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FINANCIAL STATEMENT Based upon 2014/15FY data for over 200 development related user fees, the recommended fee increases will generate approximately $2.739 million annually. BACKGROUND The City conducted a fee study of certain development related services based on the premise that there are certain services and regulatory requirements that the City provides that are of special benefit to an individual or business and are appropriately not a cost or financial burden of the general taxpayer. Also, one of the City's General Plan fiscal policies is to have development pay 100% of the cost to provide City services. In 2009, the City hired PRM to prepare a review and analysis of the City's direct and indirect costs associated with the delivery of development related services (Study). Based on the City's accounting records, the analysis tabulated the full cost of providing development related services including both direct and indirect costs. The review and analysis then recommended certain cost recovery levels for each fee based on economic and policy considerations (the "Recommended Cost Recovery Level"). The Recommended Cost Recovery Level was then compared with revenues currently received for these services to determine the recommended cost recovery rate for each service. DISCUSSION The Study presented the cost of providing development related services by individual divisions including building and safety, fire prevention, planning and engineering. Staff has updated the Study's findings which were based on the 2007/08FY expenditures to the current budget year (2014/15FY) revenue and expenditures. The following is a brief summary of the findings by division: Building and Safety Division The Building and Safety Division (Building Division) provides the following services: permit processing, plan checking, building inspections and investigations of complaints regarding potentially dangerous buildings. The City's goal has been to recover 100% of the cost of these services in the fees charged by the Building Division. However, the Study found that in 2007/08FY the Building Division recovered approximately 88% of the cost of these services. In the past several years the Building Division's cost recovery rate has dropped and in 2014/15FY it is estimated to be 75% based on the analysis presented in Table 1. For all building permit applications, the building permit and plan review fees are based upon the cost or valuation of construction projects. Construction valuation tables are used to determine the construction value for all permits for new construction projects. For all other permits, the valuation of the project is provided by the applicant. The new construction valuation table is adjusted annually to reflect changes in the Engineering News Record (ENR) Construction Cost Index for the San Francisco Bay Area. In 2007/08FY, the new construction permits' valuation represented approximately 25% of the valuation for all permits issued by the Building Division. In 2014/15FY, new Page 2 of 10