Title
Staff Report Regarding Discussion of Modifying Existing Planning Appeal Fees
Staffreport
SUMMARY AND RECOMMENDATIONS
Appeal fees for planning cases are a direct cost, deposit-based fee that reimburses the City for hourly staff/administrative processing costs. The deposit amount is set at the average cost of processing an appeal. Staff recommends the Rules Committee review the existing Planning appeal fees and their justifications and provide guidance on staff’s recommended modifications to them for consideration in the FY18-19 City Master Fee Schedule.
BACKGROUND
In consideration of public concerns expressed during the recent Parrott Street Apartments appeal on March 19, 2018 (APL18-001), the City Council directed the Rules Committee to review the cost of filing an appeal. Appeal fees are a direct cost where the appellant pays a deposit from which the City deducts the hourly cost of processing. Following the outcome of the decision, the appellant either receives a refund of the remaining balance or a bill if an outstanding amount is still required. The Planning Division typically processes three or four appeals each year. Most appeals are filed by applicants seeking to modify a condition of approval for a previously approved project, neighbors who object to an approved project, or persons seeking to challenge a provision or interpretation of the Zoning Code.
Appeal fees are identified within the City’s Master Fee Schedule, which is annually reviewed and approved by the City Council in the spring as part of the budget process. Adjustments to the fee schedule are also possible at other times. The current fee schedule requires a $5,300 deposit to file an appeal, including a non-refundable 6% technology fee applied to all applications. Appeals heard by the City Council pay an additional non-refundable $534 filing fee to the City Clerk.
The methodology and software currently used by Planning staff to track their time allows applicants and appellants to obtain up-to-date and accurate information regarding the status of their deposit balance as well as task summaries to account for each hour spent processing. The current deposit-based method recoups staffing costs plus overhead, but costs related to internal legal counsel from the City Attorney or the attendance of independent legal counsel during an appeal to the City Council are not recovered.
In 2016, ClearSource Financial Consulting conducted a cost of service analysis and fee study for the Community Development Department that examined the time and staffing costs involved with processing different types of applications. The study’s goal was to simplify and facilitate an accurate application of fees. The study recommended a number of changes to the Department’s fees, which were reduced or increased accordingly. The appeal deposit was recommended to be increased from $2,000 to $5,000 in order to more accurately reflect the average cost of processing. The study’s recommendation was influenced by a number of prior appeals that required substantial staff time to process and had exceeded their deposited amount. The City Council adopted this updated appeal fee in the FY 17-18 Master Fee Schedule.
Analysis
Current City policy is to attempt cost recovery for discretionary planning applications (those requiring a public hearing), including appeals. Establishing a reasonable and proportionate appeal fee is challenging since the cost of processing appeals can vary widely. A number of prior appeals in recent years, such as a contested solar wind turbine proposed near Heron Bay, a Site Plan Review for Greenhouse Marketplace and an interpretation on electric fences, required a significant amount of staff time to process and had inadequately recovered costs, prompting an increase in the recommended deposit amount following the outcome of the prior fee study.
Deducting an hourly rate from a set deposit has shown to be an equitable method for processing an appeal. The concern from the public and the City Council understandably is that a higher deposit amount can be prohibitively expensive for a concerned resident with limited financial resources to challenge a decision. The benefits of averaging the appeal deposit using the current method is that it reduces or eliminates the balance due after a Council decision is made, since a losing appellant may have little incentive to pay an outstanding balance, and a higher appeal fee generally discourages frivolous requests.
Staff recommends the Rules Committee reduce the deposit fee established by the prior fee study by half, to $2,500. This amount is more closely aligned with the amount established prior to the fee study (see attached table “City Appeal Fees by Fiscal Year”). Staff does not recommend eliminating the established direct-cost deposit method for a fixed fee. The recommendation of the Rules Committee will be forwarded for City Council consideration with the upcoming annual Master Fee Schedule update.
Previous Actions
The current fee schedule was presented to the City Council on March 6, 2017 and approved on May 1, 2017 under Resolution 2017-060.
Legal Analysis
California Government Code enables cities to defray the cost of processing applications so long as the fees are reasonable and proportionate to the costs incurred.
Fiscal Impacts
Modifying or reducing the deposit for an appeal would not have a discernable fiscal impact. Establishing a fixed fee could have a fiscal impact if the fee does not cover the cost of services provided.
ATTACHMENTS
• City Appeal Fees by Fiscal Year
• Current Appeal Fees by City in Alameda County
PREPARED BY:
Andrew J. Mogensen, AICP
Planning Manager
Community Development Department