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CITY OF VANCOUVER ADMINISTRATIVE REPORT |
Date: |
January 18, 2005 | |
Author: |
Rick Scobie | |
Phone No.: |
604.873.7399 | |
RTS No.: |
04800 | |
CC File No.: |
1758 | |
Meeting Date: |
February 3, 2005 |
TO: |
Standing Committee on Planning and Environment |
FROM: |
Directors of Development Services and Support Services |
SUBJECT: |
Year 2005 Zoning, Building and Trade Permit Inflationary Fee Increases |
RECOMMENDATION
A. THAT Council approve an across-the-board 2.75% increase (as reflected in the attached fee schedules) in all zoning, subdivision, sign, tree removal, secondary suite inspection, "flat fee" building and trade permit fees, and miscellaneous fees, to compensate for inflationary increases to the City's costs, to be effective upon amending by-law enactments;
FURTHER THAT the revised fee schedules incorporate corrections to various minor errors and omissions, as reflected in the attached fee schedules;
AND FURTHER THAT the Director of Legal Services bring forward for enactment the necessary by-law amendments to By-laws Nos. 5585, 5208, 8057, 5563, 6553, 3507, 6510, 7347 and 5644, generally in accordance with the attached fee schedules.
B. THAT the Director of Development Services and the Chief Building Official advise the development and building community of these changes.
GENERAL MANAGER'S COMMENTS
The General Manager of Community Services RECOMMENDS approval of A and B.
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 inflationary adjustment of 2.75% in zoning, subdivision, sign, tree removal, secondary suite inspection, building and trade permit fees based on a "flat fee", and miscellaneous fees, to reflect increased costs sue to inflation in the year 2005. Some miscellaneous amendments are also advanced to correct errors in the current fee schedules.
BACKGROUND
In January 2003 Council approved a 2.75% across-the-board fee increase in the specified services, to reflect cost increases due to inflation in 2003. The most recent across-the-board application fee increase in these services of 2.5% was approved by Council in July 2004 and enacted on September 14th.
The primary reason for inflationary increases is to keep fees consistent with City administration and enforcement costs which increase primarily in direct response to contractual salary-related costs. Fees have traditionally been adjusted annually for inflation, other than when selected fees have been more comprehensively reviewed as to costs and market rates for equivalent service(s).
The delay in implementing inflationary increases for 2004 was due to work on completing a comprehensive, corporate review of the costs and revenues associated with these specified services. Results of this corporate review were reported on December 2, 2004. Six service areas with cost recovery deficiencies were identified. Specific adjustments were presented to achieve cost recovery in subdivision and strata conversion applications, file research and plans & miscellaneous fees. These adjustments were enacted on December 14th. Work is now concluding on specific adjustments to rezoning and development application fees. This will be the subject of a report anticipated to be submitted for consideration in March.
DISCUSSION
According to the Director of Budget Services, revenues for 2005 are to be increased by 2.75%.
Inflationary fee increases are important in maintaining some relationship between revenues and associated costs. However, annual revenues from our various application/permit fees are much more reflective of external market conditions that determine development and construction activities. Application volumes can vary year to year in terms of number of applications, types of applications and size of applications. 2004 saw a further increase in the trend of recent years for expanded development and construction activities in the city. Consequently, application/permit fee revenues increased far in excess of the inflationary fee increases. In 2002, 2003 and 2004, annual application/permit fee revenues rose respectively from $17,223,372 to $18,597,332 to $21,230,530 in 2004. These year-over-year revenue increases amount to 7.9% and 14.2%, far outpacing the corresponding inflationary fee increases of 2.75% and 2.5%. In fact, since the 2004 inflationary increase only took effect in mid-September, the revenue increase last year was essentially a function of increased development and construction activities.
Although revenues have been increasing more than can be attributed to inflationary fee increases, revenues have not always exceeded what has been projected and incorporated into the City's budget. In 2002, actual revenues exceeded budgeted revenues by $406,272 or 2.42%. Fee revenues in 2003 were below budget by $116,568 (0.62%). In 2004, revenues exceeded budget by about $2,069,500 or 10.8%.
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.
The 2.75% fee increase for 2005 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 since value of construction implicitly responds to inflationary increases and applicant's submitted values are reviewed against industry standards);
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*);
Suites Inspection By-law #6553;
Gas By-law #3507;
Sign By-law #6510;
Private Property Tree By-law #7347; and
Miscellaneous Fees By-law #5664.
Approval of an inflationary increase for 2005, to be effective as soon as the by-laws could be presented for enactment, (i.e., March 1st) would provide little advance notice to prospective applicants of forthcoming increases, inhibiting them from factoring these into project costs in advance. Annual inflationary fee increases have, however, been well established and it is reasonable to expect an increase this year. Nonetheless, in order to provide some forewarning, written notice was sent to industry groups on January 4th advising of the 2005 inflationary increase to be recommended by staff. Notices were also posted in several locations in the East Wing where prospective applicants - many of whom are frequent customers - attend to obtain the identified services.
There are several miscellaneous amendments also incorporated into the proposed fee schedules attached as Appendix A. Two of these revise specific development application fees that were not correctly revised during 2003 inflationary increases. In both instances, the fees in effect in 2003 and 2004 were less than they should have been if properly inflated. These corrections pertain to the maximum fee payable under Section 3(a), where the maximum should currently be $17,770 rather than $17,250, and the additional incremental fee under Section 6(b), where each additional 200 m2 of site area or part should currently pay $185 rather than $168. Other miscellaneous amendments, of a non-financial nature, that have been incorporated principally involve corrected references to subsections in the Building By-law fee schedule.
Based on last year's application volumes, the 2.75% inflationary increase would result in revenue increases of approximately $42,000 per month.
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. Consequently, increased application volumes do not yield increased staff costs. Staff costs do increase by way of contractual obligations and cost recovery would justify increased application fees. 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 budgeted costs.
CONCLUSION
Planning, building and trade permit fees are commonly adjusted annually to ensure full recovery of City administration and enforcement costs. This report recommends an increase of 2.75% for inflationary increases in 2005, to be effective as soon as the various by-law amendments can be enacted. It also recommends various miscellaneous text amendments to
several of the fee schedules to correct previous errors in two existing development application fees as well as correct references to by-law subsections pertaining to building permit applications.
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