ADMINISTRATIVE REPORT

   

TO:

Standing Committee on City Services and Budgets

FROM:

General Manager of Engineering Services

SUBJECT:

Building Site Construction Crossing Fees

 

RECOMMENDATION

A. THAT fees established under Section 80(2) of the Street and Traffic By-law for crossing a City boulevard or sidewalk for construction purposes be revised as follows:

B. THAT Council direct the Director of Legal Services to prepare the necessary by-law amendments which will implement the new fee schedules as proposed in Recommendation A, effective July 22, 2003.
COUNCIL POLICY

Council on January 17, 1991 resolved:
THAT every Department/Board review services for which fees are now charged to ensure that fees are recovering the full cost of the services to the City, or are equivalent to competitive charges where the fee is of a market nature, rather than for cost recovery.

PURPOSE

The purpose of this report is to recommend revised fee categories and an increase in fees charged to developers for crossing City boulevards to access building sites for construction.

BACKGROUND

The City inspection of building sites under construction has two aspects. One involves inspection related to building codes and City by-laws concerning the building construction itself, and is carried out by the City's Permits and Licenses Department. The other involves inspection of the developer's activities on the street abutting the building site. This inspection is carried out by the Building Sites Inspection Section of Engineering Services, and the recovery of the costs for this inspection is the subject of this report.

Any building construction on private property has an impact on City streets. Construction activity virtually always requires the delivery of construction materials and often the removal of demolition or excavation debris. The movement of these materials between the site and the street is usually facilitated by allowing developers or their contractors the use of a portion of the City street allowance. Lumber, steel, concrete and other building materials are unloaded from trucks parked in the curb lane and are transported across the City boulevard. Regulating these construction activities is necessary so as to protect the interests of the City.

A Street Use Permit is used to regulate the developer and contractor use of the City street allowance for the various construction activities. There are two cost items associated with the permit: refundable deposits and non-refundable fees. The refundable deposit is collected to provide for the repair of any damage done to City property. If the developer repairs all damage itself, then the deposit is returned to the developer upon completion of the project. The non-refundable fee portion is collected to recover City costs of administering the permit program, such as inspections.

The inspection of the street area abutting building construction sites is carried out by the Building Sites Inspection Section of Engineering Services. Currently this section consists of a staff of a supervisor and four field inspectors, handling more than 1,600 sites across the City. This inspection service protects the City's interests in the street areas adjacent to developments in the following manner:
· The condition of street infrastructure adjacent the building site is documented through photographs and notes prior to the start of building construction. A review takes place after construction to determine the amount of damage, if any, caused by the developer and arrangements are made for restoration.
· During construction, sites are monitored to ensure sidewalks, streets and lanes are kept clear for use by other citizens. Materials on the boulevard, or streets tracked with mud are dealt with.
· The inspector can provide liaison between citizens adjacent to the site and the developer. The inspector deals with citizen complaints regarding the use of the abutting street area by the developer.
Sufficient staffing is necessary to ensure complaints are dealt with in a timely fashion and to monitor problem sites with enough frequency to keep poor practices under control.

This report deals with the fee charged through the Street Use Permit to cover the cost of the inspection by the Building Sites Inspection Section.

DISCUSSION

The fee structure for inspection of street areas abutting building sites is intended to recover the staffing and equipment costs of the Building Sites Inspection section. The fee structure was last adjusted in 1995. Due to the length of time from the last update, a fee increase is necessary to catch up with inflation, add fee categories to better recover the costs of inspection, and to balance costs and revenues.

The inflationary increase required is 12%.

As part of the review of fees charged for this program, areas were identified where additions to the existing fee structure should be made. These areas involved multifamily/commercial sites where demolition is required and major development sites. Several new categories, as detailed below, are being proposed to provide a more appropriate recovery of the inspection costs for these types of development sites.

· Presently, commercial sites that require demolition are charged the same fee for inspection as those with no demolition. However, the demolition contractor is usually different from the building contractor and therefore a separate inspection is required after demolition before the start of actually building construction. In order to recover the costs of this inspection it is being recommended that two additional fee categories be established: one for demolition sites up to half a block in size at a cost of $250, and another for sites larger than half a block at a cost of $450.

· The revised fee structure also introduces the category of Major Development sites, which would apply to sites larger than half a block. A larger fee should be charged, as these sites require more inspection than a typical major commercial project. The fee for these sites would be $2,450 compared to the $2,050 fee proposed for large commercial sites less than half a block in size.

This would result in increases of approximately 5.7% to total fee revenue.

Finally, a slight increase is required to balance costs and revenues. In 1998 staffing in the Building Sites Inspection section was reduced by one position as an adjustment to a reduction in development levels. Since then development levels have remained roughly constant but there is a slight shortfall in the fee revenues to completely cover the costs of the inspection program. A fee increase of 4.9% is required to deal with this shortfall.

In order to obtain comments from the Building Community, draft copies of this report were forwarded to the Architectural Institute of BC, the Greater Vancouver Homebuilders' Association, and the Vancouver Regional Construction Association for review and comment in late April. Several comments were provided in discussions with the representatives for these agencies. The response was that, although there were no specific concerns with the increases proposed in this report, there was a general concern regarding the increasing costs through developer charges being implemented or proposed in Vancouver and the resulting increased cost to development. The Vancouver Regional Construction Association requested that this report be held and considered in the fee review that is currently being undertaken by Community Services. We feel that this report should be considered now because it is an established program providing numerous benefits. The Community Services report deals specifically with development, building and trade permits from which this program is separate. Should the Community Services fee report result in changes to fee recovery policy, then those changes can be incorporated into future fee review reports for this program.

The following is a table of proposed fees incorporating the increases noted above, with anticipated annual revenue based on the number and distribution of sites experienced in 2002.

TABLE OF PROPOSED FEES

 

Existing Fee (rate held since 1995)

Proposed Fee 2003

Percent Increase

Projected Annual Number of Sites Based on 2002

Proposed Annual Revenue

single and two family dwellings

$105

$125

19.0%

348

$43,500

single and two family dwellings requiring demolition

$155

$180

16.1%

945

$170,100

multi-residential or commercial requiring no excavation

$470

$550

17.0%

39

$21,500

multi-residential or commercial requiring excavation, less than 3 stories in height

$875

$1,030

17.7%

6

$6,200

multi-residential or commercial requiring excavation,3 stories or more in height

$1,750

$2,050

17.1%

30

$61,500

major development site,
½ block or larger

na

$2,450

na

2

$4,900

demolition only - multi-residential or commercial site less than ½ block

na

$250

na

56

$14,000

demolition only - multi-residential or commercial site ½ block or larger

na

$450

na

2

$900

Total (Number of Sites excludes Demolition Only categories)

1370

$322,600

Building Sites Section 2003 Budget

$321,800

The total increase for multi-residential or commercial sites involving demolition would be approximately 30 to 70% due to the combination of the increase and the new fee category. This would affect approximately 58 of the total 1370 sites. As explained earlier however, these sites typically require extra inspection due to the separate demolition and construction phases, and the extra cost should be recovered.

ALTERNATIVES/OPTIONS

An alternative to raising fees would be to continue the Building Sites Inspection program with no, or lower increases to fees. It is estimated that this would result in an annual shortfall of up to $60,000 which the City would need to fund. This option is not recommended as the policy for this program is for it to be self funded by fees charged to the building sites.

FINANCIAL IMPLICATIONS

The increase in existing fees and the new fee categories recommended are expected to provide full recovery of the costs to inspect the street areas abutting building construction sites and maintain the current service levels.

This recovery is based on the assumption that the level of new development that generated the 2002 fee quantities will be maintained. This is considered to be reasonable, in that there is no expectation of a significant increase or decrease in the level of development activity for 2003. The present correction is significant, and reviews of the recovery level in the future will allow for a response to changes in development trends if necessary.

CONCLUSION

It is recommended that the level of fees for Building Site Inspection be increased, to bring the fees up to required levels which recover inflation and other increases. The review of costs and revenues in this area will be done on a more regular basis in order to avoid the need for such significant corrections in the future.

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