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Home My WebLink AboutSS2 - Master Fee Schedule Update - Correspondence"RECEIVED AFTER AGENDA PRINTED " 55 2 October 4, 2013 The Honorable Keith Curry and City Council City of Newport Beach 100 Civic Center Newport Beach, CA 92660 Re: CONCERNS REGARDING AGENDA #SS.2 UPDATES TO THE MASTER FEE SCHEDULE AS IT RELATES TO FIRE FEES Dear Mayor Curry, On behalf of our membership, we would like to thank Newport Beach Fire staff for an opportunity to review the Life Safety Fee proposal. After careful review of fee proposal, we express concern over the proposed increase of Newport Beach Fire fees. Our primary recommendation is to maintain development- related fees at their current fee level. The Building Industry Association of Southern California, Orange County Chapter (BIA /OC) is a non - profit trade association of nearly 1,000 companies employing over 100,000 people affiliated with the home building industry. The Orange County Chapter represents the largest member base within BIA Southern California. Our mission is to champion housing as the foundation of vibrant and sustainable communities. BIA /OC remains committed to fees adjustments that are consistent with our Fair Share Principles (Exhibit A). We agree in part with the need for new categories of fees to keep up with new building trends. In contrast, we disagree with methodology used to calculate cost and fees. Maintaining fire fees at a reasonable level is vital to promoting a healthy housing and business environment. We recommend re- evaluating the proposed fee increase based on the following seven points: 1. Newport Beach Fire Department currently has the 2nd highest fees in the Court — The current hourly rate fire fees are $160 per hour, which are the second highest fees next to Orange County Fire Authority. A more accurate comparison to municipal fire agencies reveals that the proposed fee increases would be 37% higher than Huntington Beach and 53 %n higher than Anaheim on an hourly basis. They are dramatically more when comparing the total cost to the customer. 2. Proposed Fee Increase Exceeds Rate of Inflation — Many public agencies evaluate Consumer Price Index (CPI) data as a primary factor for fee adjustments. The proposed rate increase of 10.6 %, is almost double the rate of inflation over the last three years. The Los Angeles -Santa Ana Metropolitan region's CPI only grew by 5.6 %. Orange County Chapter Building Industry Association of 8oulhem California 17744 Sky Park Circle Suite 170 Irvine, California 92614 949.553.9500 fax 949.769.8943 www.biaoc.com PRESIDENT DAVE BULLOCH STANDARD PACIFIC HOMES VICE PRESIDENT DONNA KELLY LENNAR TREASURER JOAN MARCUS - COLVIN THE NEW HOME COMPANY SECRETARY BRIAN GEIS BROOKFIELD HOMES IMMEDIATE PAST PRESIDENT MICHAEL McCANN ALLIANCE RESIDENTIAL TRADE CONTRACTOR COUNCIL V.P. TOM RHODES TWR ENTERPRISES ASSOCIATE VICE PRESIDENT MARK HIMMELSTEIN NEWMEYER & MILLION, LLP MEMBER -AT -LARGE MIKE WINTER SARES -REGIS GROUP MEMBER -AT -LARGE JIM YATES RANCHO MISSION VIEJO CHIEF EXECUTIVE OFFICER MICHAEL BALSAMO �Nl.irn 4rl (. �tltnn:ana4s�> 3. Over 54% of Service Does Not Direct Serve the Customer — A breakdown of hourly rate demonstrates that a majority (54 %) of service does not directly impact the customer. Salary & Benefits Internal Dept. Admin Citywide Support Total: Dollar $81.41 $46.06 $50.19 177.66 Percent 46% 26% 28% Direct vs. Indirect 46% 54% 4. 100% Cost of Recovery is Unorthodox Antonia Orange Countv Fire Deoartrnents — Among all municipal fire agencies in Orange County, the cost of recovery is between 30% and 36 %. One hundred percent cost of recovery of fire prevention fees would break with an established precedent. Life Safety costs are currently met through a healthy balance between user fees and general funds. Given the good stewardship of the City's finances, maintaining the fees at current levels will continue to foster a stable public safety and business environment. 5. Fact: Fee Increases Will Result in Longer Time and Higher Cost to the Customer — Table A is an example of the extreme costs of a specific service. The customer's total cost is compounded by higher rates and longer times. Newport Beach Fire provided the following analysis of fees. Table A: Comparison of Cost and Time for Plan 75 Head Sprinkler System Service Newport Beach Anaheim Point Variance % Variance Plan Check Rate $342 Plan Check Time 125 min le Inspection Rate $297 0 Inspection Time 1 115 min NMMMQG7 5kmin 11% 6. Ouestionable Costs Associated with Fire Prevention — There is potential redundancy of costs among fire administration, training, insurance, and "all other materials and support" specified in the Citywide Allocation Plan and Life Safety Planning & Development Indirect Cost Rate Proposal (Exhibit B). For example, fire training is identified and billed twice among different cost segments resulting in higher indirect costs for the department and fees to customers. Various indirect administrative costs are broadly labeled, not well documented, and potentially overlap. If the City were to adopt a 100% cost of recovery, we ask for due diligence pursuant to State law that fees shall not exceed the estimated reasonable cost of providing the service.' I Government Code § 66014 et seq. -2- BIA Remains Open to Alternative Cost of Recovery Structures — Our primary recommendation is to maintain fees at their current levels. Alternatively, City Council may explore a cost of recovery that reaches a level of compromise between the City staff and BIA/OC recommendations. Based on the merits of our concerns, we encourage you to maintain Newport Beach Fire Fees at their current levels. We would welcome the opportunity to further study this matter with the City. As always, we remain a resource to the City on important issues that are related to the well -being of our local communities. Thank you for time and thoughtful consideration Respectfully, zg- Michael Balsamo Chief Executive Officer Cc: City Council Mr. David Kiff; City Manager Mr. Kevin Kitch, Assistant Fire Chief Enclosures (2) -3- Exhibit A BUILDING INDUSTRY ASSOCIATION OF SOUTHERN CALIFORNIA/ ORANGE COUNTY CHAPTER LAND DEVELOPMENT FEE SURVEY THE FAIR SHARE PRINCIPLES It is recommended that Jurisdictions: Notice. Provided sixty (60) days notice if effective date of any fee increases. Public Hearing. Publish notice and hold hearing prior to consideration of fee increase along with mailed notice to any petitioning party pursuant to Section 54992 of the Government Code. Resolutions. Do not amend enabling resolutions. Work for the inclusion of all development fees in one new, comprehensive resolution. Volume Adjustment. Adopt reduced rates for subsequent plan check and inspection of identical buildings. Source Documents. Insure that the actual fee authorization document with official signature is available for distribution by development services agency or city clerk upon request. Other Agencies. Publish, and clearly display, contact list of any other known agency that may claim regulatory jurisdiction. Payment Timing. Honor deferred payment rules under Government code Section 53077.5. Nexus and Need. Provide evidence of fee nexus and identified need through generation of nexus study and a needs assessment in accordance with State Law. Establish Specific Benefit Areas. Assessment fees are within clearly defined boundaries for benefited properties and not be utilized to subsidize other tax - supported facilities or services. An adopted plan of expenditures and implementation schedule should be in place prior to adoption according to State Law. 10. Documents Kept Current. Cost -of- living increase is documented in newly published schedules. No undisclosed, intermediate calculations are required to determine one's probable liability. 11. School Fees. School fees only be implemented with a school facilities master plan, adopted budget, and specific spending plans adopted after public hearing. Indirect Cost Rate Proposal Agency: City of Newport Beach Department: Life Safety Planning & Development Fiscal Year: 201212013 DESCR P t0 OF CO I Costs e e bta _ t rest rea A). Personnel Costs 1 Salary and Wages $ 1,028,074 $ 280,770 $ 747,304 Distribution %: 100% 27% 73% 2 Temporary & Overtim6s'A's S 81,529 $ 81,529 3 Benefits $ - $ - 1,109,603 $ 81,529 $ 280,770 $ 747,304 B) Other Operating Expenses 4 Training 6,500 6,500 5 Vehicle Maint 20,414 20,414 6 Jr Firefighter camp 00 6,500 - 7 Prof Svcs 46,114 - 8 Fuel Mod 000 190,000 - 9 Insurance 34, 38 34,238 10 All other matt & supp 80,920 80,920 11 - 12 - 13 - 14 - 15 - 16 17 18 19 - 20 Capital Outlay - Subtotal: $ 384,686 $ 242,614 $ 142,072 S Total Dept Ex nditures $ 1,434,289 S 324,143 S 422,842 S 747.304 _C) Indirect Costs _ , - - 21 citywide cap 460,785 460,785 22 - 23 - 24 - 25 - Subtottal: S 460,785 $ - - - § 460,785 S - T Costs s- 9S 07 S 4. 978S$ 04 0) Internal Admin /indirect Rate: Dept Indirect Costs: $422,842 Direct Sal & Benes: $747,304 Internal Indirect Cost Rate: 56.6% E) External AdioiMndifect Rater - Indirect Costs: $460985 Direct Sal & Benes $747_304 - '_ External Indirect Cost Rote: 61.7% 7123/2013 MGT of America, Inc. 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