Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Standing Committee on City Services and Budgets

FROM:

Director of Development Services in consultation with the Chief Building Official, Director of Current Planning, Director of Cultural Affairs and Director of Legal Services

SUBJECT:

Miscellaneous Fee Amendments

 

RECOMMENDATION

GENERAL MANAGER'S COMMENTS

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 fee amendments related to energy utilization, building envelope repairs and non-profit cultural facilities.

BACKGROUND

Services generating fees in the Community Services Group have historically fallen into three major types of activities:

· business license fees;
· application fees for various "planning" services such as rezonings, subdivisions and development applications; and
· application fees for various "building" services such as building permits, trade permits, sign permits and file research.

A comprehensive fee review of "planning" services led to major fee adjustments in 1986 and 1997. Building permit application fees were updated in 1999 when the new Building By-law was enacted.

In years when fees are not the subject of a more thorough review, they are adjusted only for general inflation. The most recent fee increases in applications primarily related to planning and building activities was in February 1999 when a 1% increase was incorporated for inflation and a 2% increase was established to recover costs associated with implementation of a document imaging system (being the second of two increases approved in 1996). A Council report on inflationary increases is expected to accompany this report.

With the advent of Development Services and the increasing integration of many "planning" and "building" services, a more comprehensive review of application fees associated with these processes needs to be undertaken to reflect changes in these processes. It has been anticipated that for many projects a higher level of service will be provided in the early stages of review but that subsequent components of the review would prove more efficient, with less re-work due to improved project management through new services such as project scoping and project facilitation. Implementation of these services, and other process changes to improve review group integration via a "project orientation" rather than a discrete "application orientation", are making good progress. While it was hoped this review could be undertaken this year, the new processes have not yet reached a stable state where costs -and any corresponding fee changes - can be established with any lasting credibility. Webelieve the process changes will have stabilized by mid-2002 and recommend the comprehensive review be undertaken at that time.

Despite the absence of a comprehensive fee review, staff have reviewed a number of existing fees which warrant more immediate attention. Fundamental change is recommended to the building permit surcharge for energy utilization. Council extension is sought for the reduced fee for building permits involving building envelope repairs. A reduced development application fee for non-profit cultural facilities is also recommended.

DISCUSSION

Energy Utilization Fees

In 1991, Council introduced Energy Utilization (EU) requirements into the Building By-law and established a corresponding fee, set out as a surcharge on the building permit application fee, and broadly applicable to all building permit applications. At that time, industry representatives encouraged the City to consider a simpler way to calculate the required payment.

Since 1991, design and construction professionals have become more familiar with the EU requirements. Consequently, less resources are required by the City to administer the EU program. In 1996, Council eliminated a vacant EU position (one of two existing) and established audit procedures for EU requirements.

The EU surcharge applies to building permit applications where the application fees are calculated as a percentage of the value of the construction. Last year, revenues from the EU surcharge amounted to $224,000. Total revenues from building permit application fees, excluding the EU surcharge, amounted to $3,669,000.

This year, building permit application fee revenues, excluding the EU surcharge, are trending higher due to application volumes and the higher construction value of many of the projects. These higher revenues will more than cover the costs of providing the staff services for EU administration.

On this basis, it is recommended that the EU surcharge be eliminated for the time being, noting that a comprehensive fee review will be undertaken in 2002. At that time, EU issues can also be revisited in the context of broader urban sustainability issues that are coming to the fore.

Building Permit Fee Exemption for Envelope Repairs

In July 1999, Council approved the exemption of building permit fees for building envelope repairs, in line with the recommendations of the Barratt Commission report of June 1998. This policy was to be re-evaluated after 18 months. In the 12 months period since June 2000, the City has waived fees on approximately 99 building envelope repair permits totalling $196,480.00 in revenue waived. While the frequency of applications for envelope repairs on low and medium rise wood frame residential buildings has started to decline over recent months, we are expecting an increasing number of repairs to high rise residential buildings. A recently released report from CMHC indicates that the incidence of premature failure of building envelope components in high rise buildings is increasing, particularly in buildings constructed more than 10 years ago. In view of this development, it is recommended that the exemption of permit fees for residential building envelope repairs remain in effect until Dec 31, 2002, with a report back to Council at that time.

Development Application Fee for Non-Profit Cultural Facilities

For the last several years non-profit societies making development application for either childcare facilities or social service centre facilities have paid a reduced application fee as reflected in the by-law. This reduced fee (presently $310) can be considerably less than would otherwise be required based on the specifics of the proposal and the fee category into which it fell, theoretically up to maximum application fee of $29,520. Non-profit cultural facilities represent a very positive component contributing considerable value to the social fabric of our city, as do non-profit childcare and social service centres, and should be fostered through a reduced development application as well. It is therefore recommended that the present fee schedule reference be amended to read as follows:

FINANCIAL IMPLICATIONS

Elimination of the EU surcharge will result in a reduction in annual fee revenue of approximately $240,000. We propose that this will remain in effect until we have completed a more comprehensive fee review in 2002 which will encompass review of a broader range of urban sustainability issues. Reducing the development application fee for non-profit cultural facilities will result in a reduction in annual revenue of less than $5,000. There will be no offsetting reduction in staff costs. Approval will reduce the excess revenue being generated by application fees. To the end of August, application revenues were almost $700,000 in excess of anticipated (budgeted) revenues. By year's end, this excess could approach $1 M, assuming application volumes persist. Application revenues are mostfrequently in excess of budget, reflecting conservative predictions by staff as a consequence of uncertain future application volumes.

Extending the application fee exemption for building envelope repairs would result in the City foregoing approximately $15,000 per month in application revenue. In anticipating revenues for this year's budget, staff had contemplated extension of this fee exemption. Approval of the extension will therefore not affect the budget.

CONCLUSION

Although a comprehensive review of "planning" and "building" application fees has not yet been undertaken, review indicates there are a few fees which are in need of some immediate attention. It is proposed that general inflationary increases in permit fees will be addressed in a forthcoming report.

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