,400)($437,400) ($269,600)($269,600) ($112,500)($112,500) ($7,400)($7,400) ($506,979)($506,979)($370,000) ($60,000)($60,000) ($22,500)($22,500) $33,430 $33,430 ($14,280) ($334,000)($334,000)($624,900) ($142,895)($142,895) ($238,000)($238,000) ($308,500)$200,000 ($108,500)$294,000 ($106,000)($106,000)$140,000 Total ($3,709,400)$500,000 ($3,209,400) ($2,209,923) BSR Balance After BAO’s $15,840,600