Council Finance Committee - meeting_joint_regular

So welcome everyone to the council finance committee meeting of, 05/08/2025. It's 08:34AM. I'll call the meeting to order. This is a hybrid meeting allowing the public comment in person and virtually, and instructions for addressing the committee virtually can be found on the agenda. We'll start with roll call, and it looks like all committee members are present.

We'll move that for the minutes. Item three is the approval of prior meeting minutes, the minutes from the 12/06/2024. Council Finance Committee meeting, are up for approval. Would any member of the public joining us virtually or in person like to provide comment on the minutes from December 6? If so, please click raise hand in, raise hand button in Zoom, and interested attendees should raise

their hand. Hold on. We'll take

in person speakers first, and then each speaker will have, three minutes. Any items they wanna discuss or a motion for the minutes?

I will move to approve the minutes and share my gratitude to staff for, incorporating the corrections of the email. Thank you.

So a motion by council member Ramirez. Second. Second. Secondary by the vice mayor. Vice mayor Ramos, there's no further discussion. All in favor, aye.

Aye.

Opposed? So that passes unanimously. So we'll move on to item four or communications for the public. Would any member of the public join us virtually in person like to provide comment on any items that are not on the agenda? If so, click raise hand in Zoom. And if there's any can raise their hand here. Does anyone wish to speak?

Don't see any I'm raising their hand.

No. I'm seeing their hand.

Are aligned. So we'll close oral communications from the public and move on to item five, our discussion action discussion action items. The first item is the fiscal year twenty twenty three, twenty twenty four single audit report. And, our finance administrative administrative services director, Derek will make brief remarks before the presentation by the city's auditor. Thank

you, Chair Clark, and good morning, many members, Ramirez and Ramos. Derek Crampone, your finance and administrative services director. Item number 5.1 is the report out from the city's audit firm on the 06/30/2024 single audit report, which is all the federally funded awards that the city receives. We're required to have an annual audit if we spend more than $750,000 each year in federal funds. And so we actually have our auditor, Ahmed Badawi from Badawi and Associates on the line, and he will give a presentation on the single audit report. Great. And I'm gonna share my screen for the presentation.

Would it be possible, Derek, if I share my screen?

Yeah. You can. That's fine if that works.

Yeah. If I can so I can control my slides?

Sure.

Alright. Good morning, and and thank you for inviting me to your meeting. Good good to see you again. I did meet with you late last year to present the Citi audit. Hopefully, next year, it will be just one meeting for both the Citi and the single audit. But for this year, this is just a quick presentation regarding the single audit. So I am going to go in a slideshow and get started. So this is a presentation to the council finance committee. Today, I'll present to you the 2024 single audit of the city of Mountain View, the results of that audit agenda for today. Sorry.

I'll just give you a very brief overview of our firm and the engagement team. Again, a very high level overview of our audit audit methodology, provide you the audit results, and then some of the required communications. As far as our firm and the engagement team, so this slide just give you a very brief overview of our firm. We have about twenty five years of experience. We're a very specialized firm. We work mostly with government clients. We have about 65 government clients. We have about 44 cities that we audit and about 30 employees. And so far, luckily, we have zero lawsuits, legal action, or disciplinary actions. As far as the engagement team, so this was the engagement team that worked on the city and the single audit.

Me being the audit partner, we had a quality control reviewer, an audit manager, an audit senior, three professional staff, and an IT specialist. So that was our our audit team. Moving on to the audit methodology. So, really, I tried to break down the single audit into the different steps or phases that we go through. We start by receiving a schedule of expenditures of federal awards from the city we call CEFA.

We receive and review that. We, the next step is to do risk assessment. So we assess whether the city is a high risk or a low risk auditee, and then we assess each program listed on the CEFA, whether it's a high risk or low risk program based on whether it was audited in the past or not and whether it had any findings in the past. Once we select the major programs that are to be tested, then we perform the compliance work, and that usually involve assessing the risk of noncompliance and also testing the control over compliance and the compliance itself. And then finally, the reporting phase where we report on the CIFET and on the major programs that we selected for testing whether the city complied or not.

That's a single audit report that you receive. Wanted to summarize for you the audit results. The auditors report, we have issued an unmodified opinion, meaning that it's a clean opinion. We believe the city complied in all material respects with the requirements of those grants. As far as the auditee risk, so the city did qualify as a low risk auditee.

Normally, the city would not qualify if it either did not have a single audit in the past or had material weakness and material findings in the past. The major programs tested, we selected two major programs, the CDBG entitlement grant and the home investment partnership program. The city had about 6,400,000.0 almost in total federal award expenditures during the year. The programs we selected for testing represented 96% of those expenditures, so almost the entire federal expenditures. Pleased to say that as far as deficiencies in internal control over compliance, we, did not note any.

And as far as noncompliance with the requirements of these two those two programs, we also noted no instance of noncompliance. Finally, on my slide here, just wanted to provide you some of the required communication as your independent auditors. Just responsibilities as our audit firm is to provide an opinion on whether the city complied with the major program's compliance requirements or not. We're also, responsible to provide an opinion on the CIFA in relation to the financial statements. We evaluate and test internal control over compliance, evaluate compliance with major program requirements, and then finally communicate with the governing body, which is what I'm doing today.

The city have responsibilities in this process. So the city take responsibility for the CIFA. It is responsible for providing us a complete and accurate list of federal awards and federal expenditures, establish and maintain internal control over compliance, make all records available to us during the audit process, establish internal control to prevent and detect fraud, inform us of all known and suspected fraud related to, the federal awards, comply with the major program's compliance requirements, And then if we have audit findings, then take corrective action on audit facts. And, that conclude my presentation. I wanna say thank you for, allowing us to provide service to Citi.

And, again, the goal is next year, hopefully, this presentation be combined with the Citi presentation. We already started working on the single audit for 2025. We selected, what we hope would be the only major program to be tested, and we started doing testing work on that. So we are ahead compared to last year, but I'll be happy to answer any questions that you may have. Thank you. Are there

any committee member questions? No questions.

No. Come in.

Okay. If there's if there's no one online to speak, does anyone in the room wish to speak?

Yeah. Just one comment for the committee, since director Ramcona and I are in a reporting relationship. I was actually interviewed by mister Badawi and his staff to see what my observations were of the FAST department, and so that interview lasted somewhere between twenty minutes and a half hour as part of the process.

Any, I don't see any public comments. So is there, any discussion or action we'd like to take?

May member Ramirez. Thank you, chair. So first, I wanna share my appreciation for mister Badawi and also for for staff for compiling the audit and and presenting the findings today. A few years ago, we used the CFC used to not see for a single audit. But I think it was during the when the counts the the city was receiving a substantial amount of funding through the American Rescue Plan Act, we figured it'd be helpful just to make sure, you know, we're understanding the the use of the funds.

And and so think for the first time, a couple of years ago, we started seeing the, the single audit, which, doesn't require council approval. This is this is the only body that that would be seeing this. So I'm I'm grateful for the opportunity just to understand what's going on, and happy to support the staff recommendation to to accept the approval. You sorry. Do I have to Is that a motion? Yeah. I move to approve the Okay.

So Yeah. Okay. So the motion by committee member Ramirez to, receive and accept the city single audit report for fiscal year, that ended 06/30/2024. Is there further discussion?

Yeah. One quick question, and it might be a dumb question, so please bear with me. Do what would with all the changes that are happening in the federal government, would we take into account how that would go when we do

our audits and how we handle because we

don't settle on funding. So, like, if they change their requirements, how do we track? How do we adjust to that? How do we do that?

Yeah. Great question. So we work with our audit firm. We we on any new requirements, we're all always kept apprised of any requirements. You know, personally, I think maybe the threshold could decrease, and they would wanna see more audits. So I have a feeling that could be on the table eventually instead of the $750,000 threshold, which would just mean that they the audit firm would be looking at more programs that we're receiving federal funding on and looking at expenditures. But we work closely with the audit firm on on any new pronouncements and making sure that we comply with them. So just but nothing has changed yet. Okay.

Yeah. And I I would just add, council member, that should there be any further action from the federal administration and a reduction of the funds, that that is possible. And council's actually going to be seeing an agenda item on Tuesday where you're gonna be reviewing the the federal consolidated plan for the home and c d CDBG funds. Right now, we are operating off of the assumption that we will have the same amount. But if those amounts would change, so would the parameters of of the audit.

We would just have to adapt to whatever the decreased or changed funding amount would be. But you will be seeing, this funding and the recommended programs to be funded on Tuesday night.

With that, I'll second.

Okay. So motion by committee mayor Ramirez, seconded by the vice mayor. I will support this as well. This is about as clean as clean an audit as you can get. So thank you to everyone involved in this. It's it's just good to know that we're in we're in good hands with with our staff for these programs. So all in favor, aye. Aye. Aye. That carries unanimously. Thank you very much.

Thank you for having. Have a

good day.

We'll move on to item 5.2, which is, the results of the use of the study and an update on capacity capacity study with our city manager.

And,

I'm sorry, and finance administrative.

Yes. Thank you, chair of the art. So I will just kick us off. And while our director is pulling up for the short presentation, so just as a really quick overview, it has been over a decade since the city has holistically looked at our our fees or even updating our master fee schedule, which, quite frankly, is too long to do this. So many things have changed since the last time we had our fees looked at holistically.

What we do do every year, though, annually is staff will look at certain fees that may need change and recommend adjustments as part of the recommended budget. So there is a table in here every year that shows what the fees are and any increases, but we haven't done the full study to actually really capture our post recovery, since, like I said, more more than ten years. So, this has been something that's been in the works for quite some time. It's a significant undertaking. It involves a consult consultant working with almost every single department, and having to spend time doing the analysis to to justify, what a fee might be and really back into why a certain fee would be recommended for either increase or decrease.

And I know there were a few questions, council member, about, just some policy questions on should the city or could the city subsidize certain fees or decrease certain fees, that is certainly within your purview. I have seen other places, at least fees sometimes related to nonprofit use for recreational sort of events, or I know childcare came up as well. So that is certainly something that if this committee would like us to research it further, that's something that we could probably bring back with the agenda item, which is coming to you all in in June. But there are also some other fees that we would not recommend reducing, and we can talk about that further as you get through your discussion. So I just kinda wanted to lay set the stage for that, and I'll go ahead and turn it over to mister Rampone to kick us off.

Alright. Thank you, Kimbra. Hello again. Derek Rampone, your finance and administrative services director. As Kimbra said, what you the item you have in front of you is the results of the user fee study and an update on the capacity charge study.

As you can see, we have represent representative from several departments here today providing support and available to answer questions as well. We also have our consulting team from Willdan Associates on the line, Tony Thrasher and Priti Patel, so they can also assist with any questions that you may have about the process. A quick background on the user fee study. Kimber covered some of it. But, you know, as part of a general cost recovery strategy, local governments, including the city of Mountain View, has adopted user fees to fund programs and services that provide limited or no direct benefit to the community as a whole and mainly benefit the specific user.

The city's fee schedule was last comprehensively reviewed and updated over ten years ago. And since that time, a lot has changed. Costs have risen. There have been new government laws and regulations in regards to fees, and community needs have evolved. As a result, the user fees need to be updated to ensure that they are current and appropriately recover the city's cost of actually providing the service.

Over the past ten years, we have made annual updates to the fees schedule, but they mainly consisted of inflationary increases that are based on CPI or other cost indexes. And as I said earlier, in 2024, the city engaged Willdan Financial Services to conduct a cost allocation plan and user fee study as part of a formal RFP process. A few of their Northern California clients include the city of Hayward, Foster City, Salinas, Gilroy, San Bruno, Napa, Petaluma, and Richmond, Richmond, just as background. So diving in a little bit more on the purpose of this study and the cost allocation plan. In particularly, the cost allocation plan is being used to develop indirect cost rates that can be used in calculating actual costs of providing the service.

It actually also assists the city in recovering administration and overhead costs from federally funded grants as once we have a approved overhead rate that results from our cost allocation plan, the federal government will actually reimburse us for a portion of our administration and overhead, which we currently don't receive. So that will be helpful. The user fee study obviously has many purposes. Act the first one is help helping determine the actual cost of providing a service. It assists with reviewing the fees and the structure and how we, you know, bill bill the users to make sure it's updated with our current practice.

It helps identify any new fees that we may need to that should be charged, and it also identifies any outdated or obsolete fees that we should remove and that we're no longer offering. It also helps ensure that we know what our maximum cost recovery can be, and that helps reduce any general fund subsidies or any other fund subsidies when we don't charge the full cost. The final product results in a model that staff can annually update by updating the cost of salaries and benefits. And so that will really help us as we go forward to have a more accurate increase every year and not just a a standard 3% or depending on what index we use. It also helps ensure compliance, like I said, with federal and state requirements, and it's a best practice by having a third party conducted at least every five years or so.

And it provides transparency to the community on how much costs are really depending on each service. So a little bit just on the methodology. This is also in the report, but this is a snapshot of how the cost of service is developed. They're usually generally, there are three cost layers as you can see, starting with the central services overhead, and these are the administrative support departments. And then we have department overhead from the department that's actually providing the service.

So those could be supplies, memberships, your typical overhead. And then personnel costs, right, or the direct salary and costs broken down by into an hourly rate. And once those are all known, they come up with a fully burdened hourly rate by classification, by position throughout the city. And then the consultant will meet with each department to discuss how much time it takes for it to provide each service and which classification is you know, encompasses. And once that's determined, that's how you come up with the actual cost or estimate the actual cost of the providing the service.

And that's what you see in fee or in attachment one, the fee schedules. So the results showed, I think, what we kind of assumed that numerous fees were not covering the actual cost of delivering the service. And as a result, the general fund and other funds would be subsidizing those fees when when they don't cover the actual cost because costs have to be picked up somewhere. So as a reminder, cities are allowed to collect up to the actual cost of providing the service. However, the fee cannot exceed the cost.

The cost or the fee can be lower, but it can never exceed the cost. Comparing user fees to other cities, fees can be difficult due to cost differences that vary city by city. In addition, the organizational and operational structure of departments and how they provide services may be different. Some services may have one city employee involved, and then in city b, there may be three employees involved. So it's kind of hard to compare it sometimes.

And the fees charged, the rate structure themselves can be different. You could have a flat fee at one city and an hourly fee at another, so those are kind of hard to get reconciled sometimes. And with that, I'm going to turn it over to Elizabeth on the capacity charge updates.

Good morning. Good evening. Of the committee. Elizabeth Flagel, water resources manager, Pacific Works. So this is a separate but parallel study that was conducted over a similar timeline.

The city hired Bartle Wells and Associates, financial independent financial public advisers to prepare an updated water and wastewater capacity charge study. The last time we prepared such a study was in 2014. This was the first time the city adopted these these charges, and they are specifically designed to equitably recover the cost of the of the infrastructure or water and wastewater system, infrastructure, and assets, based on the development the portions of those infrastructure that are benefiting new development. We use the same approach as we did in 2014, which is a very common approach for cities such as Mountain View where most of the infrastructure is built out and is built specifically to provide services to new development. That approach is called the system buy in approach.

And it one major factor in the system buy in approach is the cost of the actual infrastructure. And since 2014, the value and the cost of the city's water and wastewater infrastructure has increased substantially. As part of this new study, we updated all of the updated fees for all of the existing customer categories, which are included in the memo. But we also asked the consultant to look at some additional new categories, which have been very common in the cities, plant applications. These include assisting assisted living units, senior care facilities, ADUs, and also some larger water meter sizes that are becoming more common.

The results of the study recommend increases to the water and sewer cap water and wastewater capacity charges that range from approximately 20 to 85% for water, depending on the customer category, and between 85 and a 125% for wastewater charges. One important component that I wanna draw your attention to is that all applicants receive a credit for the existing use on the site. So they only pay for the incremental increase in capacity needs on the city's infrastructure. The staff recommendation is to move forward with consideration for adoption on June 10 concurrent with the other fee study recommendations. And we've also included two additional recommendations.

One is to grandfather in the existing fees for applicants that have already been received and complete, and we will also be recommending an exemption for ADUs. The next slide shows a comparison, a little small, but it shows a comparison of the current combined water and wastewater fees for an apartment on the left and a single family home on the right compared to other neighboring agencies such as Milpitas, Redwood City, Palo Alto, Sunnyvale, Menlo Park, etcetera. Currently, compared to these agencies, the city's fees are on the low end, and this study will bring them approximately into the mid range

of the issue. Just to clarify, that's per unit?

This is per dwelling unit. So, for example, if a single family home were to be torn down and a new single family home erected, they would get a credit and which would cancel out the fee. So they would not pay an any capacity charge. If a single family home were to be torn down and something else built in its place, they would get the credit for the single family home, and the new fee would be assessed based on the new capacity demand on the increased capacity demand on the systems. Thank you. And that concludes my slides.

Alright. So as you can see on the slide, we're at the red arrow today at the CFC meeting. The next step in this process is that's that the community services department will actually be sending out notifications to user groups tomorrow informing them of their their fee increases. And on May 12, there's a development review update meeting with developers where both the user fee study and capacity charge study will be discussed. And then on June 10 will be a public hearing and potential adoption of the modified fees, including the capacity charges discussed today. Staff recommendations are listed on this slide as well, and staff is available for any questions.

Thank you. We'll start with community questions. I have a lot,

but I also dominate the conversation. If that's someone else Do

you have any?

Thank you for I know this is a percolating undertaking and very important work. Glad that CFC has opportunity to preview it. And I'm also very grateful that we're going to take this information out to the community to get input so that we'll help us understand what trade offs we may wanna make, sacrificing some cost recovery opportunity to ensure that members of our community access the facilities and recreational opportunities that that they want to enjoy. And, also, some of the questions I'm gonna get into were not, you know, accidentally or unintentionally discouraging folks from doing business in the city. So maybe a couple of high level questions first.

I know there were some sort of cleanup items that were uncovered in the responses to the questions I submitted. Thank you very much. Yeah. I know you only had a day. I'm I'm guessing there's gonna be some continued review and just making sure that I was confused by some of the headers, for instance. So will there continue to be some review and cleanup of of the formatting?

Yes. There will be. Yeah. We're just doing some final scrub. This was actually version 10. We will yeah. So we will be on version 11 just cleaning up, like, some of the the formatting errors or formatting issues. So we'll clean those up to clarify and make it hopefully, you try to present it in a little bit cleaner version, but it's in Excel. So we do our best. But, yes, we will be cleaning it up. And and as mentioned in the staff report, I think we talked about some of the rounding as well in the questions and answers. And so we'll be looking at that as well with some input from today's meeting on rounding down to have clean even amounts.

Right. Right.

And so yeah.

Totally fair. Okay. But, you know, I I I should have assumed that parade permit had nothing to do with massage business. So, you know, that that kind of thing where it's like the the readability, I think, will which are benefit from another look through, but thank you for for taking care of that. And then sort of another bigger picture question.

I know we often will conduct financial feasibility analyses when we, look at things like community benefit obligations and, you know, the CMR and lieu fees, but those analyses presumed, you know, much lower fees and charges. So I'm I'm curious to know if if any if if staff or the the consultant has thought about the the relevance of those feasibility studies and whether they're it should be reviewed in light of potentially significantly higher fees imposed on development applications. I know it's a big question, and I'm not really sure who to target it to.

Just repeat the last piece of that.

Sure. So I'm I'm I guess the concern I have is, you know, if you look at, like, the the fee stack on on a given development proposal, it's there's part fees and BMR in lieu and commercial linkage fees and you know, permit fees and stuff like that. When we did the financial feasibility analysis to show that a community benefit fee, for instance, was feasible, it presumed, you know, much lower fees. Now we're increasing the fees, but we're not necessarily updating those financial feasibility analysis, which means that some number of developments that used to be financially feasible may no no longer be because, you know, the the permit fees and some of these charges are are much higher. So I guess the the sort of the higher level question would be, should we review some of those financial feasibility analyses to show that the community benefit fees we're imposing are still feasible, or whether as a consequence of increasing these fees, the fee stack has grown so great that really development in Mountain View is is no longer feasible.

So I'll I'll take the first part of that, and then I'll ask our community development director to fill in and maybe even our community services director. So, fundamentally, we have a problem in Mountain View with our development services fund. Development services fund is in the red to the tune of $7,000,000 and growing. And the challenge that we have is that we don't have a problem with development in Mountain View. There there is no, halt on development, I guess, because of that, because of the fees.

And the challenge we have is that we have a similar volume of development projects coming in. They are more complex now. They're taking a lot more time. And as most folks know, we've we've added some staff over the past few years to keep up with the volume and the demand. But what's happened is that the costs were being charged, in some cases, pennies on the dollar for this halftime spent on some of these projects.

And so we're in a really precarious situation with the general fund subsidizing development activity right now in Mountain View. Every year, that amount will grow. So 7,000,000 now could double next year and double the year after that. So what we're having to do is spend some of our general fund, limited period funding. And the past few years, we have been having to move it over to help supplement the DSF.

So, fundamentally, that that's, a challenge we have right now. And that is fundamentally why we really need to, and it is a best practice to rightsize those fees. To your other question in terms of whether some of our fees are too high, I think you're aware that for the housing element, we are looking at our parkland fees and the reduction of those fees. There are also various laws moving through the legislature that would probably change the nature of what any local agency could charge for park fees. So there's a lot of things coming down the Pike that I think will affect not just Mountain View, but but others.

And I'd like to invite, our community services director to just give a little bit of an overview of the timing for that. Then as far as the financial analysis you're talking about or the nexus studies, Christian, if you could speak a little bit more about that. But I think we we do have a fundamental challenge in that our fees are too low right now for the most part. Some of the fees that may be perceived as too high, like Parkland fees, will lower. They will lower. We just haven't got to that study yet. So those aren't included in this.

I always find it helpful when you start talking about the subject to think of subsidies in terms of a spectrum. One end of the spectrum while we're here is the entire community, your residents. If they benefit in total, that starts to beg for a good argument for subsidies. At the other end of the spectrum, are limited number of residents or even nonresident corporate entities. That starts to really look like a diversion of public funds, which is not necessarily a good practice.

So this exercise was to determine the fully loaded cost for the service the city provides. This exercise should be kinda detached a little from the other other conversation in the sense that it would probably be more prudent to accept the exercise at face value, understand a lot of the fees are lower than they should be, and remedy that. Down the road, as developments are looked at on an individual basis, the council always has the ability to decide Yes. If they wanna waive fees or not. But I think this exercise should try to be taken at face value and determine using that spectrum of benefit or limited or no benefit so that there isn't a diversion of the public

funds. So So we have someone online.

Yeah. Tony. Go ahead, Tony. Hello.

Tony Thrasher, project manager Will Dan, project manager for the for the user fee study. So I did want to speak up a bit as far as industry standards and things that we've experienced for talking with development communities and such. So user fees are single time use fees on total develop on the overall development. They are not the part that's gonna dissuade any sort of development, within your city. Impact fees, taxes, those other things you you mentioned, those are the things that get passed on in the individual kinda unit price.

But these sort of costs are not things we typically get pushed back on developers from from a a cost basis. Whenever we meet with them, the answer is what do we get out of it? And the other kinda thing that we always notice is that if a if a city were to implement expedite fees at a 100% or even greater, then they'll always use them. So it's time is the money for them. Right?

So they're often when we're having those communications with the developers, we're making sure that we wanna make sure to frame this as, like, this is operational cost to the city. If the city does not recover the cost of providing these services, it impacts their ability to fund these departments and those services. It delays turnaround times. Right? It can impact, you know, the service being provided, and so they can't get their project rolling. And so we have not experienced in any city that we've worked with that user fees are end up being a a detriment to the amount of development that happened within a city itself. So I would not anticipate any decrease in development as a result of these. Again, impact fees are a different story, but user fees are not.

Thank thank you. I have for later, but I'll I'll try and go through this questions at faster clip. So the staff research fee thank you for the response. I'm I'm still a little concerned about when it would be applied. So if I if I'm a resident and I submit a request through ask Mountain View asking for information about a project, would I be charged by the city?

So if you're just asking for information on documents we may have, that would fall more under the public records request action process, in which case there would not be a charge. Staff would share that information. However, we do get a lot of inquiries, I will say, primarily from third party businesses that wish for us to actually review the content of a permit, talk to them about the conditions of the permit, and have questions and sort of want us to have these dialogues that are way more specific to the actual, you know, documentation at hand. And sometimes the questions involve extensive research, particularly if it's an older property that is well beyond the boundaries of, like, a PRA request. Oh, and I'm Lindsey Akins.

Sorry. Assistant community development director.

Thanks, Lindsay. So I I'm I'm not sophisticated enough to know what that line looks like, but I'm going to trust you on this. And then, for the also the downtown parking fee, will will the fee schedule be modified to recognize some of the limitations or the specificity that is that the staff response to the question includes. So in other words, like, if you if I just look at the fee schedule, it looks like a fee for, you know, a downtown parking space regardless of whether it's subject to a b twenty ninety seven or or anything. But it's it's the information here isn't isn't terribly isn't sufficient, I guess, for me to to really understand when I would pay this fee.

Is there is it possible to how would I learn more about whether this fee applies to me or not?

I think from a policy perspective, I don't know if there's a way to embed policy implications. But I'm assuming when you start to have direct contact with the developer, you inform them of policy implications.

That's right. Good morning, committee members. Christian Murdoch, community development director. So I think, what we can offer between now and the next consideration of this item by the council is to work with director Rampone to see if we can put a brief caveat there, something like, you know, in parentheses when required by zoning. So at least there's an indication that there are instances perhaps when that would not be required and prompt a conversation by a prospective applicant or developer. Something much more extensive than that is probably difficult to embed in this format of a fee, table Okay. Of this sort.

That that works for me. Thank you. I that. The gatekeeper preauthorization application, I appreciate the breakdown. Some of this was surprising to me, though. The the gatekeeper hearing so this is this is for the authorization hearing. Right? This isn't aft like, after council authorized authorized a step to review an application. I I understand there's a much more substantial review that's necessary. But this level of review for projects that so we have an authorized level of review in a great detail seems really substantial.

And I'm looking in particular at the the engineering requirements providing review of project traffic circulation, mapping, and compliance with city policies. That do does that level of granularity typical for a preauthorization hearing review fee per application?

So I think I'll start and then perhaps allow, Public Works director to supplement that specific work of her team. I think as we prepared this particular estimate of the fee, we were reflecting, I think, what staff understood is the expectations that council would want staff to be able to answer questions about certain project components. And so to be able to answer those questions, staff needs to do a certain amount of analysis and study of the project, which involves multiple members of the public works department. You know, perhaps you can characterize a little more some of the specific work or other aspects of it, but I think it's really geared towards and speak able to answer the council's questions in anticipation of what those questions would be at the authorization hearing.

Yeah. I think Christian summed it up pretty well. There's a lot of front loaded effort that goes into it. It's sort of with the intent of getting everything out there upfront so that we don't see a lot of surprises later on as we're

going through making our way through the process.

I'm thinking about, and this was before many folks in the room were with the city. There was a a gatekeeper hearing, Chris, you might have been on the council for this, where a single family homeowner in the Cuesta Park neighborhood wanted to build, like, a second unit. That was a gatekeeper authorization. So this fee, I understand for, like, Charleston Plaza, which is much more significant redevelopment. But would you impose this fee on the Coesta Park single family homeowner as well?

I mean, I think in that isolated hypothetical, yes, as the fee is proposed in this structure here. I think what you're also aware of, based on your membership on that council policies and procedures committee is that the council will be considering new gatekeeper exemptions on May 27 or an overall policy, I should say, which would include updated exemptions. And that type of project may potentially be subject to an exemption from an authorization hearing, and so conceivably would not be subject to that fee.

Okay. Thank you. Well, then I guess we'll have that conversation at the end of and then I think the city manager sort of spoke to this earlier, but there were the fee increases for uses that I think are are the kinds of uses that we are really trying to encourage, like childcare and nonprofit uses and and even safe parking. What would be should would it be sufficient for us if a majority of the committee is interested to say we would love staff to explore appropriate subsidies to make sure we're not deterring Mhmm. Those types of uses?

I think that that could be the the motion. Okay. Part of the motion or recommendation if that's what the committee wishes.

Okay.

And I would ask our finance director,

do you have any

other insight as to the non because we have built in some reductions for nonprofit usage. I know, certainly, for community services. So maybe we can speak to that a little bit further. Sure thing. Christine? Hello. Director Crosby. Good

morning. Christine Crosby is the second services director. So last fiscal year's budget cycle, we did hear from the public about our fees for the nonprofit. You specifically related to barbecue areas and for the rabbit hole. And through last year's budget cycle, we moved forward with reducing the peak hour rate for nonprofits, the rabbit hole, by 50% of the resident rate.

That reduced it down. We also included a onetime free use per year that they could use that space. And then we also introduced, a nonprofit rate for barbecues. During this fee cycle, we were then able to go through and update all of the peak rates for nonprofits and reduced it so that it was 50% of the resident rate and making it consistent across the board. So that you'll see, within the fee study for, all of the facilities that recreation reserves, that decrease took place.

Which is great. Thank you. And then also for permit fees for for the uses as well. So that then if we simply said we would love for staff to explore subsidies, that would be sufficient. Okay.

Two more questions, then I'm I'll get out of your hair. I'm sorry. The first is the so the heritage tree removal EOP is very heavily subsidized. I think it's, 95% or something. And I I I I think I understand the the staff explanation, but I'm I I I guess I'm I'm struggling to understand how that that feels like a policy determination, and I don't know if I would would feel comfortable so heavily subsidizing, especially I've seen enough PRC meetings to know that oftentimes the the appeals are denied.

Right? So it's like, you know, it it's it's a it's a huge amount of staff time expended on something where we're not getting the cost recovery to just, you know, have have it kind of fizzle out. So is is that is that do you feel in your heart that that subsidy is actually worthwhile?

So it is a policy decision. And in the last, I would say, since COVID, we have heard that the current $50 fee at times has been a burden to some residents to submit an application for a tree that is not necessarily on their property, but one that they're interested in saving in the community. And so as the response that you see in your packet is trying to find that balance of it's just $50 now, but then the actual cost is much more significant. Where do we find that sweet spot? And so that's what we were trying to help determine.

And, again, this is a policy decision of which you you have authority to give us some direction.

Okay. Thank you. That's

the The choices are barrier to entry versus frivolous appeals.

Well And we're seeing a significant increase in the number of appeals within the last six months. And so we there there is a a a great balance. We just don't want to similar to recreation programs, don't we were trying not to price somebody out from a a process. Right.

So that and and those are my comments for when we get back to development in a little bit. So I appreciate you saying that. But but I I appreciate that that the need to find that balance. Last question. So I I'm, it sounds like staff will already go back and, you know, I'll speak for myself. I'm not really interested in seeing adult entertainment and card room those types of uses proliferate in Mountain View. So it sounds like you're gonna go and potentially eliminate the subsidy proposed without further action from this body.

That's

correct. It's great. Thank you. The one I didn't see is tobacco or smoke shops. Is there a reason there isn't, like, a call out for cost recovery for those users?

So council will have an agenda item coming to you all. I believe it's gonna be the the last meeting in May for the vaping ban, and some of what you ask will be addressed in the in the vaping ban. But it is certainly a consideration that you could consider now or you could, you know, bring up at that time for a greater, maybe, discussion on tobacco related fees. But that's certainly something that you all discuss.

Do we have the authority in this meeting to say I don't know if the application can respond to this. It wasn't something that I'm guessing was explicitly studied. So would it require additional study to to Tobacco fees? Tobacco or or, like, smoke shop cost recovery?

No. I do not believe so. But if you want to give direction to look into that, and then that's what we would, you know, bring back more information on that. But we don't have city I would need to talk to the city attorney's office about the extent of what they studied or not with the police department in that vaping ban. I'm not sure that they did. So Who

do guys have? So that's an example of use that actually has been a problem

Mhmm.

In that view. So I I would be interested to the extent we can. And, you know, it's not it's not a deterrent. Right? It's cost recovery. But I've noticed that some of these cost recovery fees are quite high, and so it may serve, you know, for a use that I'm fairly interested in as a as a deterrent. So those are my questions for now.

Thank you

for your indulgence.

Any other questions?

Just a quick one because I I I knew this budget very well before I was on council. When they did the fees for the rental housing committee, which I also saw that there was a question that's changing is on that. How come when you match what the I can't find it now, but whatever. But, like, it had the pros it had the the current fee and then the proposed fee, which usually was the same, and then it said, the the full cost. Wouldn't it automatically be the full cost? Is that why it's just NA in the charts?

I

don't know which. And I and I believe our housing director is here. Right?

Is is Yes. So perhaps So we can

mister Chen can't speak to.

Yes. Good morning, everyone. Wayne Chen, housing director. Yeah. I'm happy to answer any questions. It sounds like, council member vice mayor Ramos' questions may be more about how the information shows up, in the chart. But according to the responses, yes, the rental housing committee did, support, the reduced fee at a $142. This is not a fee that's typically part of the master fee study. So I think any information that might need to be reflected in the document, we we can certainly incorporate.

Especially

since we're looking at at doing some subsidy toward the, mobile home rent stabilization fee, It would be nice to show that, like, one, it's the the program on its definition is generally 100% cost actually, not on this not on the its definition, but, like, it it usually is 100% cost recovery, and so that should be reflected in the full cost and the percentage of sub subsidy.

And vice mayor, I believe you're on page 44.

Found it.

Right. And so it's about three quarters of the way down the page. The rental housing fee. I believe that's the one you're speaking to, and the balance that say NA. And maybe someone speak to why there are NA.

Yeah. It's actually so those two fees are not part of the fee study, and we're be pulling those out and presenting that at the June 10 meeting as separate items since those come directly from the housing department and part of their, committee.

So

yeah. Tony Thrasher again. I just wanna know. So a lot of the NA's you see in our study, there is cost associated with those things. But if they're not included within our cost analysis, then we can't show that we developed or determined the cost. Right? So it's simply, designating that if, you know, any action that we would be asking counsel to take for suggested fees are not based off of the cost analysis that we did in our study. Right? So that's we we wanna make sure there's a clear distinction in there. That the NA represents a a few different things in these cases.

So in the full cost, it's often that either a cost was not calculated or a cost was not needed to be calculated in the in the, form of, say, penalty. In community services, the way that a lot of those are provided, they actually fall under a different, exemption under prop 26 as a fee as instead of being a tax. And so those can be set based off market rates, policy decisions. They are not cost recoverable based in the same way that, say, permits would be. We do a cost analysis on all the community service, you know, services and rentals and all that to make sure that they are not earning a profit, which, of course, they are not.

But we also wanna make sure that we are not showing cost calculations for which we did not, you know, determine one in the study.

So these this this attachment, the facility schedule, is only what our consultants did. Is there a chance that we can distinguish, like because we I would love to see, like,

a full,

a study so that we have context for for all of these things.

And director Chen, when are you coming back with your analysis and recommendations for fees? It sounded like you were doing a separate track on that.

Yep. Thank you, assistant manager, Andrews. So, these fees are typically parallel tracked in coordination with the finance and administrative, department. The rental housing committee sets its own budget. And, on April 22, the rental housing committee, or the twenty fifth, the rental housing committee, reviewed the proposed fees, and we've provided those, those proposed fees, with to to FASD.

And so the rental housing committee is looking to adopt the the reduced fees for the mobile home space ordinance at a $142, and the rental housing committee has also approved or recommended adoption of CSFRA fees at a $130. So those will be information provided to FASD through the overall budget process, but it is on a separate apparel track.

Yeah. And we will split them out. On the June 10, we'll have fees that were in the fee study and then other fees that were recommended for modification, and those will be included in those.

I don't have any additional questions. So, we'll, is anyone in the room with public comment? Is there anyone

online who? Raising their hand.

Okay. So so no public comment on this item, so we'll bring it back for, discussion and, and, ultimately, a motion. If anyone would like, do you wanna start? Yes.

Thank you, chair. So first, I I I think this is important, and I'm grateful to everyone for helping right size the fees, recognizing that it has been a long time, and cost recovery is important, especially in a time resource scarcity. So I think it it on balance, this is very good. I do want to, I may quote, our congress member, Sam Liccardo, when he was mayor of San Jose, he'd often say, a 100% of nothing is nothing. And the point of saying that was in response to folks like me who say, well, why can't we impose more of a fee burden or a tax burden on development?

Right? We want all of the good things. We want parks and affordable housing and community benefits. But if you start taxing too heavily, then you push development into oblivion, and then you collect nothing. And I think housing starts generally have shown that we're looking at a bleak outlook for a little while, you know, and with tariffs and and labor costs escalating, what I worry is even if this isn't the fee that that breaks the camel's back, it it is considered in a silo.

We do have other significant fees and taxes that we're imposing on development. And I think we're we are rapidly approaching a point where development may not be feasible. We might see things entitled as we often do that don't get built. And I think that's that's actually kind of the environment we're in. So I I may ask before when when the budget comes back to us and and the fee schedule in its final form for for information about housing starts just so we could understand that context.

Right? Are we actually seeing development fall off a ledge? And as a consequence, maybe we don't adjust these fees for maybe we provide only a modest subsidy, but we really do need to think about fees and taxes holistically and that fee stack and the the the total cost of, especially, residential development, which I think is is a priority for the council. So that's these are I'm gonna support this, but I do so with great caution and with with some desire and and urgency of around evaluating the total fee stack and making sure that we're not accidentally disincentivizing development as a whole in in the city. I am interested in include yeah. I'll I'll move to I guess, is it approve and recommend?

Steven accept the user fee study and then recommend it to

the council for adoption. Thank you, chair. I'll move to approve the staff recommendations with with some additional direction to have staff evaluate potential subsidies for child care centers for the various permits that are described, conditional use and development review permits. I think there's some others. And then also for safe parking, that's that's someone doing us a favor.

Right? So I'm I'm I'm not certain we wanna disincentivize, you know, a private property owner from helping the city address our homelessness challenges. So I I think that that should you should consider a healthy subsidy there. And then it's nonprofit housing needs, meals, and similar programs operated by nonprofit agencies. That use shows up multiple times, and I'd be it it's not totally clear to me exactly what that is referencing, but I I that that those all sound like good things.

And so it'd be helpful for for us to understand, you know, why so if if staff says, actually, we do need full cost recovery, here's why I will understand and appreciate that. But if you determine those are unbalanced good things that support vulnerable folks in our community, then I would support subsidy for those uses as well. I would also include so the the recommendation from staff to slightly reduce the abandoned shopping cart impact inbound fee subsidy so I get, you know, nearest whole number, but going down the nearest dollar instead of the nearest 10. I I that's that's a modest change, but it is my pet project. That's why I ran for council all those years ago.

And then also including somebody's taking notes. Right? An exploration of the tobacco or smoke shop cost recovery, if that is something that can include. And finally, I think I'm I'm I don't know what the number is, but I would maybe, staff, if if you can, tee up some options for a heritage tree removal appeal fee adjustment. I I know that there's a balance, and I I I wanna respect that.

But I also feel like, especially if you're starting to see an increase in appeals that are denied, I don't think that the subsidy is helping either the community or the So a a reduction in that that subsidy, I think, would have would have some merit. I have a lot of concerns about so that's the that's the motion. I have some concerns about things like the gatekeeper.

Members. Earlier, you also mentioned either fully adjusting the fee for adult Oh, yeah. Or or removing it.

So, yes, I thought that was already a stat recommendation.

Yeah. That it will be discussed.

Wanna just clarify?

Yeah. A 100% my preference would be a 100% cost recovery for adult entertainment and car rooms and then pool and billiard rooms. But I know those are those are not common. But if we get one, then people will say, oh, why is the city subsidizing that? So that's that's thank you. I appreciate that. So that then that would be the motion. And also separate from that, unrelated, I do have concern about the the gatekeeper preoccupation application. I I would love for it to be sensitive to the scale and magnitude of a of a project. That may not be something that you can do in time for the the budget.

But as you said, director Vardock, maybe in in the context of the gatekeeper policy that we're creating. Maybe we can find a way to be sensitive to the the gatekeepers for any text amendment, zoning change, general plan amendment, and that that could be big, and it often is, or it could be very small. And so it it it looks like I said, what is it? $12,000 fee. You know, the the well capitalized folks are gonna be able to absorb just fine.

They don't mind taking that risk, but that could be a severe deterrent for someone who's doing a much more modest development that may we may actually want. But where it ceases to be feasible simply because you have to pay $12,000 for the privilege of going to counsel to ask for permission for your application to be reviewed. And that may be, you know, too much for for some number of prospective developers. So I'll end my comments there. Thank you all again for for this work. I'm I'm grateful that you, you brought it to the CFC for for review.

Vice Mayor, do you have any comments?

Sure. I'll start with seconding the,

councilmember of

I look forward to on on a broader level, because Zurich goes really in-depth. On a basic level, it's just we're happy to subsidize things that we want and get the full cost of coverage of the things that we don't. There's probably a discussion about development there just because we we do want housing. I don't think that's changed. I look forward to eventually seeing probably voodoo dolls of council member Ramirez when the people who wanna do the the heritage tree removal stuff.

I welcome their hatred.

Because because I know a few of those. So that's gonna be fun, and they care very much. And they they complain they already complain about the fees that they pay now for that, which which will be also fun to to take on. But, overall, I I thank you, staff, for doing such an in-depth job. And I know this is a long time coming, and I wish I had the ability to go as deeply as as a view who my colleagues have on some of these, but, it is really kind of eye opening how much we, how much things cost.

So just to recap, we had a motion by council member Ramirez, seconded by the vice mayor Ramos for the staff recommendation and looking at my notes, exploring between now and when it comes back to council, exploring subsidies for, kind of like childcare, safe parking, nonprofit agency programs. There was something about shopping carts that I didn't understand.

We got it. Married with all I got.

I don't like abandoned shopping carts. Yeah. But I okay. As long as you got what you needed. Tobacco and smoke shops. Re revisiting that item. Sounded right. Heritage Tree appeal, adoption, adult entertainment card rooms. I guess just re reviewing that.

Massage rooms. Yeah. We got it. Yeah.

And then trying to account for the scale of a of a gatekeeper. Did I miss anything?

No. You got it. Yes. You captured it. Thank you.

Okay. So, so that was the motion, which I am. Thank you for delving into all this. This has been a long time coming. I think you have 10 people.

I think

that was less than it was made or

it was lost some time ago. This is

on your current work plan too. I forgot to mention that. So this

is It's crazy.

It's an accomplishment. Yay.

Oh, a

big thank you to the consultant too. I forgot to recognize Tony and his team. So thank you for your your work.

Our pleasure, and thank you very much for hearing us out.

Alright. So all in favor of the motion, aye.

Aye.

Aye. Any opposed? That passes unanimously. And thank you, everyone, for showing us through the two items of the

Jeremy, I have to say one thing. Just I I wanna make sure you all understand what will happen on June 10, because it'll be a little different than how our prior, I think, budget meetings have gone because we have a number of items. It'll be separate items. So you'll receive your recommended budget, which you'll actually receive at the May. And then there will be a separate item on this for the master fee schedule.

Then there'll also be a separate item related to our bonding for the public safety building. So we're bringing that financing plan to you all. And then there will be a fourth brand new item related to position vacancies, which we all agencies are now required to report out, pursuant to a new law that has been passed by the state.

That would be interesting.

Yes. It is

in San Jose?

Yes. So it'll be a pack an evening basically filled with financial and budgetary updates and policy decisions from council. So we we also appreciate your support of this and diving into this as much as you have. I think this will be a real improvement for the city and, will really help our operations. So thank you all too.

And I'll just add one thing on the vacancy report. The legislation also requires notification to the labor groups, and the labor groups will have an opportunity to speak if they choose to.

Okay. So item six, any, committee staff, comments, questions or or question.

So I'm curious to know what what's on the work plan for this body this year. It's on in the I think it's a of a referral for a couple of items. For work plans? Yeah.

For the auditor work plan. For the internal or the the city auditor.

Right?

Is that the one you're referring to?

I don't see. I'm just gonna it was

So there was there was something I wanted to raise that council member Clark had raised about the travel policy for council members.

Right.

So you could, as the CFC, tackle that. It goes to CPPC Mhmm. Because it's more of a a budget ary item. So that could be something that we could put on your work plan coming up. So something to something to think about. And then I was just speaking with, assistant city manager about we probably will have an item for you all to consider about, bonding and the fiduciary duty that council and staff have, when we make our bond representations, basically.

The the city has an underwriter council and a continuing disclosure council and their recommendation and doing our recommendation as well as that all council members receive a briefing on your fiduciary role when we do go to market with bonding. I could three of you sit on this body. This would be a good opportunity to have three of you in the training

at once. Mhmm. Okay. So the the minutes so thank you. That's helpful. And then there's the so the minutes did include looks like I'm I'm actually having trouble with the person. This is item 6.2 appointment of the city audit is some reference to include the city's expense policy and travel p card to the list of work plan items. So that it wasn't clear to me, like, is that something that we're looking at this year and what the scope of that was. And then I also agree if if there's a way for, council member Clark's referral, I'm I'm comfortable with CFC looking at

it too.

Who's on CFC? Who's on CFC? It's us too and council member McAllister. Oh, so

you just stream me up, McAllister?

That's good.

I need to go back and look at

my notes. Was

really you all just wanted to holistically kind of review what the policy is Okay. And just just to see it and assess it. Okay. It it that was it.

I wasn't in the meeting at that point, so I don't Oh, no. Yeah. Yeah. I remember I was out.

Look at my notes, which

We'll make sure.

Bring my laptop today. Well,

that that was my link.

Okay. Any other questions or reports? If, see, none will adjourn at 09:46PM. Thank

you. 9946 Thank

you very much.

Thank you. So funny. Sweet. And we have a. We do?