HomeMy WebLinkAbout05/24/2010 Work Session
City of Springfield
Work Session Meeting
MINUTES OF THE WORK SESSION MEETING OF
THE SPRINGFIELD CITY COUNCIL HELD
MONDAY, MAY 24,2010
The City of Springfield Council met in a work session in the Emergency Operations Center, Springfield
Justice Center 230 4th Street, Springfield, Oregon, on Monday, May 24, 2010 at 6:00 p.m., with Mayor
Leiken presiding.
ATTENDANCE
Present were Mayor Leiken and Councilors Ralston, Lundberg, Wylie (6:25pm), Leezer, Simmons, and
Pishioneri.' Also present were City Manager Gino Grimaldi, Assistant City Manager Jeff Towery,
Assistant City Attorney Mary Bridget Smith, City Attorney Joe Leahy, City Recorder Amy Sowa, and
members of the staff.
1. Tour of Springfield Municipal Jail in Operation.
Police Chief Jerry Smith said Captain Lewis was supervisor of the jail and would be doing the tour.
The Mayor and Council took the tour of the jail.
Mayor Leiken thanked Chief Smith and Captain Lewis for the tour of the jail.
Chief Smith said the tour satisfied the requirement from the State.
2. Presentation of Development Review Cost Analysis and Selection of Draft Recovery Methodologies
by City Council.
Planning Supervisor Jim Donovan and Development Services Director Bill Grile presented the staff
report on this item. The total costs of providing development review services for planning applications
had been calculated and were presented in Attachment 2 of the agenda packet for Council review. The
next step in the process was for Council to evaluate the various cost recovery methodologies included in
the report and direct staff about which approach( es) to refine for public comment and subsequent Council
consideration during Fee Schedule adoption this summer.
The draft report included the consultant's recommendations concerning basic development review cost
recovery methodologies and specific recommendations.
The attached Council Briefmg Memo (Attachment 1 of the agenda packet) provided additional
background.
After consideration of this evening's cost analysis presentation, review of stakeholder input and a
discussion of cost recovery methodologies, Council could direct staff about which approach( es) to refme
and incorporate into the Development Fee Study and Cost Recovery Projectfinal report. The final report
would incorporate Council direction and be presented when the Planning Fee Ordinance was brought
forward for consideration and adoption this summer.
Mr. Donovan introduced the consultant, Dan Ebbs from FCS Consulting.
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Mr. Edds thanked the Mayor and Council for the opportunity to provide this service. Springfield had a
very dedicated staff in Development Services. He said he had done this type of work for the past seven
and a half years, and had done 50-60 similar studies throughout the United States, most of them on the
west coast. FCS stood for Financial Consulting Solutions Group. His company worked with local
govemment,setting rates for water, utility, development, or other costs for service.
Mr. Edds used a power point presentation to review the process to date. He reviewed the scope and study
goals:
. Determine the full cost of services of urban planning fees.
· Provide an understanding about model for recovering costs.
. Assure that fees are fair and commensurate with cost.
~ Assure thatJees are consistent with applicable law.
Mr. Edds discussed each of those goals. He said that state law required that costs were based on actual
costs or average costs. They had established the average cost of a service based on a service by service, or
fee by fee basis.
Councilor Ralston asked how they figured out average costs.
Mr. Edds said he would hold that question and explain later in the presentation. Some of that would be
addressed in the fee structure.
Mr. Edds said the process was very rigorous. The first thing they did was look at the type of data needed,
including labor costs, personnel costs, benefit costs, non-personnel costs, department overhead costs, and
Citywide costs. A lot of time was spent over a period of four days with City staff from planning,
engineering, frre prevention, and anyone else involved in the projects. There was a lot of discussion
internally regarding what it took to provide the services.
Mr. Edds referred to a slide showing the positions that potentially could be involved with processing land
use planning applications. He noted some of those positions. The reference slide was a sample from the
process showing a discretionary use permit. In this process, they looked at the activities involved in
processing that specific application. The.process descriptions came from the process mapping that Mr.
Donovan apd his staff had been doing for the last twelve years. Time was then assigned for each step by
each individual that was involved calculated by hourly rates. The rates were the function of salary,
benefits, non-personnel costs such as materials and supplies, and the number of productive hours staff had
performed the work. An analogy of this was that if an urban planning service was a CPA fIrm, how much
time per year did each staff person have to do billable work. They took the full hours, subtracted out
vacation, sick, holiday, traimngtime, and routine staff meeting time, to fmd the specific number of hours
for each position to do billable work. That formed the basis for the hourly rates.
Councilor Ralston referred to the molding company that had complained about the cost of$750. Two
staff had come out tp that business for over an hour. He asked why they couldn't just calculate the actual
cost of those two employees on an hourly basis rather than just the flat $750.
Mr. Donovan said two planners had gone out to the site as a courtesy. That wouldn't be charged as it was
a service provided by planners on duty as if someone had come into the front counter. That would be
covered by some of the department and Citywide overheads to provide customer service. For that
company, the actual processing f~ for the application would be included in the draft report, and wouldainclude routing to the transportation planner, project planner, and the planning supervisor. When theyhad
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an application, it was only for the billable hours of services provided .for that application, and the other
services were covered by customer service. The two weren't one and the same.
Councilor Ralston said it didn't seem like it would take 10 hours to review that application. He felt they
were charged too much.
Mr. Edds said he could not address specific projects, but rather the process itself. He referred back to the
slide on the discretionary use permit. What they had calculated for a discretionary permit was made up of
direct costs for staff time for processing, and included reviewing, department overhead, and city
overhead. In this analysis, he calculated the costs for staff to provide general customer service.
Councilor Simmons said the multipliers applied seemed to be too precise. When they got into the
numerics of cost, they were more productive. He asked if staff was recording activity in any costing
system within the department.
Mr. Grile said they were not. This was based on the average cost of each application rather than the actual
cost. He provided an example of two applications brought in for the same type of permit.
Councilor Simmons said over the last 30 years, the raw data was the trigger. The model was excellent and
this was a productive exercise, but the raw data was missing.
Mr. Grile said it might be helpful to have Mr. Edds describe how he used the information from
interviewing staff to determine the data.
Mr.. Edds said part of the question seemed to be how they knew the data was accurate. He couldn't say if
30 hours was a precise number, but he was comfortable it was a good average. Through the interview
process, they talked with staff that were doing the work every day and discussing how much time it took
to do the activities by position. They went through this process about three times. They looked at how
much time was assigned versus how much time was available. With the staff available in planning, if
there were 30,000 hours of time available, they would need to account for that many hours. He explained
how they went through this process, including reviews, to get to 100%.
Councilor Simmons said he understood the model, but still felt raw data was needed. He felt they needed
a costing system, but it shouldn't cost more than the value of the cost.recovery.
Mr. Edds referred to a slide regarding total costs by operating section which included: (1) total budgeted
personnel expenses; (2) total budgeted non-personnel expenses; and (3) total department and city wide
indirect costs. Figures for each of those were separated into the different departments of planning,
engineering and transportation, surveying, and frre prevention. He discussed those costs.
Mayor Leiken asked for an example of total department indirect costs.
Mr. Edds said indirect costs were calculated as a percentage of labor dollars. 32.9% of labor had been
added city wide. City wide costs would be lights, heating, City Attorney, City Council, Finance, and
Information Technology. Those were all resources used by each department and city wide. Department
costs would be the overhead structure of management.
Mr. Edds referred to a slide showing total cost of service in terms of direct costs that were calculated for
planning services. There were other costs to support long range planning, urban planning, and code
enforcement. Those costs were pulled out of the calculation of what it cost to process a discretionary use
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permit in the example shown. He referred to another slide showing the cost of service by operation
section and by fee category. Over the years, he had seen that there were more regulatory requirements for
engineering services to be involved with land use planning fees. That cost had grown over the years and
that was one reason why there was an appearance of a low cost recovery.
Mr. Edds referred to a slide showing the full cost and current fee levels, which suggested a cost recovery
rate of 45%. Within that 45% there was potential recovery for City initiated projects and some non-profit
projects. When something was directed by Council or was a legislative requirement to provide a certain
service, such as the 2030 Refmement Plan, the cost for those projects were in the 45% cost recovery.
Mr. Edds referred to a chart showing the direct cost of providing a service at the activity level over the
last twelve months. That cost included labor, salaries, and non-personnel costs. He compared it to the
actual revenue and said they were actually recovering about 33% of the total costs, which included City
initiated projects.
Councilor Simmons said that the previous slide had referred to shoreline case types. He asked what that
meant.
Mr. Grile said an example would be the Willamette greenway boundary and Goal 15.
Mr. Edds said there were about 225 individual fee types in the fee schedule. They were organized by the
categories on the slide. Shoreline was one of those categories.
Councilor Ralston said it looked like they were only recovering 45%, the goal was to collect 80%, yet
local developers said the City was charging too much. He said there must be down time in part of that
80%.. If they took what each staff person made per hour in salary and benefits, took out all of the
indirects, and had each staff person keep track of time spent on a project, that would be an actual cost.
Mr. Grile said on some of these applications, the City was charging too much, and on others, not enough.
Those with the impervious surface factor were being charged too much. He provided examples. Council
would hear more detail during tonight's presentation.
Councilor Leezer asked why they were doing averages rather than raw costs.
Mr. Edds said they discussed earlier in the afternoon whether or not to set a flat fee (average costs) or
actual costs. Logic would suggest that calculating time and materials was more fair and equitable, but
execution of that was difficult. He had known it to work well only once and every other time had been
. awful. He gave an example of a City in California. There was typically no technology or management in
place to make tracking costs work wen. Even when they were in place, this often didn't work well. He
understood the methodology, as that was how he tracked his time, but it was very difficult to execute in a
planning organization. Staff had dozens of projects they were working on at one time, with phone calls
coming in as well.
Mayor Leiken discussed the full cost of $lM and the current recovery rate. Four or five years ago, the
City had a very high permit value. He wanted to know what citizens were getting for that $lM. When
they had high permit values, it was easier to say what they were getting, but with the economy down, it
was harder to make a case. That was what he would be looking for. When talking with staff, he would
want to ask what the reality was for cost recovery because 80% was not the reality. He would be
interested to see what we were getting for this amount of money. He thought staff did a terrific job, and
. usually turnaround time was good, but it was challenging when the elected officials got phone calls from
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developers. They wanted to be able to make a case. He did not necessarily compare Springfield to other
communities. He wanted to know costs, turnaround time, and what citizens were getting.
Mr. Edds said he couldn't address that in this study.
Mayor Leiken said he understood that, but those would be some of the questions he would expect after
this process.
Mr. Edds said they had calculated the actual costs. Costs versus what the price should be was different.
That was the conversation the Mayor was referring to.
Councilor Lundberg said part of the actual cost was the decision on what was included in the actual costs.
That didn't seem that difficult. The City had seen many proposals from different consultants. This seemed
more complicated than it should.
Councilor Ralston said if a developer was not organized, it would cost more. That would be a motivator
for them to be more organized.
Mr. Edds said he would address that later in the presentation. One question for Council was to identify
what they wanted to recover 80% of. It could be a percentage of the division or section providing the
service, of the direct costs, or total costs. He.referred to a chart showing 80%, 15% and 60~~ recovery of
total costs. Each of those percentages captured various costs.
Mr. Grile said Council had looked at the full cost of the program and asked for 80% recovery. Mr. Edds
had brought that down into fInite components.
Councilor Ralston said there were some staff in departments that didn't generate revenue. That needed to
be included.
Councilor Wylie suggested looking at the department costs for Development Services planning division
as a standalone department, and dividing that by the number of employees to get the hourly cost to run the
department. That was a simplified way to do this. It was confusing when adding in additional city costs
because that was not being done in the other departments. She asked if the indirects were figured into the
Development Services budget.
Mr. Grimaldi said the indirects, such as space in the building, was not divided by divisions, but by
departments.
Mr. Edds said that was one of the things they were trying to capture in this study.
Councilor Simmons said when Council adopted 80% cost recovery, it was to be inclusive ofindirects and
all the costs in the process. They never achieved that in reality, but that was the intention. Mr. Edds had
pointed out some of the tough issues they needed to discuss. If Council determined they wanted to recover
80% of the costs, that percentage needed to include the actual costs. If they would be recovering costs for
all the direct and indirect costs, they needed to follow through with that. In general, the City had been
under costs. His argument was whether or not those costs were proper and concise enough with the raw
data. The model gave them the opportunity to dig into that further. He felt it was an excellent way to
approach this issue and gave Council the opportunity to make a better decision. Council needed to make a
decision whether or not to subsidize certain components in the process and what costs to recover.
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Councilor Lundberg said she appreciated the breakdown of costs. She noted that the City was
overcharging for impervious surfaces. When costs got to a certain point, people no longer paid. Council
needed to balance that breaking point. They also needed to decide what costs to include and at what level
of recovery. She,liked how it was laid out. It would be important to determine which services were public
benefit and which were individual benefit. Council would have to make those decisions.
Mayor Leiken said basically the costs were labor. When they adopted the percentage, there were staff that
were working extra long hours on many projects. He was not sure a percentage could be put on cost
recovery. They needed to adapt and change with the economy. They needed to get back to the value to the
citizen.
Mr. Grimaldi said when setting a percentage of recovery, it didn't guarantee the City would collect that
amount. When activity dropped off, revenue would be less. Fees would be set, but revenue would
fluctuate with activity.
Mr. Grile reinforced Mayor Leiken's comment. From 2004-2006, the City had three big applications from
Royal Caribbean, SYmantec, and the Bakery. Each of them had the big impervious surface factor applied,
and each of them requested expedited review. That brought their fees to nearly three times the normal
rate. They were willing to pay that because they wanted excellent customer service and that's what they
got. Whether a big project or small, staff wanted to provide excellent customer service. They frequently
went out in the field to meet with developers and handle issues. It was difficult to recover costs for that
type of service. .
Mr. Edds said they tried to pick out a few services to show whery there was an under recovery of services
or over recovery. Pre-submittal meetings and development issues meetings were both under recovery. Site
Plan review was over recovery. He discussed those charges. Mr. Donovan had gone through and
developed three projects that showed the costs and revenues for a small site plan review, medium site plan
review and large site plan review. He discussed the cost recovery for each project and a breakdown of the
services for each of those projects.
Mr. Donovan said the large site plan reviews were the highest cost and impervious surfaces were a good
indicator. With any incremental fee, at some point it went a little under, to even, to just above. He
discussed the current prices and how they could be over or under actual cost. If they were to review all the
steps in the process, they could determine what indirects they would want to recover and could address
the problem areas. He felt they needed to look at a recovery rate for the 10-50% recovery rates, look at
what they had at the 60% rate, and determine how to account for those examples that were way
overpriced. He felt they could restructure the small, medium and large applications, but didn't feel they
could ever get away from the problem of the far upper end. There were other things they could do such as
exempting the applications.from CPI and other increases, or do a comprehensive cost analysis any time
they wanted to increase the fees. The reason they may have gotten to the higher fees was because they did
not cap them or exempt them from some of those increases. Under today's fees, they were under-
recovering at the beginning and end, and loading the fees in the middle.
Councilor Ralston said they definitely needed to deal with the large sites. He also felt they needed to
estimate how much actual time was spent on applications. He liked the idea of knowing the cost of
personnel and the indirects and recover 80%. He would like to track actual costs for awhile.
Councilor Simmons said if they applied the theory to adjust, it appeared we were charging more than the
cost. But taking a further look at the other costs associated with stormwater and engineering, we may fmd
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May 24,2010
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we were under-collecting in storm drainage and SDCs. It was very complex. It appeared the fees needed
to be trimmed down, but it may not need that adjustment because of the other costs.
Councilor Lundberg asked if the graphs could be a way for Council to make some decisions. According to
the graphs, small applications were being heavily subsidized at the expense of the larger developments. In
other settings, they tried to equalize that and that's what she would want to do in this process. The middle
size group appeared to be close to where it should be, and they needed to treat everyone the same, unless
they wanted to pay extra for expedited review.
Mr. Edds summarized the pre-submittal meeting with the current fee, the full calculated costs, the current
annual revenue, and the total cost of that service based on last year's volume.
Mr. Edds talked about the recommendations to Council. He and staff needed to know the percentage of
cost recovery Council wanted and also the specificity of the percentage of 'what'. Council also needed to
set policies about when and how these fees were updated. One of his standard recommendations was to
update them annually based on the CPI factor for three years. During years four and five, they could go
through the review process again because regulations changed in that time frame. Other recommendations
included a two-tiered fee structure for the pre-submittal meetings. The fIrst tier was for those projects
where the meeting was required (higher cost), and the second tier was for those projects where it was not
required (lower cost as an incentive to bring them in). There was substantial benefit to the City to get
people into these pre-submittal meetings. In his experience, almost everyone had a pre-application review,
in part because it saved the City time and money, provided familiarity with the project, and gave staff the
opportunity to redirect an applicant so they better matched the code. Springfield took those pre-submittal
meetings to a higher level. That was one of the reasons why larger applications could get done in 60 days
when the State requirement was 120 days. After Council set a policy and a percentage of recovery, he
asked that they let Mr. Donovan and his staff look at each individual fee ftem based on direction from
Council reflecting their value of encouraging smaller business.
Mayor Leiken thanked Mr. Edds for the presentation.
Councilor Pishioneri agreed upon the annual review for pre-submittal meetings. He asked if staff could
determine if technological advancements would provide efficiencies, lowering the cost.
Mr. Edds said that was very difficult to predict. He said he had calculated possible technology when he
knew that a jurisdiction was planning a techno'logy system that was currently part of the cost. Otherwise,
it was very difficult to determine.
Councilor Pishioneri said if the applications could be filled out electronically instead of on paper, it could
save time by allowing multiple staff to work on the same plan at the same time.
Mr. Edds said there was good technology out there that had given some substantial increases in
productivity, but was not without a cost.
Councilor Pishioneri asked about hourly rates for Fire and Life Safety. One chart showed a rate of
$72/hour and another graph showed $84/hr. He asked why the difference.
Mr. Edds said it could be due to the different type of review for each application. They were calculating
costs based on the rate for individual positions. One project may have different staff working on it.
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Mr. Donovan said Fire Marshal Al Gerard might be involved on certain projects, and not others. The
same could be true when other supervisors such as Mr. Donovan needed to be involved.
Councilor Lundberg said she liked the concept of pre-submittal meetings, but there were a huge number
that were under funded (as noted on page 26, Attachment 2 of the agenda packet). In the future, she would
like to look at more tiers. The additional tier could be for people that were in no hurry. The City lost a lot
of money in those meetings and this could alleviate that cost.
Mr. Grile gave an example of such an application.
Mr. Donovan said the pre meeting, including development issues meetings (DIM), was exploratory and
was not done for every project, and the pre-submittal meeting was to determine completeness of the site
plan, subdivision or other information needed. He struggled with how to keep the DIM attractive to the
citizen in order to get the right information on specific information, more than they would normally get at
the counter. These types of short meetings worked perfectly for the small, simple questions. On the other
hand, larger developments often required more information and time, but the pre-submittal meeting could
save everyone time in the long run.
Mr. Grile said the DIM was very well known and was part of Springfield's success. It was a good way to
bring everyone together to get the information in one meeting.
Mr. Donovan said completeness was a statutory requirement so those meetings were very beneficial to
staff in meeting their timelines. He liked the idea of that being a fifty percent cost recovery because of the
statutory requirement. He could bring something forward regarding another tier for the pre-submittals.
Mayor Leiken said the large developers had attorneys that were likely land use attorneys and understood
the statutes.
Mr. Donovan asked how Council wanted them to move forward.
Councilor Ralston said he still wanted staff to track actual costs. He gave an example. They could fit their
percentage based on that. He was willing to look at recovering 60%-70%. They needed to deal with the
large impervious surface costs.
Mr. Grimaldi asked if he wanted a fee system based on actual costs, or costs calculated.
Councilor Ralston said he wanted staff to track time and materials for awhile.
Mr. Grimaldi said if staff tracked the time, it would be very close to the figures in the study. He didn't
feel the time was off, but what the City was charging and the basis for those charges was off. He
suggested having further discussions on this topic as it sounded like Council had more questions and
needed more time. If Council could provide staff with a percentage to work with, they could consider
some of the things Council said tonight and come back with a fee schedule showing what it was today and
what it could be with some changes.
Councilor Wylie said it was a good idea to have more discussion. She.would like to see a combination of
what Councilor Ralston and Mr. Grimaldi were saYing. She wanted to hear the exceptions to the rule.
They needed a system that would work for the department.
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May 24, 2010
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Mr. Edds suggested they consider which projects and fees were fairly routine and consider more of flat
fee for those projects. For the larger projects, they could develop time and materials costs. He noted
experience with failed time and service fee schedules and wanted to be cautious.
Councilor Pishioneri agreed that reporting time spent on some of the more routine applications actually
wasted time. He understood that it made sense, but it was giving staff another task. For large projects it
made sense to track the time. He agreed that they should look for a third tier to lower costs for those that
were not in a hurry. He suggested building in flexibility for special cases.
Mr. Leahy said he had been on both sides of the time and materials piece and he suggested they run that
by the HomeBuilders' Association (HBA) and Chamber of Commerce before setting up that type of fee
schedule. Sometimes people wanted to know the costs at the front end rather than after the application
was completed.
Councilor Lundberg agreed with Mr. Leahy. She came from a business that provided a quote before
anything got done so the customer knew what to expect. She was happy looking to recover somewhere
between 60-80%. What to include in that percentage was a huge factor and she would prefer to look at
that further. She wanted to see what it meant to recover 80% of everything and see some variations of
what those figures could mean. She wanted to look at specific things such as expedited reviews. She
wanted to know how much it would cost in fees from the beginning. They needed more information.
Councilor Pishioneri asked if staff could provide a couple of scenarios to show the costs today and the
costs if a new schedule was set. He would like to see some options.
Mr. Grile said staff could put something together.
Mayor Leiken again thanked Mr. Edds. .
Mr. Edds said he received a comment from someone that had worked with the company that put in the
RiverBend hospital. The gentleman commented that he could not have been happier with the City of
Springfield and staff when putting in the hospital.
ADJOURNMENT
The meeting was adjourned 7:51 p.m.
Minutes Recorder - Amy Sowa
Attest:
.~
Amy Sow
City Reeo er un n