PREPARED BY: LIBBY TYLER DATE OF MEETING: 06/10/2024
SUBJECT:
TITLE
CONSIDER ADOPTING RESOLUTIONS (1) IMPLEMENTING THE FY 2024-2025 BUILDING, PLANNING, AND PUBLIC WORKS USER FEE INCREASES THE CITY COUNCIL PREVIOUSLY DETERMINED SHALL TAKE EFFECT ON JULY 1, 2024 BASED ON THE BUREAU OF LABOR STATISTICS EMPLOYMENT COST INDEX, AND (2) APPLYING THE WEST CONTRA COSTA TRANSPORTATION ADVISORY COMMITTEE (WCCTAC) APPROVED INFLATIONARY FACTOR INCREASES TO WCCTAC SUBREGIONAL TRANSPORTATION MITIGATION PROGRAM (STMP) FEES EFFECTIVE JULY 1, 2024 PURSUANT TO SECTION 15.62.040 OF THE SAN PABLO MUNICIPAL CODE
CEQA: This action is not a project as defined by CEQA. CEQA Guidelines Section 15378(b)(4) states that “project” does not include the creation of government funding mechanisms or other governmental fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Workplan Compliance statement
Focus on Economic Development and Diversification is a major adopted policy goal under the FY 2023-25 City Council Priority Workplan, as adopted on May 1, 2023.
BACKGROUND
City User Fees for Building, Planning and Public Works
In 2020, the City of San Pablo performed a cost of service study for Building, Planning, and Public Works user fees. The fees were adopted on August 3, 2020, with an effective date of January 1, 2021. On May 3, 2021 by Resolution 2021-055, the City Council revised the user fees per the methodology described below and determined that the fees would be increased annually based on that methodology effective July 2, 2022 and each July 1st thereafter.
City Council Adopted Fee Methodology
Prior to adoption of the updated fee schedule in July 2020, MGT Consulting Group (MGT) prepared information regarding an annual escalation factor to account for inflation and minimize the decrease in cost recovery until the next user fee study. At that time, MGT recommended an annual escalation factor based on the April 2020 Consumer Price Index for All Urban Consumers (CPI-U) for the San Francisco Bay Area be applied annually as part of the budget process to make sure that user fees keep pace with inflation. The factor was adopted in Resolution 2021-055 for future year adjustments for Building, Planning, and Public Works fees to be effective July 1st of each fiscal year, starting in July 2021.
MGT subsequently recommended that the annual inflationary adjustment be based on the Bureau of Labor Statistics, Employment Cost Index: total compensation for State and local government workers - all workers rather than on the CPI-U for the San Francisco Bay Area. MGT concluded that the Bureau of Labor Statistics index is more appropriate than CPI because it tracks the cost of government employees, which is largely what affects the cost of City services over time. As part of Resolution 2021-055 (copy attached), the City Council approved the change in the inflationary factor methodology and determined that the new methodology should be used annually to increase Building, Planning, and Public Works user fees effective July 2, 2022 and each July 1st thereafter.
The inflationary factor for the twelve -month seasonally adjusted rate reported in March 2024 was 4.7%. This rate has been applied to increase current the Building, Planning, and Public Works user fees to the levels set forth in Exhibit A. These new user rates will take effect July 1, 2024.
West Contra Costa Regional Transportation Fee
In 2019, the West Contra Costa Transportation Advisory Committee (WCCTAC) conducted a fee study for the West County Subregional Transportation Mitigation Program (STMP) which reviewed West County existing conditions and growth projections, developed criteria for a development project list and identified development projects and determined the nexus between the projects and the maximum potential fee that could be charged. The West Contra Costa jurisdictions share a desire to assure that new development in West County pays its fair share toward regional circulation and transit improvements that are proportional to the traffic impact the new development will generate. The fees are collected at the time of issuance of building permits for applicable development projects by each local jurisdiction in West County on behalf of WCCTAC. These fees are utilized to fund projects that provide congestion relief to mitigate traffic on regional routes and through improved transit service.
The Final Fee Study for the West County STMP established the maximum potential fees that could be charged to eligible development projects. These fees were approved by each jurisdiction. Ordinance 2019-001, adopted by the City Council in 2019, amended Chapter 15.62 of the San Pablo Municipal Code to update the STMP and establish, consistent with industry standards, that the Engineering News Record Construction Cost Index for the San Francisco Bay Area shall be used annually to determine adjustments to the STMP fees to keep the fees current with inflation or deflation. Under this requirement, STMP fees are to be adjusted adjustment effective July 1 of each year based on the Engineering New Record’s SF Bay Area Construction Index for February of that year. This year, based on that methodology, the increase to STMP fees effective July 1, 2024 will be 0.7%. The WCCTAC board report for the April 26, 2024 notes the significantly difference between this increase versus last year’s which was relatively high at 7.1%.
The existing and adjusted fee rates provided by WCCTAC are shown below. Under Chapter 15.62, the adjusted fees will be collected for any applicable project issued a building permit after July 1, 2024. According to WCCTAC, TAC members are responsible for incorporating the adjusted fees into their municipal fee schedule, as appropriate, with an effective date of July 1, 2024 or as close to that date as TAC member legal counsel permits.
FISCAL IMPACT
The adopted budget amount for Building, Planning, and Public Works fees (Development Services fund 212) in the FY 2023-2024 budget is $1.356 million. These are user fees that are charged to building, planning, and public works applicants seeking City permits and approvals.
The City Council adopted the Fee Methodology and annual adjustments in August 2020 in Resolution 2020-103. The proposed City fees provide full cost recovery for all applicable fee-related activity or service with the exception of a limited number of fees in the Planning Fee Schedule. The adopted fees were effective January 1, 2021 and the first fees reflecting the escalation factor were adopted by Resolution 2021-055 in May 2021 and were effective July 1, 2021. Since completion of the fee study and adoption of the revised fees, higher revenues have accrued from building, planning, and public works fees, and the General Fund subsidy has been reduced. In addition, the annual adjustment based on the Bureau of Labor Statistics, Employment Cost Index implemented as part of the annual Budget Process in 2021 more accurately reflects the change in cost of fee-related activities or services without having to perform more frequent formal fee studies, and is an industry standard.
The adoption of the STMP fees does not cause a fiscal impact to the City of San Pablo budget.
Attachments:
Att A - Draft Resolution adopting Building, Planning and Public Works fees for FY 2024/25
Exhibit A proposed fees attached
Att B - Draft Resolution applying the West Contra Costa Transportation Advisory Committee (WCCTAC) Approved Inflationary Factor to the West County Subregional Transportation Mitigation Fees effective July 1, 2024
Att C - Resolution 2021-055, adopted May 3, 2021