ADMINISTRATIVE REPORT

Date: October 3, 2001
Author/Tel. Rick Scobie 604.873.7399

RTS No. 02321

CC File No. 1758

CS&B: October 18, 2001

TO: Standing Committee on City Services and Budgets

FROM: Director of Development Services in consultation with the Director of Support Services, Chief Building Official, Director of Current Planning, Director of Finance, and Director of Legal Services

SUBJECT: Year 2000, 2001 and 2002 Zoning, Building and Trade Permit Fees

RECOMMENDATION

A. THAT Council approve an across-the-board 3.5% increase (as reflected in the attached fee schedules) in all zoning, subdivision, sign, tree removal, "flat fee" building and trade permit fees, and miscellaneous fees, to compensate for 2000 and 2001 inflationary increases in the City's costs, to be effective upon enactment of the amending by-laws.

B. THAT Council approve a further 2.5% increase to these same fees (as reflected in the attached fee schedules), to compensate for 2002 inflationary increases in the City's costs, to be effective January 1, 2002.

C. THAT the Director of Development Services and the Chief Building Official advise the development and building community of these changes.

D. FURTHER THAT the Director of Legal Services bring forward the necessary by-law amendments for enactment.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services RECOMMENDS approval of the foregoing.

A general fee increase of 3.5% reflects inflationary increases for 2000 and 2001, noting that an inflationary fee increase was not pursued last year in anticipation of a possible significant increase later in 2000 related to new information technology. A further inflationary increase in costs of 2.5% is anticipated in 2002 and therefore a 2.5% increase in fees is recommended, to be effective at the beginning of next year.

COUNCIL POLICY

It is Council policy that fees and charges be established on the basis of the cost of providing the associated services or at market level where the service is provided in a market environment.

PURPOSE

The purpose of this report is to seek Council approval for an inflation adjustment of 3.5% in zoning, subdivision, sign, tree removal, building and trade permit fees based on a "flat fee", and miscellaneous fees, to reflect increased costs in the years 2000 and 2001, and to increase these fees a further 2.5% on January 1, 2002, to reflect cost increases due to inflation.

BACKGROUND

The most recent fee increases in applications primarily related to planning and building activities were in February 1999 when a 1% increase was incorporated for inflation.

A 2% increase was also established in 1999 to recover costs associated with implementation of a document imaging system (being the second of two increases approved in 1996). This previous 4% in fee increases is further addressed in an associated Council report dealing with upgrades to our document imaging system.

There was no inflationary increase in these application fees in 1998.

The primary reason for inflationary increases is to keep fees consistent with City administration and enforcement costs which increased by about 1.5% in 2000 and by 2.0% in 2001. These costs are expected to increase by a further 2.5% in 2002. Fees are adjusted for inflation in years where we do not conduct a comprehensive review of cost and market rates for equivalent service(s).

DISCUSSION

The budget target for application fees was established this year to reflect both anticipated application volumes and an anticipated fee adjustment to cover inflation. Due to higher than anticipated application volumes, application fee revenues this year are above budget target, even in the absence of an inflationary fee adjustment. The application volumes to date are expected to continue for the balance of this year, resulting in revenues above budget even if an inflationary fee increase is not introduced. This has lessened the urgency in seeking fee adjustments for inflation.

Application volumes vary year to year with some years producing revenues in excess of the budget projection and in other years there are revenue shortfalls. Whether application volumes - and thus revenues - fluctuate from year to year and budget targets are met or not, the City continues to face inflationary increases in the costs of its services. Consequently, fee adjustments for inflation are best undertaken on a regular, annual basis as they are incurred, since they are difficult to introduce later on a "catch up" basis. [As noted above, this is the case this year in seeking an inflationary increase for 2000 due to the special circumstances related to information technology.]

Although inflationary increases for 2000, 2001 and 2002 are generally recommended, it is recommended that there be no increase to the fees that are currently set for demolition of buildings containing dwelling units that have at any time since November 1, 1986 provided residential occupancy. That demolition permit fee is currently set at $1,000 per unit. This fee will be the subject of a future report to Council.

The next comprehensive review on planning, building and trade fees will be undertaken in 2002 once new processes flowing from the Development and Building Review have stabilized to enable accurate assessment of the costs of application services.

The 3.5% fee increase for 2000 and 2001, and 2.5% increase for 2002 recommended in this report would encompass application fees pertaining to the following:

· Zoning and Development Fee By-law #5585;
· Subdivision By-law #5208;

· Building By-law #8057 in terms of plumbing trade permit fees and other "flat fee" charges (i.e., not building permit application fees based on a percentage of the value of construction*);

· Electrical By-law #5563 in terms of "flat fee" charges (i.e., not electrical trade permit fees based on a percentage of the value of construction*);

· Inspections of Secondary Suites By-law #6553;
· Gas By-law #3507;
· Sign By-law #6510;
· Private Property Tree By-law #7347; and
· Miscellaneous Fees (Planning) By-law #5664.

* Value of construction implicitly responds to inflationary increases and applicant's submitted values are reviewed against industry standards.

 

Applicants throughout 2000 and thus far in 2001 have benefited from the absence of fee increases corresponding to inflationary increases in costs to the City. Fee increases for these years, if approved, should be effective immediately upon enactment of the by-laws establishing the new fees. Approval of an inflationary increase for 2002, approved at this time but not effective until January 1^st, would provide some advance notice to prospective applicants of forthcoming increases, enabling these increases to be better factored into project costs in advance.

FINANCIAL IMPLICATIONS

Based on current application volumes, the 3.5% inflationary increase would result in revenue increases of approximately $40,000 per month. The further 2.5% increase in 2002 would generate additional revenues of approximately $30,000 per month, again assuming current application volumes. City costs in providing our application services essentially consist of staff costs. For various reasons, staff complements tend not to be altered on an annual basis corresponding to changing application volumes; rather, increased volumes yield reduced service response time in application processing. Staff costs do, however, increase by way of contractual obligations. Increasing our application fees to reflect the increased costs to the City in providing these services will help ensure that our revenues continue to cover our costs even in those years when application volumes decline.

CONCLUSION

Planning, building and trade permit fees are commonly adjusted annually to ensure full cost recovery of City administration and enforcement costs. This report recommends an increase of 3.5% for inflationary increases in 2000 and 2001. A further 2.5% inflationary increase is recommended for 2002, to be effective at the beginning of next year.

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Fee by-laws on file in the City Clerk's Office

(c) 1998 City of Vancouver