1:00 P.M. - Consideration of Request for Board Direction Regarding Community Development Department Loan Repayment Plan and Adjustments to Ongoing Operations

Summary

The City Council is considering the Community Development Department's (CDD) financial health, including a loan repayment plan and adjustments to its Building, Code Enforcement, and Planning Divisions' operations for Fiscal Year 2026/27. The Building Division is currently unable to make a $130,000 loan payment in FY 2025/26 and faces a deficit, while the Planning Division has a $509,834 deficit and the Code Enforcement Division operates with a significant General Fund subsidy.

Three options are presented for FY 2026/27, all incorporating the $130,000 Building Division loan repayment:

• Option 1 (Significant Staff Reduction): Proposes no fee increases, leading to substantial staff reductions across divisions (e.g., Building FTEs reduced to 7.00 from a potential 9.60, Planning to 10.00 from 16.00).
• Option 2 (Moderate Fee Increases & Staff Reduction): Includes moderate fee increases (e.g., Building permit valuation fees to 3.1% from 2.6%, hourly rates to $164.73 from $99.87; Planning hourly rates to $232.83 from $128.75) alongside considerable staff reductions.
• Option 3 (Fully Unsubsidized Fees & Current Service Levels): Proposes fully unsubsidized fees (e.g., Building permit valuation fees to 3.7%, hourly rates to $169.57; Planning hourly rates to $239.70) to maintain current service levels and staffing (Building 9.60 FTEs, Planning 16.00 FTEs).

CDD also plans to enhance cost recovery by charging for all pre-application meetings, county projects, limiting counter time to 30 minutes, and adding new fees for various minor modifications and inspections. The California economy is forecast to recover in late 2026 with stronger growth in 2027, impacting future permit revenues.

Citizen Impact

Residents will be directly affected by potential increases in permit and planning fees for construction, renovations, and development projects, which could raise the cost of home improvements or new construction. Depending on the chosen option, there may also be reduced staffing and slower service times for building permits, planning reviews, and code enforcement, impacting project timelines and responsiveness to complaints.

Confidence

high