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HomeMy WebLinkAbout2001/03/12 Board of Appeals & Advisors Agenda Packet (2) COUNCIL AGENDA STATEMENT DRAFT Item 2- Meeting Date 03/27/01 Jlz..-IC? ( ITEM TITLE: A PUBLIC HEARING TO CONSIDER ADOPTION OF AN URGENCY ORDINANCE AND A NEW ORDINANCE AMENDING CITY ORDINANCES 1670, 2507, AND 2509; AND AMENDING CHAPTERS X (BUILDING AND HOUSING), XIV (PLANNING), AND XV (FIRE) OF THE CITY'S MASTER FEE SCHEDULE. AN URGENCY ORDINANCE NO, OF THE CITY OF CHULA VISTA, CALIFORNIA, AMENDING ORDINANCE 1670 RELATING TO SIGN PERMIT AND PLAN REVIEW FEES; AND AMENDING ORDINACES 2507 AND 2509 RELATING TO PLAN REVIEW FEES FOR BUILDING AND MECHANICAL WORK RESPECTIVELY; AND AMENDING CHAPTERS X (BUILDING AND HOUSING), XIV (PLANNING), AND XV (FIRE) OF THE CITY'S MASTER FEE SCHEDULE. AN ORDINANCE NO, OF THE CITY OF CHULA VISTA, CALIFORNIA, AMENDING ORDINANCE 1670 RELATING TO SIGN PERMIT AND PLAN REVIEW FEES; AND AMENDING ORDINANCES 2507 AND 2509 RELATING TO PLAN REVIEW FEES FOR BUILDING AND MECHANICAL WORK RESPECTIVELY; AND AMENDING CHAPTERS X (BUILDING AND HOUSING), XIV (PLANNING), AND XV (FIRE) OF THE CITY'S MASTER FEE SCHEDULE, SUBMITTED BY: Director of Planning and Building Director of Budget and Analysis REVIEWED BY: City Manager (4/5ths Vote: Yes,JL No--1 BACKGROUND: The various fees charged by the City of Chula Vista for building-related services (e,g, plan review, building and ancillary inspection, permit processing and issuance) as described in Chapters X (Building and Housing) and XIV (Planning) were last updated in 1993, Since then the City has significantly increased its staffing levels and expenditures to keep pace with the rapid growth occurring in the eastern portion of the City. These changes coupled with the Building Industry Association's (BIA) contention that the City's current building-related fees are unjustifiably high prompted city staff to conduct a comprehensive study of all building permit and related fees, The main goal of the study was to ensure that the long run stream of revenues collected from building- related fees are sufficient to fund the long run costs associated with providing these services, A secondary goal of the study was to establish fair and appropriate fees for plan review, consultation, and inspection services related to the installation of fire suppression systems, fire alarm systems, and hydrant placements, for which the City has historically provided gratis, RECOMMENDATION: That City Council adopt an urgency ordinance amending ordinances 1670, 2507, and 2509, resulting in changes to sections 15,52,020, 15.08.050, and 15,16.050 of the Municipal Code as indicated in Attachment A, and amending Chapters X (Building and Housing), XIV (Planning), and XV (Fire) of the City's Master Fee Schedule as indicated in Attachment B, effective for a period of thirty (30) days from the date of adoption; and that City Council place a measure to adopt an Page 2, Item Meeting Date 5/26/00 ordinance amending ordinances 1670, 2507, and 2509, resulting in changes to sections 15,52,020, 15,08,050, and 15,16,050 of the Municipal Code as indicated in Attachment A, and amending Chapters X (Building and Housing), XIV (Planning), and XV (Fire) of the City's Master Fee Schedule as indicated in Attachment B on its first reading, to take effect and be in full force on the sixtieth (60th) day from and after its second reading and adoption, BOARDS AND COMMISSIONS: Two presentations were made to the Chula Vista Board of Appeals and Advisors and staff answered all questions. Following the second presentation the Board voted to formally endorse the proposed changes to the City's Municipal Code and Master Fee Schedule, DISCUSSION: Developing a nexus between the costs of providing building-related services and the fees charged for these services was accomplished via the following methodology. Methodology The first step in the process was to identify the total costs (both direct and indirect) of providing building-related services, The direct costs associated with providing building-related services primarily consisted of the salaries, benefits and supplies and services related to direct service providing staff (i.e, Plans Examiners, Building Inspectors, Development Service Technicians), The indirect costs associated with providing building-related services primarily consisted of the proportional shares of the salaries, benefits, and supplies and services related to departmental management and citywide support services, Examples of indirect costs include departmental management and clerical support, information services, personnel, and payroll, Since indirect costs represent a substantial portion of overall costs, staff felt it prudent to update the City's indirect cost allocation prior to undertaking the fee study, This was particularly important because the quantity, composition, and compensation of city staff changed significantly during the prior fiscal year. Updating the City's indirect cost allocation improved the accuracy of the allocation of City and Departmental support services and their associated costs to the various building-related services, Completing the indirect cost allocation required the contributions of numerous city staff and included extensive interviews with key personnel from each department and an in depth review of all departmental budgets. The indirect cost allocation was used in conjunction with direct cost data collected during interviews with personnel from the Divisions of Building, Engineering, Planning and Fire Prevention to determine the total costs of providing plan review, building and ancillary inspections, permit processing, permit issuance, and plan maintenance services, It was determined that costs related to plan review were incurred by each of these divisions while costs related to inspections and permit processing were confined to Building and Engineering' The second step in the process was to collect data regarding types of building activities (e,g, new construction, additions, tenant improvements), permit volume for each activity, and the relative time to complete each building-related service, These data were collected from staff interviews and the Permits Plus database, Since many permit fees are based upon building valuation, it was necessary to further demarcate permit volume for several valuation ranges, This required making adjustments to the building valuations recorded by Permits Plus because the existing fees are based upon building valuations derived from tables published by Building Standards in 1993 and the proposed fees are based upon building valuations derived from tables published in the most recent edition of Building Standards' This procedure effectively eliminated the impact of changing the basis for building valuation to the most recent set of Building Standards tables and insured that any changes in permit fees resulting from this study would be strictly representative of changes in total costs and the allocation of total costs to the various building activities, Page 3, Item Meeting Date 5/26/00 Next, total costs were allocated to the various building activities based upon permit volume and the relative time required to complete each service, Since the building services provided for any given permit potentially extend a year or more beyond the time of issuance, it was decided to base èosts on the current year's budget and to base levels of service on the prior year's actual permit volume, This methodology was chosen for two reasons, First, it insures that resource levels will always be sufficient to complete services in a timely manner. Second, it allows for simple, fair, and consistent annual adjustments to the building fee schedule because overcharging or undercharging during any given year is compensated for by the following year's fee update. For example, if permit volume were to temporarily drop then the adjustment mechanism would increase fees in the subsequent year because total costs would now be spread over a smaller number of permits, The opposite effect would occur if permit volume were to increase substantially, If increases or decreases in permit volume were deemed permanent then staffing levels would be adjusted accordingly resulting in fairly constant fees over the long run. Finally, the cost data were matched with the permit volume data to arrive at fees for each type of service and activity, To facilitate the transition to the proposed fee schedule an effort was made to retain the structure of the current fee schedule as much as possible while concurrently simplifying it by eliminating redundant fees, For example, under the existing fee schedule the total permit fee charged for a typical tract home includes building plan review fees, site plan and architectural review fees, building permit fees, permit issuance fees, unit fees based upon the number of plumbing, mechanical, and electrical fixtures, plan maintenance fees, and Certificate of Occupancy fees. Under the proposed fee schedule the fee for the same permit would be comprised of a plan review fee and a permit processinglinspection fee, Maintaining the existing fee structure while simplifying the fee schedule significantly reduces the cost of redesigning the Permits Plus System to conform to the proposed fee schedule, Two types of fees are being proposed as a result of this study: flat fees and valuation- based fees, Flat fees are proposed for any services where the level of effort required did not vary significantly enough to warrant disparate fees, Valuation-based fees were only proposed when a nexus existed between a buildings valuation and service costs, Basing certain fees on building valuation helped to improve equity among fee payers because building valuation accurately reflects design complexity, materials, square footage, and other features that affect the level of staff effort required, Using flat and valuation-based fees instead of charging on an hourly full cost recovery basis helped reduce record keeping costs and resulted in lower fees overall. However, it is important to note that the use of flat and valuation-based fees may require annual review and possible annual adjustments when permit voiume or costs change significantly, For valuation-based fees, the valuation ranges were chosen to group together similar types of permits, Table 1 lists the valuation ranges being proposed and the most common types of permits in each range. Table 1: Proposed Valuation RanCles Total Valuation Most Common Permit Tvpes $1 to $2,000 Masonry Walls, Roofing, City Standard Plans $2,001 to $100,000 Additions to Single Family Residences and Tenant Improvements $100,001 to $300,000 New Single Family Tract Homes $300,001 to $500,000 New Single Family Custom Homes and New Apartments I Condominiums $500,001 to $1,000,000 New Commercial Construction $1,000,001 and up New Commercial Construction and New Apartments I Condominiums Page 4, Item Meeting Date 5/26/00 The proposed changes to the City's existing Master Fee Schedule are presented in the appendix to this report, While the City's general policy has been to charge permit fees commensurate with the full cost of the services provided, some situations warrant modifying this policy in order to maintain public safety, Staff supports a policy that would provide a financial incentive to individuals that need to replace or repair equipment and/or materials that are essential to the maintenance of safe and habitable residences. By subsidizing the cost of certain minor residential permits such as water heaters, furnace replacements, gas line repairs, and the resetting of gas and electric meters, the City will be encouraging applicants to ensure that their repair work is being done in a safe and reliable manner, which will enhance safety for not only the individual residence but also the surrounding neighborhood, Other minor residential permits, such as patio covers, air conditioning systems and room additions, are not being recommended for subsidy because they do not constitute work that must be performed to maintain the safety and habitability of a structure and are elective actions, It is also appropriate to recognize that some homeowners will cite the cost of the permit as justification for not obtaining the required permits, When this occurs it creates life safety issues for users of the structures as well as the immediate neighborhood and burdens the City's Code Enforcement Section with a duty to pursue correction of the violation, The cost associated with pursuing a code enforcement complaint exceeds the cost of the proposed subsidy for these types of minor permits, The types of permits being proposed for subsidy are only those for which homeowners have very limited control over the timing of the need for such repairs, Staff is proposing that fees for these types of permits be charged at 50% of the actual costs, The impact on the City's fiscal year 00 - 01 general fund resulting from this action is estimate at $50,000 assuming that permit volume continues at its fiscal year 99 - 00 level. Kev Findinqs 1, Since the current policy of charging separate plan review fees for the Divisions of Planning, Building, Engineering, and Fire Prevention is cumbersome, A single fee schedule for plan review should be adopted that accurately captures the total costs incurred by these four divisions. 2, Since the amount of time required to review city standard and repetitive plans was not found to increase with building valuation, A flat fee for the review of all city standard and repetitive plans should be adopted.3 , 3, To ensure resource levels will always be sufficient to complete services which have been paid for in a timely manner and to ensure that fees are maintained at an equitable level, Fees for building-related services should be adjusted annually based on the current year's budgeted costs, the prior year's permit volume, and the most recently published Building Standards valuation tables. This adiustment mechanism mav reQuire increasinQ or decreasinq fees in future vears to keep pace with temporary swinqs in development activity . 4, The separate unit fee schedules for electrical, plumbing, and mechanical permits were found to be of little benefit when used in conjunction with building permits, In addition, they were found to be a hindrance to providing quick and accurate fee estimates, Therefore, The unit fee schedules should be eliminated and the costs associated with providing these services incorporated in the building permit fee. Page 5, Item Meeting Date 5/26/00 5, To increase the likelihood that potentially dangerous residential repairs are pèrformed in a safe and reliable manner and to reduce code enforcement costs, Permits for residential repairs that generally preclude a homeowner from planning for the expense of the repair (i.e. water heater replacements) should be subsidized at 50% of the actual costs of providing these services. 6. Interviews with personnel in the Division of Fire Prevention indicated a substantial amount of Fire Prevention staff time is being committed at no charge to the review and inspection of fire· suppression and preventions systems, Therefore, Fees should be implemented to cover the costs associated with the plan review and inspection of sprinkler systems, hydrant installations, fire alarm systems, and hood suppression systems. Impact of Proposed Chanqes on Fee Pavers Adoption of the proposed changes to the Master Fee Schedule would affect numerous parties including large tract housing developers, building contractors, and individual home owners, In particular: · Permit fees for minor items such as water heater replacements and the addition of air conditioning units would increase but would still generally be lower than the average fee charged by other San Diego County jurisdictions. · The costs for permits to construct small structures such as patio covers, room additions, and masonry walls would rise slightly, · Developers of tract housing would pay somewhat higher fees for model home permits but substantially lower fees for each repetitive home in the tract. Thus, the permitting costs for a tract development under the proposed fee schedule would be much lower than the costs under the existing fee schedule, · The permit fees for custom homes and large commercial projects would generally (but not uniformly) increase slightly, The proposed fees were compared to an average of the fees charged by several other jurisdictions within San Diego County,' The proposed fees for model and custom homes would be the highest of the five jurisdictions in the comparison, However, the proposed fees for repetitive homes and tract home developments would be the lowest in the County, For most other types of permits the proposed fees are fairly consistent with those being charged by other San Diego County jurisdictions, Fiscal Impact Estimating the net impact on the City's General Fund resulting from the proposed changes to the City's Master Fee Schedule and Municipal Code is complicated by two factors, First, the amount of revenue collected via the provision of building-related services is dependent upon future permit activity, which is highly contingent upon unpredictable business cycles, Second, the structure of the proposed fee schedule for building-related services is significantly different from that of the existing fee schedule, making comparison difficult. However, comparing the total costs of providing building-related services for fiscal year 2001 (identified in the course of this study) with the plan review and permitting fees collected during fiscal year 2000 gives some indication of the potential loss in revenue, Following this methodology, the net loss to the City's General Fund is anticipated to be in excess of $1,400,000. Page 6, Item Meeting Date 5/26/00 Proposed Ordinance ChanQes Plan Review Fee for Buildinc Construction: One of the proposed changes to the Master Fee Schedule replaces the existing plan review fee for building construction, currently set at 65 percent of the building permit fee, with a plan review fee based upon building valuation, This requires a minor change to Municipal Code section 15,08,050, Plan Review Fee for Mechanical Work: One of the proposed changes to the Master Fee Schedule eliminates the existing plan review fee for mechanical work, currently set at 25 percent of the total permit fee, and instead incorporates these costs into the total permit fee, This requires a minor change to Municipal Code section 15,16,050. Sicn Permit Fees: One of the proposed changes to the Master Fee Schedule eliminates the existing sign permit and plan review fee, currently set in accordance with the fee schedule set forth in Section 303(a) and (b) of the Uniform Building Code, 1973 Edition, and instead charges a sign permit and plan review fee in accordance with Chapter X, Sections C 1 and C2 of the Master Fee Schedule, This requires a minor change to Municipal Code section 15.52,020, Urcencv It is necessary that the proposed changes to the City's Master Fee Schedule and Municipal Code become effective immediately to ensure that the costs incurred by the City in the provision of plan review, inspection, and permitting services are accurately reflected in the fees charged for those services, Since the proposed changes to the City's Master Fee Schedule and Municipal Code are anticipated to result in an overall reduction in the fees charged for the aforementioned services it is in the interest of public welfare to implement these changes immediately. The prospect of continuing to charge fees that are in excess of costs constitutes a current and immediate threat to the public health, welfare, and safety justifying the immediate imposition of these changes, AcknowledQements This study is the result of the combined effort of the following staff: Sohaib AI-Agha, Beverly Blessent, Greg Bottorff, Lou EI-Khazen, Cheryl Fruchter, Jim Geering, Jack Griffin, George Krempl, Bob Leiter, Peggy McCarberg, Bob McSeveney, Gordon Murdoch, Norm Ostapinski, Bob Powell, Brad Remp, Jim Sandoval, Steve Stingl, Ed Thomas, Ed Van Eenoo, and Karen Wooten. I The Division of Fire Prevention provides inspection services for numerous activities but the fees charged for these services were not included in this review, 2 The tables published by Building Standards are adjusted by the San Diego Area Chapter of the International Conference of Building Officials prior to use by the City of Chula Vista for establishing building valuation, 3 The City maintains standard plans for patio covers, masonry walls, carports, and decks, Projects conforming to these standards do not require formal review by plan check engineers, Repetitive plans refer to plans identical to previously approved model plans, 4 The jurisdictions represented in the fee comparison were the Cities of San Diego, EI Cajon, Carlsbad, Escondido, National City, and the County of San Diego,