REPORT TO COUNCIL
SUBJECT
Title
Public Hearing - Annual Review of Fees and Charges for Fiscal Year 2014/15
Report
REPORT IN BRIEF
The fees and charges of the City are reviewed and adjusted each year in accordance with Council Fiscal Policy. This annual evaluation ensures that all fees and charges of the City are aligned with the cost to provide each service, except for those fees that are legally limited, market based, or subsidized per Council direction.
After a detailed staff review of fees, necessary adjustments have been made to the proposed Fee Schedule. Fees that are legally limited remain unchanged. Fees that are intended to recover the cost of service were reviewed and adjusted by the increase in labor costs of the work unit that provides the service if necessary. In general, labor costs, including salaries and benefits rose 4.5%, and this is the default increase used for labor related fees. In some cases, staff from the appropriate department reviewed the fees in more detail and made further adjustments. Fees related to construction price are changing in accordance with the Construction Cost Index (CCI), which was 2.9%. The Recommended FY 2014/15 Fee Schedule (Attachment 1) details all proposed fees. Most fees become effective at the start of the new fiscal year, with the exception of development processing fees which become effective 60 days after adoption.
Each year the City Council reviews recommended changes to the City's fees and charges. Tonight's public hearing is to allow public input and comment on fees and charges that will be effective for FY 2014/15. This hearing on the proposed fees will be followed by formal action to adopt updated and new fees on June 24, 2014.
BACKGROUND
The attached Fee Schedule references all City fees, except the proposed utility rates and fees for recreation services. Fees related to utility services (water, refuse, and sewer) are also being adopted tonight by a separate Council action when the utility rates are set(RTC 14-0327). Fees for recreation services are established administratively by the Director of Library and Community Services. Those fees are established based upon market conditions and City Council adopted policies to ensure fairness and accessibility.
Most new fees become effective at the start of the new fiscal year on July 1, 2014. Exceptions are changes to Development Processing fees (filing, accepting, reviewing, approving, or issuing of an application or permit) and mitigation fees; these become effective 60 days after adoption (in accordance with §66017 of the California Government Code).
EXISTING POLICY
Council Policy 7.1.1 Fiscal -Long Range Goals and Financial Policies,
Policy B.5.2 - User charges and fees should be adjusted at least annually to avoid sharp changes.
Policy B.5.4 - User fees should be established at levels which reflect the full cost of providing those services.
Policy B.5.5 - Council may determine for any service whether a subsidy from the General Fund is in the public interest.
California Government Code Section 66016(a): Prior to levying a new fee or service charge, or prior to approving an increase in an existing fee or service charge, a local agency shall hold at least one open and public meeting, at which oral or written presentations can be made, as part of a regularly scheduled meeting.
ENVIRONMENTAL REVIEW
N/A
DISCUSSION
The majority of fees charged by the City are set to recover the cost of providing the service. In most cases, the cost to provide the service is based on personnel costs, as fees are predominantly labor-based. The labor-based increases take into account the full cost of labor, including the cost of employee benefits.
Council Fiscal Policy guides staff to set fees for services to recover cost where possible and legally allowed. Staff continues to work to ensure that all fees not legally limited, market based, or subsidized provide for full cost recovery. The results of these efforts have been incorporated into the Recommended FY 2014/15 Fee Schedule (Attachment 1); the proposed Schedule details all recommended fees. For ease of administration, many fees have been rounded to the nearest logical unit. The inflation rate for full cost recovery, 4.5%, is derived from an average increase of regular employee salaries and benefits between FY 2013/14 and FY 2014/15. Fees related to construction price changes are increasing 2.9% in accordance with the CCI for the period of May 2013 to May 2014, as reported by Engineering News-Record. New fees or fees that are proposed to be adjusted by an amount other than inflation are discussed below.
New Fees
The following new fees have generally been proposed to address a new demand for service, to recover the cost resulting from a significant increase in demand for service that the City already provides, or to collect revenue for a service that has been provided at no cost but can be legally recovered from the user of the service. Each new fee has been carefully evaluated to ensure it covers the cost of providing each service.
General Throughout the City
Flash Drives
Any person who is requesting information from the City may purchase a 2GB ($6.50) or 4 GB ($7.50) flash drive to have the information digitally, such as public records from the Department of Public Safety.
Department of Community Development
Review BMR Alternative Compliance Plan
This fee applies to residential developers seeking Council approval of one of the alternative compliance methods available under SMC 19.67.090, such as payment of in-lieu fees or transfer of credits from another affordable housing project (off-site units). The fee covers staff time to review the applicant's proposed alternative compliance plan, prepare a Report to Council, pay for any required public noticing, take the application to hearing, prepare the affordable housing developer agreement reflecting the approved alternative, and monitor the developer's implementation of the plan after approval, until the alternative has been approved (fees paid or off-site units completed). Staff estimates that the level of effort to process this application is similar to other Planning applications that require City Council review such as a Rezoning or General Plan Amendment.
Review of Conversion Impact Report
This fee applies to mobile home park owners seeking Council approval of their conversion impact report (CIR). SMC Chapter 19.72 requires a CIR, which is subject to review and recommendation by the Housing and Human Services Commission (HHSC) and final action by the City Council. CIRs were required in the past. However, no separate fee was collected to cover staff costs. The fee would cover staff time to review the applicant's proposed plan, prepare reports to HHSC and City Council, pay for any required public noticing, and take the application to hearing. This fee would not cover staff costs to hire and manage the services of a Housing Relocation Specialist; those fees would be determined in the CIR. Based on past experience with the CIR process, staff estimates that the level of effort to process a CIR is similar to other Planning applications that require City Council review such as a Rezoning or General Plan Amendment.
Consultant Provided Special Studies or Services and 4.01: Consultant Provided Special Studies or Services: Staff Review (% of consulting fee)
These fee categories have been added to reflect the current practice used for environmental studies. The City selects, retains and manages the consultant and the fee is paid for by the applicant. The applicant must provide the contract amount. A related fee for staff review of the study (and management of the contract) is based on the same premise as the environmental studies (10% of the contract value). A minimum amount required for any study is included to reflect the minimum amount of work required to monitor and review any study, and make sure it is captured in the staff report and conditions of approval.
Affordable Housing Developer Agreement Preparation
This fee applies to residential developers with projects that include an affordable housing density bonus and/or are subject to SMC 19.67 (BMR Ownership Housing) but are not pursuing approval of an alternative compliance method under SMC 19.67.090. The fee amount accounts for staff time to review program requirements and agreement terms with applicants, review proposed unit selection and characteristics, costs for consultation with special housing counsel and/or in-house counsel as needed, and document preparation and recording.
Storm Drain Inlet Markers
This fee is for the purchase of markers that are required to be placed at all storm drain inlets for new construction and major alterations. This is a requirement on the builder's building permit and verified by the building inspectors.
Department of Public Works
Utility Modeling Analysis and Public Record Drawing Maintenance Fee
These fees apply to redevelopment proposals of any size and provide for the utility modeling analysis done by a consultant to capture the potential additional impact of the redevelopment on public sewer/water systems and capacities.
Department of Environmental Services (ESD)
Administrative Citation Fine Schedule for Sewer Use Violations and Administrative Citation Fine Schedule for Stormwater Management Violations
The purpose of these additions is to implement the City's administrative citation process under SMC 1.05.030 for violations of the City's Sewer Use and Stormwater Management chapters akin to the process used by Neighborhood Preservation. In general, an administrative citation would be issued for moderate to severe violations or recurring issues. Examples include exceeding a discharge permit limit for a contaminant such as metals, failure to conduct required treatment system monitoring, not maintaining grease traps or interceptors at a restaurant, or storage of materials too close to storm drains.
Department of Public Safety
Taxicabs 2-Year Franchise Fees, Additional Owners(s) Application Fee
Staff recommends adding this fee to be consistent with similar application fees for other types of industries. This is the only change proposed for Taxicab related fees.
Proof of Correction: Valid License Plate Display
California Vehicle Code (VC) 40225(c) provides for a civil penalty reduction ($10.00) for providing proof of correction on VC 5204 citations. Anyone cited for this violation that provides required proof of correction in accordance with that section and the time requirements of 40215 VC is eligible for this reduction. It is being added to the fee schedule as reference.
Proof of Correction: Disabled Placard
VC 40226 provides for a civil penalty fee reduction ($25.00) for providing proof of handicap placard when a citation for a handicap parking violation is issued. Anyone cited for a failure to display a handicap placard that provides required proof of correction in accordance with that section and the time requirements of 40215 VC is eligible for this reduction. It is being added to the fee schedule as reference.
Several new permit categories are added to align with the January 2014 adoption of the 2013 California Fire Code:
· Amusement buildings
· Display of fueled vehicles inside a building
· Open flames, candles in assembly occupancies
· Temporary place of assembly
· Pyrotechnic special effects
New permits categories are also added based on local amendments to the California Fire Code (SMC 16.52) adopted in January 2014:
· Battery systems
· Emergency Responder Radio Coverage Systems
· Firefighter Air Replenishment Systems
· Helicopter Lifts over Populated Areas
· Outdoor Assembly Events
· Haunted Houses, Ghost Walks
Updates throughout the Fire Prevention and Hazardous Materials permit categories and descriptions are proposed based on adoption of the 2013 California Fire Code, elimination of the local Toxic Gas Ordinance, revisions to the Hazardous Materials Storage Ordinance (Title 20 SMC) and update to US DOT hazard classes.
In 2014 DPS is initiating a third party review of all Fire Prevention & Hazardous Materials permit and inspection fees with the overall intent that fees reflect no more than the actual cost of providing services. A consultant will be selected and work in the fall of 2014 to review the operating costs associated with each fee and make recommended adjustments or updates as appropriate for implementation either mid-year or with the FY 2015/16 fees.
Non-Standard Fee and Charge Adjustments
The following fees are adjusted by an amount different than labor-based inflation:
General Throughout the City
New copies of the City Charter booklet were ordered at a lower cost of approximately $7 each, resulting in a reduction from $15 for this booklet.
Development Impact Fees
The City charges development impact fees on new developments to mitigate the costs of infrastructure or facilities necessitated by that development. Since these fees are not labor-based, they are adjusted based on different factors, as discussed below:
Park Dedication In-Lieu Fee (Department of Community Development)
Staff is awaiting an appraisal from an outside consultant performing a land valuation study that will be the basis to update the Park Dedication Fee. For the Recommended FY 2014/15 Fee Schedule, the Park Dedication Fee is listed at the existing fee of $69 per square foot. Staff will return to the City Council at a later date with the results and proposed update to the fee.
Sense of Place (Department of Community Development)
This fee is increasing 2.9% in accordance with the Construction Cost Index (CCI) for the period of May 2013 to May 2014, as reported by Engineering News-Record.
Housing Mitigation Fees (Department of Community Development)
At the June 10, 2008 Council meeting, City Council directed staff to use the Consumer Price Index (CPI) to index this fee in future years (RTC 08-190). The CPI increase for the period of April 2013 to April 2014 is 2.6% for the San Francisco Area, as reported by the United States Department of Labor, Bureau of Labor Statistics. The Housing Mitigation Fee for FY 2014/15 has been adjusted to reflect this inflationary increase.
Transportation Impact Fee (Department of Public Works)
These fees are increasing 2.9% in accordance with the Construction Cost Index (CCI) for the period of May 2013 to May 2014, as reported by Engineering News-Record.
Department of Community Development
Art Permit Reviewed by Arts Commission
In accordance with RTC 13-140 <http://sunnyvale.ca.gov/Portals/0/Sunnyvale/CouncilReports/2013/13-140.pdf>, for the Recommended FY 2014/15 Fee Schedule, staff increased this fee from 89% cost recovery in FY 2013/14, to full cost recovery (including labor inflation) in FY 2014/15. Each project continues to require 48 hours of staff project review time, requiring a fee of $3,430 for full cost recovery.
CEQA: Staff Review of EIR or TIA Preparation
This fee is to recover costs for staff time to perform this work. In prior years, the fee was based on 10% of the cost paid by the applicant to a consultant for preparation of either of these documents. A minimum requirement of $1,407 has been proposed, modifying the existing fee to account for the minimum amount of staff time needed to evaluate each study by charging either the minimum or 10%, whichever is higher.
Department of Environmental Services
The majority of the fees in this section are increasing by 2.9%, in accordance with the Construction Cost Index (CCI) for the period of May 2013 to May 2014, as reported by Engineering News-Record because the fees are related more to construction costs than straight labor costs. Exceptions to the 2.9% increase include Section 9.01C, Construction Credits, Section 9.02D, Water Meters, Section 9.02E, Water Main Tapping Fee, and Section 9.05, Groundwater to Sewer Discharge. Each of these sections are increasing to reflect the actual cost of labor, including overhead, support services, and materials needed to complete the given task or provide the required service.
9.02 D: Water Meters
Staff is recommending a larger than usual increase for the installation of water meters, which are charged to developers when putting new connections into service, because the current fees do not fully capture all the labor hours. The proposed fees, ranging from an increase of approximately 22% (2" Meters) to 30% (3/4" meter), now accurately reflect all labor hours.
9.02 E: Water Main Tapping Fee
A detailed review found that the methodology in calculating this fee did not capture all labor and materials costs. Tapping costs are increasing 22.8% and 25.5% over the previous year to reflect full cost recovery, which includes all labor, tapping sleeves, valves, fittings, and other materials.
9:07: Delinquency Processing Fees and Turning On And Restoring Water Service Fees
These fees are proposed to be held flat for FY 2014/15 to continue to align with the cost of service.
Department of Library and Community Services
Library fees are recommended to be held flat for FY 2014/15. This keeps them in sync with the fees and fines charged by the Silicon Valley Library System.
The only other fees from the Library and Community Services Department that are included in the Fee Schedule are the Refundable Damage Deposits and Application Fees for Community Special Events. These fees are proposed to be increased by 3.5-4% to reflect labor and material cost increases.
Department of Public Safety
As part of the budget preparation process, a detailed analysis of the majority of Public Safety fees was performed to ensure that they reflect both the direct and indirect costs of providing the service. This analysis included review of the time and materials required to provide the service. In the majority of cases, fees are proposed to be held flat to FY 2013/14 amounts. Proposed changes from FY 2013/14 are primarily due to a re-alignment of personnel that resulted in different personnel providing certain services.
Other fees that are not legally limited but left unchanged or decreased, or the recommended increase warrants discussion in this report, are as follows:
No Increase
Taxicab Franchise Fees are staying flat for FY 2014/15. This fee is a combination of a franchise fee, which is not necessarily cost related, and a series of annual fees which are cost related. Staff will evaluate the fee structure over next year to adjust for changing costs, and set the fees to meet intended policy goals with regards to the regulation of taxicabs in the City.
Alarm Permit fees are being held flat as they are sufficient to cover their costs. The following fees are based on state and local law and are compared with neighboring cities during the fee update process. Since there have been no new violations, penalties, or assessments added to state or local law, and current fines remain consistent with surrounding cities, these fees are recommended to be held flat in FY 2014/15.
· Civil Penalties for Parking Violations
· Administrative Citations
False Alarm Fees have also been held flat. The fees are not based on the cost to provide service but are instead set to discourage false alarms. Staff believes the current fee structure adequately meets the intended objective.
Decrease
The following fees are recommended to be decreased primarily to reflect lower cost personnel providing the service:
· Secondhand Dealer/Pawnbroker Permit, Additional Owner(s) (each) - Decrease from $115 to $109
· Firearms Sales Permit (Renewal) - Decrease from $153 to $140
· Vehicle Release Fee, Post Storage Hearing Fee - Decrease from $196 to $148
· Adult Establishment License/Massage Establishment License (Not Certified with CAMTC), Additional Owner - Decrease from $199 to $109
· Animal Control Services Fees and Charges, Other Fees, Field Service Charge, per trip - Decrease from $110 to $97
· Animal Control Services Fees and Charges, Other Fees, Animal Establishment Permit (Renewal) - Decrease from $42 to $41
Notable Increases
As noted previously, a detailed analysis of Public Safety fees was performed to ensure they reflect both the direct and indirect costs of providing the service. A significant component of that review is the analysis of the staffing that performs the service and the amount of time that it takes. For the fees listed below, the analysis indicated that the time required to provide the service needed to be increased, additional staff were involved, and/or the service was being provided by staff at higher pay grades. As a result of this analysis, each of the fees below is proposed to be increased by an amount more than just labor-based inflation.
· Vehicle Mechanical or Registration Violation Citation - Increase from $42 to $49
· Secondhand Dealer/Pawnbroker Permit, One Owner - Increase from $338 to $468
· Secondhand Dealer/Pawnbroker Permit, Renewal - Increase from $228 to $403
· Peddler/Solicitor Permit - Increase from $145 to $205
· Adult Establishment License, Application - Increase from $4,292 to $4,536
· Adult Establishment License, Annual Renewal - Increase from $3,997 to $4,449
· Massage Establishment License (Not Certified with CAMTC), Application - Increase from $941 to $1,114
· Massage Establishment License (Not Certified with CAMTC), Annual Renewal - Increase from $876 to $1,028
· Animal Control Services Fees and Charges, Other Fees, Vicious Animal Permit (Renewal) - Increase from $42 to $95
Department of Public Works
Municipal Golf Course Green Fees
Golf fees are market based and staff has completed the annual Golf Market Survey (Attachment 2), which provides an overview of basic weekday and weekend fees and a comparison with the Sunnyvale fees for each course. Based on the results of the survey and current market conditions, fees for FY 2014/15 are recommended to increase for the majority (between 2.2% and 11.8%), with some fees staying flat.
Fees Being Restructured/Replaced
The City currently charges fees for the services below, but a restructuring has occurred to better align with how services are being delivered or to comply with local, state, or federal laws.
Department of Public Safety
7.01 A: There will no longer be a flat fee for address searches referenced on the fee schedule. Now, an address search either falls under the electronic records request section of the California Public Records Act (section 6253.9(b) GC) or it falls under the records request section (6253(b) GC). Neither section provides for a flat fee. These replacements are outlined below:
7.01 C: Informal Traffic Discovery
DPS is responsible for responding to discovery requests in traffic cases. As such, DPS is obligated to provide defendants with the evidence related to their cases. The courts allow the prosecuting agency to charge reasonable fees for copies of evidence . The proposed fees are the same as the fees charged by the Office of the District Attorney in other criminal cases. (California Penal Code, Section 1054.1)
7.01 D: Public Records Requests
For public record requests, GC 6253(b) allows staff to charge the "direct cost of duplication" of the record. For electronic records, GC 6253.9(b) provides that staff can also charge for costs associated with any special effort put into data compilation and programming. (California Government Code Section 6253(b); 6253.9(b))
7.01 E: Public Records Requests - Electronic Records
For electronic documents where production of the record requires special handling such as programming and computer services necessary to produce a copy of the record, actual costs may be charged (California Government Code, Section 6253.9 (b)). This method is utilized when the request would require data compilation, extraction or programming to produce the record. Staff is proposing this to be listed separately in the new fee schedule as such requests are becoming more frequent.
7.01 F: Civil Subpoena Fees - Document Production
For civil subpoenas, California Evidence Code, Section 1563 allows the responding party to charge "reasonable costs" incurred in responding to the subpoena. EC 1563 further defines "reasonable costs" as $.10 per page for copies, clerical costs of up to $24 per hour for locating and making records available, and costs to retrieve documents from offsite storage. The Evidence Code does not specify a cost for copying tapes, DVDs, CDs, etc., so staff is proposing reasonable fees that will reflect the cost of production. Unlike the California Public Records Act, the Evidence Code does allow compensation for all staff time associated with responding to the request. For this reason, the $24 per hour administrative fee is included, as allowed pursuant to section 1563.
7.03 F: Firearms Seizure Fee (per incident - 6 or more firearms)
Staff recommends deletion of this fee from the Fee Schedule as the fee amount is no longer tiered depending on the number of firearms, but rather, is proposed to charge the actual cost, no matter how many firearms.
7.03 G: Officer Contract Overtime (per hour)
Staff recommends a tiered approach to distinguish between one-time administrative costs and ongoing costs that continue per hour. The proposed new structure is a charge of $228 for the first hour and $144 for each subsequent hour.
7.03 G: Officer Contract Overtime (Schools or Non-Profits) (per hour)
Staff recommends discounting this fee by waiving one-time administrative costs for schools and non-profits, charging only for the ongoing personnel costs that continue per hour. The proposed new structure results in a fee decrease from $161 to $144.
7.09: CalEPA Electronic Data Fee
Staff recommends deletion of this fee from the Fee Schedule as it is being replaced by the Technology Fee ($27 annually for each consolidated permit). The New Technology Fee is proposed to recover annual costs associated with vendor contract for support and maintenance of cloud-based permit and inspection database and local portal and replacement of equipment. Mandated electronic reporting of hazardous materials information by businesses to the City and by the City to CalEPA became effective in January 2013. Grant funding has covered some initial costs but will not continue after July 2014. This fee is intended to fully fund the costs associated with the vendor contract for Digital Health Department (DHD) electronic reporting, permitting and inspection database, plus administrative and IT support and equipment and field tablet maintenance, support, and replacement. Vendor costs and current number of active permits (1,258) are known. The additional costs and ongoing permit numbers are estimated.
7.10 D: Animal Control Services Fees and Charges, Re-inspection Fee
Staff recommends a tiered approach to distinguish between one-time administrative costs and ongoing costs that continue per hour. The new structure proposed is a charge of $38 for the first half hour and $76 for each subsequent hour. The previous fee was listed as "actual cost".
Department of Public Works
Subdivision Map/Legal Plan Review Fee - Parcel Map Plan Check Fee (per Map), Final Map Plan Check Fee (per Map)
These fees are being replaced by Subdivision Map/Legal Plan Review Fee - Parcel Map Plan Check Fee (per Map), Tract/Final Map Plan Check Fee (per Map), Outside Surveyor Fee for all Maps to be more specific about these plan review fee components and have structure that better aligns for full cost recovery. The changes are based on a detailed 2009 cost of service study by consultants on fees related to development.
Public Improvement Engineering Plan Check and Inspection Fees - Public Improvement Construction Costs from $50,001 to $250,000
This fee has been replaced in order to simplify and clarify the existing fees. The current range has been expanded to $50,001 to $1,000,000 and combines previous brackets that went from $50,000 to $250,000 and $250,001 to $1,000,000. The fee has changed from $18,706 plus 4% of cost to $17,909 plus 4% of cost.
Deletions
Office of the City Manager
Provision of Notary Public Services - Protest of Non-Payment, Notice of Protest, and Recording a Protest
Staff recommends deleting this fee as these services are not provided by this office.
Department of Finance
Business Licensing processing fee (Renewal - 2-year)
Staff recommends deletion of this fee from the Fee Schedule. Recent court decisions determined that agencies could not charge a processing fee on business licenses.
Department of Library and Community Services
Torn, Damaged or Missing Pages (Per Page) and Replacement Cost for Lost or Damaged Book Cover, Media Case or Pamphlet Folder
Staff recommends deletion of these two fees from the Fee Schedule because the revenues are minimal compared to the staff time taken to assess the condition of the item, manually add a fee to the patron's account, and follow up with the patron regarding the fees. Staff surveyed neighboring libraries and found that they had eliminated these small fees.
Department of Public Works
Street Trees - Parkway Concrete Removal, Street Tree Root Removal, Root Barrier Installation
Staff recommends removal of these fees as these services have not been used in the last few years and the City generally does not provide these services any longer. Those that require these services are referred to a private certified arborist and company.
FISCAL IMPACT
The impact of proposed adjustments to these fees has been incorporated in the recommended FY 2014/15 Budget and Resource Allocation Plan. Attachment 1 presents the Recommended FY 2014/15 Fee Schedule reflecting proposed fees and charges.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board outside City Hall, at the Sunnyvale Senior Center, Community Center and Department of Public Safety; and by making the agenda and report available at the Sunnyvale Public Library, the Office of the City Clerk and on the City's website.
Notice of the public hearing on the proposed fees and charges was published in the Sunnyvale Sun on May 23rd and May 30th. Notice was sent to the Building Industry Association and the Tri-County Division of the California Apartment Association, which requested notice pursuant to Government Code. Boards and commissions wishing to make comments, suggestions, or recommendations may testify at tonight's public hearing.
STAFF RECOMMENDATION
Recommendation
Tonight's only action is to conduct the public hearing to meet the requirements of the City Charter and the California Government Code. Council should provide direction to staff on any fee requiring further review prior to the budget adoption on June 24, 2014.
Staff
Prepared by: Tim Kirby, Assistant Director of Finance
Reviewed by: Grace K. Leung, Director, Finance
Approved by: Robert Walker, Interim City Manager
Attachments
ATTACHMENTS
1. Recommended FY 2014/15 Fee Schedule
2. Golf Market Survey - January 2014