Development Services Review. Final Report. Zucker July 2016

The Community Development Fund is a special revenue fund used to account for the collection of planning, building, and engineering fees. The expenditures of these funds are restricted to the costs associated with processing building, engineering and planning applications.

General Plan Update Fund (207)

The General Plan Update Fund is a special revenue fund established to account for the costs of updating the General Plan. The update has been funded by a surcharge on all planning and building permit fees and by transfers from various funds: General, Park Development Impact, Community Development, Redevelopment, Housing, Sewer, and Water. The expenditures are restricted to costs incurred for the General Plan update. We commend the City for the way in which the Annual Budget clearly sets forth the philosophy that development should be required to pay appropriate development fees to offset the cost of the service being provided. The building, engineering, and planning functions are funded in a special 206 Fund. A percentage of permit fees is transferred to a General Plan 207 Fund. The intent is that these are full cost recovery services funded by fees, which is a best practice. Community Development Fund 206 Since the fees should normally relate to actual development services, an argument could be made that certain division expenditures should be funded by the General Fund. This would include the code enforcement function which is part of building, the CIP function, public counter and flood plain management which are part of engineering, environmental programs which are part of building and engineering and the various Community Development department accounts related to CDBG, housing, and redevelopment. Table 2 shows the budgets and projected revenues related directly to development fee revenues and the 206 Fund. We have deducted Environmental Projects, Code Enforcement, CIP, and the General Plan Update from the budget to show what cost recovery would be if these items are covered by the General Fund rather than development fees. Table 2 Appropriations and Projected Revenues Related to Development Activities, 206 Fund FY 15-16

Env. Proj

Code Enf.

GP Update

Net Expense

% Recovery

Function

Budget

CIP

Revenue

Building

1,464,792 28,466

-

-

1,303,164 2,477,376 190%

133,162

Morgan Hill, California

19

Zucker Systems