HomeMy WebLinkAboutFY10 Fourth Quarter Update - REVISED ON 8/2.pdf
Commission Memorandum
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REPORT TO: Honorable Mayor and City Commission
FROM: Chris Saunders, Interim Director of Planning and Community
Development
Chris Kukulski, City Manager
SUBJECT: Department 4th Quarter FY10 (April 1, 2010 to June 30, 2010) Budget
Update
MEETING DATE: July 26, 2010
AGENDA ITEM TYPE: Work Session
RECOMMENDATION: Move forward with current Planning Department staff levels; draw
funding from TIF districts in recognition of time being expended; continue to monitor revenue
situation closely, consider adjustments to application review fee schedule
BACKGROUND: Because of the anticipated difficulty estimating Planning Fee revenues and
workloads (planning applications) in FY09, we committed to make quarterly decisions regarding
staffing levels and operating costs in the department.
The Planning Department is funded by a blend of general fund, dedicated planning mil levy, and
application review fees. Page 6 contains the philosophy behind the development of the structure
of fees for processing of applications.
1. Monthly Application Fee Revenues of $14,000 minimum. The FY10 Budget was
balanced with the assumption that application fees would provide a monthly average of
$14,000 in revenue. This estimate is a continuation of the base minimum average used for
the last three quarters of FY09, and has been carried forward into FY10. This revenue
stream was for the staffing levels as they existed at that time. Presently there is one
vacant position for which recruiting has been concluded with a start date in the latter half
of August.
Fourth Quarter FY10 Planning Fee Revenues were as follows, details of application
numbers and types are in Section 2.
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Actual
Operational
Revenues
1st
Quarter
FY10
2nd
Quarter
FY10
3rd
Quarter
FY10
4th
Quarter
FY10
Fiscal Year
1st month $19,859 $ 8,987.00 $16,871.86 $12,866.39 $58,584.25
2nd month $10,173 $17,165.10 $11,756.00 $8,689.54 $47,783.64
3rd month $10,933 $11,440.00 $13,462.32 $12,191.85 $48,027.17
Quarter Total
Application Fees
Revenues
$40,965 $37,632.10 $42,090.18 $33,747.78 $154,435.06
Average Per
Month $13,655 $12,544.03 $14,030.06 $11,249.26
The 4th Quarter FY10 adjusted monthly average of $11,249.26 is below the
$14,000 target for average monthly revenues. For the quarter as a whole, this means that
permit revenues were below the $42,000 quarterly target. However, the departmental
expenses have been below budgeted levels. Discussion of how these revenues match with
the departmental budget is provided in Section 3.
Additional work items. The Department processed applications for City property
development projects in the quarter.
Departmental Project Amount of Fee Waiver
Swim Center COA/Sign permit $117.50
Lower Yards FSP modification $250
4th Quarter FY10 total fee waivers $367.50
In addition to the revenue items, the Department assisted in the preparation of various
city projects thereby saving consulting costs:
1) Helped prepare FSP modification application for Lower Yards.
2) Help prepare master plan for Library site.
3) The Department continued staffing the North Seventh and Northeast Urban Renewal
District Boards which now amounts to approximately ½ FTE. Examples of the work
being done include Depot Park, which is now under construction, and development of
TIF funded programs to support public/private partnerships encouraging redevelopment
in the North Seventh Urban Renewal District. Also underway is the Phase 1 sidewalk
improvements on N. Seventh Avenue which will begin construction in Q1 of FY11. This
relatively new, and certainly expanding, role is not funded by the TIFs but is being
covered by the Department’s budget.
2. Applications Received: The following table lists the planning applications that were
received each month of this quarter. In the 4th Quarter of FY10, the department averaged
45 project applications / month (plus a total of 88 sign permit applications). In the
previous three months (3rd Quarter FY10), the department averaged 25 project
applications per month (plus a total of 97 sign permit applications).
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The type of applications submitted for review varies by month. As described with the
previous quarterly report, there has been a shift in the application load away from large
subdivisions to smaller scale projects. Individual home related items such as a Certificate
of Appropriateness for a remodel or addition now make up a larger percentage of the
overall project review workload.
When the City Commission adopted the current fee structure , there was a deliberate
choice to collect a greater percentage of the cost of review from large commercial and
subdivision projects and a lesser percentage of cost from small scale projects. This
represented a commitment of greater general fund support for the ‘mom and pop’ projects
that did not generate revenue to their owners. As the work load has shifted by project
type, this has resulted in lower application fee revenues to a greater degree than is
explained solely by a change in the number of applications submitted.
Application Type April 2010 May 2010 Jun 2010 4th Quarter Total
Pre-Application 0 1 1 2
Prelim. Plat 1 0 0 1
Final Plat 0 0 0 0
Sub. Exempt. 0 0 0 0
Flood Plain 0 0 0 0
BOA (COA-DEV) 2 0 0 2
Admin. Appeals 0 0 0 0
Master Plan Amend 0 0 0 0
UDO Amend 0 0 0 0
CUP 1 0 1 2
ZMA 0 1 0 1
Conservation Update 0 0 0 0
Entryway Update 0 0 0 0
PUD 0 0 0 0
PUD Final 0 0 0 0
Re-use 2 3 3 8
Annexation 0 1 0 1
Prel. Site Plan 2 1 1 4
Master Site Plan 0 0 1 1
Final Site Plan 1 3 4 8
Mods to FSP 2 4 2 8
Informal 1 1 1 3
STUP 0 0 1 1
COA 28 26 33 87
Improvements Agree 3 3 1 7
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Application Type April 2010 May 2010 Jun 2010 4th Quarter Total
Variance 0 0 0 0
Comp. Sign Plan 0 0 0 0
Condo Conversions 3 1 0 4
Code Enforcement 0 0 0 0
Monthly Totals 46 45 49 140
Signs 34 26 28 88
3. Budgeted Expenditures: The Department’s FY10 budget was approved for an average
of $64,814 in expenditures per month ($777,768 for the year). Actual spending through
June 2010 averaged $59,903.60 / month ($718,843.20 for the year), or 7.6% under
budget. This includes the recruitment costs associated with the Director search. Vacancy
savings in the Director position accounts for most of the reduction in spending. Not all
FY10 expenditures have cleared the financial system yet so some minor change to these
figures is expected.
Anticipated annual application revenue of 14,000 per month for 12 months equals
$168,000. The Department collected $154,435.06 in application revenue for FY2010.
This leaves a shortfall in anticipated revenue of $13,564.94. The Departmental
expenditures for the fiscal year were $58,924.80 below budgeted amounts. The difference
in revenues maintains the general proportion to the anticipated revenues to general fund
support.
The requested Departmental budget for FY2011 shows an overall decrease from FY2010.
Possible Responses to Revenue Changes
A. Utilize long range planning set aside:
In Commission Resolution 4111, a fee was adopted, as authorized by statute to help fund
the City’s long range planning activities. These are paid simultaneously with other
application fees. The relevant state law sections are provided below. Many of the
elements in the Commission’s adopted work plan will carry out policies and goals
established in the City’s growth policy and associated neighborhood plans. Staff is
working to carry out and complete those work plan elements at this time. For a more
detailed description of long range plan related work please see the City Manager’s report
on the progress of the work plan. Additionally, in this fiscal year the Department spent
considerable time and effort on the finalization of the Downtown neighborhood plan. For
these reasons, Staff included the long range planning set aside to fund staff time in this
quarter’s revenues shown above. Quarter 4 revenues in this area are $3,450. This is
equivalent to funding approximately 124 hours in the quarter.
“76-1-410. Planning fees -- limit. (1) Governing bodies that have committed in a
resolution to adopting or that have adopted a growth policy that includes the provisions of
76-1-601(4)(c) may assess planning fees to pay for services that fulfill the purposes of
Title 76, chapter 1. The planning fees are in addition to any other fees authorized by law
and may be collected as part of either subdivision applications or zoning permits.”
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“76-1-102. Purpose. (1) It is the object of this chapter to encourage local units of
government to improve the present health, safety, convenience, and welfare of their
citizens and to plan for the future development of their communities to the end that
highway systems be carefully planned; that new community centers grow only with
adequate highway, utility, health, educational, and recreational facilities; that the needs of
agriculture, industry, and business be recognized in future growth; that residential areas
provide healthy surroundings for family life; and that the growth of the community be
commensurate with and promotive of the efficient and economical use of public funds.”
B. TIF funding
As noted above, the Department is providing administrative support (approximately ½
FTE) to two of the City’s urban renewal districts. As requested by the Commission after
the prior quarterly report, Staff has verified that the N. Seventh TIF district has $10,829
budgeted and Commission approved for part-time staff and professional services.
Funding for staff support has been continued in the FY2011 N. Seventh TIF budget. Staff
recommends the Commission direct the use of budgeted urban renewal district funds to
help fund this level of staffing through the Department of Planning and Community
Development. An exact amount is not recommended at this time. Some of these funds are
used for other services besides Department staff. The NURB does not have an existing
line item in their 2010 budget for staff services. A line item for staff services was
included in the 2011 budget.
The funding for TIF support would more than wholly erase the annual application
revenue shortfall from FY2010.
C. Workforce Housing
Work regarding the administration of the workforce housing ordinance is again picking
up as the Norton East subdivision is moving forward. At this time the load has been
manageable however, as the project continues forward to begin bringing lots to market
the time required for administration will increase significantly. Funding for affordable
housing previously was used to fund a position to do this work. That position was
terminated when development activity hit its steep decline. It is recommended to draw
from those funds to support the staff time to manage this program. Alternatively, the
administration could be contracted to a third party.
D. Utilize set aside for Historic Structures Inventory update
The City collects a sum of money with each COA application for a certificate of
appropriateness to help fund an update of the 1984 historic structures update. This fee
varies between $25-$100 depending on the nature of the application. The funds are
deposited in a reserve account and separate from the normal operating funds of the
Department. The balance in the fund is now approaching $60,000.
The City has to date held the funds with the intention of using them to match grant
funding, thereby obtaining greater leverage on local dollars. A federal grant has been
applied for which would double those funds. We hope to hear from the funding agency
before the end of August. If we are successful in obtaining the grant it is expected that an
appropriate contractor would be hired to begin the survey update process. This would
require staff effort which could be paid for with a portion of the dedicated funds.
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If the grant is not awarded to the City, the Department has staff with the necessary skills
to begin the update process internally. This would mean less rapid progress but would be
much better than doing nothing. As the Commission is aware, the age of the current
inventory is causing difficulties for administration of the historic preservation program. It
is proposed to set aside a certain number of hours per month for historic preservation
staff to work on the update to the historic structures inventory. This time would be funded
by the COA set-aside. The COA set aside has not been reported as operational income in
prior reports. The net financial effect would be similar to an increase in application
revenues.
This action would materially advance on-going priority five from the department’s
section on the Commission Work Plan, as well as supporting items 1(5) and 2(4).
E. Increase Planning fee levels based on audit findings, to more accurately cover the
costs associated with processing applications. A revised fee schedule went into effect
on August 28, 2008. They had a positive effect on revenues throughout FY09 and
continue to do so in FY10. However, the fee structure does not reflect two years of wage
and operational cost increases. Therefore, cash revenues have not been consistent with
the amount of support intended to be provided by application fees.
In addition, the fees charged for the processing of sign permits are presently solely based
on building code fee tables, not the Department's adopted fee schedule. Most signs are
inexpensive compared to other construction and the present fee structure does not recover
reasonable costs for the time and effort involved in processing the applications. When
many large projects were being submitted with associated revenues this was not as
readily apparent as it is now.
The City Commission has given direction for Staff to bring back a revised fee resolution
in the Commission’s adopted work plan to adjust for changes in actual costs for
application processing and to incorporate a more proportional cost recovery for
processing sign applications. This would preserve the balance between general fund
support and application revenues executed by earlier Commission action. This will move
forward as consistent with the work plan.
Past Responses to Revenue Changes
A. Reduce FTE’s: Reductions in force occurred early in FY09. Reduced positions were 1
Planner Tech, 0.5 Admin Assistant, and 1 Workforce Housing Coordinator These
positions are not proposed to be filled in FY10. Positions for a Planner III and an
additional .5 FTE administrative position, both of which became vacant in FY09, are not
planned to be filled in FY10. This results in a 4 FTE reduction in overall staffing levels.
The Planning Director position became vacant through retirement at the conclusion of the
quarter. No vacancy savings were realized in the 2nd quarter of the fiscal year but did
occur in the 3rd and 4th quarters. The position will to be filled in the 1st quarter of the
2011 fiscal year.
Workload for next quarter: While the national credit and finance problems are expected to
continue to have a negative effect on overall subdivision and building activity in the City, the
overall financial climate appears to be stabilizing. Staff is receiving an increased volume of
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inquiries about the development process. Several significant reuses of vacant commercial spaces,
such as REI, are positive indicators as is the interest by Safeway and Kohl’s stores in locating in
Bozeman. Several applications for zone map amendments have been submitted since July 1st to
set the stage for subsequent development projects. Overall, much more careful due diligence
appears to be the practice, so staff is spending more time consulting with potential applicants
before any items are submitted.
A number of items will affect workloads in the department in the 1st Quarter of the 2011 fiscal
year.
• The retirement of the Planning Director temporarily reduced staffing by one FTE.
Duties are being covered by the Assistant Planning Director. Adjustment of
workloads and responsibilities has been necessary. The new Planning Director will
begin in the latter part of August with associated time to become established.
• The preparations of RFP for updates for the four impact fees will begin in the 1st
Quarter with formal release after adoption of the final budget.
• Department staff have been participating in the development of medical marijuana
policy. Ordinance amendments should take effect in the next quarter. It is anticipated
that there may be additional development applications as a result.
• Construction on the new American Legion Building and F&H buildings have
commenced and are advancing well.
• The Planning Department is now fully engaged in staffing of two Tax Increment
Finance Boards. Upcoming construction projects and program preparation are
significant work elements.
• A number of major subdivisions in various stages of preliminary and final plat
approval continue to require a great deal of staff time to process requests for
extensions, improvements agreements, re-phasing, re-platting, and, in some cases,
working out details of financial guarantees taken over by banks. These subdivisions
include: Baxter Meadows; Meadow Creek; Legends II; Flanders Creek; and West
Winds to name a few. Staff will especially be dealing with the issue of remaining
improvements to be completed in many of these subdivisions throughout FY10. A
text amendment in coordination with the City Attorney’s office is a precursor to
addressing some of the outstanding items.
• Spring/summer is typically a busy season for applications for Certificates of
Appropriateness as home owners prepare for and execute summer remodeling
projects.
• Staff is presently working with interns to create a digital summary of the historic
structures inventory. This project will position the City to more efficiently pursue an
update to the inventory as well as making the information more available to the
public. A grant for funding assistance in the inventory update has been prepared and
submitted. If the grant is awarded then grant administration will occupy a
considerable amount of time. If the grant is not awarded then an update to the historic
inventory should begin using the locally generated fees.
• Long Range planning activities continue to occupy a significant amount of
Department time and resources in FY10. The Bozeman Community Plan, Bozeman
Economic Development Plan and the Downtown Neighborhood Improvement Plan
were recently completed. Implementation such as UDO text amendments, grants, and
other actions will require considerable staff time and resources.
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Fee schedule philosophy and background: These concepts were originally documented and
accepted by the City Commission in March 2006. They were first implemented in Commission
Resolution 3904 and have guided fee updates since that initial adoption. These are applicable to
determining fees for processing applications.
The City hired the accounting firm of Anderson/ZurMuehlen to review the time commitment for
processing various forms of applications. The work was done in 2008. This study formed the
basis for the most recent fee schedule update, also completed in 2008.
1. Recover general operational costs attributable to development review for
Planning Dept.
2. Recognize that costs affect behavior and the City wishes to encourage some
behaviors and discourage others.
A. Desired behaviors are: Annexation, Property improvements and removal
of non-conformities, compliance with generally applicable standards, and timely
completion of work.
B. Undesired behaviors are: Violations of standards, seeking of special
exceptions without compelling reason, and appeals of administrative decisions.
3. Relieve general taxpayer from costs originated by specific requests.
4. Comply with legal requirements affecting fee amounts.
5. Allocate costs throughout the development process so that expenses are
distributed to multiple points and reflect, to a degree, the ability of the applicant to
recover the costs through value added.
6. Special projects such as neighborhood plans, city-wide long range planning,
regulatory development, and code enforcement are to be considered independently
and mostly funded by the general tax base.
UNRESOLVED ISSUES: To consider whether to consider with the program as presently
constituted or to make changes.
ALTERNATIVES: Consider options A-E as presented.
FISCAL EFFECTS: As described in the memo. Uncertainty in permit activity in future
Quarters is a concern as is the shift in the mix of projects submitted, and warrants close
monitoring in the FY11 and following years. Alternatives to address a future cash revenue
imbalance are suggested and described above in the Response to Revenue changes section.
Attachments: None
Report Compiled: July 20, 2010