City Council Report 915 I Street, 1 st Floor Sacramento, CA

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1 City Council Report 915 I Street, 1 st Floor Sacramento, CA File ID: December 12, 2017 Discussion Item 01 Title: Development Process Improvements Update and Staffing Plan Implementation Location: Citywide Recommendation: Pass a Resolution: 1) authorizing the City Manager to add 24.0 FTE and vehicles across five departments; 2) authorizing the City Manager to amend the FY2017/18 revenue, expenditure and multi-year operating budgets as necessary to fund the proposed staffing and vehicle plan; 3) increasing the FY2017/18 revenue and expenditure budgets by $750,000 for the Community Development Department to cover increased consultant services for development plan review; and 4) amending the approved Schedule of Reclassification Requests (Schedule 8) to reclassify a Telecommunications Technician II. Contact: Ryan DeVore, Director of Community Development Department, (916) , Community Development Department Presenter: Ryan DeVore, Director of Community Development Department, (916) , Community Development Department Attachments: 1-Description/Analysis 2-Background 3-Resolution Matthew Ruyak, Interim City Attorney Mindy Cuppy, City Clerk John Colville, City Treasurer Howard Chan, City Manager Page 1 of 11

2 File ID: Discussion Item 01 Description/Analysis Issue Detail: Sacramento is experiencing an unprecedented level of development activity. The construction valuation of building permits issued has more than tripled from an inflation adjusted $390 million in Fiscal Year (FY) 2013/14 to $1.3 billion in FY2016/17. It is expected that this number will grow to $1.5 billion in FY2017/18 and $1.7 billion in FY2018/19, an alltime high for Sacramento (see Background). Current staffing levels are not adequate to address this rapid increase in activity. In an effort to address the current backlog and help in expediting plan review, it is recommended that 24.0 FTE be added to the five departments directly involved in development plan review (Community Development, Fire, Parks and Recreation, Public Works, and Utilities). Additionally, an increase in the Community Development Department s consultant services budget of $750,000 is recommended for building services. Staff are proactively engaged in a process mapping effort to gain a better understanding of the current review process. The goal of this effort is to identify opportunities to eliminate duplication and streamline the development review process. Additionally, staff is working with the development community to ensure the revised processes are transparent and reduce the time between application and permit issuance. This effort will be completed soon and staff will return to Council in February 2018 with additional recommendations, including requests for the resources necessary to optimize the review process, as well as minor adjustments to development fees to fully execute a comprehensive response. Policy Considerations: In early 2017, the City Council held a public strategic planning session where economic development and homelessness were identified as top priorities. Developing a more responsive development review process allows staff to issue permits for housing more quickly, increasing supply and holding costs down. An increased supply of housing is a very important tool to reduce homelessness. Additionally, the 2035 General Plan contains several policies related to promoting economic development (ED) and maintaining a responsive development review process. ED 3.1.8: Streamline Development Process. The City shall continue to identify, develop, and implement strategies, programs, and processes that streamline its development review process. ED 4.1.2: Strong City and Business Relationship. The City shall project a helpful, positive, and courteous customer service attitude and approach toward businesses. ED 1.1.4: Small and Startup Business Assistance. The City shall assist small and City of Sacramento December 12, 2017 powered by Legistar Page 2 of 11

3 File ID: Discussion Item 01 startup businesses with resource referrals and financial and technical assistance to facilitate their expansion and job creation. Economic Impacts: A timely development review process has a direct effect on our economy. Each $1 million of construction valuation for a new commercial building results in an additional $850,000 in economic output and 5.2 jobs. Every $1 million of construction valuation for new single or multi-family housing units results in an additional $1.6 million in economic output and 11.4 jobs. Environmental Considerations: The actions in this report do not have any potential for significant effect on the environment and are exempt under the California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3). Sustainability: Not applicable. Commission/Committee Action: None. Rationale for Recommendation: Citywide construction valuation has increased from $390 million in FY2013/14 to $1.3 billion in FY2016/17. Additionally, in FY2017/18 the construction valuation amount is expected to exceed the record of $1.5 billion. Furthermore, staff expects that number to grow to $1.7 billion in FY2018/19. In support of this projection, the Building Industry Association (BIA) was asked to survey their members to gauge the expected demand going into The BIA anticipates a 30% increase in new home permits pulled in calendar year Finally, the announcement of a potential deal with Centene to bring 5,000 or more jobs to the city and 1.5 million square feet of office space will also result in a significant level of supporting development activity in the surrounding area. All sections of staff that support the development review process are at staffing levels that are currently at 40% to 60% of the levels during the last period of similar activity (10 years ago). Before the recent spike, City development departments had been able to maintain a similar level of service because of ongoing process improvement efforts, streamlining, and automation. Staff has implemented the following improvements to enhance efficiencies and service levels: 1. Delivered an online permitting system. Thousands of permits are issued each year, eliminating the need for our customers to visit the public counter. While the number of permits has increased by an average of 15% per year, the number of counter customers has remained steady; a clear sign of success. City of Sacramento December 12, 2017 powered by Legistar Page 3 of 11

4 File ID: Discussion Item Delivered an electronic plan review platform. This allows customers to submit development plans remotely and track comments and responses easily. 3. Introduced an electronic payment system for all permit types. This eliminates the need for customers to drive to the permit counter for payment. 4. Introduced Permit Tracker. Applicants and citizens can track the progress of a planning entitlement or building permit online. 5. Released the Qflow counter management software. This gives staff the ability to effectively manage the nearly 100 customers that visit the Community Development Department public counter each day. It also expands the ability to offer appointments, displays live counter wait times on the City s website, and allows for a segmentation of work based on the experience of the applicant and the magnitude of the project/request. 6. Developed an online inspection scheduling platform. This reduces calls to 311 and other City staff necessary to schedule the 60,000+ inspections performed each year. 7. Delivered a performance measurement program. This allows staff to track workload, efficiencies, and effectiveness of programs and services. 8. A summary of efforts may be found at the City of Sacramento s website Streamline In summary, staff has proactively engaged in long-standing efforts to streamline the development review process, including the introduction of many programs aimed at developing efficiencies and ensuring an effective, transparent, and timely process. Additionally, staff has recently partnered with the development community to ensure that needs are met where the services are delivered. Financial Considerations: In an effort to address the current development plan review backlog and the outlook for increased building activity, it is recommended that 24.0 FTE, eight vehicles, funding for services and supplies, and additional funding for consultant services be added to the FY2017/18 Approved Budget. These increases will be offset through increased revenues, increased reimbursements from development projects, base budget reductions, and transfers from the Gas Tax Fund (for Public Works vehicles). The FY2017/18 estimated cost of this plan is $2.3 million ($2.2 million from the General Fund). The annual ongoing cost is approximately $3.6 million. City of Sacramento December 12, 2017 powered by Legistar Page 4 of 11

5 File ID: Discussion Item 01 Department Union Vehicles FTE Community Development Accounting Technician Stationary Engineers Local Administrative Analyst Sacramento City Exempt Employees Association 1.00 Associate Civil Engineer Western Council of Engineers 1.00 Building Inspector I-III Stationary Engineers Local Development Services Technician I Stationary Engineers Local Junior Development Project Manager Sacramento City Exempt Employees Association 2.00 Supervising Building Inspector Stationary Engineers Local Department Subtotal Public Works Associate Civil Engineer Western Council of Engineers 2.00 Construction Inspector III Stationary Engineers Local Engineering Technician III Stationary Engineers Local Supervising Engineer Sacramento City Exempt Employees Association 1.00 Telecommunications Tech Trainee Stationary Engineers Local Telecommunications Engineer I Western Council of Engineers 1.00 Traffic Control and Lighting Tech II Stationary Engineers Local 39 (1.00) Department Subtotal Utilities Associate Civil Engineer Western Council of Engineers 1.00 Department Subtotal Fire Administrative Technician Sacramento City Exempt Employees Association 1.00 Senior Fire Prevention Officer Sacramento Firefighters, Local Department Subtotal Parks and Recreation Landscape Technician I Stationary Engineers Local Department Subtotal Total Staffing and Vehicle Plan Local Business Enterprise (LBE): Not applicable. City of Sacramento December 12, 2017 powered by Legistar Page 5 of 11

6 Background: Development activity is nearing record levels. The City Council directed the City Manager to develop a response to this activity to ensure a timely and transparent development review process, supporting a resurgence in economic development. At the City Council meeting on September 12, 2017, Councilmember Ashby directed the City Manager to identify ways to expedite the development process for housing construction. Councilmember Hansen echoed the need for a review of the development process, staffing levels, and timeliness. This report offers recommendations to both the immediate needs of the increase in activity, as well as a commitment to ensure that our processes are as efficient and effective as possible. The Community Development Department (CDD) leads a longstanding multi-disciplinary Process Improvement Team that continually studies and implements process improvements and interdepartmental coordination in the development process. This group seeks to identify barriers to a timely, predictable, transparent development review process, as well as any gaps in communication during the transfer of review between departments and divisions. Considering the rapid increase in activity, there was a comprehensive group discussion on current market activity and projected growth, development review service levels, and an analysis of the efficiencies and effectiveness of processes. In mid-october, CDD partnered with the BIA to create workflow maps for four processes identified as needing further study. Immediate staffing needs and areas for improvement were identified. Staff will continue to work with the BIA and other stakeholders to implement the recommended process improvements, with an update on our progress and the presentation of an implementation plan scheduled to be presented to City Council in February The immediate staffing needs are supported by the data presented in the following graphs and tables, which clearly demonstrates the sharp increase in activity in all areas of development review. Page 6 of 11

7 Construction valuation represents the value of the physical construction associated with a development project where a permit has been issued. The graph below shows inflation-adjusted constructed valuation numbers back to The activity is now nearing all-time highs. In fact, staff expects to eclipse the previous record at the end of this fiscal year. $1,800,000,000 $1,600,000,000 $1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 Total Construction Valuation by Fiscal Year (Inflation Adjusted, 2.5%/year) FY82 FY84 FY86 FY88 FY90 FY92 FY94 FY96 FY98 FY00 FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16 FY18 The graph below represents the number of building permits issued per fiscal year. This offers a confirmation that a few projects are not simply driving up the construction valuation. The previous record of 18,082 permits, set in FY2003/04, has been eclipsed and the number is expected to grow to 20,000 permits in FY2018/19. 25,000 Total Number of Permits by Fiscal Year 20,000 15,000 10,000 5,000 0 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 The following six tables show significantly increased levels of activity across all departments that support the development review process. Page 7 of 11

8 The first table shows the first step in the development review process. It is an indicator of the work that follows the issuance of a planning entitlement, indicated in the subsequent tables. The number of planning applications processed has increased 55% over those submitted in Like the projected increase in building permits issued, it is expected that the number of planning applications received will increase. Community Development - Planning Division Workload Trend Year Planning Applications * *Estimated based on time remaining in Community Development - Building Division Workload Trend Year Inspections Plan Reviews Counter Customers ,254* 16,614* 22,185* ,300 14,353 20, ,979 10,408 21,250 *Estimated based on time remaining in Development Engineering Workload Trend Year Number of Reviews ,200* , ,362 *Estimated based on remaining time in Public Works Construction Inspection Workload Trend Year Number of Inspections * *Estimated based on remaining time in Utilities Development Review Workload Trend Year Number of Reviews * Page 8 of 11

9 *Estimated based on remaining time in 2017 Fire Prevention Division Workload Trend Year Number of Inspections Number of Plan Reviews * 1890* *Estimated based on remaining time in 2017 Page 9 of 11

10 RESOLUTION NO XXXX Adopted by the Sacramento City Council APPROVING THE ADDITION OF DEVELOPMENT POSITIONS IN FIVE DEPARTMENTS, VEHICLES, AND INCREASE IN FUNDING FOR CONSULTANT SERVICES TO ADDRESS THE CITY S SIGNIFICANT INCREASE IN DEVELOPMENT ACTIVIY BACKGROUND: A. At the City Council meeting on September 12, 2017, Councilmember Ashby directed the City Manager to identify ways to expedite the development process for housing construction. Councilmember Hansen echoed the need for a review of the development process, staffing levels, and timeliness. B. Sacramento is experiencing an unprecedented level of development activity. The construction valuation of building permits issued has more than tripled from an inflation adjusted $390 million in Fiscal Year (FY) 2013/14 to $1.3 billion in FY2016/17. It is expected that this number will grow to $1.5 billion in FY2017/18 and $1.7 billion in FY2018/19, an alltime high for Sacramento C. Current staffing levels are not adequate to address this rapid increase in activity. In an effort to address the current backlog and help in expediting development applications and permits, it is recommended that 24.0 FTE be added to the five departments directly involved in development plan review (Community Development, Fire, Parks and Recreation, Public Works, and Utilities). The FY2017/18 estimated cost of this recommendation is $2.3 million ($2.2 million from the General Fund). The annual ongoing cost is approximately $3.3 million. BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS: Section 1. The City Manager is authorized to add the following positions and vehicles to the five departments as reflected below: Page 10 of 11

11 Department Union Vehicles FTE Community Development Accounting Technician Stationary Engineers Local Administrative Analyst Sacramento City Exempt Employees Association 1.00 Associate Civil Engineer Western Council of Engineers 1.00 Building Inspector I-III Stationary Engineers Local Development Services Technician I Stationary Engineers Local Junior Development Project Manager Sacramento City Exempt Employees Association 2.00 Supervising Building Inspector Stationary Engineers Local Department Subtotal Public Works Associate Civil Engineer Western Council of Engineers 2.00 Construction Inspector III Stationary Engineers Local Engineering Technician III Stationary Engineers Local Supervising Engineer Sacramento City Exempt Employees Association 1.00 Telecommunications Tech Trainee Stationary Engineers Local Telecommunications Engineer I Western Council of Engineers 1.00 Traffic Control and Lighting Tech II Stationary Engineers Local 39 (1.00) Department Subtotal Utilities Associate Civil Engineer Western Council of Engineers 1.00 Department Subtotal Fire Administrative Technician Sacramento City Exempt Employees Association 1.00 Senior Fire Prevention Officer Sacramento Firefighters, Local Department Subtotal Parks and Recreation Landscape Technician I Stationary Engineers Local Department Subtotal Total Staffing and Vehicle Plan Section 2. Section 3. Section 4. The City Manager is authorized to amend the FY2017/18 revenue, expenditure, and multi-year operating budgets as necessary to fund the proposed staffing and vehicle plan. The FY2017/18 Community Development Department revenue and expenditure budgets shall be increased by $750,000 to cover increased consultant services. The FY2017/18 approved schedule of reclassifications requests (Schedule 8) shall be amended to include 1.0 FTE Telecommunications Technician II (Stationary Engineers, Local 39, Rep Unit 03). Page 11 of 11