CITY OF ENCINITAS CITY COUNCIL AGENDA REPORT Meeting Date: July 17, 2013

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1 CITY OF ENCINITAS CITY COUNCIL AGENDA REPORT Meeting Date: July 17, 2013 TO: VIA: FROM: Mayor and City Council Members Gus Vina, City Manager Tim Nash, Finance Director Planning & Building Department Jeff Murphy, Director Kerry Kusiak, Senior Planner II SUBJECT: The City of Encinitas Energy Efficiency Permit Fee Waiver Program: Year-end report and Council direction for continuance. BACKGROUND: On July 18, 2012, Council adopted Resolution (Attachment CC- A ), which authorized the City s Energy Efficiency Permit Fee Waiver Program (Fee Waiver Program) for one year, beginning August 1, 2012 and ending July 31, The program provides a waiver of fees for basic energy efficiency permits (i.e. solar photovoltaic, solar water heating, electric vehicle home charging, and natural gas vehicle home refueling) and provides an equivalent fee reduction for more complex energy efficiency permits. EsGil Corporation, the City s contract building permit and inspection services provider, agreed to partner with the City in this effort and reduced by 50% the fees charged to the City for providing plan check, permitting, and inspection services for energy efficiency permits. As part of the July 2012 action, Council directed staff to return with a report on the results of the program, including the total costs to the City and EsGil Corporation and the impact the program had on influencing the decision to install energy efficient systems. This staff report fulfills this direction. ANALYSIS: Dating back to 2001, the City has issued 670 permits for rooftop solar PV systems, almost all of which are installed on single-family homes. Over 75% of the permits have been issued since July 1, Refer to (Attachment CC-B ) for permit breakdown. From August 1, 2012 through July 3, 2013, 180 energy efficiency permit applications benefitted from the Fee Waiver Program. Most of the permit applications were for rooftop solar PV installations with 153 permit applications filed, followed by electric vehicle home charging systems with 19 filed, and 8 permit applications were filed for ground-mounted solar PV systems. Last printed 7/11/ :58:00 PM PBD\KK\\t:\reports\sr solar-ev-permits-fees doc /17/2013 Item #07 Page 1

2 A. Program Costs Plan check and permit fees for the energy efficiency permits in question consist of fees paid to EsGil Corporation for performing contract plan check, permitting, and inspection services (at 50% of their normal rate), and City fees for costs of providing these contract services and for Planning Department review of the permit applications. For example, the permit cost to an applicant for a rooftop solar photovoltaic system is roughly $319. This cost consists of approximately $201 in building permit and inspection fees paid to EsGil, and roughly $118 in Planning Department costs. Under the program, EsGil waives roughly $100 of their fees, with the City picking up the remainder of Esgil s cost and waiving the Planning Department Costs of $118. The overall cost through the end of the program to the City is projected to be approximately $42,000 and the cost to EsGil projected to be approximately $20,000, for a total program cost of $62,000. A table itemizing the costs of the program to date is attached to this report (Attachment CC-C ). B. Impact of the Program Each property owner that was issued a permit for an energy efficiency system installation was mailed a brief survey. As of June 20, 2013, 136 surveys were mailed and 60 responses received. Of those who responded, saving money was the biggest factor in influencing property owners to install energy efficiency systems, followed by reduce energy use, environmentally friendly, and reduces GHG. Roughly 25% of respondents were aware of the City s fee waiver program, and all but one of those respondents noted that the City program influenced their decision to install. Additionally, as can be seen in Attachment CC-B, there was significant increase in the number of permits issued over the past year for these types of systems. However the chart also shows that similar increases were seen in the previous three years. It is unclear whether the past year s increase is due to influence of the fee waiver program, or is rather a continuation of a previous trend of increasing number of permits due to other factors. C. Going Forward Pursuant to conversations with EsGil Corporation, they have indicated that they are not able to continue to waive their fees past the scheduled end date of July 31, If Council chooses to continue the program, all plan check, permitting, and inspection fees charged by EsGil would need to be paid by the City. Last printed 7/11/ :58:00 PM PBD\KK\\t:\reports\sr solar-ev-permits-fees doc /17/2013 Item #07 Page 2

3 Assuming no net increase in permit activity (we understand that many of the existing rebate programs are not renewing), the program cost to the City on an annual basis would be approximately $62,000, including $20,000 in waived Planning Department fees and $40,000 cost to pay EsGil for permit review and inspection. The adopted FY 13/14 City Budget anticipated continuation of the program and these associated revenue losses and costs. Staff suggests that, if the Council chooses to continue with the program, the program be evaluated on a yearly basis in conjunction with the overall review of the budget. Although this program was approved with a separate resolution of the Council when it was initiated last year, because it was included in the adoption of this year s budget, a resolution is not needed to continue the program; directing staff to continue the program by minute action will be sufficient. Should Council decide not to continue the program, a budget adjustment to eliminate the program s revenue losses and costs will be requested in the first quarter review of the budget. FISCAL IMPACTS: As discussed above, the anticipated fiscal impact to the City of continuing the program would be a revenue loss in the Planning and Building Department budget of approximately $22,000 per year in combined Planning Department minor plan check fee revenues and overhead revenues, and a yearly general fund cost of approximately $40,000 to pay EsGil for plan check, permit, and inspection services, for a total program cost of approximately $62,000 per year. This fiscal impact is already accounted for in the approved FY13/14 City Budget. ENVIRONMENTAL ANALYSIS: The project has been determined to be statutorily exempt from environmental review pursuant to Sections and of the California Environmental Quality Act. The Energy Efficiency Permit Fee Waiver Program is an existing fee waiver program that applies to ministerial (building) permits for energy efficient projects such as solar photovoltaic and solar water heater systems. In addition, the program helps implement the City s adopted Climate Action Plan, which includes a strategy that promotes installation of solar PV on existing residential buildings to reduce City-wide emissions. RECOMMENDATION: Receive the report and provide direction to staff. ATTACHMENTS: Attachment CC-A Resolution , adopted July 18, 2012 Attachment CC-B Energy efficiency permits issued Attachment CC-C Energy Efficiency Permit Fee Waiver program costs through July 3, 2013 Last printed 7/11/ :58:00 PM PBD\KK\\t:\reports\sr solar-ev-permits-fees doc /17/2013 Item #07 Page 3

4 Exhibit CC-Á f..l Resolution Energy Effciency Permit Fee Waiver Program July 17, /17/2013 Item #07 Page 4

5 RESOLUTION A RESOLUTION OF THE CITY OF ENCINITAS CITY COUNCIL WAIVING OR REDUCING BUILDING PERMIT FEES FOR THE INSTALLATION OF ENERGY EFFICIENT SYSTEMS INCLUDING SOLAR PHOTOVOLTAIC, SOLAR WATER HEATING, ELECTRIC VEHICLE HOME CHARGING, AND NATURAL GAS VEHICLE HOME REFUELING SYSTEMS WHEREAS, the City of Encinitas Climate Action Plan includes residential and nonresidential building strategies to promote energy effcient measures, including renewable energy installations such as solar photovoltaic and solar water heating systems, as a means to reduce greenhouse gas emissions; and WHEREAS, the City of Encinitas Energy Road Map states that city government can play an important role in influencing the energy attitudes and actions of local residents and businesses by being a resource for information on energy effcient measures and promoting energy effciency programs; and WHEREAS, the City desires to continue to be a local leader in improving energy efficiency, thereby contributing to cleaner air, reducing greenhouse gas emissions, and reducing governent expenditures of taxpayer dollars and citizen expenditures for energy use; and WHEREAS, as a part of the City's leadership role in promoting energy effciency, the City Council support measures that promote and encourage the installation of energy efficient systems; and WHEREAS, the reduction of permitting fees for energy efficient measures has been shown to be and effective measure to encourage their installation; and WHEREAS, the City's contracted building permit plan check and inspection services provider, EsGil Corporation, has agreed to partner with the City and join in the effort to encourage the installation of energy effcient systems by reducing the amount charged to the City by 50% for providing building permit and inspection services related to energy effcient systems for one year. NOW, THEREFORE, the City Council of the City of Encinitas hereby resolves as. follows: 1. That the foregoing recitals are true and correct. 2. For a period of one year beginning August 1,2012, the following fees, including the component fees of permit issuance fees, electric permit fees, plumbing permit fees, plan check fees, City overhead fees, and Planng Department minor plan check fees, for building permits related to basic energy effcient system installations shall not be charged to the building permit customer: a. Solar photovoltaic and solar water heating systems permit fees totaling $ /17/2013 Item #07 Page 5

6 b. Electric vehicle home charging system permit fees totaling $ c. Natural gas home refueling system permit fees totaling $ For a period of one year beginning August 1, 2012, for more complex energy effcient system installations requiring plan check and inspection services above and beyond those required for basic systems, the building permit customer shall receive a discount to the plan check and permit fees charged equivalent to the amounts stated above. 4. Each applicant, ancl the related propei1y and/or business owner, that applies for a building permit for the listed energy efficient systems shall be given a survey to ascertain the impact that the fee waiver or reduction had on influencing the decision to pursue installation of the energy efficient system. 5. Not later than July 2013, staff shall return to Council with a repoi1 on the results of the program, including the total cost to the City incurred by waiving or reducing the above fees, the total contribution to the program of EsGil Corporation due to the reduced fees charged to the City, the impact the waiver or reduction had on influencing the decision to install an energy effcient system, and the total number of the number of each type of energy efficient systems installed. PASSED AND ADOIJTED this 18th day of July, 2012, by the following vote, to wit: A YES: Bai1h, Bond, Gaspar, Muir. NAYS: None. ABSENT: Stocks. ABSTAIN: None. ATTEST:,*lt~,\~tL4L Kathy N6llywooä City Clerk of the City of Encinitas 07/17/2013 Item #07 Page 6

7 Exhibit CC-B Energy Efficiency Permits Issued Energy Effciency Permit Fee Waiver Program July 17, /17/2013 Item #07 Page 7

8 Energy Efficiency Permits Issued "C C1 :: II 100.!.! 'ẹ. C o Fiscal Year -+Roof-mounted Solar PV Ground-mounted Solar PV "' Roof-mounted Solar Water Heaters -.Home Electric Vehicle Supply Equipment "' Total All Permit Types -.Other EVSE Total Permits Issued Roof PV IGround PV IRoof H2O IHome EVSE lather EVSE ITotal /17/2013 Item #07 Page 8

9 Exhibit CC-C Energy Efficiency Permit Fee Waiver Program Costs Through July 3, 2013 Energy Effciency Permit Fee Waiver Program July 17, /17/2013 Item #07 Page 9

10 Solar PV, solar water heater Fee type Standard permit fees \' Fee permits revenue EsGiI fees permit issuance fee $ $5, electrical or plumbing permit fee $ $21, plan check fee $ $5, total $ $32, City fees Citv overhead $ $10, Planninq minor plan check fee $ $8, total $ $19, Total all fees to customer $ $51, EV home charging station Fee type Standard permit fees Fee permits revenue EsGiI fees permit issuance fee $ $ electrical permit fee $ $2, total $ $3, City fees Citv overhead $ $1, Planninq minor plan check fee $50;00 19 $ total $ $2, Total all fees. $ $5, Costs to waive all fees to customer Revenue 50% EsGil General loss permits fees* Fund cost $ ($2,857.75) $ ($10,626.00) $ ($2,656.50) $ ($16,140.25) ($68.17) 161 ($10,975.37) ($50.00) 161 ($8,050.00' ($118.17) 161 ($19,025.37) $ ($35,165.62) Waived City fees (revenue loss) City general fund cost Total City cost ($19,025.37) ($16,140.25) ($35,165.62) Costs to waive all fees to customer Revenue 50% EsGiI permits loss revenue fees* $ ($337.25) $ ($1,254.00) $ ($1,591.25) ($56.95) 19 ($1,082.05) ($50.00) 19 ($950.00' ($106.95) 19 ($2,032.05) $ ($3,623.30) Waived City fees (revenue loss) City general fund cost Total City cost Natural gas home refueling - simple/standard plan (no plan check) Fee type EsGil fees permit issuance fee. $35.50 plumbing permit fee $ electrical permit fee $ total $ City fees Citv overhead $ Planninq minor plan check fee $50.00 total $ Total all fees $ Standard permit fees Fee permits revenue ($2,032.05) ($1,591.25) ($3,623.30) Costs to waive all fees to customer Revenue 50% EsGil permits loss revenue fees* $17.75 $66.00 $66.00 $0.00 $ ($101.83' ($50.00) ($151.83) $0.00 Total program cost to City through July 3, 2013 (48 weeks) EsGil contribution through July 3,2013 (48 weeks) Estimated City program cost through July 31,2013 (52 weeks) Estimated EsGil contribution through July 31, 2013 (52 weeks) ($38,788.92) $17, ($42,021.33) $19, Did not receive any natural gas home refueling permit requests. *EsGil has agreed to partner with the City and join in the effort to encourage the installation of energy efficient systems by reducing the amount charged to the City for these permits by 50% for a period of one year. 07/17/2013 Item #07 Page 10