To: HONORABLE MAYOR AND From: Stephen M. Haase

CITY COUNCIL

Council District: City-Wide

SNI: N/A

SUBJECT: APPROVAL OF ORDINANCES AMENDING THE MUNICIPAL CODE TO ALLOW FOR PROPOSED CHANGES TO THE RESOLUTION OF FEES AND CHARGES RELATED TO BUILDING AND PLANNING FEES

REASON FOR ADDENDUM

Earliest Council consideration of this action is requested to allow sufficient time for a second reading of the proposed ordinance changes on May 27, 2003 for changes related to Building fees and June 3, 2003 for changes relating to Planning fees. This will ensure 30 days notice before the implementation of proposed changes in the fee resolution.

RECOMMENDATION

It is recommended that the City Council take the following actions:

1. APPROVE AN ORDINANCE OF THE CITY OF SAN JOSE AMENDING SECTION 4.46.050 OF CHAPTER 4.46 AND SECTION 4.47.040 OF CHAPTER 4.47 OF TITLE 4 AND REPEALING SECTION 24.02.470 OF CHAPTER 24.02 OF TITLE 24 OF THE SAN JOSE MUNICIPAL CODE TO MAKE NONSUBSTANTIVE REVISIONS TO THE PROVISIONS REGARDING THE RATE OF TAX

2. ADOPT A RESOLUTION INITIATING AN AMENDMENT TO TITLE 20 OF THE SAN JOSE MUNICIPAL CODE TO ADD A NEW SECTION 20.10.100 TO AUTHORIZE THE ESTABLISHMENT OF COST RECOVERY FEES FOR PLANNING SERVICES AND PROCESSES, SETTING A PUBLIC HEARING ON JUNE 3, 2003 AND REFERING SAID ORDINANCE TO THE PLANNING COMMISSION.

3. APPROVE AN ORDINANCE OF THE CITY OF SAN JOSÉ AMENDING CHAPTER 20.10 OF TITLE 20 OF THE SAN JOSE MUNICIPAL CODE BY ADDING A NEW SECTION 20.10.100 AUTHORIZING THE ESTABLISHMENT OF COST RECOVERY FEES FOR PLANNING SERVICES AND PROCESSES

BACKGROUND

In the recently published Fees and Charges Report, the Department of Planning, Building and Code Enforcement proposed implementation of a new fee structure for residential construction projects that is based on anticipated staff time and an hourly rate instead of on valuation. Staff research has shown that the new methodology provides a closer nexus between fees and the cost of service. This change is consistent with recommendation #2 from the City Auditor’s report 00-04: “Implement a fee schedule that results in the assessment of fees that are commensurate with the cost of providing service.”

Additionally, the Planning Division has proposed new cost recovery fees for its services and administering its processes that require amendments to Title 20 to authorize these new fees. In accordance with the procedures set forth in Title 20, the City Council shall refer these amendments to the Planning Commission for review and recommendation.

ANALYSIS

The proposed ordinance changes are intended to facilitate the following two ends:

1. Allow the City Council the option of approving the new building permit fee structure proposed for residential construction without changing the methodology used for calculating construction related taxes; and

2. Provide general language in Title 20 authorizing the charging of cost recovery fees for various planning services and processes.

Currently residential building permit fees are based upon a set of criteria for valuation which is set forth in SJMC Section 24.02.470. The valuation calculated under that section is also used to calculate the Construction Excise Tax under section 4.46.050 and the Commercial-Residential-Mobilehome Park Building Tax under section 4.47.040. Because it is intended to keep the same methodology for the calculation of the taxes, it is necessary to keep the substantive provisions from Section 24.02.470 in the Municipal Code.

The proposed ordinance will delete section 24.02.470 in order to eliminate the requirement that building permit fees be based on the construction valuation of the property. The substantive provisions of that section will be added to the relevant sections of Chapters 4.46 and 4.47 to preserve the same rate and methodology for the calculation of construction taxes.

In addition, section 20.10.100 would be added to Title 20 authorizing the Director of Planning to charge a cost recovery fee for all permits, accommodations, and processes administered by the Director under Title 20, and as set forth in the fee resolution adopted by the City Council. This change will clarify the authorization for various new cost recovery fees proposed by the Department.

Approval of these ordinance changes will make proposed fee changes possible, but will in no way preempt the Council’s ability to approve, amend, or reject the recommendations outlined in the Proposed Budget and Fees and Charges Report.

PUBLIC OUTREACH

The ordinance changes related to Building fees will have a second reading on Tuesday, May 27, 2003. The ordinance changes related to Planning fees will have a second reading on June 3, 2003 in order to allow the proposed changes to be considered by the Planning Commission at its meeting on May 28, 2003.

COORDINATION

This memo has been coordinated with the City Attorney and the City Manager’s Budget Office.

CEQA

Not a project.

STEPHEN M. HAASE, DIRECTOR

Planning, Building and Code Enforcement