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Home My WebLink AboutFin Proposed Master Fee Schedule ____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: December 19, 2022 Disposition: Waived reading, referred to it by title only, and introduced the ordinance x Resolutions 15178 x 15179 x 15180 Agenda Item No: 6.a Meeting Date: December 19, 2022 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Finance Prepared by: Nadine Atieh Hade, Administrative Services Director Claire Coleman, Senior Management Analyst City Manager Approval: _________ TOPIC: PROPOSED MASTER FEE SCHEDULE UPDATE SUBJECT: 1. AN ORDINANCE OF THE CITY OF SAN RAFAEL CITY COUNCIL REPEALING AND REPLACING CHAPTER 3.34 OF TITLE 3 OF THE SAN RAFAEL MUNICIPAL CODE, TITLED FEE AND SERVICE CHARGE REVENUE/COST COMPARISON SYSTEM 2. RESOLUTION AMENDING THE CITY MASTER FEE SCHEDULE 3. RESOLUTION RESCINDING RESOLUTION NO. 11942 AND ESTABLISHING AN AFFORDABLE HOUSING IN-LIEU FEE FOR DEVELOPMENTS WITHIN THE CITY OF SAN RAFAEL EQUAL TO $362,817 FOR EACH AFFORDABLE HOUSING UNIT AND PROVIDING FOR ANNUAL ADJUSTMENT OF FEE 4. RESOLUTION AMENDING THE CITY’S PARKING CITATION FINES EXECUTIVE SUMMARY: Staff are proposing amendments to the City’s Master Fee Schedule, affordable housing in-lieu fees, and parking citation fines, as well as an ordinance repealing and replacing Chapter 3.34 of the San Rafael Municipal Code. The changes to the Master Fee Schedule are based on a 2019 fee study conducted by MGT Consulting Group and aim to ensure the City maintains sustainable and effective operations. The primary changes proposed are to Building, Planning, Public Works, and Fire Department fees. Proposed changes to the Parking citation fines are intended to bring the City closer to neighboring cities and Marin County citation fines. The proposed affordable housing in-lieu fees are based on a recent Marin County study and help the City support the development of housing affordable to very low-, low- and moderate- income households. RECOMMENDATION: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 1. Waive Reading, Refer to it by Title Only, and Introduce An Ordinance of the City of San Rafael City Council Repealing and Replacing Chapter 3.34 of Title 3 of the San Rafael Municipal Code, Titled Fee and Service Charge Revenue/Cost Comparison System 2. Adopt the Resolution Amending the City Master Fee Schedule 3. Adopt the Resolution Rescinding Resolution No. 11942 And Establishing an Affordable Housing In- Lieu Fee for Developments within the City of San Rafael Equal to $362,817 for Each Affordable Housing Unit and Providing for Annual Adjustment of Fee 4. Adopt the Resolution Amending the City’s Parking Citation Fines BACKGROUND: The City of San Rafael last conducted a comprehensive update to the City’s fee schedules with a study by a third-party consultant in 2011, which included the fees and fines for a variety of City services and programs. The City has made numerous fee updates since that time such as the recent Library and Recreation fee changes in 2021 and 2022. Fee schedule updates are intended to ensure that the City operates sustainably and recovers costs for activities including plan review, building and fire inspections, and use of the public right-of-way. State law, including Propositions 26 and 218, provide detailed guidance and restrictions on allowable rates, which are capped at 100% cost-recovery for most fees. Parking fees are not limited to cost-recovery levels due to the Proposition 26 exception for use or rent of public property and penalty fees. Past Master Fee Schedule updates, like this one, have recommended that some fees be kept below cost-recovery levels when deemed a public benefit. Operational costs have increased since the most recent comprehensive master fee schedule update was completed. Increases in costs of goods and services due to inflation, as well as wage cost of living increases have resulted in higher costs than the fee schedule currently accounts for. The recommended fee updates support continued operations and ensure that service levels currently provided by departments such as Community Development, Public Works, and Fire can continue. Parking Services is an enterprise fund and, as such, is completely reliant on revenue from two sources: parking revenue from meters and pay machines, and parking citation fines. Since mid-2020, due to the COVID-19 pandemic, parking revenues have been in steep decline and have been supplemented by the City’s General Fund. ANALYSIS: 1. Ordinance Repealing and Replacing Chapter 3.34 of the San Rafael Municipal Code Staff proposes to repeal and replace the provisions of Chapter 3.34 of the SRMC, titled Fee and Service Charge Revenue/Cost Comparison System. This chapter, adopted in September 1997, provides the City’s service charge revenue/cost comparison system to ensure that service fees do not exceed the reasonable estimated cost to provide the services for which the fees are charged. The code lists services provided by the City together with a percentage of cost recovery for each enumerated service. It also provides that the City Manager and other department directors review the listed services annually and propose recommended changes, if any, to the City Council to recover the listed percentage of costs in the ordinance. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3 The replacement language provides a “catch all” provision that the City Council may adopt by resolution fees and service charges to recover costs reasonably borne and such costs will be reflected in the “Master Fee Schedule”. Government Code section 66016(b) permits a local agency to levy a new fee or service charge or approve an increase in an existing fee or service charge, by ordinance or resolution. The legislative body may not delegate this authority. The ordinance repeals the following substantive provisions of Chapter 3.34: Section 3.34.020 (delegation of authority and direction to manager): This section directs the City Manager and directors to conduct rate reviews and issue executive orders to set effective dates of the fees, rate structures, and associated procedures. These provisions have not impacted how staff presents its recommendations to the City Council, in part because state law requires that the City Council set or increase new fees and service charges, and this authority cannot be delegated. Staff will continue its current process to study rates and recommend changes to the rates to be adopted by resolution of the City Council. Section 3.34.030 (“costs reasonably borne” defined): Repeal will remove the details defining how “costs reasonably borne” be determined, which include direct and indirect costs, fixed asset recovery expenses, general overhead, departmental overhead, and debt service costs. Repeal of this code provision will allow staff to consider and apply best practices in developing and recommending fee structures. The government code sets clear guidelines for what staff can include in its cost recovery calculations. Staff will continue to provide the backup for all proposed fees in its recommendations to the City Council. Section 3.34.040 (schedule of fees and service charges): Listing the schedule of fees and service charges constrains the City Council’s discretion to set cost recovery fees to those percentages listed in the code, some of which are set below 100%. By removing these restrictions from the code, the City Council may set new fees or service charges or approve increases to an existing fee or service charge, by resolution that are unconstrained by the discrete lists and capped percentages in the code. The fee setting will still be limited by state law including provisions requiring cost recovery as the basis for fees. 3.34.050 and 3.34.060 (statutory public meeting; provision of data): Repeal of these sections will have no impact. These sections mirror the State law requirements for public meeting and notices. 2. Amendment to Master Fee Schedule The City hired MGT Consulting Group to conduct a comprehensive review and update of the City’s Master Fee Schedule. MGT Consulting Group met with representatives from each department impacted by the fee schedules to evaluate the current fee structures and provide recommendations for updating both the structure and fee amounts to better align with current service offerings and cost recovery goals. The consultants and staff worked to calculate the fully burdened cost of each service, which includes the staff time dedicated directly to the fee-generating service as well as administrative support costs and physical infrastructure costs. The consultants and staff also evaluated best practices for how and when to collect fees, as well as what types of services the City has added or removed since the last master fee schedule update. Staff evaluated these different elements to develop the proposed fee schedules (Attachment 5). The proposed fee schedules result in an incremental change to most of the fees. However, there are a number of fee categories where the proposal includes additional structural changes or more significant changes to the fee amount. The below sections provide more information on the fee categories where staff are proposing more significant changes to the current fee structure and/or amount. Staff have indicated which fees they recommend that the City subsidize (charge lower than actual cost) due to a wider public benefit. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4 Public Works Public Works fees cover a wide variety of service types within the public right of way. Each fee type was reviewed by staff and updated according to the hourly rate. Staff rounded to the lowest amount of time required for a task to ensure fees do not exceed cost recovery. The primary changes, aside from adjusting for inflation, are to account for Public Works staff review of development applications. Several other adjustments are recommended to decrease permit costs for smaller encroachment permits. The changes recommended are summarized in the following four areas: Encroachment Permits Fees: In order to encourage compliance, we are recommending subsidizing “temporary and small” permit fees. These permits have had a high rate of violation because the residents felt the fee was too high and did not apply for the required permits. An example of this type of application would be someone renting a dumpster for a short period of time to be placed in the public right of way. The proposed 71% subsidy (29% recovery amount) is intended to encourage all parties to apply for the appropriate permits and therefore decrease the rate of violations. When these construction activities are reviewed by the City, the public reaps the safety benefits of ensuring that activities within the right-of-way have been appropriately reviewed and inspected. The standard encroachment permit is recommended to be increased to $358 which would recover the full projected actual cost. Table 1. Encroachment Permit Fees Service Name Current Fee Proposed Fee Proposed Cost Recovery Amount Minor Continuing $368 $493 100% Major Continuing $2,394 $2,435 100% Utility/Special District Base fee (includes one Traffic Control Plan [TCP]) $919 $986 100% Each additional TCP $411 Temporary Small (Debris Box Placement) $246 $50 29% Standard $246 $358 100% Streetary Fees: On October 3, 2022, the City Council approved the new Streetaries Program, including the fees included below in Table 2. No changes are proposed to the streetary fees. Moving forward, the fees will be included in the Master Fee Schedule. Table 2. Streetary Fees Fee Fee Amount Timeline Application fee $2,000 (one time) Fee waived until December 31, 2023 Annual Encroachment Lease fee $3,600 per parking space • Fee waived until June 1, 2023. • Between June 1, 2023 and May 30, 2024: Fee discount of 50% applies. • Between June 1, 2024 and May 30, 2025: Fee discount of 25% applies. • Beginning June 1, 2025: 100% of fee applies (no discounts or waivers) Deposit $2,000 (one time) Fee due prior to the start of construction for new streetaries or before application is accepted for existing streetaries. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5 Fees Tied to Public Works Review of Building and Planning Permits: Public Works does not currently charge for the time spent reviewing building and planning permits, however staff is now recommending that the City charge for this critical service. The recommendations made in this section are based on the hourly rate multiplied by the time spent on a typical application. The level of review varies greatly depending on the complexity of the application. The fee rate is reasonable considering staff time requirements and the comparison with what developers pay to private consultants for plan preparation. If a development application contains specialty reports that require expert review, which is often contracted out by the City, the proposed fee is the cost of the study plus 20% to account for administrative management by the City. Table 3. DPW Fees to Review Planning and Building Permits Service Name Current Fee Proposed Fee Proposed Cost Recovery Amount Full Review N/A $454 100% Over the Counter Review N/A $113 100% Flood Zone Project N/A $340 100% Hydrology Study N/A $454 100% Traffic Study: Assumptions memo N/A $817 100% Traffic Study: Impact report N/A $4,086 100% Regulated Project/ Stormwater Control Plan N/A $1,134 100% Geotechnical Study N/A $680 100% Third-Party Geotechnical Peer Review N/A Consultant Cost + 20% Admin Fee 100% Consultant Third Party Review N/A Consultant Cost + 20% Admin Fee 100% City Surveyor Review N/A Consultant Cost + 20% Admin Fee 100% Plan Check & Inspection Fees: This type of fee applies primarily to building permits and not to entitlement applications. Most building permits are reviewed by the Building Division and do not require review by Public Works. Permits for work within the right of way are routed to Public Works to ensure the stability of the infrastructure, storm drain issues, construction management and inspections. There is a low volume of this type of permits. A new scale based on the cost of the project is recommended. Larger projects (identified by cost) require more review by staff. If the project value is less than $20K, the standard temporary encroachment permit fee of $368 would apply. Table 4. Right-of-Way Plan Check and Inspection Service Name Current Fee Proposed Fee Proposed Cost Recovery Amount Under $20K $246 $368 100% $20K - $50K $246 $618 100% $50K - $100K $246 $1,235 100% $100K+ $246 $4,942 100% SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6 Grading Permit Fees: Costs and time to process grading permits have decreased due to process and technological improvements. Seasonal grading usually requires a more involved review process as weathering the project area needs to meet storm water requirements. Table 5. Grading Permit Fees Service Name Current Fee Proposed Fee Proposed Cost Recovery Amount Permit & Plan Check $869 $782 100% Seasonal Grading Inspections / Rainy Season N/A $1,563 100% Community Development Building Permit Fees Staff recommends a realignment of base permit fees to reflect the estimated cost of inspections. There are no changes to the plan check fees, which will continue to be 75% of the building permit fee. The table below shows the comparison of the existing base fee amount versus the proposed base fee amount as well as the additional proposed multiplier for each $1,000 above the base fee valuation. This is similar to the way fees are calculated under the current fee structure. Table 6. Building Permit Fees by Valuation Application Type Current Fee Proposed Fee Proposed Cost Recovery Valuation Base Fee Base Fee Additional fee per $1,000 above the base amount Proposed Cost Recovery From To $0 $25,000.00 $104 $247 for first $2,000 plus $24.00 for each additional $1,000 or fraction thereof up to and including $25,000.00 100% $25,000.01 $50,000.00 $587 $799 for first $25,000 plus $11.55 for each additional $1,000 or fraction thereof Up to and including $50,000.00 100% $50,000.01 $100,000.00 $947.50 $1,087.75 for first $50,000 plus $16.07 for each additional $1,000 or fraction thereof up to and including $100,000.00 100% $100,000.01 $500,000.00 $1,483 $1,891.25 for first $100,000 plus $7.36 for each additional $1,000 or fraction thereof up to and including $500,000.00 100% $500,000.01 $ 1,000,000.00 $4,837 $4,835.25 for first $500,000 plus $13.56 for each additional $1,000 or fraction thereof up to and including 1,000,000.00 100% SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 7 Application Type Current Fee Proposed Fee Proposed Cost Recovery $1,000,000.01 $5,000,000.00 $8,386 $11,615.25 for first $1,000,000 plus $4.19 for each additional $1,000 or fraction thereof up to and including $5,000,000.00 100% $5,000,000.01 and above $24,976 $28,375.25 for first $5,000,000 plus $4.19 for each additional $1,000 or fraction thereof. 100% Sub fees for electrical, mechanical, plumbing (MEPs) are not included in this fee study and the City will continue to use the prior fee schedule for those, available in Attachment 5, Exhibit A2-A4. Residential Building Reports (RBRs) fees (Table 7. below) have been aligned with recommendations made during public outreach which included recommendations that portions the proposed fees, including fees for Multifamily and Condominium units, be partially subsidized. Table 7. Residential Building Report Fees Application Type Current Fee Full Cost Recovery Fee Level Proposed Fee Proposed Cost Recovery Amount Single-family/duplex (per unit) $290 $463 $350 75% Multi-family first unit $270 $463 $330 71% each additional per unit $30 $40 $40 100% Condominiums (per unit) $255 $463 $350 75% Planning Fees Planning fees fall under two categories: flat rate fees and deposit-based fees. The planning division fees currently recover anywhere from approximately 35% to full cost recovery and have required subsidizing from the General Fund to cover the remaining portion of the costs required to process an application. In formulating a recommendation, staff evaluated the existing fee structure with a lens toward increasing efficiency and transparency. These efforts resulted in recommendations to change the methodology of certain types of fee collection to more accurately reflect the full cost and to continue to subsidize select fee types. However, it is important to mention that over the past few years, staff has continued to find ways to streamline the review of planning applications. Below are just a few examples that demonstrate the planning division’s commitment to continue to improve our processes which can result in time and cost reductions. • With the adoption of the Downtown Precise Plan, certain low impact uses (e.g., art studios, dance classes, billiards, and recreational uses) previously required a use permit with a fee of $2,258. These uses are now allowed as permitted use and do not require a planning review fee. Other businesses (e.g., fitness facilities, medical offices) previously required a major use permit requiring a deposit of $3,767 but can now be reviewed through an administrative use permit with a fee ranging between $398 to $1,420 depending on the type of use. • Early in 2022, planning staff created a standard, easy to use template for review of administrative applications. What was previously an 8-page document that took 3 months to process is now a 3-page document (including a friendly 1-page approval letter) that takes a few weeks to process. The template has resulted in a time savings for planning staff and a time-cost reduction for the SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 8 applicant. This change has resulted in a cost reduction of approximately $1,022, depending on the type of project. • In spring of 2022, the City Council approved a streamlined review process, allowing certain types of multi-family residential projects to be reviewed by representatives from both the planning commission and the design review board in one combined meeting. This change reduces the processing time by approximately 3 months. Flat Rate Fees Flat rate fees are fees charged to an applicant as a one-time fee and are expected to cover actual processing costs. The City does not charge additional fees if actual costs run higher. Below is a sampling of fees for common planning projects. For a full list of Flat Rate Planning Fees, see Exhibit D. Table 8. Flat Rate Planning Fees Application Type Current Fee Proposed Fee Proposed Cost Recovery Lot Line Adjustment $3,131 $6,075 100% Use Permit – Administrative/Over the Counter $398 $387 100% Design Review – Administrative/Over the Counter $398 $387 100% Design Review – Staff Level $1,167 $2,938 100% Sign Program – Minor Exception $1,043 $1,397 100% Deposit-Based Fees Deposit-based fees are fees that are charged to applicants with the expectation of full cost recovery. Upon project application submittal, an initial deposit is made by the applicant. Planner time spent on processing the application is billed to this deposit at a fully burdened hourly rate until a decision is made. If, after the initial deposit, additional money is needed to complete project processing, the applicant is invoiced for the additional fees. The invoice will typically include an estimate of additional money needed to complete the project to a decision. For those current deposit-based projects that have a relatively consistent processing time, staff is recommending a change in methodology to a flat fee in order to provide financial certainty to applicants. However, the time needed to process some deposit-based fees can vary significantly. For those fees, staff is recommending that they remain deposit-based, but to adjust the initial deposit to reflect processing cost more accurately. Table 9 shows a sampling of deposit-based fees that staff recommends converting to flat rate fees (see attached Exhibit D for the complete list). These are currently deposit-based fees associated with applications that have relatively consistent processing times and for which the cost of processing these types of applications is generally consistent from project to project. Therefore, staff recommends a change in methodology for these type of fees from deposit-based to a flat rate fee that is equal to the actual cost of processing these types of applications. This change in methodology would provide greater financial certainty for the applicant compared to the deposit-based approach. Table 9. Change in Methodology of Deposit-Based Planning Fees to Flat Rate Fees Service Name Current Deposit-Based Fee Proposed Flat-Rate Fee Proposed Cost Recovery Small Subdivision Map $3,735 $13,457 100% SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 9 Service Name Current Deposit-Based Fee Proposed Flat-Rate Fee Proposed Cost Recovery Use Permit - Planning Commission $4,305 $8,815 100% Design Review - Zoning Administrator $2,258 $5,639 100% Design Review – Planning Commission $6,872 $15,152 100% Sign Program – Major (Planning Commission) $8,523 $8,038 100% Table 10 shows a sampling of typical deposit-based applications along with the current deposit amounts. (See attached Exhibit D for the complete list). The current initial deposit amount represents approximately 40% to 60% of the actual cost of processing an application for the type of project shown. Processing time for the project types shown below can vary greatly depending on the complexity of project. Therefore, staff recommends that these fees remain as deposit-based fees and that the fees be increased to reflect full estimated cost recovery. It should be noted that any unused deposit funds are refunded to the applicant. Table 10. Deposit-Based Planning Fees to Remain Deposit Based Fees Service Name Current Deposit- Based Fee Proposed Deposit- Based Fee Proposed Cost Recovery Tentative Map $7,293 $17,588 100% Development Agreement $11,534 $28,606 100% General Plan Amendment $8,646 $17,889 100% Rezoning/Pre-Zoning $7,176 $17,889 100% Planned District $11,194 $18,879 100% Table 11 shows application types with fees that staff are proposing to maintain at below the 100% recovery amounts (subsidized). The following explains the rationale for each of the fees described: • Conceptual Design Review and Preapplication fees – These types of applications allow early consultation with developers and lead to more successful submittal of formal applications. One common response received during outreach to stakeholders is that these types of applications are an applicant’s first experience with the City and these fees should reflect the City’s desire to encourage development within the City. Therefore, staff recommends subsidizing a portion of this fee. • Use Permit - Zoning Administrator – These types of permits are typically related to smaller, local startup businesses and increasing the fees to the recommended amount could make it difficult for a small business to get started in the City. To lower the bar for entry, staff recommends subsidizing a portion of this fee. • Appeals to Planning Commission and City Council – To neither encourage or discourage appeals, but to reduce the likelihood that participation in the public process is barred by economic status, staff recommends continuing subsidizing a portion of this fee. • Reasonable Accommodation for Disabled – To foster inclusion for all populations, staff recommends continuing subsidizing a portion of this fee. Table 11. Proposed Subsidized Fees SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 10 Service Name Current Fee Proposed Fee Proposed Cost Recovery Conceptual Design Review $1,750 $3,000 61% Preapplication $1,191 $2,086 30% Use Permit - Zoning Administrator $2,476 $2,707 60% Appeals by Non-Applicant Resident $300/$350 $350 4% Appeals by Applicant, Non-Resident $4,476 $5,000 65% Reasonable Accommodations $964 $964 25% Fire Staff recommends that Fire Department related fees are updated to ensure full cost recovery for all fees. In some cases, the results are a slight reduction in cost while others include a slight to moderate increase. Most Fire Department fees involve construction and operational permits or fire inspections. All inspections and reviews are conducted by trained professionals to reduce community fire risk and ensure safe occupancy of buildings. Construction Permits Construction permits are required for the installation of fire protection systems such as fire alarms, private fire mains and fire suppression systems, as well as for special event temporary structures. Full cost recovery for these types of fees results in a recommended 4.5% increase. Operational Permits Operational permits are required for certain activities that present a high fire or life safety risk. The permit is intended to ensure those activities are conducted in a safe manner. These include carnivals, fireworks, compressed gasses, hazardous processes, cutting and welding, motor fuel dispensing facilities and many other activities that carry an elevated risk to the community. Full cost recovery for these types of fees results in a recommended 4.5% increase. Fire Inspections Fire inspections are conducted on apartments, schools, commercial businesses, and new construction as required in many cases by state and local laws. Commercial businesses are required to pass a fire inspection either annually or up to every 5 years depending on size. Staff is recommending that fees related to commercial business inspections increase by $7 for the smallest businesses and up to $51 for the largest type of businesses. This results in a roughly 25% increase over the current fees and full cost recovery. Most new construction and large remodels require automatic fire extinguishing systems like sprinklers to be installed. These projects are reviewed, inspected, and approved by the Fire Department. To achieve full cost recovery, some sprinkler fees are increase by 4%. Other fees like backflow preventers and fire sprinklers of 11 or more are decreasing to ensure fees do not generate more revenue than actual cost. These changes affect a small number of new buildings a year in San Rafael. In addition, fees for consultation and plan review are proposed when necessary, in the development review process (Table 12). In many larger developments, these fees are already being collected to pay for third party review. No changes to that process are proposed. SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 11 New Fees The Fire Department is recommending new fees be added to align with current costs that are not currently being captured. Staff recommends including new consultation and planning fees for new projects. These fees are currently not assessed, and the department recommends charging a $251 fee if required for a project. This fee would not be assessed on all new projects but for those projects that require more than one hour of staff support due to either complexities or substandard submittals. Ten or fewer projects a year would be affected by this change. Table 12. Proposed New Fire Inspection and Development Fees Service Name Current Fee Proposed Fee Proposed Cost Recovery Consultation – Flat rate 2 hours $0 $251 100% Plan Review – Flat rate 2 hours $0 $251 100% Inspection - Flat rate 2 hours $0 $251 100% Reinspection - Flat rate 2 hours $0 $251 100% With the addition of the City’s Wildfire Mitigation Division and new ordinances to prevent wildfires, certain homes are applying to obtain single specimen exemptions from new regulations. These exemptions require yearly staff inspections, and the department recommends instituting a new “Exemption from vegetation ordinance” fee to recover costs associated with these inspections. It is estimated that this fee will affect up to 100 homes but that the number of affected households would decrease over time as more become compliant. Along with commercial businesses, the department conducts annual inspections on apartment buildings per state law. These inspections currently carry no fee which is not consistent with other commercial businesses that are currently assessed a fee. The department recommends adding a new fee of $153 per inspection to inspect apartment buildings. These inspections require significant staff time and cost recovery will ensure the department can adequately inspect them all on an annual basis. The department estimates this will impact over 200 apartment buildings in the City. Short-term rentals are permitted by the City and required to do a self-certification for outdoor wildfire safety. These inspections are currently done through self-certification by the property owner. The department plans to recommend conducting those inspections to ensure compliance and community safety. If the department conducts the inspections, the recommended fee is $126 and would affect approximately 200 properties depending on the number of registered short-term rentals. Excessive public calls when not necessary are not only a nuisance but also threaten public safety by diverting first responders away from other important calls. While these occur rarely, a new fee would allow the department to charge callers for staff response to excessive calls to offset the cost and to try and discourage the behavior. Excessive public calls are considered three or more non-emergency calls in a 12-month period. This fee is not intended to charge callers that need frequent necessary emergency assistance. The recommended cost for this new fee is $413. CPI Increases Staff are recommending that the Council include a provision for an annual CPI increase with an annual maximum increase of 3% for all new and updated fees as part of this study. This increase would also apply to the Recreation and Library fees approved by Council in 2021 and 2022. The annual CPI increases would ensure that City fees keep up with increases in supply, contractual services, and labor SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 12 costs to maintain consistent cost recovery levels. As is City practice, the CPI increase would be commensurate with the annual percentage increase, if any, in the previous year to the San Francisco- Oakland-Hayward Price Index for All Urban Consumers (“CPI”), calculated from February to February. It would be capped at 3% annually, rounded to the nearest whole dollar, and would not adjust downwards in the event of deflation. Implementation Schedule One of the comments received by stakeholders during public outreach process (see Community Outreach section below) is that projects that have received land use entitlements would be hit with an unexpected increase in building permit fees and that applicants that may be looking at development opportunities in the City would be deterred by our fee increases. To provide the community with ample time to adapt to the new fees, the City recommends implementing all fees (except for parking citations) in the new fiscal year, on July 1, 2023. CPI increases would go into effect based on the following schedule: Table 13: Proposed CPI Schedule Fee Type Annual Effective Date Recreation Fees January 1 beginning 2024 Childcare Fees New school year (mid-August) beginning 2023 All Other Fees July 1 beginning 2024 3. Amendment to Parking Citation Penalties Staff is recommending that the City Council adjust several of the parking violation penalties/fines to bring the City in line with other cities and towns in Marin. California Vehicle Code 40203.5 (a) states “to the extent possible, issuing agencies within the same county should standardize parking penalties”. All cities and towns in Marin County have some level of parking enforcement and either collect revenue through paid public parking and/or issue citations for parking violations. Staff have surveyed the cities and towns in Marin to compare San Rafael citation rates to other nearby jurisdictions. In most cases, the other jurisdictions have fines that are higher than San Rafael, and on average the City’s citations fees are lower than our neighboring cities. Staff is evaluating a variety of opportunities to improve the fiscal health of the Parking Fund, including changes in operations, sale of assets, and raising meter rates. The proposed citation increases would serve as an interim measure to support the Parking Fund while the City continues evaluating additional options. These fine increases are projected to raise revenue by approximately $269,000 per year at current citation issuance rates but will not be enough to resolve the fiscal gap in the Parking Fund created by the pandemic and potential long-term changes in commuting patterns. To assist the City with the analysis of long-term parking operations and fiscal health, Parking Services has engaged a consultant, W-TRANS, to provide a financial assessment, including a detailed analysis and list of recommendations that consider both financial and equity impacts to the community of changes in parking rates or operations. Table 14. Proposed Parking Citation Fines SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 13 Description Code Current Rate Proposed Rate Change in Rate Expired Meter 5.60.050(E) $35 $40 14% Red Zone 5.48.020-R $65 $80 23% Abandoned Vehicle or Parked Over 72hrs 5.40.030 $150 $205 37% Expired Registration - Correctable 4000 A $165 $215 30% No Current Tab – Correctable 5204-A $93 $135 45% Compliance With Signs/Curb Markings 5.48.020 $35 $50 43% Overtime Parking Zone 2hr 5.48.020(02) $35 $45 29% No Plates – Correctable 5200 $93 $114 23% Wrong Way/18 Inches from Curb 22502-A $35 $55 57% Failure to Comply With Space Markings 5.48.030 $35 $45 29% Blue Zone Physically Handicapped 22507.8 $275 $335 22% Implementation Schedule The increase in citation rates is recommended to commence on January 1, 2023. 4. Amendment to Affordable Housing In-Lieu Fee The City of San Rafael requires market-rate residential development projects to contribute to affordable housing through provision of affordable units on-site, payment of an in-lieu fee, or donation of land to the City (SRMC Section 14.16.030). In-lieu fees are placed in the City’s Affordable Housing Trust Fund and used solely to increase and expand the supply of housing affordable to very low-, low- and moderate- income households. The City’s current in-lieu fee is based on a 2003 study by David Paul Rosen and Associates and provides for an annual adjustment of the fee based on inflation in construction costs and land values. Last updated in February 2019, the current in-lieu fee for one (1) affordable unit is $343,969.47. Through a Senate Bill 2 Planning Grant, the City of San Rafael, Marin County and five other Marin jurisdictions jointly retained Strategic Economics and Vernazza Wolfe Associates to study and offer recommendations related to inclusionary housing policy and commercial linkage fees. The study was completed in 2022 and included calculation of the in-lieu fee based on the housing affordability gap – the difference between what households at various income levels (very low, low, and moderate) can pay for housing and the cost of developing market rate housing. A detailed explanation of the calculation of these fees is available on pages 15 - 32 of the consultant team’s study, Attachment X. Staff is recommending an in-lieu fee of $362,817, informed by Strategic Economics’ 2021 affordability gap analysis for providing apartment units at 90% of Area Median Income rents, with annual adjustment of the fee based on the California Construction Cost Index or comparable index as selected by the Community Development Director. As part of the study, the consultant team held two stakeholder forums at the onset of the project, one with market rate developers, and a second with affordable developers and housing advocates. Participating developers asked for a more common inclusionary policy among Marin County jurisdictions, stating that the variation and complexity in the inclusionary ordinances makes it difficult to assess project costs and SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 14 establish project momentum during the pre-development process. Corte Madera has already adopted the proposed in-lieu fee and other jurisdictions have indicated their intention to do so, which would increase consistency across Marin jurisdictions. Staff is not recommending an update to the percentage of affordable housing required, given that the City Council amended the percentage in 2021 and staff is in the process of evaluating the effectiveness of the policy in increasing housing production. Staff plans to bring forward recommendations related to commercial linkage fees – the other component of the study – in the first half of 2023. Implementation Schedule The increase in the affordable housing in-lieu fee is recommended to commence on July 1, 2023. COMMUNITY OUTREACH: Community Development, Public Works and Fire Department: Staff conducted joint targeted outreach to stakeholder groups including the Chamber of Commerce (August 16, 2022, and September 22, 2022), local developers (August 22, 2022), Marin Builders Association (August 31, 2022) and the Marin Association of Realtors (September 30, 2022). Feedback from community engagement meetings included concerns about the impacts of the pandemic and possible recession and an emphasis on the need for clarity and simplicity around fees from the beginning of a project. Community members commented on the need to support affordable housing and multi-family housing development. Staff also received feedback that community members appreciated the Community Development Department’s great customer service and commitment to ongoing process and technology improvements. In response to community feedback, staff are recommending that fees go into effect on July 1, 2023 to give the community time to adjust as needed. Staff are also recommending that a variety of high-volume fees, as well as permit fees for affordable and multi-family housing, be set below cost recovery levels. Additionally, staff are recommending that some fees be changed from deposit-based to flat fees to more accurately reflect the full fees up front, rather than return to applicants for payment multiple times over the lifecycle of a project. Parking City staff from the Parking Division conducted public outreach about the proposed fee increases. The community outreach included: • September 1, 2022 – Briefed the CEO of the Chamber of Commerce and Director of the Business Improvement District (BID) on potential changes • November 1, 2022 – Briefed the Chamber of Commerce CEO on the specific recommendations • November 3, 2022 – Briefed the BID Director on the specific recommendations • November 8, 2022 –At the request of the Chamber CEO, the Chamber of Commerce Economic Vitality Committee was briefed on the specific recommendations by Parking staff. • November 17th, 2022 – At the request of the BID Director, the BID Board of Directors was briefed on the specific recommendations by Parking staff. FISCAL IMPACT: The proposed changes to the Master Fee Schedule will result in increased revenue to the City, primarily to the City’s General Fund in addition to the Parking Fund, General Plan Fund and Affordable Housing Trust Fund. Table 15 below provides a high-level summary of the current revenues and fee recovery levels by department and division as well as the cost recovery levels and estimated revenues SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 15 from the recommended fee rates. Revenues from City fees fluctuate annually depending on economic conditions, development activity, and other forces outside the City’s control. The estimated revenue totals are based on 2019 activity. Table 15: Total Fee Change Impacts by Division/Department Current Proposed Annual Cost Annual Revenue Annual Subsidy Annual Revenue Increased Revenue Recommended Subsidy Public Works $779,000 $555,000 29% $667,000 $123,000 14% Building and Safety $2,533,000 $1,971,000 22% $2,533,000 $562,000 0% Planning $696,000 $350,000 50% $570,000 $221,000 18% Fire Department $228,000 $115,000 50% $228,000 $113,000 0% Total $4,236,000 $2,991,000 29% $3,998,000 $1,019,000 5.6% The annual CPI increase will result in a variable fiscal impact depending on the prior year’s inflation estimates. These impacts will compound year over year but are designed to keep pace with rising wage and materials costs, not increase revenues for the City. The fiscal impact related to the affordable housing in lieu fee is dependent on the number of projects that opt to use the in-lieu fee option. In 2021 and 2022, the City approved at least two projects that propose payment of an affordable housing in-lieu fee for a combined total payment of approximately $3.5 million in in-lieu fees. Staff expects these payments to be made in fiscal year 2023/2024. Parking The increase in citation rates will generate an estimated $269,000 in annual revenues. This potential increase will provide support to the Parking Fund while Parking Services works with a consulting firm to determine additional solutions to the fiscal gap and opportunities for the department. OPTIONS: The City Council has the following options to consider on the ordinance: 1. Introduce the ordinance for adoption as proposed. 2. Introduce the ordinance with amendments as directed by the Council. 3. Do not introduce the ordinance and provide alternative direction to staff. The City Council has the following options to consider on each of the resolutions: 1. Adopt the resolution as presented. 2. Adopt resolution with modifications. 3. Direct staff to study other fee options and return to the City Council with more information. 4. Take no action. RECOMMENDED ACTION: 1. Waive reading, refer to it by title only, and introduce An Ordinance of the City of San Rafael City Council Repealing and Replacing Chapter 3.34 of Title 3 of the San Rafael Municipal Code, Titled Fee and Service Charge Revenue/Cost Comparison System 2. Adopt the Resolution Amending the City Master Fee Schedule SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 16 3. Adopt the Resolution Rescinding Resolution No. 11942 And Establishing an Affordable Housing In-Lieu Fee for Developments within the City of San Rafael Equal to $362,817 for Each Affordable Housing Unit and Providing for Annual Adjustment of Fee 4. Adopt the Resolution Amending the City’s Parking Citation Fines ATTACHMENTS: 1. Ordinance of the City of San Rafael Repealing and Replacing Chapter 3.34 of the San Rafael Municipal Code 2. Resolution Amending the City’s Master Fee Schedule 3. Resolution Amending the City’s Affordable Housing In-Lieu Fee 4. Resolution Amending the City’s Parking Citation Fines 5. Proposed Fee Schedules 6. Current Fee Schedules 7. Consultant Reports ORDINANCE NO. 2024 AN ORDINANCE OF THE CITY OF SAN RAFAEL CITY COUNCIL REPEALING AND REPLACING CHAPTER 3.34 OF TITLE 3 OF THE SAN RAFAEL MUNICIPAL CODE, TITLED FEE AND SERVICE CHARGE REVENUE/COST COMPARISON SYSTEM WHEREAS, pursuant to Article XIIIB of the California Constitution, the City of San Rafael may adopt fees to cover the costs of providing regulation, products or services to the public, including direct costs, indirect costs, debt service and fixed asset recovery expenses; and WHEREAS, State law under Government Code section 66016 permits a local agency to levy a new fee or service charge, or approve an increase in an existing fee or service charge, by ordinance or resolution; and WHEREAS, the City Council adopts by resolution a master fee schedule of all of the various fees and charges for service collected by the City; and WHEREAS, the City Council finds that the provisions of Chapter 3.34 of the San Rafael Municipal Code, providing a fee and service charge revenue/cost comparison system, are unnecessary because the Council desires to continue setting service fees in accordance with appliable State law and adopting such fees by resolution; and WHEREAS, this Ordinance No. 2024 was introduced and read by title only at a duly-noticed public meeting of the San Rafael City Council on the 19th day of December 2022. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL DOES ORDAIN AS FOLLOWS: DIVISION 1. Chapter 3.34 of Title 3 of the Municipal Code of the City of San Rafael is hereby repealed and replaced in its entirety to read as follows: Chapter 3.34 – FEES AND SERVICE CHARGES 3.34.010 – Schedule of fees and service charges. The city council may from time to time adopt or change fees and service charges to recover costs reasonably borne to provide any regulation, product or service to the public, including but not limited to direct costs, indirect costs, debt service, and fixed asset recovery expenses. Such fees and service charges will be adopted or changed by resolution of the city council and incorporated in a “Master Fee Schedule”. 3.34.020 – Appeal to city council. (a) Any person who feels that any fee or service charge is in excess of the percentage of costs reasonably borne to be recovered as set out in this chapter, or that in adopting such fee or service charge the provisions of this chapter have not been complied with, may appeal in writing to the city clerk. Appeals under this section must be filed within ninety (90) days of the adoption of the fee or service charge. (b) No fee or service charge for which an appeal has been filed shall take effect until heard by the city council or its designee. Such appeal shall be heard within forty-five (45) days of the filing of the appeal. Such appealed fee or charge shall take effect, as originally imposed or as modified, immediately upon the decision following the hearing by the city council or its designee. DIVISION 2. All former ordinances or parts thereof conflicting or inconsistent with the provisions of this Ordinance or the Codes hereby adopted are hereby repealed. DIVISION 3. If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion of this Ordinance. The City Council of the City of San Rafael hereby declares that it would have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases shall be declared invalid. DIVISION 4. The City Council finds that adoption of this Ordinance is exempt from the California Environmental Quality Act (CEQA), pursuant to 14 CCR Section 15061(b)(3), since it can be seen with certainty that there is no possibility that the adoption of this Ordinance may have a significant effect on the environment. DIVISION 5. This Ordinance shall be published once, in full or in summary form, before its final passage, in a newspaper of general circulation, published and circulated in the City of San Rafael and shall be in full force and effect 30 days after its adoption. If published in summary form, the summary shall also be published within fifteen (15) days after the adoption, together with the names of those Council members voting for or against same, in a newspaper of general circulation published and circulated in the City of San Rafael, County of Marin, State of California. Within fifteen (15) days after adoption, the City Clerk shall also post in the office of the City Clerk, a certified copy of the full text of this Ordinance along with the names of those Councilmembers voting for and against the Ordinance. THE FOREGOING ORDINANCE was first read and introduced at a regular meeting of the San Rafael City Council on the 19th day of December 2022, and was passed and adopted at a regular meeting of the San Rafael City Council on the 17th day of January 2023 by the following vote, to wit: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ______________________________ Kate Colin, Mayor Attest: _____________________________ LINDSAY LARA, City Clerk RESOLUTION NO. 15178 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AMENDING THE CITY MASTER FEE SCHEDULE WHEREAS, the City of San Rafael has conducted an analysis of its services, the costs reasonably borne, the beneficiaries of those services, comparable fees charged by like agencies, and the revenues produced by those paying fees or any charges for special services; and WHEREAS, the City wishes to comply with both the letter and spirit of Article XIIIB of the California Constitution and limit the growth of taxes; and WHEREAS, the City has a policy of recovering costs reasonably borne of providing special services of voluntary and/or limited nature, such that general taxes are not diverted from general services of a broad nature, and thereby utilized to subsidize unfairly and inequitably such special services; and WHEREAS, the fees included in the City’s Master Fee Schedule are structured in a manner that is consistent with the City policy; and WHEREAS, the City’s Master Fee Schedule was last updated comprehensively in 2011; and WHEREAS, since 2011, there have been changes in City services offered and the costs borne to provide services; and WHEREAS, the City wishes to amend the Master Fee Schedule based on the current costs reasonably borne to provide services; and WHEREAS, an amendment to the City’s Master Fee Schedule was prepared and published and determined to be in compliance with all of the requirements of California Government Code and other applicable laws. NOW, THEREFORE BE IT RESOLVED, that the City Council hereby amends the Master Fee Schedule as follows: Section 1. Amendment to Fee Schedule The Master Fee Schedule presented in the staff report for this resolution, along with the existing Library and Recreation fee schedules approved in 2021 and 2022, is hereby approved and directed to be computed and applied by the appropriate Departments and collected by the City’s Finance Department. Section 2. Separate Fee for Each Service All fees set by this resolution are for each identified service; additional fees shall be required for each additional service that is requested or required. Where fees are indicated on a per unit measurement basis, the fee is for each identified unit or portion thereof, within the indicated ranges of such units. Section 3. Basis of Charges The Council finds and determines that the charges for services imposed by this Resolution are necessary to cover the costs of providing the specified services and do not exceed cost recovery levels, including direct and indirect costs, of providing the service. Section 4. Interpretations The Administrative Services Director, in consultation with the City Manager may interpret this Resolution. Should there be a conflict between two fees applicable to the same service, then the lower in dollar amount of the two shall be applied. Section 5. Waiver of Permit Fees and Charges The City Council may, on a case- by-case basis, grant a waiver of payment of all or portion of the fees established by this Resolution when it determines that it is in public interest to do so. Section 6. Repeal Resolutions and other prior actions of the City Council in conflict with the contents of this Resolution are hereby repealed. Section 7. Severability If any portion of this Resolution is held to be invalid or unconstitutional by any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions and all other portions shall remain in full force and effect. The City Council declares that it would have adopted this Resolution and each section or portion thereof irrespective of the validity of any other section or portion. Section 8. Consumer Price Index (CPI) Increases Fees shall be increased annually based on the Bureau of Labor Statistics’ annual CPI estimates for the San Francisco Bay Area. Annual fee increases shall go into effect based on the schedule below. Section 9. Effective Date The fees provided herein shall become effective on July 1, 2023. CPI increases shall begin for Childcare fees for each new school year, beginning in August 2023. Recreation CPI increases shall begin on January 1, 2024. All other CPI increases shall be applied beginning July 1, 2024. I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of the City of San Rafael, held on Monday, the 19th day of December 2022, by the following vote, to wit: AYES: Councilmembers: Bushey, Hill, Kertz, Llorens Gulati & Mayor Kate NOES: Councilmembers: None ABSENT: Councilmembers: None Lindsay Lara, City Clerk 1 RESOLUTION NO. 15179 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL RESCINDING RESOLUTION NO. 11942 AND ESTABLISHING AN AFFORDABLE HOUSING IN-LIEU FEE FOR DEVELOPMENTS WITHIN THE CITY OF SAN RAFAEL EQUAL TO $362,817 FOR EACH AFFORDABLE HOUSING UNIT AND PROVIDING FOR ANNUAL ADJUSTMENT OF FEE WHEREAS, the San Rafael General Plan 2040 sets forth the relationship between future development and the need for new housing affordable to very low, low and moderate income households; and WHEREAS, Section 14.16.030 of the San Rafael Municipal Code establishes requirements for the provision of affordable housing units by new residential and non-residential development projects and the option to accept fees in-lieu of the creation of new affordable housing units, with such in-lieu fees being dedicated and used by the City for the creation, rehabilitation and acquisition of off-site affordable housing units; and WHEREAS, SRMC Section 14.16.030(D)(4) states that an in-lieu fee will be established by resolution of the City Council; and WHEREAS, State Housing Law (Government Code Section 65580) states that local governments have a responsibility “to facilitate the improvement and development of housing…[for] all economic segments of the community”; and WHEREAS, for the 2014-2018 period, 31% of households in San Rafael were either extremely low or very low income, and 46% of households in San Rafael were low income, based on data from the Comprehensive Housing Affordability Strategy (CHAS); and WHEREAS, the General Plan 2040 identifies a shortage of housing affordable to very- low or low-income households caused by a variety of factors including high land and construction costs; and WHEREAS, the lack of local, affordable housing contributes to traffic congestion within and through San Rafael due to the need for lower-wage workers to commute from outside Marin County to jobs in San Rafael; and WHEREAS, the State-imposed Housing Needs Determination for the period from 2023 to 2031 mandates the planning for 3,220 additional housing units in San Rafael, 1349 of which are to be very low and low income units; and WHEREAS, the purpose of the in-lieu housing fee is to help provide affordable housing units which require public assistance in situations where it is infeasible or impractical to construct such units onsite; and 2 WHEREAS, developers have indicated that consistency in fees across jurisdictions facilitates development by reducing the time needed to understand fee policies of individual jurisdictions; and WHEREAS, Resolution No. 11942, previously adopted by the Council to provide for the calculation of an in-lieu fee for residential development projects, uses a methodology that is not in alignment with other jurisdictions in Marin County; and WHEREAS, the City Council determines that the affordable housing in-lieu fee shall be based on the difference between the cost to construct a residential unit, including the costs of site improvements, off-site improvements and land, and the affordable price at which it could be sold or rented. This affordability gap was analyzed for a range of rental and ownership housing developments constructed in Marin County in the “Inclusionary Program and In-Lieu Fee Study” by Strategic Economics and Vernazza Wolfe Associates (2022) (Exhibit A). The City Council wishes to adopt an in-lieu fee based on these assumptions and annually adjusted for inflation in construction costs and land values. NOW THEREFORE, BE IT RESOLVED that the City Council of the City of San Rafael hereby adopts this Resolution, rescinding Resolution No. 11942, establishing a new affordable housing in-lieu fee equal to $362,817 for each affordable housing unit required to be provided by Section 14.16.030 of the San Rafael Municipal Code, and providing for annual adjustment of the fee based on the changes in the California Construction Cost Index, or comparable index as selected by the Community Development Director. The first adjustment to the City’s in-lieu fee shall be made on July 1, 2023. I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the Council of said City on Monday, the 19th day of December, 2022, by the following vote, to wit: AYES: COUNCILMEMBERS: Bushey, Hill, Kertz, Llorens Gulati & Mayor Kate NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None LINDSAY LARA, City Clerk RESOLUTION NO. 15180 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AMENDING THE CITY’S PARKING CITATION FINES WHEREAS, the City of San Rafael provides parking enforcement services throughout the City limits, including Downtown and in residential neighborhoods; and WHEREAS, the City of San Rafael maintains parking spaces and garages that are available for use to the general public; and WHEREAS, the City has the legal authority to levy and adjust parking meter and citation rates under Article XIIIA, §3, of the California Constitution; and WHEREAS, the City has not updated its citation fines since 2011 and is currently charging citation fines that are lower than its neighbors and peers; and WHEREAS, the City desires to adjust parking citation fines to discourage parking violations, improve traffic conditions and compliance, and raise revenues. NOW, THEREFORE BE IT RESOLVED, that the City Council hereby amends its Parking Citation Fines as follows: Section 1. Amendment to Fine Schedule The changes to the Parking Citation Fines presented in the staff report for this resolution are hereby approved and directed to be computed, applied and collected by the City’s Parking Division. Section 2. Interpretations The Administrative Services Director, in consultation with the City Manager may interpret this Resolution. Should there be a conflict between two fines applicable to the same service, then the lower in dollar amount of the two shall be applied. Section 3. Severability If any portion of this Resolution is held to be invalid or unconstitutional by any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions and all other portions shall remain in full force and effect. The City Council declares that it would have adopted this Resolution and each section or portion thereof irrespective of the validity of any other section or portion. Section 4. Effective Date The fines provided herein shall become effective on January 1, 2023. I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the City Council of the City of San Rafael, held on Monday, the 19th day of December 2022, by the following vote, to wit: AYES: Councilmembers: Bushey, Hill, Kertz, Llorens Gulati & Mayor Kate NOES: Councilmembers: None ABSENT: Councilmembers: None Lindsay Lara, City Clerk City of San Rafael Master Fee Schedule City of San Rafael Community Development - Building/Safety and Code Enforcement Service Name Fee Description Current Fee Current Recovery %Proposed Fee Proposed Recovery % Valuation-Based Building Permit Fees Valuation 104 0 0 1 Up to $2,000.00 Flat 104$ 42% 247.00$ 100% $2,000.01 to $25,000 Valuation 104$ 42% 247.00$ 100% 24.00$ per each additional $1,000 above $2,000 $25,000.01 to $50,000.00 Valuation 580$ 73% 799.00$ 100% 11.55$ per each additional $1,000 above $25,000 $50,000.01 to $100,000.00 Valuation 958$ 88% 1,087.75$ 100% 16.07$ per each additional $1,000 above $50,000 $100,000.01 to $500,000.01 Valuation 1,477$ 78% 1,891.25$ 100% 7.36$ per each additional $1,000 above $100,000 $500,001 Valuation 4,711$ 97% 4,835.25$ 100% 13.56$ per each additional $1,000 above $500,000 $1,000,000.01 to $5,000,000.00 Valuation 8,176$ 70% 11,615.25$ 100% 4.19$ per each additional $1,000 above $1M Greater than $5,000,000 Valuation 29,167$ 103% 28,375.25$ 100% 4.19$ per each additional $1,000 above $5M Valuation-Based Plan Check Fees 0 0 0 1 Building/Structural % of bldg pmt 65% 100% 65% 100% Energy % of bldg pmt 10% 100% 10% 100% Additional Plan Review Hourly, 1/2 hr. min.125$ 70% 179$ 100% Renewables 0 0 0 1 Photovoltaic Residential System 15kW or less Set by State 450$ 450$ n/a More than 15kW Set by State $450 + $15 per kW above 15kW n/a Commercial System 50kW or less Set by State 1,000$ 1,000$ n/a 50 - 250kW Set by State -$ $1,000 + $7 per kW above 50kW n/a More than 250kW Set by State -$ $2,400 + $5 per kW above 250kW n/a Solar Thermal Residential System 10kW or less Set by State 450$ 450$ n/a More than 10kW Set by State -$ $450 + $15 per kW above 10kW n/a Commercial System 30kW or less Set by State 1,000$ 1,000$ n/a 30 - 260kW Set by State -$ $1,000 + $7 per kW above 30kW n/a More than 260kW Set by State -$ $2,610 + $5 per kW above 260kW n/a Current Incremental Fees to Add to Base Fee Per Unit Staff Recommendation Per Unit City of San Rafael Master Fee Schedule Service Name Fee Description Current Fee Current Recovery %Proposed Fee Proposed Recovery % Current Per Unit Staff Recommendation Per Unit Mechanical, Electrical and Plumbing Permits - Valuation 0 0 0 1 See Exhibits A2, A3 and A4 Residential Building Reports *0 0 0 0 1 Appeal Flat 100$ 50% 100$ 50% Single Family, Duplex (per unit)Flat 290$ 63% 350$ 75% Multi-Family First Unit Flat 270$ 58% 330$ 71% Each Additional Unit Flat 30$ 75% 40$ 100% Condominiums Flat 255$ 55% 350$ 75% Other Fees 0 0 0 0 1 Inspections outside normal hours:-$ After hours Hourly, 2 hr min.-$ 0% 269$ 100% Weekends/Holidays Hourly, 2 hr min.-$ 0% 359$ 100% Reinspection fee New, Hourly, 1 hr. min.-$ 0% 179$ 100% Administrative Review New, Hourly, 1/2 hr. min.-$ 0% 194$ 100% Permit Renewal Fee (for expired permits) - 2 year permit New, %-$ 0% 15% 75% Board of Appeals Fee:New, Flat -$ 0% 1,000$ 17% Building Investigation Fee 3x Building Permit Fee -$ 0% 3x Building Permit Fee 100% *Non refundable **New fee to fund new and routine upgrades to Permit Management System, Electronic Plan Review Software, Digital Inspection Software, Record Digitalization, Software integrations, and Enterprise Resource Planning System. Note: State mandated charges will be added to the building permit fees pursuant to state law as follows, or as state law may hereafter be amended: CA Green Building Fund: $4 for every $100,000 valuation (minimum of $1 regardless of valuation). 10% of surcharge retained by City for administrative costs, code enforcement education, etc., per statute Health & Safety Code Section 18931.6) S.M.I.P.: 0.013% ($13 per $100,000) of valuation for residential occupancies of no more than 3 stories 0.028% ($28 per $100,000) of valuation for all other occupancies 5% of surcharge retained by the City for data utilization, seismic mapping, etc.; per statute. (Public Resources Code Section 2705) Exhibit A2 Mechanical Permit Fees Current Furnace or Heater: Up to 100,000 BTU $20.00 Over 100,000 BTU $24.70 Floor Furnace $20.00 Wall Furnace, unit heater $20.00 Furnace/AC Alteration or Repair $19.00 Diffuser (ea) $1.60 Gas Piping, up to 4 outlets $6.30 Each additional gas outlet $1.60 Boiler, Compressor, Refrigeration 0-3 HP 100 M BTU $20.00 4-15Hp, 100-500M BTU $37.25 16-30 Hp, 500-1000M BTU $51.00 31-50 Hp, 1000-1750M BTU $75.60 Over 50 Hp or 1750M BTU $126.50 Air Handlers Under 10,000 CFM $14.70 Over 10,000 CFM $24.70 Evaporative Coolers $14.70 Ventilation Hoods $14.70 Appliance Vent or Fan $10.00 Ventilation system, not part of furnace $14.70 Other not listed $14.70 Special Inspection/Investigation or reinspect $67.70 Permit Fee Normal $32.00 Supplemental $10.00 Minimum $125.00 Exhibit A3 Electrical Permit Fees Current New Residential Construction/Addition Multi Family $0.068/sqft. Single Family $0.077/sqft. Swimming Pools $67.70 Photovoltaic System-Residential $169.50 Photovoltaic Systems-Commercial $968.60 Carnivals & Circuses Generators, electric rides $32.00 Booths each $10.00 Temporary Power pole $32.00 Tamp. Lighting, Christmas Tree lots $16.80 Unit fee schedule Outlets: Plugs, switches First 20 $1.60 Each additional $1.05 Fixtures: First 20 $1.60 Each additional $1.05 Pole lights $1.60 Appliances < 1 (hp) (kw) (kva) Residential $6.30 Non-residential $6.30 Power Apparatus (HP or KW) Up to 1 $6.30 Over 1 and not over 10 $16.80 Over10 and not over 50 $33.60 Over 50 not over 100 $67.70 Over 100 $102.00 Busways 100 ft or fraction $10.00 Signs, one circuit $33.60 Circuit or subfeed $24.70 Services <600v, up to 200A $37.25 <600v, 200A to 1000A $75.60 >600v or over 1000A $151.70 Addnl. Meter (ea) $10.00 Miscellaneous Apparatus/panels $24.70 Special Inspection/Investigation or reinspect FBHR Permit Fee Normal $32.00 Supplemental $10.00 Minimum $125.00 Exhibit A4 Plumbing Permit Fees Water Closets $9.50 Wash Basins $9.50 Tubs/ Showers $9.50 Sinks $9.50 Floor Drains $9.50 Grease Trap $9.50 Other fixtures or traps $9.50 Sewage Ejector $54.60 Building Sewer $20.50 Private Sewage System $54.60 Water Heater $9.50 Gas Piping, 1-5 outlets $7.00 Additional, ea. $1.60 Water Piping $9.50 Repair, waste and vents $9.50 Vacuum Breaker 1-2 $7.00 Backflow prevention 2” or less $9.50 Over 2” $20.50 Medical gas system $68.25 Additional outlets > 5 $7.00 Rainwater System (inside)/per drain. $9.50 Graywater system $54.60 Lawn Sprinkler System $9.50 Special Inspection/Investigation or reinspect FBHR Permit Fee Normal $27.30 Supplemental $13.70 Minimum $125.00 City of San Rafael Master Fee Schedule City of San Rafael Planning Fees Service Name Fee Description Current Fee Current Recovery % Recommended Fee/Deposit Recommended Recovery % Mapping Lot Line Adjustment Flat Fee 3,131$ 52%6,075$ 100% Small Subdivision Flat Fee 3,735$ 28%13,457$ 100% Tentative Map Deposit 7,293$ 41%17,588$ 100% Map Amendment and Extensions Flat Fee 2,239$ 29%7,833$ 100% Certificates of Compliance Flat Fee 3,410$ 60%5,642$ 100% Exception (Subdivision Ordinance)Flat Fee 2,761$ 41%6,760$ 100% Development and Annexation 0 0 0 0 1 Development Agreement Deposit 11,534$ 40%28,606$ 100% Use Permit 0 0 0 0 1 Use Permit - Administrative/Staff level Flat Fee 398$ 103%387$ 100% Use Permit – Administrative/Temporary Flat Fee 1,420$ 77%1,840$ 100% Use Permit - Zoning Administrator Flat Fee 2,476$ 55%2,707$ 60% Use Permit - Planning Commission Flat Fee 4,305$ 49%8,815$ 100% Current Recommendations Per Unit City of San Rafael Master Fee Schedule City of San Rafael Planning Fees Service Name Fee Description Current Fee Current Recovery % Recommended Fee/Deposit Recommended Recovery % Current Recommendations Per Unit Variances 0 0 0 0 1 Minor Variance - Zoning Administrator Flat Fee 2,508$ 59%4,239$ 100% Variance - Planning Commission Flat Fee 3,767$ 43%8,815$ 100% Reasonable Accommodation for Disabled Flat Fee 964$ 26%964$ 26% Exception (Zoning)Flat Fee 1,023$ 56%1,840$ 100% Exception (Hillside)New, Flat Fee -$ 0%2,742$ 100% Design Review 0 0 0 12340.57578 1 Design Review (Staff/Administrative)Flat Fee 1,167$ 40%2,938$ 100% Design Review – Over the counter (Staff/Administrative)Flat Fee 398$ 103%387$ 100% Design Review – Staff With DRB Flat Fee 3,564$ 47%7,650$ 100% Design Review - Zoning Administrator Flat Fee 2,258$ 40%5,639$ 100% Design Review – Planning Commission Flat Fee 8,523$ 56%15,152$ 100% Conceptual Review Flat Fee 1,750$ 35%3,000$ 61% Sign Review – Staff Flat Fee 255$ 102%249$ 100% City of San Rafael Master Fee Schedule City of San Rafael Planning Fees Service Name Fee Description Current Fee Current Recovery % Recommended Fee/Deposit Recommended Recovery % Current Recommendations Per Unit Sign Program – Minor (Staff)Flat Fee 1,049$ 75%1,397$ 100% Sign Program – Major (Planning Commission)Flat Fee 4,303$ 54%8,038$ 100% Sign Review – Minor Exception Flat Fee 1,043$ 75%1,397$ 100% Sign Review – Major Exception Flat Fee 4,220$ 52%8,038$ 100% Temporary Banner Permit Flat Fee 132$ 71%186$ 100% Appeals to Planning Commission - Non-Applicant (Resident)Flat Fee 300$ 4%350$ 5% Appeals to Planning Commission - Applicant or Non-Resident Deposit 4,843$ 63%5,000$ 65% Appeals to City Council - Non-Applicant (Resident)Flat Fee 350$ 4%350$ 4% Appeals to City Council - Applicant or Non-Resident Deposit 4,476$ 51%5,000$ 57% Negative Declaration Deposit 10,346$ 59%17,658$ 100% Monitoring of mitigation measures and conditions of approval Deposit 5,000$ 77%6,471$ 100% General Plan Amendment Deposit 8,646$ 48%17,889$ 100% Rezoning/Pre-Zoning Deposit 7,176$ 40%17,889$ 100% Planned District Deposit 11,194$ 59%18,879$ 100% City of San Rafael Master Fee Schedule City of San Rafael Planning Fees Service Name Fee Description Current Fee Current Recovery % Recommended Fee/Deposit Recommended Recovery % Current Recommendations Per Unit Pre Application Meeting/Letter Flat Fee 1,191$ 17%2,086$ 30% Licensing Agreement (Outdoor Dining)Flat Fee 564$ 33%1,717$ 100% Certificate of Appropriateness for alteration of historic structure Deposit 5,430$ 57%9,554$ 100% Certificate of Public Convenience and Necessity for alcoholic beverage license Deposit 1,612$ 54%2,992$ 100% Neighborhood Meeting Deposit 1,440$ 52%2,796$ 100% Planning/Zoning research (includes review of SB35 applications)Deposit, Per Hour Actual Cost 100%157$ 100% General Plan Maintenance Fee Surcharge to building permit fee 35% of building permit fee 35% of building permit fee N/A Planning Review of Building Permits - Multi-family Change from Hourly to % of Building Payment N/A 10% of building permit fee 50% Planning Review of Building permits - All Others Change from Hourly to % of Building Payment N/A 20% of building permit fee 100% Archaeology Referral Flat Fee 80$ 100%80$ 100% Small Cell Permit Deposit 2,000$ 40%4,970$ 100% Telecomms Permit Flat Fee 2,000$ 200%1,000$ 100% Short Term Rental Registration - first year Flat Fee 170$ 100%170$ 100% City of San Rafael Master Fee Schedule City of San Rafael Planning Fees Service Name Fee Description Current Fee Current Recovery % Recommended Fee/Deposit Recommended Recovery % Current Recommendations Per Unit Short Term Rental - renewal Flat Fee 135$ 100%135$ 100% Certified Massage Establishment Certificate or Operator Permit: Certified Massage Establishment - Sole Proprieter Registration Flat Annual Fee 63$ 31%203$ 100% Certified Massage Establishment - Registration with Employees Flat Annual Fee 124$ 43%290$ 100% Certified Massage Establishment -Changes to File/Business Flat Annual Fee 25$ 0%25$ 100% Certified Massage Establishment -time extension new 50% of original fee Consultant costs will be charged to the deposit account plus 25% to cover contract administration and review of consultant work product. Multiple application discount: when multiple applications are filed simultaneously, a 25% discount on each deposit-based application type will apply. City of San Rafael Master Fee Schedule City of San Rafael Public Works Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Document/Information Services 0 0 0 0 1 8.5" x 11"Per Print 10$ 6650%0.15$ 100% 11" x 17"Per Print 15$ 7552%0.20$ 100% 24" x 36"Per Plot 25$ 9790%0.26$ 100% 36" x 48"Per Plot 30$ 294%10$ 100% Public Records Request 1 Per Print -$ 0%0.15$ 100% Property Information Request Per Request -$ 0%208$ 100% Flood Plain Letter Response Per Response 167$ 74%227$ 100% Custom Map/ Document Production Hourly Rates -$ 0%Hourly Rates 100% Transportation Services 0 0 0 0 1 Oversize Load Review - Single Trip Set by State 16$ 19%16$ 19% Oversize Load Review - Annual Set by State 92$ 36%92$ 36% Oversize Load Review - Repetitive (6 month max)Set by State 92$ 36%92$ 36% Police Escort Services (Two hr min.)Flat + Hourly 301$ 86%348$ 100% Current Recommendations Per Unit Per Unit City of San Rafael Master Fee Schedule City of San Rafael Public Works Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommendations Per Unit Per Unit Encroachment Permits 0 0 0 0 1 Minor Continuing Encroachment Permits Flat Fee 368$ 75%493$ 100% Revocable License Agreements for Major Continuing Encroachment Flat Fee 2,394$ 98%2,435$ 100% Utility/Special District Encroachment Permits Flat + TCP count -$ 0%$1,213 + $233 for third+ insp 100% Base Fee (inclds 1 Traffic Control Plan)Flat 919$ 93%986$ 100% Each Additional TCP Each -$ 0%411$ 100% Temporary Encroachment Permit 2 0 -$ 0%-$ 100% Small - debris or moving boxes and parking changes Flat Fee 246$ 144%50$ 29% Standard - all other (Up to $20K of improvements/Infrastructure. Greater than $20k see improvement section fees 32, 32.1 & 33)Flat Fee 246$ 69%358$ 100% PW Review of Building and Planning Permit 3 0 0 0 0 1 Full Review 4 Per Review -$ 0%454$ 100% Over the Counter Review Per Review -$ 0%113$ 100% Construction Inspection - Onsite Improvements When required, per inspection -$ 0%164$ 100% Flood Zone Project New, Flat -$ 0%340$ 100% Hydrology Study New, Flat -$ 0%454$ 100% City of San Rafael Master Fee Schedule City of San Rafael Public Works Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommendations Per Unit Per Unit Traffic Study: Assumptions Memo New, Flat -$ 0%817$ 100% Traffic Study: Impact Report New, Flat -$ 0%4,086$ 100% E.12 Regulated Project/Stormwater Control Plan New -Flat Fee -$ 0%1,134$ 100% Geotechnical Study New - Flat Fee -$ 0%680$ 100% 3rd Party Geotechnical Peer Review Actual Cost + Surcharge -$ 0% Actual cost + 20% administrative fee 100% Consultant 3rd Party Review New, %-$ 0% Actual cost + 20% administrative fee 100% City Surveyor Review New, %-$ 0% Consultant actual cost + 20% administrative fee 100% Parcel Map Plan Check (Minor Subdivision)Flat Fee 713$ 63%1,134$ 100% Final Map Plan Check (Major Subdivision)Deposit + Hourly 3,285$ 0%$1,815 Deposit 100% Lot Line Adjustment Review New - Flat Fee -$ 0%1,134$ 100% Tentative Map Review New - Deposit + Hourly -$ 0%$1,815 Deposit 100% Right-of-Way Improvements/Infrastructure - Plan Checking and Inspection 0 0 0 0 1 $0 - $20k cost of improvements Flat Fee 246$ City of San Rafael Master Fee Schedule City of San Rafael Public Works Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommendations Per Unit Per Unit $20k - $50k cost of improvements Flat Fee 246$ 40%618$ 100% $50k - $100k cost of improvements Flat Fee 246$ 20%1,235$ 100% $100k+ cost of improvements Deposit + Hourly 246$ 5%4,942$ 100% Improvement/Subdivision Inspections 0 0 0 0 1 Curb and Gutter Inspection: Projects under $5,000 Delete 368$ Projects over $5,000 Delete 2,615$ -$ -$ 1$ Sidewalk Inspection:0 -$ 0%-$ 100% Projects under $5,000 Delete 368$ Projects over $5,000 Delete 2,516$ -$ -$ 1$ Driveway Approaches:0 -$ 0%-$ 100% Projects under $5,000 Delete 368$ Information Request Services 0 0 0 0 1 Projects over $5,000 Delete 2,615$ -$ -$ 1$ Multiple Driveways 0 -$ 0%-$ 100% City of San Rafael Master Fee Schedule City of San Rafael Public Works Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommendations Per Unit Per Unit Projects under $5,000 Delete 368$ Projects over $5,000 Delete 2,615$ -$ -$ 1$ Grading Permits - Plan Check and Inspections (includes NPDES)0 0 0 1 Permit and Plan Check Flat Fee 869$ 111%782$ 100% Seasonal Grading Inspections (rain seasons)Per rainy season (Oct 15 - Apr 15)-$ 0%1,563$ 100% Water Use Permits 0 0 0 0 1 Water Course Permits Flat Fee 31$ 7%454$ 100% Tide Land Permits - Dredged Material Flat Fee 1$ 0%618$ 100% Tide Land Permits - Other Tidelands Permits deposit + hourly 500$ 81%618$ 100% Streetary Permits Application fee Flat Fee 2,000$ 100%2,000$ 100% Annual Encroachment Lease fee Annual Flat Fee 3,600$ na 3,600$ na City of San Rafael Master Fee Schedule City of San Rafael Public Works Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommendations Per Unit Per Unit Deposit Deposit 2,000$ na 2,000$ na Special Studies (new)0 0 0 0 1 Special Studies (reimbursement)Flat Fee 2,056$ 45% Actual cost + 20% surcharge 100% Footnotes 1) Public Records Request fees may be waived at the City's sole discretion for requests totaling fewer than 50 pages per request. 2) Temporary Encroachment Permit Fees: there is no charge for debris boxes if placed on private property. 4) Fee is per review. Fee may be charged several times if there are multiple reviews of the project. 3) PW Review of Building & Planning Permit - All planning and building permit submissions may be referred to third-party review by an external consultant or the City Surveyor at the discretion of Department of Public Works staff. The applicant is responsible for reimbursement of any fees accrued by external consultants or City Surveyor. City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Fire Inspections Nuisance Alarm Fee Engine Company FBHR, 2 hr minimum -$ 0% $ 413 100% Fire Inspections - Operational Permits Aerosol Products Flat Fee 240$ 95% 251$ 100% Amusement Buildings Flat Fee 240$ 95% 251$ 100% Aviation Facilities Flat Fee 240$ 95% 251$ 100% Carnivals and Fairs Flat Fee 240$ 95% 251$ 100% Cellulose Nitrate Film Flat Fee 240$ 95% 251$ 100% Combustible Dust-Producing Operations Flat Fee 240$ 95% 251$ 100% Combustible Fibers Flat Fee 240$ 95% 251$ 100% Compressed Gases Flat Fee 240$ 95% 251$ 100% Covered Mall Buildings Flat Fee 240$ 95% 251$ 100% Cryogenic Fluids Flat Fee 240$ 95% 251$ 100% Cutting and Welding Flat Fee 240$ 95% 251$ 100% Dry Cleaning Plants Flat Fee 240$ 95% 251$ 100% Current Recommended Per Unit Per Unit City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommended Per Unit Per Unit Exhibits and Trade Shows Flat Fee 240$ 95% 251$ 100% Explosives Flat Fee 240$ 95% 251$ 100% Blasting - First Flat Fee 240$ 95% 251$ 100% Blasting - Each Additional Each Addtl 150$ 119% 126$ 100% Fire Hydrants and Valves Flat Fee 240$ 95% 251$ 100% Flammable and Combustible Liquids Flat Fee 240$ 95% 251$ 100% Floor Finishing Flat Fee 240$ 95% 251$ 100% Fruit and Crop Ripening Flat Fee 240$ 95% 251$ 100% Fumigation and Thermal Insecticidal Fogging Flat Fee 240$ 95% 251$ 100% Hazardous Materials Flat Fee 240$ 95% 251$ 100% HPM Facilities Flat Fee 240$ 95% 251$ 100% High-piled Storage Flat Fee 240$ 95% 251$ 100% Hot Work Operations Flat Fee 240$ 95% 251$ 100% Industrial Ovens Flat Fee 240$ 95% 251$ 100% Lumber Yards and Woodworking Plants Flat Fee 240$ 95% 251$ 100% City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommended Per Unit Per Unit Liquid-or Gas-fueled Vehicles or Equipment in Assembly Buildings Flat Fee 240$ 95% 251$ 100% LP-gas Flat Fee 240$ 95% 251$ 100% Magnesium Flat Fee 240$ 95% 251$ 100% Miscellaneous Combustible Storage Flat Fee 240$ 95% 251$ 100% Open Burnings Flat Fee 240$ 95% 251$ 100% Open Flames and Torches Flat Fee 240$ 95% 251$ 100% Open Flames and Candles Flat Fee 240$ 95% 251$ 100% Organic Coatings Flat Fee 240$ 95% 251$ 100% Places of Assembly Flat Fee 240$ 95% 251$ 100% Private Fire Hydrants Flat Fee 240$ 95% 251$ 100% Pyrotechnic Special Effects Material Flat Fee 240$ 95% 251$ 100% Public Fireworks Displays Flat Fee 770$ 36% 2,138$ 100% Pyroxylin Plastics Flat Fee 240$ 95% 251$ 100% Refrigeration Equipment Flat Fee 240$ 95% 251$ 100% Repair Garages and Motor Fuel-Dispensing Facilities Flat Fee 240$ 95% 251$ 100% City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommended Per Unit Per Unit Rooftop Heliports Flat Fee 240$ 95% 251$ 100% Spraying or Dipping Flat Fee 240$ 95% 251$ 100% Storage of Scrap Tires and Tire Byproducts Flat Fee 240$ 95% 251$ 100% Temporary Membrane Structures and Tents Flat Fee 240$ 95% 251$ 100% Tire-Rebuilding Plants Flat Fee 240$ 95% 251$ 100% Waste Handling Flat Fee 240$ 95% 251$ 100% Wood Products Flat Fee 240$ 95% 251$ 100% Other Special Hazard Operations or Use Flat Fee 240$ 95% 251$ 100% *Multiple Operational Permits First permit at full price, each additional at 50% of schedule above -$ 0% First permit at full price, each additional at 50% of schedule above 100% Fire Inspections - Construction Permits Automatic fire-extinguishing systems Flat Fee 300$ 95% 314$ 100% Fire sprinkler system single family dwelling Base + $4 per sprinkler 300$ 95% 314$ 100% Fire sprinkler systems with 10 sprinklers or less Base + $4 per sprinkler 300$ 95% 314$ 100% City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommended Per Unit Per Unit Fire sprinkler systems with 11 sprinklers or more Base + $4 per sprinkler 450$ 143% 314$ 100% Backflow Preventer Assembly Flat Fee 150$ 119% 126$ 100% Battery Systems Flat Fee 300$ 95% 314$ 100% Compressed Gases Flat Fee 300$ 95% 314$ 100% Emergency Response Radio Coverage System Flat Fee 300$ 95% 314$ 100% Fire Alarm and Detection Systems and Related Equipment Base +4 per device 300$ 95% 314$ 100% Fire Pumps and Related Equipment Flat Fee 450$ 143% 314$ 100% Flammable and Combustible Liquids - 1st tank Flat Fee 300$ 95% 314$ 100% Flammable and Combustible Liquids - each addtl tank Each Addtl Tank 150$ 96% 157$ 100% Hazardous Materials Flat Fee 300$ 95% 314$ 100% Industrial Ovens Flat Fee 300$ 95% 314$ 100% LP-Gas Flat Fee 300$ 95% 314$ 100% Private Fire Hydrant Flat Fee 150$ 48% 314$ 100% Spraying or Dipping Process Flat Fee 300$ 95% 314$ 100% Standpipe System Flat Fee 300$ 95% 314$ 100% City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommended Per Unit Per Unit Temporary Membrane Structures and Tents Flat Fee 300$ 95% 314$ 100% Underground Fireline Flat Fee 300$ 95% 314$ 100% Vegetation Management Fire Protection Plan Flat Fee 300$ 80% 377$ 100% Work (repair, replacement, relocation) Flat Fee 50$ 32% 157$ 100% Fire Inspections - Other Fire Prevention Fees Consultation Flat Fee -2 hour min -$ 0% 251$ 100% Plans review Flat Fee -2 hour min -$ 0% 251$ 100% Inspection Flat Fee -2 hour min -$ 0% 251$ 100% Reinspection Flat Fee -2 hour min -$ 0% 251$ 100% Investigation fee for performing work without an approved permit 2 x normal permit fee + permit fee -$ 0% 2 x normal permit fee + permit fee 100% Inspections outside normal work hours: Early or late inspections on normal work days Flat Fee -$ 0% 359$ 100% Inspections outside normal work hours: Call back or weekend inspections Flat Fee -$ 0% 717$ 100% Fire/Smoke damper inspection - up to 4 dampers Delete 150$ Fire/Smoke damper inspection - each additional damper Delete 40$ City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommended Per Unit Per Unit Fire hydrant flow test and report Flat Fee 200$ 80% 251$ 100% Fire Inspections - SFM Fire Clearance Inspections Fire clearance inspection Flat Fee 150$ 80% 189$ 100% Commercial Life Safety Inspections Business type I Per Year 24$ 76% 31$ 100% Business type 2 Per Year 63$ 100% 63$ 100% Business type 3 Per Year 109$ 87% 126$ 100% Business type 4 Per Year 200$ 80% 251$ 100% Reinspection (after 2nd reinspection) Each 61$ 49% 126$ 100% Fire and Life Safety Plan Checks Fire Code Review of Building Permit 50% of building plan check fee -$ 0% 50% of building plan check fee 100% Fire Services - Fire Inspections Liability for Persons Causing Emergencies Actual Cost -$ 0% Actual Cost 100% Fire Watch Actual Cost -$ 0% Actual Cost 100% Fire Services - Hazardous Materials City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommended Per Unit Per Unit Fire Code Related Hazardous Materials Inspections No Fee -$ 0% -$ 100% Hazardous Materials – Residential Actual Cost -$ 0% Actual Cost 100% Consultative Services – Hazardous Materials No Fee -$ 0% -$ 100% Fire Services - Fire Reports Fire Reports Varies 17$ 43% 39$ 100% Fire Services - Emergency Medical Services ALS Bundled Base Rate Flat Fee 2,075$ 55% 2,075$ 55% BLS Bundled Base Rate Flat Fee 2,075$ 55% 2,075$ 55% First Responder Fee Flat Fee 358$ 55% 358$ 55% Oxygen Flat Fee 157$ 55% 157$ 55% Mileage per mile Per Mile 49$ 55% 49$ 55% Treat No Transport Flat Fee 423$ 55% 423$ 55% Fire Services Fire/EMS Training and Education Actual Cost FBHR 100% FBHR 100% Fire Protection Services - CSA #19 CSA#19 Agreement Per Contract 100% Per Contract 100% City of San Rafael Master Fee Schedule City of San Rafael Fire Service Name Fee Description Current Fee Current Recovery % Recommended Fee Recommended Recovery % Current Recommended Per Unit Per Unit New Fees Exemption from the Vegetation Ordinance New -$ 0% 126$ 100% Multi-Family dwelling inspections New -$ 0% 153$ 100% Short-Term Rental Inspection New -$ 0% 126$ 100% Excessive Public Assist Calls New -$ 0% 413$ 100% Fee # 124 based on an agreement with County Service Area 19 (unincorporated San Rafael) Fee #123 Fully burndended hourly rate (FBHR) plus any supplies or materials required to conduct training Fee #116-122 Fire Services - Emergency Medical Services - Fees may include ambulance dispatch and fuel surcharge (mileage) component. City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 01 General Services Service Description Charge 01.01 Bad Check Charges 01.02 Business Licenses 01.03 Agenda Fees 01.04 Reproduction Work 01.05 City Clerk Documents City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 01 General Services Service Description Charge 01.06 Special Services City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 03 Police Services Service Description Charge 03.01 Fingerprinting 03.03 Concealed Weapons 03.07 Response Services 03.08 DUI Fees 03.10 Towing Services 03.11 Permits 03.12 Police Support Services Fees 03.14 Subpoenas Duces Tecum 03.16 Massage Establishments City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 03 Police Services Service Description Charge 03.17 Fortune Tellers 03.18 Solicitors/Peddlers 03.19 Taxi/Public Convenience City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 05 Building Services/ Fire Prevention Service Description Charge 05.01 Plan Checking 05.02 Permits and Inspections 05.06 Residential Inspection 06.01 Fire Inspections 06.04 Commercial Life Safety Inspections 06.05 Reinspection Services 06.09 Fire and Life Safety Plan Checks City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 06 Fire Services Service Description Charge 06.01 Fire Inspections 06.02 Hazardous Materials 06.03 Fire Reports 06.07 Fire District Services 06.08 Emergency Medical Assistance 06.10 Fire/EMS Training and Education City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 07 Library Services Service Description Charge 07.01 Late Fines 07.02 Reserves - ILL (Inter Library Loan) 07.04 Lost/Damaged Items City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 08 Recreation Services Service Description Charge 08.00 Recreation Programs 08.06 Child Care Programs City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 10 Planning Services Service Description Charge 10.01 Mapping 10.02 Development and Annexation 10.03 Use Permits 10.04 Variances City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 10 Planning Services Service Description Charge 10.05 Design Review City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 10 Planning Services Service Description Charge 10.06 Sign Review 10.07 Appeal Fees City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 10 Planning Services Service Description Charge 10.08 Environmental Impact Fees 10.13 General Plan Fees City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 10 Planning Services Service Description Charge 10.14 Other Planning Services 10.15 Code Enforcement City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 10 Planning Services Service Description Charge City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 11 Engineering Services (Public Works)Service Description Charge 01.04 Maps 03.05 Transportation Services 09.03 Refuse Fee 09.04 Construction Fee 11.01 Encroachment Permits City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 11 Engineering Services (Public Works)Service Description Charge 11.02 Public Works Services 11.03 Improvement Plan Checking 11.04 Improvement Inspection Fees City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 11 Engineering Services (Public Works)Service Description Charge 11.05 Street Cut Inspection (Utilities) 11.06 Grading Permits - Plan Checks and Inspections 11.07 Grading Inspections City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 11 Engineering Services (Public Works)Service Description Charge 11.08 Water Use Permits 11.09 Information Request Services 11.10 Right -of-Way City of San Rafael Master Fee Schedule FBHR= Fully Burdened Hourly Rate For Staff Positions 13 Maintenance Services Service Description Charge 13.00 Maintenance Services 14.00 Other Services Exhibit E 1 Operational Fire Permits*Fee Aerosol Products $240 Amusement Buildings $240 Aviation Facilities $240 Carnivals and Fairs $240 Cellulose Nitrate Film $240 Combustible Dust-Producing Operations $240 Combustible Fibers $240 Compressed Gases $240 Covered Mall Buildings $240 Cryogenic Fluids $240 Cutting and Welding $240 Dry Cleaning Plants $240 Exhibits and Trade Shows $240 Explosives $240 Blasting $240 first blast and $150 each additional blast Fire Hydrants and Valves $240 Flammable and Combustible Liquids $240 Floor Finishing $240 Fruit and Crop Ripening $240 Fumigation and Thermal Insecticidal Fogging $240 Hazardous Materials $240 HPM Facilities $240 High-piled Storage $240 Hot Work Operations $240 Industrial Ovens $240 Lumber Yards and Woodworking Plants $240 Liquid-or Gas-fueled Vehicles or Equipment in Assembly Buildings $240 LP-gas $240 Magnesium $240 Miscellaneous Combustible Storage $240 Open Burnings $240 Open Flames and Torches $240 Open Flames and Candles $240 Organic Coatings $240 Places of Assembly $240 Private Fire Hydrants $240 Pyrotechnic Special Effects Material $240 Public Fireworks Displays $770 Pyroxylin Plastics $240 Refrigeration Equipment $240 Exhibit E 1 Repair Garages and Motor Fuel-Dispensing Facilities $240 Rooftop Heliports $240 Spraying or Dipping $240 Storage of Scrap Tires and Tire Byproducts $240 Temporary Membrane Structures and Tents $240 Tire-Rebuilding Plants $240 Waste Handling $240 Wood Products $240 Other Special Hazard Operations or Use $240 *Multiple Operational Permits First permit at full price, each additional at 50% of schedule above Construction Fire Permits**Fee Automatic fire-extinguishing systems $300 per system Fire sprinkler system single family dwelling $300 plus $4.00 per sprinkler Fire sprinkler system with 10 sprinklers or less $300 plus $4.00 per sprinkler Fire sprinkler system with 11 sprinklers or more $450 plus $4.00 per sprinkler Backflow Preventer Assembly $150 Battery Systems $300 Compressed Gases $300 Emergency Response Radio Coverage System $300 Fire Alarm and Detection Systems and Related Equipment $300 plus $4.00 per device Fire Pumps and Related Equipment $450 Flammable and Combustible Liquids $300 for the first tank and $150 each additional tank Hazardous Materials $300 Industrial Ovens $300 LP-Gas $300 Private Fire Hydrant $150 Spraying or Dipping Process $300 Standpipe System $300 Temporary Membrane Structures and Tents $300 Underground Fireline $300 Vegetation Management Fire Protection Plan $300 Work (repair, replacement, relocation)$50 ** Fee includes permit, plans review and inspection services Exhibit E 1 Other Fire Prevention Services Fee Consultation FBHR - min 1 hour Plans review FBHR - min 1 hour Inspection FBHR - min 1 hour Reinspection FBHR - min 1 hour Investigation for performing work without an approved permit 2 x normal permit fee + permit fee Inspections outside normal work hours: Early or late inspections on normal work days FBHR x # of hours x 1.5 - min 1 hour Call back or weekend inspections FBHR x # of hours x 1.5 - min 4 hour Fire/Smoke damper inspection $150 for up to 4 dampers and $40 for each additional damper Fire hydrant flow test and report $200.00 SFM Fire Clearance Inspection Fee Fire clearance inspection $150 Commercial Life/Safety Inspection Fee Bi-annual inspection of commercial business See Exhibit E2 Exhibit E2 Description FEE* Business type I Simple, small business,approved for self-inspection (inspected every 4 years)$23.90 per year Small offices and retail stores - typically under 3000 sqft. Business type 2 Small, relatively uncomplicated business (inspected every 2 years)$62.95 per year Business types, less than 10,000 sqft. Business type 3 Medium sized and/or medium complexity business (inspected every 2 years)$108.90 per year 10,001 - 40,000 sqft businesses Business type 4 Large and/or complex business (inspected every 2 years)$200.45 per year Over 40,000 sqft. businesses Reinspection (after 2nd reinspection) $61.00 each *All fees listed above are billed at the total fee divided by the number of years in the inspection cycle Commercial Life/Safety Inspections CITY OF SAN RAFAEL Management Services Department Parking Services Division Exhibit A Description Authority Code Penalty- Effective 7/1/2012 I. Parking Penalties EXPIRED REGISTRATION - CORRECTABLE C.V.C 4000a Per County Bail PLATE ISSUED TO ANOTHER VEHICLE C.V.C Per County Bail ALTERED LICENSE PLATE(S)C.V.C Per County Bail NO PLATES - CORRECTABLE C.V.C Per County Bail PLATES IMPROPERLY PLACED/OBSCURED C.V.C Per County Bail NO CURRENT TAB - CORRECTABLE C.V.C 5204a Per County Bail PARKED ON SCHOOL GROUNDS C.V.C $35.00 NO PARKING IN BICYCLE LANE C.V.C $65.00 PARKED IN INTERSECTION C.V.C $65.00 PARKED IN CROSSWALK C.V.C $65.00 FIRE STATION ZONE C.V.C $150.00 PARKED IN FRONT OF DRIVEWAY C.V.C $65.00 PARKED ON SIDEWALK C.V.C 22500F $65.00 OBSTRUCTING TRAFFIC C.V.C $65.00 DOUBLE PARKED C.V.C $65.00 PARKED IN A BUS STOP C.V.C $250.00 WHEELCHAIR ACCESS C.V.C $275.00 PARKED IN FIRE LANE C.V.C $150.00 18 IN. FROM CURB /WRONG WAY C.V.C $35.00 BLUE ZONE PHYSICALLY HANDICAPPED C.V.C $275.00 BLOCKING ACCESS TO BLUE ZONE C.V.C $275.00 ADJACENT TO DISABLED PARKING C.V.C $275.00 MISUSE DISABLED PLACARD C.V.C $500.00 PARKED WITHIN 15FT OF A FIRE HYDRANT C.V.C $150.00 UNATTENDED VEHICLE WITH MOTOR RUNNING C.V.C $25.00 UNATTENDED VEH/OCCUPNT UNABLE TO GET OUT C.V.C $122.00 NO PARKING WITHIN 7 1/2 FT OF R/R TRACKS C.V.C $25.00 DISABLED ACCESS RAMP W/IN 3FT C.V.C $275.00 STOPPED/PARKED IN VEHICLE CROSSING C.V.C $122.00 PROOF OF CORRECTION C.V.C $10.00 FAILURE TO DISPLAY DISABLED PLACARD (1 x free, 2-3 times in 12 mo.)C.V.C $10.00 FAILURE TO DISPLAY DISABLED PLACARD (4 or more times in 12 mo.)C.V.C $20.00 PARKED IN PARKWAY S.R.M.C 5.40.020 $65.00 ABANDONED VEHICLE OR PARKED OVER 72HRS S.R.M.C 5.40.030 $150.00 REPAIRING/WASHING VEHICLE ON CITY STREET S.R.M.C 5.40.040 $105.00 PARKED FOR SALE S.R.M.C 5.40.045 $105.00 18 IN. FROM CURB S.R.M.C 5.40.050 $25.00 NO PKG WITHIN 6FT OF CENTER OF ROADWAY S.R.M.C 5.40.08 $65.00 FAILURE TO CURB WHEELS S.R.M.C 5.40.090 $25.00 CROSSWALK / SAFETY ZONE / INTERSECTION S.R.M.C 5.40.100 $65.00 PARKING-COMMERCIAL VEHICLES & TRAILERS S.R.M.C 5.40.140 $150.00 PARKED IN FRONT OF DRIVEWAY S.R.M.C 5.40.150 $50.00 RESTRICTED PARKING ON CITY PROPERTY S.R.M.C 5.40.160 $25.00 CAB ZONE ONLY S.R.M.C 5.40.170 $25.00 NO PARKING BETWEEN 3AM AND 6AM S.R.M.C 5.40.180 $50.00 VEHICLES OVER 6FT AT INTERSECTIONS S.R.M.C 5.40.230 $65.00 PASSENGER LOADING ZONE S.R.M.C 5.40.182 $25.00 CITY OF SAN RAFAEL Management Services Department Parking Services Division Exhibit A Description Authority Code Penalty- Effective 7/1/2012 NO ALLEY PARKING S.R.M.C 5.48.020(03)$25.00 PARKED IN A BUS STOP S.R.M.C 5.48.060 $250.00 OVERTIME PARKING ZONE 1HR S.R.M.C 5.48.020(01)$35.00 OVERTIME PARKING ZONE 2HR S.R.M.C 5.48.020(02)$35.00 OVERTIME PARKING ZONE 4HR S.R.M.C 5.48.020(04)$35.00 OVERTIME PARKING ZONE 30 MIN S.R.M.C 5.48.020(30)$35.00 PARKED IN GREEN ZONE S.R.M.C 5.48.020(g)$25.00 NO PARKING ANYTIME S.R.M.C 5.48.020(np)$65.00 RESTRICTED POLICE PARKING ONLY S.R.M.C 5.48.020 $35.00 RED ZONE S.R.M.C 5.48.020( r)$65.00 RESTRICTED NO PARKING 7AM-4PM S.R.M.C 5.48.020 $35.00 TOW AWAY ZONE S.R.M.C 5.48.020(ts)$65.00 TOW AWAY ZONE-COMMUTER LANES (LINCOLN, IRWIN, & MISSION)S.R.M.C 5.48.020(t)$100.00 PARKED IN WHITE ZONE S.R.M.C 5.48.020(w)$25.00 PARKED IN YELLOW ZONE S.R.M.C 5.48.020(y)$25.00 FAILURE TO COMPLY w/ CURB/SIGN MARKING S.R.M.C 5.48.020 $35.00 FAILURE TO COMPLY WITH SPACE MARKINGS S.R.M.C 5.48.030 $35.00 EXPIRED METER S.R.M.C 5.60.050(e)$35.00 EXPIRED METER WITH OVERTIME PARKING S.R.M.C 5.60.050(mo)$45.00 OVERTIME METER PARKING S.R.M.C 5.60.050(o)$35.00 CIRCUMVENTING OR DAMAGING PARKING EQUIPMENT TO AVOID FEES S.R.M.C 5.60.052 (b)$350.00 FAILURE TO HONOR AN IOU FOR UNPAID PARKING FEES S.R.M.C 5.60.052 (c1)$30.00 LEAVING A PARKING FACILITY W/O PAYMENT OF FEES S.R.M.C 5.60.052 (c2)$30.00 PARKING OVERNIGHT IN A GATED PARKING GARAGE S.R.M.C 5.60.053 (a)$30.00 OVERNIGHT PARKING IN CITY PARKING FACILITY W/O PERMIT S.R.M.C 5.60.053 (b)$30.00 II. Late Payment Penalties PAYMENT NOT RECEIVED 14 DAYS AFTER MAILING OF NOTIFICATION OF DELINQUENT VIOLATION C.V.C 2x Violation Not to exceed $150 PAYMENT NOT RECEIVED 21 DAYS AFTER 14 DAY PERIOD HAS ELAPSED C.V.C $40.00 DMV REGISTRATION HOLD PROCESSING FEE C.V.C $10 CITY OF SAN RAFAEL CITYWIDE COMPREHENSIVE USE FEE STUDY APRIL 2022 TABLE OF CONTENTS 2 01 SECTION 1 Executive Summary SECTION 1 Executive Summary Introduction MGT Consulting Group (MGT) is pleased to present the City of San Rafael with this summary of findings for the recently completed Citywide comprehensive user fee study. The City of San Rafael had not performed a user fee study since 2011. In late 2019, the City contracted with MGT to perform a citywide user study using fiscal year 2019/2020 budgeted figures, staffing and operational information. The current City fees represent the fees being charged at the beginning of this study. Due the Covid-19 global pandemic, the analysis for Community Development (Building, Planning and Code) and Public Works was put on hold for a year. The analysis was once again picked up in early 2022 and finalized in April 2022. This report is the culmination of an extensive study conducted by MGT in collaboration with City management and staff. MGT would like to take this opportunity to gratefully acknowledge all management and staff who participated on this project for their efforts and coordination. Study Scope and Objectives 3 This study included a review of fee-for-service activities within the following areas: Building City Clerk Finance Fire Economic Development Library Planning Police Public Works Recreation/Child Care SECTION 1 Executive Summary Study Scope and Objectives continued.. 4 The study was performed under the general direction of the Finance Department with participation from representatives from each department. The primary goals of the study were to: •Develop a catalog of the fees within each department •Streamline fees according to industry best practices •Define what it costs the City to provide various fee-related services •Compare full costs against current fee •Survey what regional cities charge for similar services •Identify additional revenue potential for each division •Provide recommendations The information summarized in this report addresses each of these issues and provides the City with the tools necessary to make informed decisions about any proposed fee adjustments and the resulting impact on city revenues. Study Findings The study's primary objective is to provide the City's decision-makers with the basic data needed to make informed pricing decisions. This report details the full cost of services and presents recommended fee adjustments and their fiscal impact. Recommendations are based on careful consideration of the results of the cost analysis, industry best practices and market comparisons. With the exception of recreation, MGT in general recommends full cost recovery on most fees. The exhibit on the following page displays the average cost recovery rates and FY 2019/2020 budgeted revenues of each department into the following categories: Column A, User Fee Costs –$7,925,812 of the City’s costs are related to user fee services. It is this $ 7,925,812 million that is the focus of this study and represents the total potential for user fee-related revenues for the City. These numbers exclude recreation. Column B, Current Revenues –Based on current individual fee levels, the City generates fee- related revenues of $6,533,490 and is experiencing an 82% overall cost recovery level. Current cost recovery levels for the departments range from 9% to 98%. These results exclude recreation. SECTION 1 Executive Summary Study Findings continued.. Column C, Current Subsidy –Current fee revenues recover 82% of full cost, leaving 18% or $1,392,324 to be funded by other funding sources. This $1,392,324 represents an opportunity for the City to adjust fees and revenues within the various departments. Note, some fees are set by statute and cannot be adjusted. Column D, Recommended Recovery –Adjusting fees to the proposed cost recovery, based on the City’s User Fee Policy would balance the specified fee revenue to $7,838,347. This would set the overall cost recovery level at 99%. Column E, Increased Revenue –$7,838,347 in potential revenue could be generated. This would represent a $1,205,179 increase in the revenue currently being collected for these activities by the City on an annualized basis. Management should take a conservative approach to increase revenue projections in light of the current Covid-19 pandemic, as it could reduce construction activity and revenue. 5 * The proposed fee structures for Recreation and Library were changed significantly from their prior structure. Several categories were added, deleted, consolidated or broken-down into sub- categories. These changes were made primarily with the customer in mind to increase overall user-friendliness of the fee schedule. Due to the comprehensive changes in the new fee structure, we are not able to project the fiscal impact of fee adjustment recommendations. SECTION 1 Executive Summary Methodology 6 MGT’s standard approach for analyzing the cost of providing fee-related services is commonly referred to as a “bottom-up”approach.The bottom-up approach was used to analyze all of San Rafael user fees.A general description of the bottom-up approach is as follows: 1.Identify all direct staff time spent on the fee related activity or service MGT conducted a series of meetings with staff from each department to identify every employee, by classification, who performs work directly in support of fee related services. Direct staff costs are incurred by employees who are “on the front line” and most visible to the customers (e.g. inspectors, plan reviewers, etc.). Once all direct staff were identified, subject matter experts for each section estimated how much time those employees spend, on average, performing each fee-for-service. Developing time estimates for fee related services can be challenging and departments should be commended for the time and effort they put into this. Although MGT provided departments with templates and other tools to assist them in developing average or “typical” time estimates, these calculations were necessarily developed by the subject matter experts within each fee area. 2. Calculate direct cost of the staff time for each fee using productive hourly rates “Productive hours” means the time staff are in their office or in the field. A full-time City employee typically has 1,950 paid hours per year. However, cost studies reduce this number to account for non-productive hours (sick leave, vacation, holidays, training days, meetings, etc.). MGT calculates the productive hourly rate for each staff classification by dividing annual salary and benefits by annual productive hour figures. The average productive hours for the City’s staff that provide these services is 1,670 per year. 3. Determine indirect or “overhead” costs Indirect costs are allocated across user fee services in order to capture the full cost of providing the service. If a department performs non-fee-related services, a commensurate amount of indirect cost is segregated and not allocated to the fee-related services. •Departmental overhead costs –these costs include managers, supervisors and support staff as well as other operational costs, such as materials and supplies that are incurred for a common purpose and not readily assigned to a particular service or program. SECTION 1 Executive Summary Methodology 7 •Indirect Cost Rate.Many of the costs that support all city programs and services are budgeted in centralized activities such as 1) Finance, which provides payroll, budgeting, and accounting support, 2) Digital Services, which provides technology support, and 3) City Attorney.The costs of these activities and other centralized services are considered indirect overhead that support fee-for-service activities as well as other programs and functions within the city. SECTION 1 Executive Summary Methodology Continued… 4. Compare total costs to the current fee schedule Once all direct and indirect costs were calculated, MGT compared the total cost for each fee- related service to the fee currently charged to the public. In most cases we found the total cost of providing a service exceeded the fee charged. In these instances, the fee can be increased to recover these subsidies, up to the full cost of the service provided -the maximum allowed fee. However, there were several services for which the total calculated cost was less than the fee charged. In these cases, the fee must be lowered to comply with State law. 5. Recommend fee adjustments MGT provides fee adjustment recommendations based on full cost information and industry best practices. For development-related departments we typically recommend 100% cost recovery. The overwhelming norm in California is to recover 100% of development related costs, and this is reflected in our recommendations. Of course, MGT’s recommendations are advisory in nature only –ultimately, Council must decide what fee levels are appropriate for the San Rafael community. Calculating the true cost of providing City services is a critical step in the process of establishing user fees and corresponding cost recovery levels. Although it is a principal factor, other factors must also be given consideration. City decision-makers must also consider the effects that establishing fees for services will have on the individuals purchasing those services, as well as the community. The following legal, economic and policy issues help illustrate these considerations. •Legal restrictions –In California user fees are limited to the "estimated reasonable cost of providing a service" by Government Code section 66014(a) and other supplementary legislation. Proposition 26 was approved by California voters in November of 2010 and clarified which charges are considered user fees and which are considered taxes. The significance of this distinction is that user fees may be raised by Council action up to the limit of actual cost, whereas taxes may not be increased without a vote of the public. None of the fee adjustments recommended by MGT are considered taxes per Proposition 26 guidelines. It should be noted that fees charged for the use of government property are exempt from Proposition 26. These include fees for parks and facility rentals as well as green fees, cart and other equipment rental fees. All of these fees may be set at a price the market will bear. Legal, Economic, & Policy Considerations 8 SECTION 1 Executive Summary Legal Economic, & Policy Considerations Continued… •Economic barriers -It may be a desired policy to establish fees at a level that permits lower income groups to use services that they might not otherwise be able to afford. •Community benefit -If a user fee service benefits the community as a whole to some extent, it is appropriate to subsidize a portion of the fee. Many public health fees have very moderate cost recovery levels. Some programs are provided free of charge or for a minimal fee regardless of cost. Parks and recreation programs also tend to have low recovery levels. Development fees are typically considered to have zero community benefit, with the benefit accruing to the developer. •Private benefit -If a user fee primarily benefits the fee payer, the fee is typically set at, or close to, 100% full cost recovery. Development related fees generally fall into this category; however, exceptions are sometimes made for services such as appeal fees or fees charged exclusively to residential applicants. •Service driver -In conjunction with the third point above, the issue of who is the service recipient versus the service driver should also be considered. For example, code enforcement activities benefit the community as a whole, but the service is driven by the individual or business owner that violates City code. •Managing demand -Elasticity of demand is a factor in pricing certain City services; increasing the price of some services results in a reduction of demand for those services, and vice versa. •Competition -Certain services, such as park usage or facility rentals, may be provided by neighboring communities or the private sector. Therefore, demand for these services can be highly dependent on what else may be available at lower prices. Furthermore, if the City's fees are too low, demand enjoyed by private sector competitors could be adversely affected. •Incentives -Fees can be set low to encourage participation in a service, such as obtaining a water heater permit. •Disincentives -Penalties can be instituted to discourage undesirable behavior. Examples include fines for construction without a building permit and fines for excessive false alarms within a one-year period. 9 02 SECTION 2 Analysis Highlights SECTION 2 Analysis Highlights Below is a brief discussion of findings for each department’s analysis. Please see the user fee summary sheets in Section 3 of this report for details on each fee calculation and cost analysis. 10 City Clerk –MGT performed a cost analysis for the various cost for service fees related to the City Clerk’s Office. Most of these fees are related to copy services as well as council chamber rentals and planning appeals. We are recommending removing one fee from the current fee schedule as it has become obsolete. The overall recommendation is to increase these fees to recover 100% of full cost except for planning appeal fees. Finance –MGT performed a cost analysis for the various cost for service fees related to the Finance Department. We are recommending to remove 10 fees from the current fee schedule as many of those fees are no longer being processed or have become obsolete with new technology. The remaining seven fees are all being recommended to recover 100% of cost. Building –MGT analyzed San Rafael’s valuation-based fees at each permit valuation level. Recommendations are made to re-align base permit fees to the actual cost of inspections. No changes are recommended for the plan check fees, which are set at industry best practice percentages of the building permit fee. The many subtrade (electrical, mechanical, plumbing) permit fees have been consolidated into three fee categories. This change will eliminate significant fee calculation work for both counter staff and the permit applicant. SECTION 2 Analysis Highlights Below is a brief discussion of findings for each department’s analysis. Please see the user fee summary sheets in Section 3 of this report for details on each fee calculation and cost analysis. 11 Fire –MGT performed a cost analysis for the various cost for service fees related to the Fire Department. We are recommending to add eight new fees to the current fee schedule to reflect the current processes in the department. We are also recommending to remove two fees as they no longer provide those services. Most of the fees are recommended to increase to recover 100% of cost. Two fees are being decreased to be within the legal limits of recovering a maximum of 100% of cost. Economic Development –MGT performed a cost analysis for the various cost for service fees related to the Economic Development D`epartment. We are adding one new fee to the current fee schedule to register outside delivery companies within the City limits. Three fees are being increase to 100% full cost recovery while one fee is being decreased by 3% to be within the legal limits of recovering a maximum of 100% of cost. Planning –MGT found that many fees currently charged via deposit/hourly rates can be more efficiently charged as flat fees. These are typically applications where the review time requirement is relatively consistent. This change will benefit developers as well, who typically prefer fixed fees over “blank check” deposits. Overall, the recommendation is to adjust fees to 100% full cost recovery with a few exception: conceptual review fees, appeals by city residents, and pre-application meeting fees. The City has historically subsidized these fees and MGT recommends this policy continue. Library –We analyzed library fees via a very detailed comparison analysis which helped staff make their final fee recommendations on both the fee amounts and fee structure. The major change in Library fees is that they will no longer be charging for any late fees. This was done in order to be aligned with Marin County Free Library fees. SECTION 2 Analysis Highlights Below is a brief discussion of findings for each department’s analysis. Please see the user fee summary sheets in Section 3 of this report for details on each fee calculation and cost analysis. 12 Police–MGT performed a cost analysis for the various cost for service fees related to the Police Department. We are adding one new fee to the current fee schedule for copies of PD reports. We are also removing five fees that have become obsolete. All fees are being recommended to increase to 100% cost recovery with the exception of the Repossession fee, which is decreasing to be within the legal limits of recovering a maximum of 100% of cost. Public Works –MGT worked with Public Works staff to revise fees into an industry- standard best practices format. The proposed fee schedule significantly streamlines and simplifies fee categories. Several new flat fees are recommended to recover the cost of required studies (hydrology, flood, traffic, etc.). All fees are recommended at full cost recovery rates, except for transportation fees, which are set at the State limit. Recreation/Child Care–We analyzed recreation and childcare fees at the total service level, rather than an individual fee by fee analysis. This was done through a macro-level analysis. The macro-level analysis allows us to review the current recovery levels for each program in the Recreation Department. That summary can be found on page 41. Additionally, we did a very detailed comparison analysis which helped staff make their final fee recommendations on both the fee amounts and fee structure. The comparison allows staff to compare their fees against their neighbors and set fees based on what the market can bear. Proposition 26 provides criteria for determining which governmental charges are considered “user fees” requiring cost justification.This proposition clarified that charges for use of public property or rental charges are not user fees and can be set at prevailing market rates. Recovery Levels: MGT typically analyzes recreation departments using the same methodology that we used for the City of San Rafael. Based on our experience it is normal to see recreation departments recover about 50% of their cost. We often find that City Councils chose to subsize programs in the recreation department to encourage participation from the community. The 72% currently being recovered in San Rafael is very healthy compared to industry standards. Increasing recovery levels to 100% would pass on an additional $2.3M to the users of City of San Rafael Recreation and Childcare programs. SECTION 2 Analysis Highlights Recommendations Going Forward: MGT recommends that the City build on its investment in this cost-of-service analysis by continuing to analyze its fees and charges, whether this is done by staff or outside consultants. Once the commitment is made to understand the full cost of providing services, it is important to review and update the analysis in order to keep pace with changes in service delivery, staffing changes, and demand levels. Most of our agencies ask us at the conclusion of the study: how often should this type of study be undertaken? Our advice is to perform this detailed analysis at least every three but not more than five years, with minor adjustments in the non-study years (to keep pace with economic impacts). MGT recommends the City apply an inflation adjustment to fees annually, based on April CPI from All Urban Consumers for the San Francisco Bay Area to keep pace with inflation. The industry best practice is to apply this index once per year as part of the City’s annual budget process. This is particularly helpful once an agency has chosen to adopt a cost recovery policy –whether 100% of cost or something less –in order to keep fees at the desired level. 13 03 SECTION 3 User Fee Summaries by Department Building MGT Consulting Group MGT Consulting Group 14 MGT Consulting Group 15 MGT Consulting Group 16 City Clerk MGT Consulting Group MGT Consulting Group 17 Economic Development MGT Consulting Group MGT Consulting Group 18 Finance MGT Consulting Group MGT Consulting Group 19 Fire MGT Consulting Group MGT Consulting Group 20 MGT Consulting Group 21 MGT Consulting Group 22 MGT Consulting Group 23 MGT Consulting Group 24 Library MGT Consulting Group MGT Consulting Group 25 MGT Consulting Group 26 Planning MGT Consulting Group MGT Consulting Group 27 MGT Consulting Group 28 MGT Consulting Group 29 MGT Consulting Group 30 Police MGT Consulting Group MGT Consulting Group 31 MGT Consulting Group 32 Public Works MGT Consulting Group MGT Consulting Group 33 MGT Consulting Group 34 MGT Consulting Group 35 Recreation/Child Care MGT Consulting Group MGT Consulting Group 36 MGT Consulting Group 37 MGT Consulting Group 38 MGT Consulting Group 39 MGT Consulting Group 40 MGT Consulting Group 41 MGT Consulting Group 42 MGT Consulting Group 43 MGT Consulting Group 44 04 SECTION 4 Fee Schedule Comparison Analysis SECTION 4 Fee Schedule Comparison Analysis A component of the Fee Analysis scope calls for a comparison of San Rafael fees against those charged by similar agencies. For the development and non-development fees, with help and recommendations from staff, MGT compared fee amounts and structure to the following agencies: Fairfield, Hayward, Napa, Novato, San Leandro, and Vallejo. For the Recreation fees we compared San Rafael fees and fee structure to the following agencies: Fairfield, Nap, Novato, San Leandro and Vallejo. Additionally, because of the uniqueness of the Falkirk Cultural Center, staff recommended we compare fees and fee structures for this specific building to the following buildings: The Outdoor Art Club, Marin Art & Garden Center, Elks Club Maple Lawn, Camron-Sanford House, and Dunsmuir Hellman. For Child Care fees we compared San Rafael fees and fee structures to the following childcare centers: Northbay Children’s Center (Healdsburg USD), Lu Sutton Facility (Novato), Mill Valley Child Care Center (Mill Valley), and Twin Cities Rec Center (Corte Madera). The purpose of this component is to give San Rafael an understanding of fee structures typical in the region. This analysis gives San Rafael management an opportunity to review fee structures and fee amounts employed by other agencies and emulate any as appropriate. MGT understands the value of this information, but believes it is important to provide the following context: 1) unless MGT has performed a similar study for the surrounding jurisdiction, we do not know what cost components are included in the fees, 2) a simple comparison of fees does not provide the City with the knowledge of whether the neighboring city has a policy of full cost recovery, or something less than 100%, 3) service levels may vary widely from jurisdiction to jurisdiction, and 4) it can be difficult to ensure an exact match up of services when each agency describes a service in its own unique manner. The following pages display the comparison analysis results. 45 MGT Consulting Group 46 MGT Consulting Group 47 MGT Consulting Group 48 MGT Consulting Group 49 MGT Consulting Group 50 MGT Consulting Group 51 MGT Consulting Group 52 MGT Consulting Group 53 2991 SHATTUCK AVENUE #203 | BERKELEY, CALIFORNIA 94705 | P: 510.647.5291 | F: 510.647.5295 | STRATEGICECONOMICS.COM MEMORANDUM To: Alicia Giudice, City of San Rafael From: Strategic Economics and Vernazza Wolfe Associates Date: July 27, 2021 Project: Marin Inclusionary Study Subject: DRAFT Inclusionary Program and In-Lieu Fee Study Purpose and Background The County of Marin, along with six of the jurisdictions within the County, are collaborating on a regional effort to implement or update existing affordable housing policy tools, namely inclusionary zoning and commercial linkage fees. Some of the jurisdictions currently have inclusionary zoning and/or commercial linkage fee programs they intend to review and update as necessary, while others are establishing new programs. Together, the seven jurisdictions have retained Strategic Economics and Vernazza Wolfe Associates (the Consultant Team) to study and offer recommendations for both these policies. This memo report provides an assessment of the existing inclusionary housing programs, summarizes best practices for setting inclusionary housing requirements, including on-site affordable units and fees in-lieu of providing affordable units on-site. The report provides an updated calculation of in-lieu fees for all the jurisdictions participating in this study. The maximum in-lieu fees were calculated for three different housing product types – single-family subdivisions, townhomes/condominiums, and rental apartments. This report also includes an analysis of key policy considerations and tailored recommendations for the City of San Rafael to guide decision-makers on potential changes to the inclusionary housing requirements and associated in-lieu fees. The memo is organized into the following sections: I. Analysis of Existing Inclusionary Policies II. Best Practices for Inclusionary Policies III. Affordability Gap/In-lieu Fee Calculation IV. Policy Considerations and Recommendations DRAFT Inclusionary Program Study and In-lieu Fee Calculation 2 I. Analysis of Existing Inclusionary Policies Some of the communities in Marin County have a relatively long history with inclusionary zoning. Of the seven jurisdictions participating in this study, five already have inclusionary policies, some of which have existed in some form since the 1980s. Sausalito adopted its policy in 2019, while the communities of San Anselmo and Fairfax have not yet adopted a policy. Concurrent to the preparation of this memo, San Rafael adopted a significantly modified inclusionary policy; both the current policy and the newly adopted versions are shown in Figures 1 and 2. Inclusionary programs typically have a specific onsite requirement to designate a portion of the project for affordable units (see Figure 1 for a comparison of onsite requirements for the seven jurisdictions) as well as alternative means of compliance with the policy, such as the payment of in-lieu fees or land dedication (Figure 2). Below are some key observations of the policy elements across the jurisdictions: • All jurisdictions apply an inclusionary requirement to both rental and for-sale projects. Fairfax and San Anselmo do not have existing inclusionary housing ordinances. • Most of the programs have established lower income targets for rental housing than for ownership projects. The policies tend to require affordable units for very low-income and low-income households on rental projects, and low-income and moderate-income units for for-sale housing. Unincorporated Marin County has lower income targets than the other jurisdictions: 60 percent of area median income (AMI) for for-sale and 50 percent of AMI for rental developments. • The percentage affordable requirement ranges from ten percent to 25 percent. Some jurisdictions require smaller percentages for smaller projects: Larkspur has a lower requirement for projects less than twenty units in size, while both San Rafael’s current and newly adopted policies include a modified requirement for larger projects. Sausalito requires a higher percentage (with deeper affordability) for projects in commercial districts. • The inclusionary policies generally have a relatively low unit threshold. The unit thresholds (minimum number of units in a project for the policy to be applicable) range from 1 or more units in Corte Madera to 5 or more units in Larkspur. The relatively low unit thresholds reflect the smaller multifamily and subdivision developments characteristic of Marin County jurisdictions. • San Rafael recently modified its policy by relaxing the onsite inclusionary requirement, adding flexibility, and shifting the targeted income groups slightly higher. • The jurisdictions take a mix of approaches to alternative means of compliance, but, overall, the alternatives are structured to encourage developers to build units onsite. Most jurisdictions either accept in-lieu fees in specific circumstances (Corte Madera, Larkspur, San Rafael), and/or on fractional units (Larkspur and Unincorporated Marin County). Land dedication or the provision of off-site units is generally allowed under special circumstances in all of the jurisdictions. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 3 FIGURE 1: ONSITE INCLUSIONARY REQUIREMENTS BY JURISDICTION Percentage Affordable by Project Size Minimum Size Threshold Affordability Target Rental For-Sale Corte Madera All projects: 25% 1 unit 5% Very Low-Income; 10% Low-Income; 10% Moderate-Income Sausalito Commercial Districts 1-5 units: 1 unit; 6+ units: 20% 1 unit Low-income Moderate-income Other Areas 15% 4 units Moderate-income Larkspur 5-19 units: 15% 20+ units: 20% 5 units 50% Very Low-Income; 50% Low-Income 50% Low-Income; 50% Moderate-Income Unincorporated Marin County 2+ units or lots: 20% 2 units or lots Very Low-Income (50% AMI) Low-Income (60% AMI) San Rafael Current Policy 2-10 units: 10% 11-20 units: 15% 21+ units: 20% 2 units 50% Very Low-Income; 50% Low-Income 50% Low-Income; 50% Moderate-Income New Policy (Approved by City Council 2/21/2021) Primary Requirement 2-15 units: 10% 16+ units: 5% 2 units Low-Income Secondary Requirement (in addition to the primary requirement for 16+ unit projects) 16+ units: Additional 5% or 10% 16 units 5% additional set-aside: Low-Income; 10% additional set-aside: Moderate-Income Fairfax No Policy San Anselmo No Policy Source: Staff from Jurisdictions, 2020; Strategic Economics, 2021. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 4 FIGURE 2: INCLUSIONARY REQUIREMENT ALTERNATIVE MEANS OF COMPLIANCE BY JURISDICTION Alternative Means of Compliance Corte Madera 1-9 unit projects can pay in lieu fee. 10+ unit projects must incorporate units on-site. Sausalito Commercial Districts Applicants can propose land dedication or off-site units if on-site units are not possible, though there is no in-lieu fee option. Other Areas Applicants can propose land dedication or off-site units if on-site units are not possible, though there is no in-lieu fee option. Larkspur Land donation, transfer of inclusionary credits, second dwelling units; In-lieu fee available for 5-14 unit projects and for fractional units (Rental: $213,267, For-Sale: $338,126). Unincorporated Marin County 2+ unit projects and subdivisions: In-lieu fee available for fractional units ($329,485 per unit). San Rafael Former Policy In-lieu fee for fractional units ($343,969 per unit). New Policy (Approved by City Council 2/21/2021) Primary Requirement None (must be on-site) Secondary Requirement In-lieu fee, off-site units located within 1/2 mile of project, or land donation. Fairfax No Policy San Anselmo No Policy DRAFT Inclusionary Program Study and In-lieu Fee Calculation 5 EFFECTIVENESS OF INCLUSIONARY POLICIES The Consultant Team surveyed the five participating jurisdictions that currently have policies, and included questions about the units produced by their policies, the means of production, and fee revenues collected. The Team also held meetings with market-rate developers, affordable housing providers, and other stakeholders (see Appendix A) to gain their perspectives regarding the policies. To summarize the results of the inclusionary policies, the Consultant Team summarized the number of units produced and the revenues generated from 2016 to 2020, shown in Figure 3. To provide more context on housing production, a summary of allocated and permitted units in the 2015-2023 Regional Housing Needs Assessment (RHNA) cycle is shown in Figure 4. The effectiveness of the inclusionary policies as a tool for affordable housing production is discussed below. The jurisdictions in this study produced 58 affordable units through their inclusionary programs over a five-year period. In the last five years, the five jurisdictions with inclusionary policies produced a total of 41 affordable rental units, 17 affordable for-sale units, and approximately $4 million for affordable housing development. San Rafael constituted most of the activity, with all 41 rental units produced there, 13 for-sale units produced, and $3.6 million generated from a single development, the 81-unit Village at Loch Lomond Marina project.2 Inclusionary programs accounted for about 14 percent of affordable housing production in the seven participating jurisdictions. According to the RHNA progress report shown in Figure 4, the participating jurisdictions permitted a total 414 affordable units and 700 market-rate units from 2015 to 2020. This indicates that the majority of below-market rate housing development has been implemented through 100 percent affordable projects. The jurisdictions are on track to meet their market-rate (over 120% AMI) and low-income (80% AMI) housing allocations. However, they are less likely to meet the target for producing very-low income (50% AMI) and moderate-income (120%) units. The inclusionary programs have not resulted in significant production of new affordable units in part because of the complexity of residential development in the county. Residential developers participating in this study cited many factors contributing to the complexity of housing development in Marin, including long and unpredictable approvals processes, opposition from some community members, lack of available sites, especially those that are zoned for multi-family housing, high land and construction costs, and inadequate or expensive infrastructure. Inclusionary requirements can be a secondary factor impacting the viability of new development in Marin, mainly in instances where the requirement is poorly matched to market conditions. Market rate developers participating this study believed that new development projects can support inclusionary requirements for lower income households. However, some noted that the percentage requirement had been increased over time in many cities, without consideration of the relative market strengths of different locations in the county. For example, some jurisdictions have targeted very low-income households for for-sale projects, which requires a deeper subsidy than what is required for low- and moderate-income households. The conversion of off-site units as an alternative means of compliance with the inclusionary requirement can fall short of the communities’ goals for affordable housing. Allowing developers to convert existing units to deed-restricted affordable units can be challenging to implement. First, unlike 2 The $3.6 million generated from the Loch Lomond Marina project were not from in-lieu fees but rather a “buyout” of a portion of the BMR requirement. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 6 the construction of new units, the conversion of existing units fails to expand the overall supply of housing in the county, trading a market rate unit for one below market rate unit rather than expanding the overall supply. Second, converted units are often of lower quality than new units, and may come with hidden costs, such as additional maintenance costs. In Marin County, the current inclusionary requirement appears to encourage developers to reduce the scale of projects to allow for the payment of in-lieu fees rather than providing on-site units. The County’s policy targets very low-income households: 50 percent of Area Median Income for rental developments and 60 percent for for-sale. These income targets are lower than other jurisdictions in the Bay Area. Projects with two units or more must provide units onsite, with the payment of in-lieu fees allowed only on fractional units. According to County staff, some development projects have reduced the scale of their projects to enable the payment of in-lieu fees rather than providing units on- site. The variation in inclusionary requirements from jurisdiction to jurisdiction can create confusion and unnecessary complexity for developers. Because each jurisdiction in Marin County has set its inclusionary requirements in an uncoordinated way, the finer details of the many different policies can be difficult for developers to navigate. A more standardized approach that is closely tied to market conditions, rather than jurisdictional boundaries, would help to rationalize the process for developers. FIGURE 3: AFFORDABLE UNITS PRODUCED AND FEE REVENUES COLLECTED, BY JURISDICTION, 2016-2020. Jurisdiction Rental Units For-sale Units Fee Revenues Corte Madera 0 3 $379,478 Fairfax [a] n/a n/a n/a Larkspur 0 0 0 Unincorporated Marin County 0 1 [d] $213,603 San Anselmo [b] n/a n/a n/a San Rafael 41 13 $3,600,000 [e] Sausalito [c] 0 0 0 Total 41 17 $4,193,081 [a] Fairfax does not currently have an inclusionary program. [b] San Anselmo does not currently have an inclusionary program. [c] Sausalito adopted an inclusionary program in 2019. [d] Produced through a shared agreement with Mill Valley. [e] Revenues collected from a buy-out of six Below Market Rate units. Source: Reported by each jurisdiction, 2016-2020. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 7 FIGURE 4. RHNA FIFTH CYCLE ALLOCATION AND PERMITTED UNITS BY AFFORDABILITY LEVEL ACROSS JURISDICTIONS, AS OF 2020 Corte Madera Fairfax Larkspur San Anselmo San Rafael Sausalito Unincorporated Marin County Total Very Low Income (50% AMI) RHNA 22 16 40 33 240 26 55 432 Permitted Units 16 13 6 15 5 12 26 93 % Complete 73% 81% 15% 45% 2% 46% 47% 22% Low Income (80% AMI) RHNA 13 11 20 17 148 14 32 255 Permitted Units 13 60 11 21 79 20 27 231 % Complete 100% 545% 55% 124% 53% 143% 84% 91% Moderate Income (120% AMI) RHNA 13 11 21 19 181 16 37 298 Permitted Units 8 4 9 23 12 6 28 90 % Complete 62% 36% 43% 121% 7% 38% 76% 30% Market-Rate (>120% AMI) RHNA 24 23 51 37 438 23 61 657 Permitted Units 179 10 90 39 201 7 174 700 % Complete 746% 43% 176% 105% 46% 30% 285% 107% Permitted Units Summary Total Affordable Units (<120% AMI) 37 77 26 59 96 38 81 414 Total Market Rate Units (>120% AMI) 179 10 90 39 201 7 174 700 Affordable Units as Share of Total 17% 89% 22% 60% 32% 84% 32% 37% Source: HCD, 2020; Strategic Economics, 2021. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 8 II. Best Practices for Inclusionary Policies This section provides a discussion of key policy issues for jurisdictions to consider as they introduce a new inclusionary program or modify an existing program, and provides recommendations based on best practices. To identify best practices, the Consultant Team reviewed reports from the UC Berkeley Terner Center for Housing Innovation, Grounded Solutions Network, and the Lincoln Institute of Land Policy. To guide the recommendations for best practices, the Consultant Team first designated market area zones. Following that, the policy elements discussed in this section include: • Market factors to consider when setting inclusionary requirements • The income groups targeted in inclusionary requirements • The minimum applicable development size • Setting in-lieu fees as an alternative to on-site or off-site units, and • Other alternative means of compliance. MARKET CONDITIONS It is important to consider market conditions when setting an inclusionary housing requirement to ensure that the policy can be tailored to the unique context of each jurisdiction, and that the policy does not constrain the development of new housing. Jurisdictions that have stronger housing markets can establish higher inclusionary requirements than those with less established or weaker markets. Based on Zillow home sale data and interviews with residential developers with experience working in Marin County (see Appendix A), the Consultant Team identified three market areas for for-sale housing across the participating jurisdictions in the County. Figures 5 and 6 show Zillow home value indices for both overall home sales and condominium sales. As shown in Figure 5 , home values are highest in South Marin, which offer the best access to San Francisco via the Golden Gate Bridge and ferries. Home values are slightly lower in Central Marin, and drop in North/ West Marin areas, which are comparatively less accessible. The market for rental housing is different from for-sale housing in Marin County. The rental housing market is strongest in the more urbanized areas that offer access to transportation infrastructure, jobs, and amenities. Most of the recent market-rate rental development activity has occurred in urban San Rafael. Tam Ridge is another significant rental project which was completed in Corte Madera in 2017. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 9 FIGURE 5: ZILLOW HOME VALUE INDEX FOR MARIN COMMUNITIES Source: Zillow, 2020; Strategic Economics, 2021. FIGURE 6: ZILLOW HOME VALUE INDEX FOR CONDO/COOPS IN MARIN COMMUNITIES Source: Zillow, 2020; Strategic Economics, 2021. $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 NovatoTomalesLagunitasWoodacreDillon BeachFairfaxSan QuentinSan GeronimoMarshallSan RafaelInvernessPoint Reyes StationSan AnselmoCorte MaderaSausalitoNicasioMill ValleyLarkspurKentfieldTiburonRossStinson BeachBelvedereNorth/West Central South $00K $200K $400K $600K $800K $1,000K $1,200K San Rafael Fairfax San Anselmo Larkspur Corte Madera Sausalito North Central South DRAFT Inclusionary Program Study and In-lieu Fee Calculation 10 PERCENTAGE REQUIREMENTS Five of the seven participating jurisdictions already have inclusionary policies in place requiring affordable units onsite. The percentage of units varies by jurisdiction, ranging from 10 percent (San Rafael) to 25 percent (Corte Madera). Most of the jurisdictions have similar percentage requirements for for-sale and rental development, but the income targeted is typically lower for rental than for for- sale housing. The percentage requirements and income targets for each jurisdiction are summarized in Figure 1. They are also plotted in Figure 7 for rental development projects and in Figure 8 for for- sale developments. The percentage of affordable housing required in a project should be set at an economically feasible level so that the inclusionary requirement does not create an impediment to housing development.3 According to market-rate housing developers, the market context for inclusionary requirements is particularly important in Marin. Development projects in the southern and central portions of the county, such as Corte Madera, Larkspur, Sausalito and parts of Unincorporated Marin, can more feasibly accommodate a higher percentage of inclusionary and/or a deeper level of affordability, compared to communities located in northern and western portions of the county. Setting a high inclusionary requirement could be prohibitive for new rental projects in Marin County. San Rafael recently relaxed its inclusionary requirement to encourage new development, despite being the most active rental market in the county. Because rental developments tend to serve a lower income market segment than for-sale developments, the inclusionary requirement for rentals is sometimes slightly lower than that for for-sale developments. Local jurisdictions can help bridge that gap by providing zoning incentives to reduce development costs for rental projects. 3 AB1505, also known as the “Palmer Fix” permits California Department of Housing and Community Development (HCD) to review inclusionary zoning ordinances adopted or amended after September 15, 2017 if it requires more than 15% of the units to be affordable to lower income households and if the locality has failed to meet 75% of its share of the above moderate RHNA. HCD can request localities to provide an “economic feasibility study” to demonstrate that the higher inclusionary requirement will not impede development activity. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 11 FIGURE 7: AVERAGE AMI TARGETS AND PERCENT ONSITE REQUIREMENT FOR RENTAL DEVELOPMENTS * Assumes the developer selects the 10% / moderate-income option for the secondary requirement. Source: Participating jurisdictions, 2020; Strategic Economics, 2021. FIGURE 8: AVERAGE AMI TARGETS AND PERCENT SET-ASIDE FOR FOR-SALE DEVELOPMENTS * Assumes the developer selects the 10% / moderate-income option for the secondary requirement. Source: Participating jurisdictions, 2020; Strategic Economics, 2021. Corte Madera Sausalito Sausalito (commercial districts) Larkspur (5-14 units) Larkspur (15+ units) Unincorp. Marin San Rafael (2-15 units) San Rafael (16+ units) * 0% 20% 40% 60% 80% 100% 120% 140% 0%5%10%15%20%25%30%Average AMI TargetPercent On-site Requirement Corte Madera Sausalito Sausalito (commercial districts) Larkspur (5-14 units) Larkspur (15+ units) Unincorp. Marin San Rafael (2-15 units) San Rafael (16+ units) * 0% 20% 40% 60% 80% 100% 120% 140% 0%5%10%15%20%25%30%Average AMI TargetPercent On-site Requirement DRAFT Inclusionary Program Study and In-lieu Fee Calculation 12 INCOME TARGETS There is a wide range in the income targets for inclusionary programs among the participating jurisdictions, as shown in Figure 1, Figure 7 and Figure 8. It is common practice for jurisdictions to target lower-income households for renter housing than for ownership housing. This is because it is generally easier for low- and moderate-income households to meet typical lending requirements. Larkspur, Sausalito, and Unincorporated Marin County target lower-income households for rental units compared to for-sale units. San Rafael and Corte Madera target moderate-income for both rental and for-sale housing. RENTAL The income targets for rental units among the jurisdictions vary widely (Figure 7). Unincorporated Marin targets very low-income households, while Larkspur targets a mix of very low- and low-income households. The other jurisdictions have higher income targets overall, including targeting to some moderate-income households. Currently, the most active rental market in Marin is San Rafael, which, of the jurisdictions in this study, produced the only affordable rental units in the last five years (Figure 3). These units were produced under the city’s previous policy, which targeted low- and very low-income households. San Rafael has relaxed this requirement with its new ordinance, which is designed to further promote new development. Among other changes, the new ordinance eliminates targeting for very low-income households. FOR-SALE In comparison to rentals, the income targets for for-sale development are overall more uniform across jurisdictions. The targeted income groups tend to consist of a mix of low- and moderate-income households. The exception to this pattern is Unincorporated Marin County, which requires a significantly deeper level of affordability (60 percent of AMI) on for-sale projects. This policy can pose a challenge in two ways. First, it can make the County uncompetitive for development with its neighbors. Further, the lower-then-average income targets in Marin County’s policy was identified by developers as being a financial burden on projects such that many do not pencil. As mentioned in Section I, County staff reports that developers tend to reduce the size of their projects in order to build fewer onsite BMR units than otherwise would have been required, preferring to pay the in-lieu fee on fractional units to the greatest extent possible. UNIT THRESHOLDS One important element of an inclusionary policy is the minimum size of development (the threshold number of dwelling units) for which the policy will apply. Because smaller scale projects are often more complex and less efficient than larger projects, many inclusionary programs around the country have exemptions or lower requirements on small projects. According to Grounded Solutions Network, California jurisdictions typically set the minimum threshold for an inclusionary requirement at between DRAFT Inclusionary Program Study and In-lieu Fee Calculation 13 two to five units.7 This is consistent with the policies of the jurisdictions in this study, where the minimum threshold ranges between one unit and five units. Because a significant share of new development projects in Marin County’s jurisdictions are quite small, it is it is important that all projects be required to provide affordable units. However, for smaller projects that have more challenging development feasibility, the percentage set-aside required could be lower, or the income group targeted could be set higher. In San Rafael projects with 5 to 15 units have a set-aside requirement of 10 percent, compared to 15 percent for larger projects. Similarly, Larkspur’s ordinance requires 15 percent affordable units for projects with less than 15 units, compared to 20 percent for larger projects. San Francisco has a lower percentage requirement on projects between 10 to 24 units of 12 percent, compared to approximately 21 percent for larger projects. SETTING IN-LIEU FEES A jurisdiction’s approach to setting in-lieu fees should consider a number of factors. The first consideration is to compare the in-lieu fee option with the provision of onsite units – which of these options does the jurisdiction wish to encourage? In many California communities, collecting in-lieu fees and leveraging funding from other sources can allow them to build 100 percent affordable housing projects for extremely-low, very-low, and low-income households. However, this approach requires administrative capacity on behalf of city and county staff, capacity from local affordable housing developers, and access to other funding sources. It can also take a significant amount of time to acquire sites and secure funding to build 100 percent affordable projects. For many of the above reasons, most of the jurisdictions participating in this study would prefer to incentivize on-site production rather than off-site units. Inclusionary housing is an important tool to promote mixed-income housing and to help correct historical patterns of economic and racial segregation. Setting the in-lieu fee at the maximum level can encourage more developers to provide units onsite. When the in-lieu fee option is available, developers are more likely to pay the fee when constructing high value or luxury units, because the reduced revenue from building units onsite is higher. (The potential value of luxury units is high, which means the developer must forgo more revenue for each unit that is designated affordable.) Another consideration for in-lieu fees is the basis of the fee. Is the fee charged on the basis of dwelling units or square feet of residential area? While communities in Marin generally charge on a per unit basis, charging on the fee on a per-square-foot basis can encourage the development of smaller units, like studios and one-bedrooms. As an example, San Francisco’s affordable housing in-lieu fee is charged on a per-square-foot basis. It is recommended that fees be implemented with a schedule for annual adjustments. As economic factors, such as construction costs, change over time, the affordability gap will also change. Fees should be adjusted based on a regularly published cost index. Further considerations for setting in-lieu fees on the basis of the affordability gap analysis are examined in Section IV. 7 Jacobus, Rick. “Inclusionary Housing: Creating and Maintaining Equitable Communities,” Lincoln Institute of Land Policy, 2015. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 14 ALTERNATIVE MEANS OF COMPLIANCE Because circumstances surrounding each project are different, it is important for an inclusionary program to provide alternative ways of meeting the inclusionary requirement other than with the provision of onsite units. Marin County has successfully used alternative means to produce new affordable units and raise revenue for housing; these alternative means include the provision of offsite units, land dedication, and partnerships with affordable housing developers. The option to construct units offsite typically requires a higher percentage of affordable units than what would be required onsite. Market rate developers stress that flexibility in the inclusionary policy is a key determinant of the production of new housing. For some projects, the dedication of land to a jurisdiction or an affordable developer can result in the construction of a greater number of units for lower income households than the provision of on-site inclusionary units. As mentioned in Section I, some developers may propose to fulfill an inclusionary requirement, not through the construction of new units offsite, but through the conversion of offsite market rate units to deed-restricted affordable units. However, this approach has some disadvantages. First, it does not result in net new housing units. Second, the off-site unit does not create a mixed-income development project. Finally, the conversion of older units can sometimes result in affordable housing units that are of lower quality than new construction. If the off-site provision of units is offered as a means of compliance, it is important for the jurisdiction to ensure that the offsite units are of equivalent quality and within close proximity to the market-rate development project. Other best practices are to require that the value of the off-site contribution is equivalent or greater than the value of the in-lieu fees. BEST PRACTICES FOR SMALL LOT SUBDIVISIONS Recent state legislation (AB 1315 [2019-2020]) sets forth rules for small lot subdivisions to encourage affordable housing in areas zoned for multifamily development. The law allows developers to subdivide parcels into smaller lots for the construction of small, individual units with limited parking. For the purposes of applying an inclusionary policy, it is advisable to treat a small lot subdivision as if it were a new construction project of the same number of units. As there may be a significant period of time between the sub-division and when new construction occurs, jurisdictions should clarify for developers the point in time when the inclusionary policy is applied and, for example, when any applicable in-lieu fees are paid. Ordinarily, it is the developer entitling the construction of the residential units, and not the developer performing the land division, who will be responsible for fulfilling whatever inclusionary policy is in effect at that time, and paying any applicable fees. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 15 III. Calculation of In-Lieu Fee Inclusionary zoning requires that new developments provide affordable housing along with market- rate housing units, either on-site or off-site, or comply with alternative measures such as payment of fees “in-lieu” of providing affordable units. The in-lieu fee is calculated based on the housing affordability gap – the difference between what households at various income levels can pay for housing and the cost of developing market rate housing. If this is for-sale housing, then the gap is based on the difference between annual mortgage costs and affordable monthly housing payments, and for rental housing, it is the difference between market rate rents and affordable rents. Once the total gap is calculated, the actual fee that is adopted depends on financial feasibility of the costs of the fee on prototypical residential developments. For the purposes of this study, the in-lieu fees were calculated for Marin County and participating jurisdictions for three development types: • For-sale single-family subdivisions • For-sale condominium townhomes • Rental apartments While the study presents the total affordability gap, the actual fee that is adopted in each jurisdiction depends on policy considerations, which are outlined in Section IV of this report. METHODOLOGY The affordability gap is defined as the difference between what very low-, low- and moderate-income households can afford to pay for housing and the cost of developing new housing. Because it measures this shortfall that must be made up by a developer offering Below Market Rate units, the affordability gap is useful for setting in-lieu fees as an alternative to producing units directly through the inclusionary program. The following steps illustrate the methodology used for calculating the affordability gap: 1. Estimate affordable rents and housing prices for households in target groups; 2. Estimate development costs of building new housing units, based on current cost and market data; 3. Calculate the difference between what renters and homeowners can afford to pay for housing, and the cost of developing those rental and for-sale units Because California Department of Housing and Community Development (HCD) and the U.S. Department of Housing and Urban Development (HUD) define the ability to pay for housing at the county level, the affordability gap is calculated on the same income categories for the entire county. The calculated in-lieu fees are valid for all of the jurisdictions participating in this study. RESIDENTIAL PROTOTYPES The Consultant Team established three housing prototypes that represent the types of development likely to occur in Marin County. The prototypes are informed by recently built and proposed development projects in Marin as well as conversations with developers with experience in Marin County. Example projects that represent the types of development likely to occur in Marin County are DRAFT Inclusionary Program Study and In-lieu Fee Calculation 16 shown in Figures 9 and 10. All five projects are in either San Rafael or Corte Madera, which have attracted most of the recent development activity among the participating jurisdictions. FIGURE 9. MARIN PROJECTS THAT INFORMED PROTOTYPES 1 AND 2 (FOR-SALE PROTOTYPES) Project The Strand Enclave 350 Merrydale Rd. Building Type Detached single-family and townhomes Townhomes Townhomes, plus flats Jurisdiction San Rafael Corte Madera San Rafael Status Built in 2015 Built in 2019 Proposed Units 34 detached, 42 townhomes 16 townhomes 41 townhomes, 4 flats Site Size (acres) 8.5 (approximate) 1.3 2.28 Units Per Acre 9 12 20 Unit Size Sq. Ft. (Approximate) Townhome: 1,650-1,900 Sq. Ft; Detached: 1,950-3,300 Sq. Ft. 2,020 Sq. Ft. Townhome: 1,450-2,100 Sq. Ft.; Flat: 800 Sq. Ft. Parking 2 car garage per unit plus visitor surface parking 2 car garage per unit plus visitor surface parking 2 car garage per townhome unit; 1 car garage per flat unit; Surface visitor parking. Source: Costar, 2021; Various marketing materials for, and articles about projects; Interviews with developers; Strategic Economics, 2021. FIGURE 10. MARIN PROJECTS THAT INFORMED PROTOTYPE 3 (RENTAL PROTOTYPE) Project Tam Ridge 703 Third St. Building Type Wood-frame apartment flats over podium, plus townhomes Wood-frame apartment flats over podium, using density bonus, near SMART station Jurisdiction Corte Madera San Rafael Status Built in 2017 Proposed Units 154 flats, 25 townhomes 120 flats Site Size (acres) 4.5 0.63 Unit Density 40 190 Unit Size Sq. Ft. Range (Approximate) Flats: 750-1,100 Sq. Ft.; Townhome: 1,300 Sq. Ft. 450-900 Sq. Ft. Parking 1.6 spaces per unit (tenant parking in podium garage plus visitor surface parking) 1 space per unit in podium (incorporates mechanical lifts) Source: Costar, 2021; Various marketing materials for, and articles about projects; Interviews with developers; Strategic Economics, 2021. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 17 The prototypes are generally based on developments built recently or proposed. Some communities in Marin typically see much smaller projects and are unlikely to see new projects of this scale. However, the per-unit cost of development is unlikely to be significantly different even for smaller and lower density projects, because the reductions in construction costs would be counterbalanced with the higher cost of land per unit. The prototypes developed for the analysis are summarized below and further details are shown in Figure 11. Prototype 1: Single-Family Subdivision The single-family subdivision prototype has 14 detached for-sale units at a density of seven units per acre, making it typical for a “small-lot” subdivision. The units, which are two stories, are a mix of three and four-bedrooms and average 2,200 square feet. Prototype 2: Condominium Townhome The condominium townhome prototype includes 30 attached for-sale units at a density of 15 units per acre. Two-thirds of the units have three bedrooms while one-third have four bedrooms. The units are three stories with tuck-under garages on the ground level, and the average unit size is 1,800 square feet. Prototype 3: Rental Apartments The rental apartment prototype is a 100-unit apartment building. It has a density of 50 units per acre and is five stories. The building is a “Five-over-one” construction type, which means the first floor is a “Type I” concrete podium to accommodate parking, with four stories of “Type V” wood-frame construction for the residential area above. Typical of rental projects, the units in this prototype are a mix of studios, one-bedrooms, and two-bedrooms. The average unit size is 800 square feet. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 18 FIGURE 11. SUMMARY OF PROTOTYPES Prototype 1: Single-Family Subdivision Prototype 2: Condominium Townhome Prototype 3: Rental Apartments Tenure For-Sale For-Sale Rental Unit Mix 3, 4 bedrooms 3, 4 bedrooms Studios, 1, 2 bedrooms Construction Type Wood-frame Wood-frame Type V over 1 Residential Stories 2 3 5 Number of Units 14 30 100 Parcel Size (Acres) 2 2 2 Parcel Size (Sq. Ft.) 87,120 87,120 87,120 Dwelling Units Per Acre 7 15 50 Unit Mix 50% 3-Bedrooms; 50% 4-Bedrooms 67% 3-Bedrooms; 33% 4-Bedrooms 10% Studios; 50% 1-Bedrooms; 40% 2-Bedrooms Average Unit Size 2,200 1,800 800 Net Residential Sq. Ft. 30,800 54,000 80,000 Efficiency Ratio (a) 100% 100% 90% Gross Residential Sq. Ft. 30,800 54,000 88,889 Parking Type 2-car garage plus surface 2-car garage plus surface Podium Parking Ratio (Per Unit) (b) 2.50 2.25 1.25 Total Parking Spaces 35 68 125 Garage Parking Sq. Ft. (c) 9,800 21,000 43,750 Floor-Area Ratio (Residential Only) 0.35 0.62 1.02 Floor-Area Ratio (Including Structured Parking) 0.47 0.86 1.52 Source: Strategic Economics, 2021. Notes: (a) Sq. Ft. associated with residential units divided by total interior square feet of building, (excludes space associated with parking). (b) The urban design specifications of these three prototypes, such as their parking ratios, may vary from the building typologies suggested in Opticos’ Objective Design and Development Standards study, currently in process. The parking ratios, as well as other metrics displayed here, are market-based, informed by conversation with residential developers familiar with Marin. (c) Based on “350 sq. ft. per parking space” standard industry assumption, which incorporates circulation. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 19 ESTIMATING AFFORDABLE RENTS AND HOUSING PRICES Affordable rents and housing prices were identified based on resources from public agencies, such as HUD and HCD, which set income levels and maximum housing costs for federal and state-funded affordable housing programs. The Marin Housing Authority then provided the specific approach for calculating affordable sales prices, which currently vary across jurisdictions because of the different income levels that jurisdictions target as a part of their inclusionary programs. The Consultant Team identified the affordability targets that would be tested in collaboration with the County of Marin, set at a level typical of existing inclusionary policies among participating jurisdictions. The affordable targets are shown below in Figure 12. Consistent with best practices from other inclusionary housing programs, the affordability gap for both rental and for-sale units was calculated for very low-, low-, and moderate-income households,.9 In consultation with the client, the Consultant Team identified specific AMI levels to reflect the average incomes of households that these units would serve, with for-sale units typically targeting households with incomes that are slightly higher than rental units within the income categories. The income levels tested for the for-sale prototypes are generally higher than for the rental prototypes because for-sale affordable housing programs tend to serve households at the higher end of the income target ranges. FIGURE 12. HOUSEHOLD INCOME TARGETS FOR AFFORDABLE UNITS BY TENURE For-sale Housing Rental Housing Very Low-income 50% AMI 50% AMI Low-income 70% AMI 65% AMI Moderate Income 110% AMI 90% AMI Source: County of Marin; Strategic Economics, 2021. Figure 13 below shows the maximum affordable monthly rents for rental housing. The household sizes shown are for one, two, and three persons per household, reflecting the typical occupancies of studio, one-bedroom, and two-bedroom units, respectively, in Prototype 3. Based on HCD guidelines, the affordable rent is calculated as 30 percent of a household’s gross monthly income, minus a deduction for utilities. The utility deduction includes costs that are usually passed onto the tenant, such as heating, water heating, cooking, and electricity. Natural gas is assumed for heating and water heating. (Water, sewer, and trash removal costs are typically covered by the property owner and excluded from the utility deduction.) 9 Households that fall between 30-50% AMI are considered very low-income; households that fall within 50-80% AMI are considered Low- income; households that fall between 80-120% AMI are considered moderate income. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 20 FIGURE 13. MAXIMUM AFFORDABLE RENT ASSUMPTIONS FOR VERY LOW, LOW, AND MODERATE INCOME HOUSEHOLDS Very Low-income (50%) Household Size 1 2 3 Maximum Annual Household Income $50,075 $57,250 $64,400 Maximum Monthly Housing Cost (a) $1,252 $1,431 $1,610 Unit Type Studio 1-BR 2-BR Maximum Monthly Housing Cost (a) $1,252 $1,431 $1,610 Utility Allowance (b) $43 $52 $71 Maximum Rent $1,209 $1,379 $1,539 Low-income (65%) Household Size 1 2 3 Maximum Annual Household Income $65,098 $74,425 $83,720 Maximum Monthly Housing Cost (a) $1,627 $1,861 $2,093 Unit Type Studio 1-BR 2-BR Maximum Monthly Housing Cost (b) $1,627 $1,861 $2,093 Utility Allowance (c) $43 $52 $71 Maximum Rent $1,584 $1,809 $2,022 Moderate Income (90%) Household Size 1 2 3 Maximum Annual Household Income $90,135 $103,050 $115,920 Maximum Monthly Housing Cost (c) $2,253 $2,576 $2,898 Unit Type Studio 1-BR 2-BR Maximum Monthly Housing Cost (a) $2,253 $2,576 $2,898 Utility Allowance (b) $43 $52 $71 Maximum Rent $2,210 $2,524 $2,827 Sources: Marin Housing Authority, 2020; U.S. Department of Housing and Urban Development, 2020; Strategic Economics, 2020. Notes: (a) 30 percent of maximum monthly household income. (b) The maximum monthly cost for each unit type is associated with households that have one more person than bedroom. (Ex: Maximum costs for studios are associated with affordability for one-person households; One-bedroom costs are associated with 2-person households; Two-bedroom costs are associated with 3-person households). (c) Utilities for rentals include an allowance for cooking (natural gas), heating (natural gas), water heating (natural gas), and "other electric" utility usage. Assumes water, sewer, and trash charges are included in the rent. Figures 14 and 15 shows the calculations of affordable sales prices for for-sale housing. The calculations are based on the following assumptions: • Based on the anticipated households that would occupy the 3- and 4-bedroom units in the two for-sale prototypes (prototypes 1 and 2), it is assumed that, on average, 6-person households DRAFT Inclusionary Program Study and In-lieu Fee Calculation 21 would occupy 4-bedroom units, while an even mix of 4- and 5-person households would occupy 3-bedroom units. • Based on the approach used by Marin Housing Authority (MHA) for calculating affordable sales prices, homeowners were assumed to pay no more than 33 percent of their gross monthly income on housing costs. 10 • The maximum affordable sales price is determined by the total monthly mortgage payment that a homeowner could afford, which incorporates standard assumptions related to the mortgage terms and other monthly housing costs associated with homeownership. o The mortgage is assumed to be 30-year fixed rate, with an interest rate of 3.8 percent, which is a typical rate at the time of research (December 2020). The owner is assumed to put down a 5 percent down payment, which is standard for conventional and CalFHA loans. o Other monthly housing costs include homeowners’ association dues, property taxes, homeowners’ insurance, interior property insurance, and premiums for private mortgage insurance required on home purchases with a down payment of less than 20 percent. Note there is no utility deduction, in accordance with MHA’s approach. • Other monthly housing costs overall are assumed to be slightly greater for condominium housing types than for single-family detached housing types, which is driven by different assumptions on monthly homeowner’s association costs. The homeowner’s association costs are expected to be higher on a per-unit basis for condominium units than for detached single- family units, which decreases the household budget available for a mortgage. (On the other hand, detached single-family homeowners are responsible for more costs that are not included in Figure 14.) 10 The percentage of income spent on for-sale housing is usually higher because it includes more expenses. Also, buyers typically have higher incomes than renters, which allow them to be able to spend more on housing costs while still having more discretionary income left over for other expenses. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 22 FIGURE 14. MAXIMUM AFFORDABLE SALES PRICES FOR SINGLE-FAMILY DETACHED SUBDIVISION (PROTOTYPE 1) Household Size (Persons per HH) 4.5 6 Very Low Income (50% AMI) Annual Household Income at 50% AMI $74,413 $83,000 Maximum Monthly Housing Cost (a) $2,046 $2,283 Monthly Deductions (b) $1,074 $1,218 HOA Dues (c) $500 $600 Property Taxes and Insurance (d) $574 $618 Monthly Income Available for Mortgage Payment (e) $973 $1,064 Maximum Mortgage Amount (f) $208,728 $228,378 Maximum Affordable Sales Price (g) $219,714 $240,398 Low Income (70%) Annual Household Income at 70% AMI $104,178 $116,200 Maximum Monthly Housing Cost (a) $2,865 $3,196 Monthly Deductions (b) $1,342 $1,518 HOA Dues (c) $500 $600 Property Taxes and Insurance (d) $842 $918 Monthly Income Available for Mortgage Payment (e) $1,523 $1,678 Maximum Mortgage Amount (f) $326,872 $360,209 Maximum Affordable Sales Price (g) $344,076 $379,167 Moderate Income (110%) Annual Household Income at 110% AMI $163,708 $182,600 Maximum Monthly Housing Cost (a) $4,502 $5,022 Monthly Deductions (b) $1,892 $2,131 HOA Dues (c) $500 $600 Property Taxes and Insurance (d) $1,392 $1,531 Monthly Income Available for Mortgage Payment (e) $2,610 $2,891 Maximum Mortgage Amount (f) $560,102 $620,390 Maximum Affordable Sales Price (g) $589,581 $653,042 Source: Strategic Economics, 2021. Notes: (a) 33 percent of maximum monthly household income. (b) Unlike for rentals, monthly deductions for for-sale units do not include utility costs. (c) Homeowners Association dues are assuming to average $0.25 per square foot. (d) Assumes annual effective property tax rate of 1.50% percent of sales price, after exemptions; annual private mortgage insurance premium rate of 0.85 percent of mortgage amount. (e) Maximum monthly housing cost minus deductions. (f) Assumes 3.8 percent interest rate and 30-year loan term. Interest rate is based on correspondence with Marin Housing Authority. (g) Assumes 5 percent down payment (95 percent loan-to-value ratio). DRAFT Inclusionary Program Study and In-lieu Fee Calculation 23 FIGURE 15. MAXIMUM AFFORDABLE SALES PRICES FOR CONDOMINIUM TOWNHOME (PROTOTYPE 2) Household Size (Persons per HH) 4.5 6 Very Low Income (50% AMI) Annual Household Income at 50% AMI $74,413 $83,000 Maximum Monthly Housing Cost (a) $2,046 $2,283 Monthly Deductions (b) HOA Dues (c) $613 $665 Property Taxes and Insurance (d) $537 $597 Monthly Income Available for Mortgage Payment (e) $897 $1,020 Maximum Mortgage Amount (f) $192,493 $218,997 Maximum Affordable Sales Price (g) $202,624 $230,523 Low Income (70%) Annual Household Income at 70% AMI $104,178 $116,200 Maximum Monthly Housing Cost (a) $2,865 $3,196 Monthly Deductions (b) $1,418 $1,561 HOA Dues (c) $613 $665 Property Taxes and Insurance (d) $805 $896 Monthly Income Available for Mortgage Payment (e) $1,447 $1,635 Maximum Mortgage Amount (f) $310,637 $350,829 Maximum Affordable Sales Price (g) $326,986 $369,293 Moderate Income (110%) Annual Household Income at 110% AMI $163,708 $182,600 Maximum Monthly Housing Cost (a) $4,502 $5,022 Monthly Deductions (b) $1,967 $2,175 HOA Dues (c) $613 $665 Property Taxes and Insurance (d) $1,355 $1,510 Monthly Income Available for Mortgage Payment (e) $2,535 $2,847 Maximum Mortgage Amount (f) $543,953 $611,059 Maximum Affordable Sales Price (g) $572,582 $643,220 Source: Strategic Economics, 2020. Notes: (a) 33 percent of maximum monthly household income. (b) Unlike for rentals, monthly deductions for for-sale units do not include utility costs. (c) Homeowners Association dues are assuming to average $0.35 per square foot. (d) Assumes annual effective property tax rate of 1.50% percent of sales price, after exemptions; annual private mortgage insurance premium rate of 0.85 percent of mortgage amount. (e) Maximum monthly housing cost minus deductions. (f) Assumes 3.8 percent interest rate and 30-year loan term. Interest rate is based on correspondence with Marin Housing Authority. (g) Assumes 5 percent down payment (95 percent loan-to-value ratio). DRAFT Inclusionary Program Study and In-lieu Fee Calculation 24 MAXIMUM AFFORDABLE RENTS AND SALES PRICES Figures 16 and 17 provide summaries for the maximum affordable rents and sales prices respectively for the various prototypes that were tested. FIGURE 16. SUMMARY OF MAXIMUM AFFORDABLE RENTS Income Level Studio 1-BR 2-BR Very Low-income (50%) $1,209 $1,379 $1,539 Low-income (65%) $1,584 $1,809 $2,022 Moderate Income (90%) $2,210 $2,524 $2,827 Source: Strategic Economics, 2021. FIGURE 17. SUMMARY OF MAXIMUM AFFORDABLE SALES PRICES Single-Family Subdivision Condominium Townhome 3-BR 4-BR 3-BR 4-BR Very Low Income (50% AMI) $219,714 $240,398 $202,624 $230,523 Low Income (70%) $344,076 $379,167 $326,986 $369,293 Moderate Income (110%) $589,581 $653,042 $572,582 $643,220 Source: Strategic Economics, 2021. ESTIMATING DEVELOPMENT COSTS The second step in the affordability gap analysis is to estimate development costs for the three prototypes. Development costs include land costs, direct or “hard” construction costs, indirect or “soft” costs, as well as financing costs, a developer fee, and a contingency for overruns. Because multi-unit residential projects are relatively rare in Marin, the Consultant Team collected available data on the few recent comparable development projects and land sales, and supplemented the data with feedback from local developers (see Appendix A), other available studies of costs in the Bay Area, and past experience with pro forma studies. The development cost assumptions are shown below in Figure 18, and a chart that summarizes the breakdown of overall development costs for the prototypes is shown in Figure 19. The development costs for for-sale housing are based on interviews with developers and homebuilders experienced with single-family and townhome development projects in Marin. This analysis estimated that total development costs for the single-family subdivision were $355 per net residential square foot while the costs for the condominium townhome were $373 per net residential square foot. Because there are limited examples of recent multifamily development in Marin, the Consultant Team relied on a variety of sources to identify the multifamily cost assumptions. They are partly based on a pro forma for a proposed Type V development in Marin, as well as an interview with a multifamily developer. The team also relied on cost data and recently completed feasibility studies for similar rental apartment developments in the Bay Area. The analysis estimated that the total development cost for Prototype 3 was $705 per net square foot. The remainder of this section explains the costs assumptions in more detail. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 25 FIGURE 18. SUMMARY OF DEVELOPMENT COST ASSUMPTIONS Single Family Subdivision Condominium Townhome Rental Apartments Land Cost (a) Per Land Sq. Ft. $56 $69 $86 Per Unit $350,000 $200,000 $75,000 Hard Costs Site Costs per Land Sq. Ft. (b) $15 $35 $35 Construction Costs per Sq. Ft. of Residential Area $110 $150 $350 Parking Cost per Space (c) n/a n/a $32,500 Other Costs (Displayed as % of Hard Cost) Soft Costs (d) 12% 12% 12% Contingency 5% 5% 5% Developer Overhead 4% 4% 4% Financing Costs Amount Financed (% of Hard and Soft Costs) 65% 65% 70% Construction Loan Fee 1.5% 1.5% 1.5% Term (Months) 18 18 24 Construction Interest Rate 4.5% 4.5% 5.0% Source: Developer Interviews, 2021; Project Pro Formas, 2021; Strategic Economics, 2021. Notes: (a) Entitled land (b) Assumes relatively flat site (c) Parking costs for for-sale prototypes are incorporated into the construction cost. Cost for rental prototype refers to one level of podium (d) Includes architectural, engineering, and consulting fees, as well as taxes, legal, insurance, accounting, and other costs. FIGURE 19. TOTAL DEVELOPMENT COSTS BY PROTOTYPE Cost Category Single Family Subdivision Condominium Townhome Rental Apartments Total Project Land Cost $4,900,000 $6,000,000 $7,500,000 Hard Costs $4,694,800 $11,149,200 $38,222,811 Soft Costs $1,344,396 $3,001,696 $10,660,521 Development Costs $10,939,196 $20,150,896 $56,383,332 Per Unit Land Cost $350,000 $200,000 $75,000 Hard Costs $335,343 $371,640 $382,228 Soft Costs $96,028 $100,057 $106,605 Development Costs $781,371 $671,697 $563,833 Per Net Residential Sq. Ft. Land Cost $159 $111 $94 Hard Cost $152 $206 $478 Soft Costs $44 $56 $133 Development Costs $355 $373 $705 Source: Strategic Economics, 2021. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 26 The following subsections provide further details on how the cost assumptions were identified. LAND COST Land costs typically vary widely, depending on factors such as location, zoning, and the amount of site work required to prepare the land for development. Because the price of land is so strongly tied to what can be built upon it, land costs are characterized in this study as the cost per dwelling unit of development. Recent comparable sales that informed land cost for the three prototypes are shown below in Figures 20-22. • There is only one relevant recent sale for an entitled single-family subdivision. The site is in Mill Valley, which tends to have high land costs compared to the Marin average. • A range of $180,000 per unit to approximately $300,000 per unit was identified for the condominium townhome prototype based on two recent sales, which reflect the high end (Mill Valley) and the low end (Novato) of the Marin County market. • For the rental apartment prototype, two sales for sites entitled for multifamily development had land costs of $75,000 per unit, a number that was corroborated by a developer with experienced in multifamily development in Marin. Based on these comparable examples and feedback from developers, the land cost assumptions were set at $350,000 per unit for Prototype 1, $200,000 per unit for Prototype 2, and $75,000 per unit for Prototype 3. FIGURE 20. RECENT LAND SALE FOR SITE ZONED FOR SINGLE-FAMILY SUBDIVISION Site Address 548 Miller Ave., Mill Valley Description Single-family subdivision (13 fee simple lots, three of which include ADUs) Site Acres 1.58 Site Sq. Ft. 68,825 Units Per Acre 10 Sale Date September 2019 Sale Price for Site $8,500,000 Land Price Per Unit (including 3 ADUs) $531,250 Source: Costar, 2021; Strategic Economics, 2021. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 27 FIGURE 21. RECENT LAND SALES FOR CONDOMINIUM TOWNHOMES Site Address 500 Miller Ave., Mill Valley 7533-7537 Redwood Blvd., Novato Description Nine condominium townhomes with underground parking and corner retail space 50 condominium townhomes (Atherton Place) Site Acres 1.2 3.7 Site Sq. Ft. 52,272 161,172 Units Per Acre 7.5 13.5 Sale Date June 2017 July 2018 Sale Price for Site $2,900,000 $9,000,000 Land Price Per Unit $322,222 $180,000 Source: Costar, 2021; Strategic Economics, 2021. FIGURE 22. RECENT LAND SALES FOR MULTIFAMILY HOUSING Site Address 703 Third St., San Rafael (a) 1203-1211 Lincoln Ave., San Rafael (b) Description Proposed apartment project with 61 units and underground, automated parking and incorporating density bonus 36 condominium flats Type V over I construction Site Acres 0.63 0.74 Site Sq. Ft. 27,395 32,234 Units Per Acre 97 49 Sale Date August 2014 March 2017 Sale Price for Site $4,650,000 $2,700,000 Land Price Per Unit $76,230 $75,000 Source: Costar, 2021; Developer Pro Formas, 2021; Strategic Economics, 2021. Notes: (a) Reflects the site's "base case scenario" which is more comparable to Prototype 3 (b) Site is now associated with pipeline assisted living proposal but at time of sale, it had been planned for condominiums HARD COSTS Hard costs refer to both horizontal site costs and vertical construction costs, including the residential area construction and parking construction. According to developers active in Marin County, construction costs for the county are higher than other locations in the Bay Area because it is less accessible to construction workers. Subcontractors often charge a premium that is equivalent to prevailing wage. The construction cost estimates for residential buildings incorporate these cost factors specific to Marin County. The construction costs also include horizontal/site costs that include demolition, grading, utility connection installation, paving, and landscaping. For the purposes of this analysis, it is assumed that DRAFT Inclusionary Program Study and In-lieu Fee Calculation 28 the hypothetical sites are relatively flat, with horizontal costs of $15 per land square foot for the single- family subdivision, and $35 per land square foot for the condominium townhomes and apartments. The construction costs for the single-family subdivision and the condominium townhome, which are based on feedback from Marin developers and homebuilders, are $110 and $150 per gross residential square foot respectively. Note that the cost of garage parking is incorporated into the residential hard cost, while the cost of any surface parking is incorporated into the site cost for these prototypes. For the rental prototype, the construction cost of the residential area is estimated to be $350 per gross residential square foot. Because there are very few examples of recent and under construction apartments over podium in Marin, the Consultant Team also reviewed pro formas for planned affordable and market-rate projects in San Rafael and other Bay Area cities to estimate costs. Based on this broad review of costs, the Consultant Team estimated that residential construction costs for Prototype 3 were approximately $350 per gross residential square foot, which translates to per unit costs of $564,000. A review of financial data from affordable housing projects in the San Francisco Bay Area supported these cost estimates, which show that affordable housing per unit costs are in the range of $530,000 to $678,000. 11 SOFT COSTS Soft costs refer to necessary costs of development that are not directly related to the physical construction of the building. They include architecture, engineering costs and other professional services fees, as well as other costs associated with doing business, such as insurance and taxes. Finally, soft costs include city permits and fees, and other miscellaneous costs. It is estimated that soft costs are 12 percent of hard costs for all three prototypes, a standard assumption that was confirmed by developer interviewees. The developer’s contingency and overhead, also account for an additional five and four percent of hard costs, respectively.12 FINANCING COSTS Financing assumptions are consistent for both for-sale prototypes because the two hypothetical projects would have similar loan terms and construction timelines. Based on input from developers that specialize in owner-occupied single-family and townhome developments, 65 percent of the project cost would be financed with debt, with a typical interest rate of approximately 4.5 percent. The development period for the for-sale prototypes is assumed to be 18 months. The rental apartment prototype incorporates a slightly higher interest rate at 5 percent, to account for a higher level of risk, with a 24-month development period. The amount financed is also tends to be slightly higher at 70 percent of project cost, according to a multifamily developer. All three prototypes incorporate a 1.5 percent construction loan fee, which is a standard industry assumption. 11 Even though affordable rental housing is rented at below market rates, the cost of construction is the same, and sometimes higher than market-rate housing. 12 Developer profit is not included in the consideration of costs for the purposes of this analysis, but could be considered in a more detailed pro forma financial feasibility analysis. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 29 AFFORDABILITY GAP The final step is to calculate the housing affordability gap, which is the difference between what very low-, low-, and moderate-income households can afford to pay and the cost of developing those units. The gap helps determine the in-lieu fee amount that would be required to cover the cost associated with developing affordable housing units. FOR-SALE HOUSING Figures 23 and 24 shows the affordability gap calculation for the for-sale housing prototypes. For each unit type, the gap is calculated as the difference between the per-unit cost of development and the affordable sales price for each income level. The average housing affordability gap is weighted based on the unit mix in the prototypes. FIGURE 23. AFFORDABILITY GAP FOR SINGLE-FAMILY SUBDIVISION Income Level and Unit Type Unit Size (Sq. Ft.) Affordable Sales Price (a) Development Costs (b) Affordability Gap (c) Very Low Income (50%) 3 Bedroom 2,000 $219,714 $710,337 $490,623 4 Bedroom 2,400 $240,398 $852,405 $612,007 Weighted Average $230,056 $781,371 $551,315 Low Income (70%) 3 Bedroom 2,000 $344,076 $710,337 $366,261 4 Bedroom 2,400 $379,167 $852,405 $473,237 Weighted Average $361,622 $781,371 $419,749 Moderate Income (110%) 3 Bedroom 2,000 $589,581 $710,337 $120,757 4 Bedroom 2,400 $653,042 $852,405 $199,363 Weighted Average $621,311 $781,371 $160,060 Source: Strategic Economics, 2021. Notes: (a) See calculation in Figure 14, above. (b) Assumes $349 per SF for development costs (c) Calculated as the difference between affordable sales price and development cost (d) Includes 50% three-bedrooms and 50% four-bedrooms. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 30 FIGURE 24. AFFORDABILITY GAP FOR CONDOMINIUM TOWNHOME Income Level and Unit Type Unit Size (Sq. Ft.) Affordable Sales Price (a) Development Costs (b) Affordability Gap (c) Very Low Income (50%) 3 Bedroom 1,750 $202,624 $653,038 $450,414 4 Bedroom 1,900 $230,523 $709,013 $478,490 Weighted Average $211,924 $671,697 $459,773 Low Income (70%) 3 Bedroom 1,750 $326,986 $653,038 $326,052 4 Bedroom 1,900 $369,293 $709,013 $339,720 Weighted Average $341,089 $671,697 $330,608 Moderate Income (110%) 3 Bedroom 1,750 $572,582 $653,038 $80,456 4 Bedroom 1,900 $643,220 $709,013 $65,793 Weighted Average $596,128 $671,697 $75,568 Source: Strategic Economics, 2021. Notes (a) See calculation in Figure 15, above. (b) Assumes $393 per square foot for development costs (c) Calculated as the difference between affordable sales price and development cost (d)Includes two-thirds three-bedrooms and one-third four-bedrooms. RENTAL HOUSING Figure 25 shows the affordability gap calculation for the rental prototype. For each rental unit type and income level, the gap is defined as the difference between the per-unit cost of development and the supportable debt per unit. The supportable debt is calculated based on the net operating income generated from the monthly rent from the affordable unit, and incorporates assumptions about operating expenses (including property taxes, insurance, maintenance, etc.), reserves, and vacancy. It also incorporates financing assumptions related to the permanent loan on the property. Assumptions on operating costs are informed by data on Victory Village, which is a recent affordable housing development built in Marin. The average housing affordability gap is also weighted based on the unit mix of the prototype. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 31 FIGURE 25. HOUSING AFFORDABILITY GAP FOR RENTAL APARTMENTS Income Level and Unit Type Unit Size (Sq. Ft.) Maximum Monthly Rent (a) Annual Income Net Operating Income (b) Available for Debt Service (c) Supportable Debt (d) Development Costs (e) Affordability Gap (f) Very Low-income (50%) Studio 650 $1,209 $14,507 $2,781 $2,418 $39,393 $458,250 $418,857 1 Bedroom 750 $1,379 $16,551 $4,723 $4,107 $66,904 $528,750 $461,846 2 Bedroom 900 $1,539 $18,468 $6,545 $5,691 $92,699 $634,500 $541,801 Weighted Average (g) $74,471 $564,000 $489,529 Low-income (65%) Studio 650 $1,584 $19,013 $7,063 $6,141 $100,036 $458,250 $358,214 1 Bedroom 750 $1,809 $21,704 $9,618 $8,364 $136,236 $528,750 $392,514 2 Bedroom 900 $2,022 $24,264 $12,051 $10,479 $170,691 $634,500 $463,809 Weighted Average (g) $146,398 $564,000 $417,602 Moderate Income (90%) Studio 650 $2,210 $26,525 $14,198 $12,346 $153,206 $458,250 $305,044 1 Bedroom 750 $2,524 $30,291 $17,776 $15,458 $191,816 $528,750 $336,934 2 Bedroom 900 $2,827 $33,924 $21,228 $18,459 $229,058 $634,500 $405,442 Weighted Average (g) $202,852 $564,000 $361,148 Notes: (a) Affordable rent levels based on 2020 income limits (b) Amount available for debt. Assumes 5% vacancy and collection loss and $11,000 per unit for operating expenses and reserves, based on operating pro formas for recent affordable projects in Marin County. (c) Assumes 1.15 Debt Coverage Ratio. (d) Assumes 4.5% permanent financing interest rate and 30 year loan. (e) Assumes development cost of $705 per net square foot on rental units. (f) Calculated as the difference between development costs and supportable debt. (g) Incorporates 10% studios, 50% one-bedrooms, and 40% two-bedrooms. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 32 SUMMARY OF MAXIMUM IN-LIEU FEE BY HOUSING TYPE A summary of the affordability gaps by tenure and income level is displayed in Figure 26. The affordability gap is the basis for setting the maximum in-lieu fee. As shown, the maximum in-lieu fee per required affordable unit (rounded) is approximately $377,000 for single-family subdivisions, $289,000 for condominium townhomes, and $423,000 for rental apartments. The maximum in-lieu fee is highest for rental apartments because the average targeted income is lower (68 percent of AMI, compared to 78 percent AMI for for-sale housing), resulting in a wider affordability gap. The calculated in-lieu fee is lower for condominium townhomes than single-family subdivisions because the construction cost for townhomes is slightly lower, while the targeted income groups remain the same. It is important to note that the City can choose to adopt lower fees than the maximum calculated in-lieu fees shown in Figure 26. FIGURE 26. SUMMARY OF MAXIMUM IN-LIEU FEES Income Level For-sale Gap Rental Gap Single-Family Subdivision Condominium Townhome Very Low-income (50% AMI) $551,315 $459,773 $489,529 Low-income (65% AMI Rental/ 70% Owner) $419,749 $330,608 $417,602 Moderate Income (90% AMI Rental)/ 110% AMI Owner) $160,060 $75,568 $361,148 Average Affordability Gap/ Maximum In-Lieu Fee $377,042 $ 288,650 $422,760 Source: Strategic Economics, 2021. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 33 IV. Policy Considerations and Recommendations This section summarizes key policy issues for the City of San Rafael to consider when updating its inclusionary housing ordinance and in-lieu fee. The following questions are addressed: • How do the calculated in-lieu fees compare with the County’s existing fees? • How do the calculated fees compare with in-lieu fees in other jurisdictions? • How much do the calculated in-lieu fees raise development costs in Marin County and impact financial feasibility? • How do the calculated fees compare with existing municipal fees, such as building permit and other impact fees? Each of these questions is addressed in the sections below, followed by a set of recommendations. COMPARISON OF IN-LIEU FEES IN MARIN COUNTY AND NEIGHBORING JURISDICTIONS The newly calculated in-lieu fees from the previous section are shown along with the existing in- lieu fees for for-sale housing for the County and other nearby jurisdictions for comparison in Figure 27. As shown, the City of San Rafael currently has an in-lieu fee of nearly $344,000 per unit for all for-sale housing. The newly calculated maximum in-lieu fee for single-family subdivisions is higher than the existing fee in all the other jurisdictions. However, the calculated fee for for-sale townhomes is lower than the County’s existing fee but higher than the current in-lieu fee for for- sale housing in Novato. The same information is shown for rental housing in Figure 28. As shown, the calculated maximum in-lieu fee for rental projects is higher than the existing fees in San Rafael, Marin County and the neighboring cities. Larkspur, Novato, and San Francisco charge lower in-lieu fees for rental projects, even though the affordability gap may be higher than for-sale housing. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 34 FIGURE 27: COMPARISON OF CALCULATED IN-LIEU FEES WITH EXISTING IN-LIEU FEES, FOR-SALE DEVELOPMENTS [a] Corte Madera has an in-lieu fee that is calculated based on construction costs and area median incomes. Because the assumptions in the calculation have not been updated for several years, the fee currently evaluates to zero. [b] In-lieu fees for San Francisco and Novato vary by the number of units in the project. Both fee amounts assume the 30-unit condo townhome prototype. Sources: Available documents from jurisdictions, 2020; Strategic Economics, 2021. FIGURE 28: COMPARISON OF CALCULATED IN-LIEU FEES WITH EXISTING IN-LIEU FEES, RENTAL DEVELOPMENTS [a] Corte Madera has an in-lieu fee that is calculated based on construction costs and area median incomes. Because the assumptions in the calculation have not been updated for several years, the fee currently evaluates to zero. [b] In-lieu fees for San Francisco and Novato vary by the number of units in the project. Both fee amounts assume the 100-unit rental apartment prototype. Sources: Available documents from jurisdictions, 2020; Strategic Economics, 2021.in-Lieu Fee in Relation to Development costs Using the development cost estimates from the previous section, the Consultant Team calculated the increase in costs that would be experienced when charging the fee in-lieu of an onsite requirement at a level of 10 percent, 15 percent, 20 percent, and 25 percent. As shown in Figure 29, the cost of the fee for would range from five to 12 percent for the single-family subdivision $377,042 $288,650 $0 $338,126 $329,485 $343,969 $187,885 $359,100 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 Calculated Fee for S.F. Subdiv.Calculated Fee for Condo TownhomeCorte Madera [a]LarkspurUnincorporated Marin CountySan RafaelNovato [b]San Francisco [b]$422,760 $0 $213,267 $329,485 $343,969 $108,730 $177,334 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 Calculated Fee for Rental Corte Madera [a]Larkspur Unincorporated Marin County San Rafael Novato [b]San Francisco [b] DRAFT Inclusionary Program Study and In-lieu Fee Calculation 35 prototype, four to 11 percent for the condo townhome prototype, and seven to 19 percent for the apartment prototype. FIGURE 29: IMPACT OF IN-LIEU FEE ON TOTAL DEVELOPMENT COSTS BY PROTOTYPE Single Family Subdivision Condo Townhome Rental Apartment Total Development Costs per Unit $781,371 $671,697 $563,833 In lieu Fees per Affordable Unit $289,905 $203,088 $422,760 Increase in Total Development Costs @ 10% Onsite Requirement 5% 4% 7% @ 15% Onsite Requirement 7% 6% 11% @ 20% Onsite Requirement 10% 9% 15% @ 25% Onsite Requirement 12% 11% 19% Source: Strategic Economics, 2021. The calculated in-lieu fee for the apartment prototype has the largest impact on development costs, due to the much higher affordability gap for apartments. Although rental apartments are the least expensive of the three prototypes to build per unit, the smaller households expected to occupy these units, which translates to lower tenant incomes, and the high operating costs of apartments mean that the affordability gap for rentals is higher in this case. This analysis suggests that for-sale developments will be able to accommodate a substantially higher percentage onsite requirement than will rental projects. BURDEN OF IN-LIEU COMBINED WITH OTHER MUNICIPAL FEES The Consultant Team reviewed the total burden of the calculated in-lieu fees in the context of other municipal fees charged by the cities, including fees such as building permits as well as any impact fees each jurisdiction might have in place.14 A table of these costs for each jurisdiction is given in Figure 30 below, including the total fees that would be paid on each prototype in-lieu of hypothetical inclusionary requirements ranging from ten to 25 percent. Because each jurisdiction has its own schedule of fees for new development, the cost of development in each community varies. For example, municipal fees for the prototypes in San Rafael range from three to four percent of development costs, while fees in Corte Madera are higher, ranging from four to five percent of development costs. The City of San Rafael will need to take into account these baseline costs when updating an in-lieu fee. 14 Connection fees charged by a local sanitary sewer and water district were also estimated; they would be expected to represent an additional three to four percent of development costs above what is shown in the Figure 30. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 36 FIGURE 30: IN-LIEU FEES AND OTHER MUNICIPAL FEES* BY JURISDICTION Current level of onsite requirement for each jurisdiction in bold. Per Unit As % of Development Costs S.F. Subdiv. Condo Apt. S.F. Subdiv. Condo Apt. Corte Madera Municipal Fees $35,776 $27,116 $23,339 5% 4% 4% Tot. Fees @10% Rqmt. $64,767 $47,424 $65,615 8% 7% 12% Tot. Fees @15% Rqmt. $79,262 $57,579 $86,753 10% 9% 15% Tot. Fees @20% Rqmt. $93,757 $67,733 $107,891 12% 10% 19% Tot. Fees @25% Rqmt. $108,253 $77,888 $129,029 14% 12% 23% Fairfax Municipal Fees $13,231 $11,258 $8,104 2% 2% 1% Tot. Fees @10% Rqmt. $42,221 $31,567 $50,380 5% 5% 9% Tot. Fees @15% Rqmt. $56,717 $41,722 $71,518 7% 6% 13% Tot. Fees @20% Rqmt. $71,212 $51,876 $92,656 9% 8% 16% Tot. Fees @25% Rqmt. $85,707 $62,030 $113,794 11% 9% 20% Larkspur Municipal Fees $39,839 $25,951 $19,449 5% 4% 3% Tot. Fees @10% Rqmt. $68,830 $46,260 $61,725 9% 7% 11% Tot. Fees @15% Rqmt. $83,325 $56,414 $82,863 11% 8% 15% Tot. Fees @20% Rqmt. $97,820 $66,569 $104,001 13% 10% 18% Tot. Fees @25% Rqmt. $112,316 $76,723 $125,139 14% 11% 22% Unincorporated Marin County County Fees $25,397 $23,656 $5,470 3% 4% 1% Tot. Fees @10% Rqmt. $63,101 $52,521 $47,746 8% 8% 8% Tot. Fees @15% Rqmt. $81,953 $66,954 $68,884 10% 10% 12% Tot. Fees @20% Rqmt. $100,806 $81,386 $90,022 15% 12% 18% Tot. Fees @25% Rqmt. $119,658 $95,819 $111,160 17% 15% 22% San Anselmo Municipal Fees $12,821 $13,837 $14,034 2% 2% 2% Tot. Fees @10% Rqmt. $41,811 $34,146 $56,310 5% 5% 10% Tot. Fees @15% Rqmt. $56,306 $44,300 $77,448 7% 7% 14% Tot. Fees @20% Rqmt. $70,802 $54,455 $98,586 9% 8% 17% Tot. Fees @25% Rqmt. $85,297 $64,609 $119,724 11% 10% 21% San Rafael Municipal Fees $27,044 $23,545 $15,113 3% 4% 3% Tot. Fees @10% Rqmt. $56,034 $43,854 $57,389 7% 7% 10% Tot. Fees @15% Rqmt. $70,530 $54,009 $78,527 9% 8% 14% Tot. Fees @20% Rqmt. $85,025 $64,163 $99,665 11% 10% 18% Tot. Fees @25% Rqmt. $99,520 $74,317 $120,803 13% 11% 21% Continued next page DRAFT Inclusionary Program Study and In-lieu Fee Calculation 37 Continued from previous page Sausalito Municipal Fees $7,448 $7,694 $9,987 1% 1% 2% Tot. Fees @10% Rqmt. $36,438 $28,003 $52,263 5% 4% 9% Tot. Fees @15% Rqmt. $50,934 $38,157 $73,401 7% 6% 13% Tot. Fees @20% Rqmt. $65,429 $48,311 $94,539 8% 7% 17% Tot. Fees @25% Rqmt. $79,924 $58,466 $115,677 10% 9% 21% * Municipal fees include all applicable permits and impact fees charged by the jurisdiction. Water and sanitary sewer connection fees are not included. Based on estimates from Marin Municipal Water District and Ross Valley Sanitary District, water and sewer fees represent and additional four percent to development costs of the single family subdivision and three percent to condo townhomes and apartments. Source: Strategic Economics, 2021. CONVERSION TO PER SQUARE FOOT FEE Jurisdictions can opt to implement the in-lieu fee as a per square foot fee, rather than a per unit fee, in order to incentivize development projects with smaller units. This may be useful for jurisdictions that primarily see developments with large, luxury units. The per square foot fees are calculated by dividing the per-unit in lieu fee by the weighted average unit square feet for each prototype. This calculation is shown below in Figure 31. FIGURE 31. EQUIVALENT IN LIEU FEES PER UNIT SQUARE FOOT FOR PROTOTYPES Multifamily Rental Condominium Townhome Single Family Subdivision Weighted Average Unit Sq. Ft. 800 1800 2,200 Affordability Gap per Unit Very Low Income (50% AMI Rental and Owner) $489,529 $459,773 $551,315 Low Income (65% AMI Rental/ 70% AMI Owner) $417,602 $330,608 $419,749 Moderate Income (90% AMI Rental)/ 110% AMI Owner) $361,148 $75,568 $160,060 Affordability Gap per Sq. Ft. Very Low Income (50% AMI) $612 $255 $251 Low Income (65% AMI Rental/ 70% AMI Owner) $522 $184 $191 Moderate Income (90% AMI Rental)/ 110% AMI Owner) $451 $42 $73 Source: Strategic Economics, 2021. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 38 COMPARISON OF INCLUSIONARY REQUIREMENTS IN SELECTED BAY AREA CITIES Figure 32 summarizes the inclusionary requirements for selected Bay Area cities outside of Marin County for the purposes of comparison. As shown, the cities all have inclusionary requirements on for-sale development projects ranging from a minimum of 5 percent in Oakland to 22 percent in San Francisco. The income targets for for-sale housing are typically low-income and moderate- income households. For rental housing, the percentage requirement ranges from 5 percent in Oakland to 20 percent in San Francisco. Most of the jurisdictions require some proportion of very low-income units, along with low-income and moderate-income units. San Francisco, San Jose, and Cupertino have lower requirements for small projects. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 39 FIGURE 32. INCLUSIONARY POLICIES FOR SELECT BAY AREA JURISDICTIONS Jurisdiction For-Sale Housing Rental Housing Fee Option Year Adopted/Updated Berkeley 20% affordable at or below 80% AMI. 20% must be affordable (10% at 80% AMI and 10% at 50% AMI). For sale: In-lieu fee option (62.5% of difference between affordable and market price). Rental: Affordable housing impact fee $39,716 per market-rate unit. 2020 Oakland 5% at 50% AMI or 10% at 80% AMI or 10% at 120% AMI. 5% at 50% AMI or 10% at 80% AMI or 10% at 120% AMI. Fee permitted. 2016 San Francisco Projects with 25+ units: 22% must be affordable to 80%-110% AMI. Projects with 10-24 units: 13% must be affordable. Projects with 25+ units: 20% must be affordable to 55%-110% AMI. Projects with 10-24 units: 13% must be affordable to 55% AMI. Fee permitted but with a higher percentage requirement than building on- site. Smaller projects pay a lower fee. 2017 San Jose Projects with 20+ units must meet 15% affordable set-aside at or below 120% AMI. Smaller projects have lower percentage requirements. 5% at 100% AMI, 5% at 60% AMI, and 5% at 50% AMI, or 10% at 30% AMI. Smaller projects have lower percentage requirements. Fee permitted. 2021 Santa Cruz 20% must be affordable to households at or 80% - 100% AMI. 20% must be affordable to households at or below 80% AMI. On-site units encouraged. 2019 Palo Alto 15% must be affordable to households at 120% AMI or below. No on-site requirement for rental. For sale: Fee permitted but developer must demonstrate infeasibility of on-site units. Rental: Affordable housing impact fee charged. 2012 Cupertino 15% must be affordable to 120% or 100% AMI. 15% must be affordable to 120% or 80% AMI. Projects with 1-6 units may provide a unit or pay a fee. For projects with 7 or more units, requires City Council approval. 2012 Source: Urban Displacement Project, 2021; City of Berkeley, 2021; Strategic Economics, 2021. DRAFT Inclusionary Program Study and In-lieu Fee Calculation 40 DRAFT Inclusionary Program Study and In-lieu Fee Calculation 41 Appendix A The Consultant Team spoke with a range of stakeholders for this report, including market-rate housing developers, affordable housing developers, affordable housing advocates, Marin housing authority staff, and local community land trusts. Stakeholders that participated in either one-on- one interviews with the Consultant Team, or in developer forums, both of which helped inform this report, are listed below in Figure 33. FIGURE 33. LIST OF STAKEHOLDERS INTERVIEWED FOR STUDY Name Organization/ Affiliation Judith Bloomberg Marin Organizing Committee Arianne Dar Bolinas Community Land Trust Todd David Housing Action Committee Justin Derby Meritage Homes Bruce Dorfman Thompson Dorfman Aaron Eckhouse California YIMBY Michael Hooper Campus Property Group Larry Kennings Marin Environmental Housing Collaborative Stacey Laumann Community Land Trust of West Marin Marianne Lim EAH Housing Stephanie Lovette Marin Housing Authority Linda Mandolini Eden Housing Tom Monahan Monahan Parker Development Wick Polite Seagate Properties Kiki La Porta Coalition for a Livable Marin Phil Richardson Individual developer Suzanne Sadowsky San Geronimo Valley Affordable Housing Association Carmen Soruco Marin Housing Authority Mary Kay Sweeney Homeward Bound Joanne Webster Housing Crisis Action Group, San Rafael Chamber of Commerce Source: Strategic Economics, 2021.