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APPROVE A PROFESSIONAL SERVICES CONTRACT WITH MATRIX CONSULTING GROUP FOR DEVELOPMENT PERMIT SERVICES FEE STUDY
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a motion:
1. Authorizing the City Manager to execute a Professional Services Contract with Matrix Consulting Group (MCG) in the amount of $82,500 for Development Permit Services Fee Study; and
2. Authorizing the City Manager to take all necessary and appropriate actions to carry out the purpose and intent of the motion.
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Summary
In 2012, a four-phase assessment was developed to address recommended findings regarding development fees. Phase I was an Econometric study that estimated the real estate market; Phase II was a permit processing fee study; Phase III, is tied to the full General Plan as a separate project, and Phase IV is the focus of this report.
In 2015, staff proposed a Phase II permit processing fee study, whereby staff and consultant recommendations for fee adjustments, elimination or addition were approved by Council. Implementation of the Phase II study recommendations reduced annual service fees by more than 20 percent, $1.25 million overall, and reduced the number of fees paid from 1,750 fee permutations to approximately 400.
The goal of the Phase IV study is to further refine the fee recommendations of the Phase II Study. It will provide a more granular review of activities within the development services function using time and motion methodology.
By approving this motion, Council will authorize the City Manager to execute a Professional Services Contract with Matrix Consulting Group in the amount $82,500 for the Phase IV development permit services fee study and authorize the City Manager to take all appropriate and necessary actions to carry out the purpose and intent of this motion (Attachment A - Professional Services Contract).
DISCUSSION
Background
A RFP was issued on September 21, 2017 to solicit proposals for a Development Permit Services Fee Study, and two vendors met the deadline of October 19 at 2pm for proposal submission. The City received proposals from:
• Berry Dunn McNeil & Parker, LLC. Portland, ME
• Matrix Consulting Group Mountain View, CA
A selection committee ranked the proposals and recommends Matrix Consulting Group (MCG) to provide the Development Permit Services Fee Study services. The proposals were ranked and scored using the criteria below.
1. Vendor Reputation - Vendor has a proven track record of ability to deliver services requested by the City. They also have current or prior provision of services to municipalities in similar services capacity.
2. Availability of Resources - Clearly demonstrated a commitment to providing all required services upon the City’s call for action. Work priorities will be scheduled or rescheduled to accommodate the City’s request for services. Demonstrated an adequate level of staffing and financial viability.
3. Service Timeline - Clearly demonstrates services can promptly be delivered that meets the City’s turnaround times. The vendor will be available to provide services for the duration of the contract as determined in the RFP. Their commitment to delivering in short order if time constraints exist.
4. Relevancy of Expertise - Described expertise aligns with the fee study review services being requested by the City. Demonstrates a clear understanding of the fee study review services to be performed by the City.
Present Situation
In 2013, Phase I Economic study, which estimated the real estate market, was completed by Economic and Planning Systems (EPS). In 2015, staff proposed a Phase II permit processing fee study whereby staff and consultant recommendations for fee adjustments, elimination, or addition were approved by Council. The Phase II study created an estimated $1.25 million reduction in annual service fees. Around the time of the conception of the Phase II permit processing fee study, a Phase III study was envisioned to evaluate Public Facilities Fees (PFF) under a strategic, limited reopening of the City’s General Plan. This effort is now being tied to the full General Plan as a separate project. Phase IV, is a more thorough revisit of the Phase II effort, with the purpose of fine tuning the Phase II results via time and motion evaluation along with identification of targeted plan check process improvements that may impact fee rates.
The effort will review Building, Planning, Development Engineering, and Special Fees related to development reviews such as plan check and inspection. It will also include an assessment of overhead hourly rates for staff who accomplish work related to permit processing; this means Building, Planning, Development Engineering, Fire Prevention, Municipal Utilities Department and Public Works Department staff who process development permits. One other key aspect of this study is an assessment as to what percentage of staff time is spent on general government activities of which the City is legally unable to charge permit applicants.
The goal of this study is to further refine the fee recommendations of the Phase II Study. It will also provide a more granular review of which activities within the Development Services function are allocated to permit processing versus general government processing using a Time and Motion methodology.
METHODOLOGY
The consultant will review Building, Planning, Development Engineering, and Special Fees related to development reviews such as plan check and inspection. The study will also include an assessment of overhead hourly rates for staff who accomplish work related to permit processing. This will include other functions included in the workflow for processing development permits such as Fire Prevention, Municipal Utilities Department, and Public Works staff. Another aspect is to assess what percentage of staff time is spent on general government activities of which the City is legally unable to charge permit applications.
• Assess existing fees and personnel tied to development review permit processing and how much time is spent.
• Hourly rates associated with staff assigned to each permit process will be analyzed to determine fully burdened overhead cost of each employee including City indirect and direct allocations impacting CDD’s and other departmental budgets tied to development permit processing.
• Once rates are generated, we expect to present the fee recommendations in two phases in order not to burden the available staff resources as we work to complete the project. The expected phases are, in order: Phase One: Planning, Building, Fire Prevention, and Phase Two: MUD and Development Engineering.
STAKEHOLDERS
Stakeholders include City staff, residents, development community, and the Development Oversight Commission (DOC). Staff expects to actively engage stakeholders as part of the study throughout the process. As part of the City’s settlement agreement with the Building Industry Association which established the DOC, the DOC is granted review of fees in an advisory capacity ahead of a Council vote to establish fee changes.
PROJECT SCHEDULE
Below are estimates of the order and timing of the project. Schedule changes will be made as necessary.
• Award Contract: February 27, 2018 (Second Council meeting in February)
• Consultant work begins: March 12, 2018 - September 30, 2019
• Presentation of First Phase Fee Recommendations (DOC meetings, City Council study sessions, and council meetings to be scheduled) - March 11, 2019
FINANCIAL SUMMARY
The total anticipated cost of the contract for an 18-month Development Permit Services Fee Study agreement is $82,500. The contract with MCG is for $75,000 plus a 10% contingency for a total of $82,500. There are sufficient funds budgeted for and available in FY 2017-18 Development Services Fund Account 048-1810-510.20-65 to cover the full cost of the contract and encumber the expense for future years.
Development Services Fee Study $75,000
Contingency (10%) $ 7,500
Total Project Cost $82,500
Attachment A - Professional Services Contract