Dozens of development fees charged by South Pasadena’s Planning Department will rise dramatically July 1 under a resolution approved by the City Council May 1. Fees for various types of conditional use permits and design reviews, for example, will rise between 106 percent and 552 percent, while the cost for a “certificate of appropriateness” from the Cultural Heritage Commission for a 6-unit, multi-family structure will skyrocket a whopping 804 percent to $9,000.
Sam Hernandez, owner of Paradise General Contractors and chair of the South Pasadena Chamber of Commerce, was unaware of the increases. But he said they represent “a big hit to developers” such as those now acquiring properties in the former 710 extension corridor. Hopefully, he said, the increases “can be justified and we are not just shooting ourselves in the foot and turning developers” over to cities like Los Angeles or Alhambra.
Jeff Burke, a partner at BurkeTriolo Studio and former member of the city’s Finance Commission, said he too was unaware of the magnitude of the increases but assumes they were calculated in good faith. The fees are not “profit centers,” he noted, and must recover their actual costs. The increases also constitute a way the city can meet its projected budget shortfall without the public vote that would be required for a tax or bond.
Hundreds of non-development fee increases charged by the city’s police, fire, finance, clerk, recreation and other departments are also poised to increase July 1. Those fees will first be reviewed by a hastily appointed ad hoc committee which hopes to complete its work so the fees can also be implemented by July 1–the start of the city’s new fiscal year.
Under state law, development fees, unlike the others, require a 60-day waiting period. The Council had originally hoped to approve all the fees May 1, but so many questions arose, councilmembers did not have time to review them.
Ellen Wood, chair of the city’s Finance Commission, told the Council if the fee schedule had been submitted to them first, the commission could have scrubbed the schedule so that when it got to the Council, it would have been “cleaner.” Burke backed that notion. As it is, the commission has already missed its chance to review the development fee increases.
The changes are the result of a major cost-of-service study performed by Mountain View, CA-based Matrix Consulting Group. Two years ago, the city adopted a 10.6 percent inflation adjustment to the fees, but Courtney Ramos, a Matrix vice president, told the Council that South Pasadena hasn’t completed a full-on cost-of-service study since 2008, “a little on the high end” compared to other cities which do them more frequently, enabling more incremental increases.
The $34,500 Matrix study showed South Pasadena’s current fees recover about 59 percent of what it costs to provide the services. That money, in turn, accounts for about 9 percent of the city’s nearly $30 million general fund, city spokesman John Pope told the South Pasadenan News. The new schedule for development and other fees will push total cost recovery to about 84 percent while bringing in another roughly $300,000 to help ease the budget shortfall.
The study concluded fees charged by South Pasadena’s building, city clerk, finance, police and recreation departments recover considerably more of their costs than as compared to nearby cities, while the planning, fire and public works departments fees recover somewhat less. One notable disparity was building permits, the fees for which recover 147 percent of their costs, compared to 80 percent to 100 percent in other cities.
But while Matrix’s contract with the city specifically included a component on “jurisdictional comparisons,” the city’s Finance Department disputed the 147 percent figure, saying that while revenue for building permits is typically collected in one fiscal year, it is “meant to account for services spanning multiple years.” Most other fees are not like that, Pope told the South Pasadenan.
The Finance Department also explained the dramatic increases in development fees, noting current fees recover only 21 percent of their cost. City staff asked the Council to push that up to 43 percent. Staff also recommended pushing non-rental community service fees, which currently recover 62 percent of their costs, to 68 percent. It said the city now subsidizes large events such as Snow Day to the tune of $100 per person, and that further adjustments should be considered by the ad hoc committee as it is unclear how many Snow Day participants are from out-of-town.
Pope noted that while the city can’t collect more than 100 percent of the cost of a service, it does have the discretion to set them lower for policy purposes. The fees for Camp Med, for example, are being kept under market to stay competitive with other cities’ youth programs.
Other fees to be examined by the ad hoc committee include booth rentals, facility fees at city parks and the War Memorial, false fire alarm charges, motion picture photography charges and many others.
District 1 Councilman Robert Joe asked about the proposed increase for hot meals served to seniors over 55 and disabled persons. Staff recommended upping that fee from $2.25 to $2.75 for service at the senior center and from $2.50 to $3.00 for home-delivered meals.
Sheila Pautsch, director of community services, said the actual cost the contractor charges for those meals is $4.75; the city fee covers 45 percent of that while federal grant money pays 19 percent, leaving the city to subsidize the remaining 36 percent. She said the cost, which hasn’t increased in at least 10 years, is now set to rise to $5.19. Staff wants to adjust the allocation to 41 percent, 21 percent and 38 percent respectively, which will have the net effect of reducing the subsidy by just under $2,000.
“We’re trying to take some of the burden off the city,” Pautsch told the Council.