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DATE: |
May 1, 2024 and May 22, 2024 |
07 |
SUBJECT
NOTICED PUBLIC HEARING:
SET HEARING FOR MAY 22, 2024:
Title
COST RECOVERY PROPOSAL to adopt ordinances related to fees and deposits IN THE DEPARTMENT OF ENVIRONMENTAL HEALTH AND QUALITY EFFECTIVE FISCAL YEAR 2024-25 AND CeQA EXEMPTION (5/1/2024 - FIRST READING; 5/22/2024 - SECOND READING UNLESS ORDINANCE IS MODIFIED ON SECOND READING) (DISTRICTS: ALL)
Body
OVERVIEW
This is a request for the County of San Diego (County) Board of Supervisors (Board) to adopt the Department of Environmental Health and Quality (DEHQ) cost recovery proposal, which includes fees and hourly rates for services associated with food, pools, housing, body art, massage, organized camps programs, wells, septic systems, site assessment and mitigation programs, hazardous materials programs, and the Solid Waste Local Enforcement Agency. This proposal also includes fees for the radiological health program, services in the vector laboratory, and miscellaneous department fees, such as rates for specialized technical staff services.
DEHQ protects the environment, community, and public health with over 40 programs that prevent disease, promote environmental responsibility, and enforce environmental and public health laws. DEHQ operates environmental health programs that regulate restaurants, public swimming pools, body art, substandard housing, septic systems, water wells, and hazardous materials. DEHQ reduces the risk of disease carried by rats and mosquitoes, oversees the State cleanup of methamphetamine and fentanyl contaminated properties, and monitors beach and bay water quality. In addition, DEHQ serves as the Certified Unified Program Agency for hazardous materials and hazardous waste, the Solid Waste Local Enforcement Agency, and is delegated the duties to implement and enforce the powers of a mosquito abatement and vector control district. DEHQ works in communities across the region, conducting more than 70,000 inspections annually, including oversight of over 15,000 food facilities and 14,000 businesses with hazardous materials. DEHQ performs surveillance and mosquito treatment at more than 1,600 sites throughout the region to lower the number of vector-borne disease incidents and protects 70 miles of coastline by taking more than 6,000 water quality samples per year. Through these services, DEHQ balances environmental, community, and economic interests to enhance the quality of life for residents and visitors.
Board of Supervisors Policy B-29: Fees, Grants, Revenue Contracts - Department Responsibility for Cost Recovery (Board Policy B-29) directs departments to recover the full cost of services provided to agencies or individuals. Exceptions require specific Board approval. The last cost recovery proposal was unanimously approved by the Board on May 24, 2023 (10). Since that time, DEHQ has continued to provide services at the approved rates. To offset fee increases, the Board approved the use of departmental one-time funds in certain programs, such as discretionary projects, and the food, body art, pools, septic, and hazardous material programs in FY 2023-24.
The fees proposed today for FY 2024-25 are necessary to ensure full cost recovery per Board Policy B-29 and to address cost changes, such as increased salary and benefit costs and Board directed initiatives such as additional positions to support removing barriers to housing.
Approximately 75% of DEHQ's costs are fixed, such as salary and benefits, retirement, enterprise-wide services, and facilities, while 25% of the department’s costs, such as services and supplies and salary savings when positions are vacant, are discretionary, meaning costs are determined by DEHQ based on operational needs. The cost recovery proposal reflects known costs as accurately as possible and ensures full cost recovery to continue to deliver programs and services to customers and communities, make data-driven decisions, and continue industry and community outreach. By reviewing and updating fees on an annual basis, DEHQ can recover costs in a consistent and predictable manner, while also providing businesses an opportunity to plan for smaller, more incremental fee increases, as stakeholders have requested.
As part of this fee proposal, DEHQ evaluated 237 fees and proposes to increase 199 fees, decrease 5 fees, modify 23 fees by adjusting the fee structure resulting in lower fees, and add 2 new fees. Additionally, 8 fees are proposed to not change. If approved, this proposal will generate $2,549,464 in revenue, resulting in an 7.9% increase on average per fee since the Board unanimously approved the last cost recovery proposal on May 24, 2023 (10).
DEHQ continues to focus on cost containment through innovation, efficiencies, and streamlining processes so that those savings can be applied where possible. Since FY 2016-17, DEHQ has applied $836,000 in ongoing savings from cost containment measures such as consolidating office space; expanding the online document library; converting to electronic applications; becoming accredited to provide mandated continuing education internally; developing plan check submittal templates for mobile food facilities, developing and implementing a mobile app to conduct temporary event inspections; and implementing the plan check digital review portal.
The practice of continuous improvement, implementing operational efficiencies, and prioritizing resources has positioned DEHQ to respond to evolving program and regulatory changes. In addition to the efforts made in prior years, this fiscal year DEHQ has approximately $195,740 in new operational savings from efficiencies or streamlining measures that were implemented since the last cost recovery proposal. The efficiencies that have been applied include combining prior year efforts, along with the efficiencies implemented this year. DEHQ has been able to apply a total of $1,031,740 in savings from all cost containment measures to this proposal, reducing costs by 2.6%. Additionally, DEHQ is proposing to use $1,129,714 one-time departmental funding to limit the fee increases and provide continued relief for businesses still impacted from the pandemic and current economic conditions in the food, body art, organized camps, state small water system, and hazardous materials programs. This use of available funding will benefit nearly 130,000 customers and help reduce costs by 2.9%. Without cost containment efforts (2.6%) and use of one-time department funding (2.9%), fees would need to increase an additional 5.5%.
Today’s proposal requires five actions from the Board. The first action is for the Board to find that the adjustments to fees and charges are not subject to the California Environmental Quality Act (CEQA) in accordance with Section 15273(a) of the CEQA Guidelines. The second action is to approve a waiver of Board Policy B-29 related to fees not being full cost recovery for food, body art, organized camps, state small water system and hazardous materials programs, and for reduced or waived fees for nonprofit organization food, housing, pool, and temporary event permits. The third action is to find that the adjustments in fees and changes contained in the proposed ordinance are necessary to meet operations in FY 2024-25. The fourth action is to approve the first reading of DEHQ’s cost recovery proposal on May 1, 2024. The fifth action is for the Board to set a hearing for May 22, 2024, for consideration and adoption of amendments to the San Diego County Code of Regulatory Ordinances.
If the Board approves the five actions above on May 1, 2024, after making the necessary findings, the Board, on May 22, 2024, will be requested to consider and adopt the ordinance amending the County of San Diego Code of Regulatory Ordinances relating to permit fees and procedures for businesses and health-regulated activities in DEHQ effective FY 2024-25. In accordance with Board Policy B-29, DEHQ will review fees annually and return to the Board with any changes.
If this cost recovery proposal is not approved, DEHQ would require one-time alternative County funding in the amount of $2,549,464 to ensure full cost recovery to continue delivering programs and services to customers and the communities, using data analysis to make data-driven decisions, and continue community outreach. If the fee proposal is not approved and alternative funding is not identified, DEHQ would have operational impacts, such as reduced services, increased processing times, reduced ability to conduct community outreach, and decreased opportunity to perform research and data analysis to support data-driven decision-making. Resources would be shifted away from innovation and data analysis to front-line operations, and we anticipate a backlog would be created. This would impact customers by increasing overall costs to applicants as well as reduce our ability to focus on innovation, streamlining, and meeting operational goals. In addition, there will be a cumulative impact and the change in future fee updates will be even higher based on the need to cover the increases in this proposal, plus fee increases in future years.
RECOMMENDATION(S)
CHIEF ADMINISTRATIVE OFFICER
On May 1, 2024:
1. Find that in accordance with Section 15273(a) of the California Environmental Quality Act (CEQA) Guidelines that the proposed changes to existing fees are exempt from CEQA. Approve the findings in Attachment F Findings Pursuant To CEQA Guidelines Section 15273(a) setting forth the basis for the applicability of this exemption.
2. Waive Board Policy B-29: Fees, Grants, Revenue Contracts - Department Responsibility for Cost Recovery for fees for the food, body art, organized camps, state small water system and hazardous materials program fees, and reduced or waived fees related to nonprofit organization food, housing, pool, and temporary event permits.
3. Find that the adjustments in fees and changes contained in the proposed Ordinance Amending the San Diego County Code of Regulatory Ordinances to Adjust Department of Environmental Health AND QUALITY Regulatory Program Fees AND ASSOCIATED ORDINANCE REVISIONS are necessary to meet operations in Fiscal Year 2024-25.
4. Approve the introduction of the Ordinance (first reading), read title and waive further reading of the Ordinance entitled: ORDINANCE AMENDING THE SAN DIEGO COUNTY CODE OF REGULATORY ORDINANCES TO ADJUST DEPARTMENT OF ENVIRONMENTAL HEALTH AND QUALITY REGULATORY PROGRAM FEES AND ASSOCIATED ORDINANCE REVISIONS.
5. Set a hearing for May 22, 2024, for consideration and adoption of an Ordinance amending the San Diego County Code of Regulatory Ordinances.
If, on May 1, 2024, the Board takes action as requested in Recommendations 1 through 5 above then, on May 22, 2024:
1. Consider and adopt the Ordinance amending the County Code of Regulatory Ordinances (second reading).
EQUITY IMPACT STATEMENT
The County of San Diego (County) strives to preserve, enhance, and promote quality of life, health and safety, sustainability, equity, and environmental resources through the implementation of programs and services that enhance the community by increasing the well-being of residents and the environment while simultaneously complying with mandatory federal, State, and local regulations. The Department of Environmental Health and Quality (DEHQ) utilized approved County methodology to ensure all direct and indirect costs are fully recovered. These recommendations will allow DEHQ to continue to provide important services to prevent disease, promote environmental responsibility, and ensure a level playing field for businesses.
SUSTAINABILITY IMPACT STATEMENT
The Department of Environmental Health and Quality’s (DEHQ) proposed amendments to the hourly billing rates, fees, and deposits for services that are provided to the public will cover the full cost of services for the department’s internal operations. The hourly billing rate, fee, and deposit changes are a result of the cumulative increase of the cost drivers such as salaries and benefits, services and supplies, and associated departmental and countywide costs. The adjustments to the fees are based on available expenditure and revenue data, time studies, and service counts. Sustainability means efficiently using and effectively protecting natural resources, balancing economic growth, and ensuring just and equitable provision of public services, without compromising the ability of future generations to also flourish and thrive. The proposed actions support the County of San Diego’s Strategic Initiative of Sustainability to align the County’s available resources with services to maintain fiscal stability.
FISCAL IMPACT
The proposed increases to fees are included in the Fiscal Year (FY) 2024-25 CAO Recommended Operational Plan in the Department of Environmental Health and Quality (DEHQ).
If approved, the overall proposed fee adjustments will result in additional estimated costs and revenue of $2,549,464, including additional estimated costs and revenue of $294,363 in the food program, $349,903 in the water program, $899,779 in the housing program, $1,005,309 in the hazardous materials program and $110 in the radiological health program, effective FY 2024-25. The funding source is fees paid by DEHQ customers.
A waiver of Board Policy B-29: Fees, Grants, Revenue Contracts - Department Responsibility for Cost Recovery (Board Policy B-29) is requested because the proposed fees do not cover all operating costs in the food, body art, organized camps, state small water systems and hazardous materials program fees. The total unrecovered cost, per Board Policy B-29, for permit fees that are not full cost recovery is $1,129,714, and if approved, will be funded with $528,121 in restricted General Fund fund balance, $34,500 in 1991 Health Realignment revenue, and $567,093 from the Environmental Health Trust Fund.
Additionally, a waiver of Board Policy B-29 is requested to continue to implement Board direction to reduce fees for food, housing, pool, and temporary event permits requested by nonprofit organizations. The total unrecovered cost per Board Policy B-29 for these Board directed waivers is approximately $450,000 in DEHQ for FY 2024-25, and if approved, will be funded with existing General Purpose Revenue.
Inclusive of all funding sources and programs, the total unrecovered cost per Board Policy B-29 for DEHQ in FY 2024-25 is $1,579,714. In future fiscal years, DEHQ will return to the Board to identify any unrecovered costs and funding sources. There will be no additional staff years.
BUSINESS IMPACT STATEMENT
These recommendations would enable the Department of Environmental Health and Quality (DEHQ) to continue to align fees to the actual costs of services provided to fee payers in each fee category. These fees allow DEHQ to continue to meet program objectives, provide a level of service expected by stakeholders and customers, and fully recover costs.
Details
ADVISORY BOARD STATEMENT
On March 27, 2024, the Environmental Health and Quality Advisory Board voted to support Department of Environmental Health and Quality’s cost recovery proposal.
BACKGROUND
The Department of Environmental Health and Quality (DEHQ) protects the environment, community, and public health with over 40 programs that prevent disease, promote environmental responsibility, and enforce environmental and public health laws. DEHQ operates environmental health programs that regulate restaurants, public swimming pools, body art, substandard housing, septic systems, water wells, and hazardous materials. DEHQ reduces the risk of disease carried by rats and mosquitoes, oversees the State cleanup of methamphetamine and fentanyl contaminated properties, and monitors beach and bay water quality. In addition, DEHQ serves as the Certified Unified Program Agency for hazardous materials and hazardous waste, Solid Waste Local Enforcement Agency, and is delegated the duties to implement and enforce the powers of a mosquito abatement and vector control district. DEHQ works in communities across the county, conducting more than 70,000 inspections annually, including oversight of over 15,000 food facilities and 14,000 businesses with hazardous materials. DEHQ performs surveillance and mosquito treatment at more than 1,600 sites throughout the region to lower the incident of vector-borne diseases and protects 70 miles of coastline by taking more than 6,000 water quality samples per year. Through these services, the DEHQ balances environmental, community, and economic interests to enhance the quality of life for residents and visitors.
Board of Supervisors (Board) Policy B-29: Fees, Grants, Revenue Contracts - Department Responsibility for Cost Recovery (Board Policy B-29) directs departments to recover the full cost of services that the department provides to agencies or individuals. Under this Board Policy, an entity or individual is responsible for all costs associated with services provided by the department to ensure those agencies or individuals benefiting from the services pay for those services, rather than the general public. Exceptions require specific Board approval.
Recognizing that many customers are still recovering from a three-year pandemic, and incurring rising costs due to inflation, DEHQ continues to focus on cost containment through innovation, efficiencies, and streamlining so that those savings can be applied where possible. The practice of continuous improvement, implementing operational efficiencies, such as online services and automation, as well as prioritizing resources in key areas and implementing program improvements suggested by stakeholders, has positioned the department to respond to evolving program and regulatory changes. DEHQ has continued to implement time and cost-saving improvements and initiatives for both the department and customers, such as converting to electronic applications, streamlined report writing and workflow processing, implementation of plan check digital review, streamlining billing, and digitizing tracking logs.
The previous cost recovery proposal was unanimously approved by the Board on March 24, 2023 (10). Since that time, DEHQ has continued to provide services to the public at the approved rates. To provide relief to businesses impacted by economic impacts, the Board has approved the use of departmental one-time funding to offset fee increases in certain programs, such as discretionary projects, and food permits for microenterprise home kitchens and cottage food operations in FY 2022-23 and all food fees in FY 2023-24. The fees proposed today for FY 2024-25 are necessary to address cost changes and to ensure compliance with Board Policy B-29 except where the Board has previously directed the waiver of fees.
In FY 2024-25, DEHQ anticipates no significant increase in facilities-related costs, and an 11% increase in costs paid to other County of San Diego (County) departments for their services, such as Information Technology, Auditor and Controller, and Human Resources, which are reflected in this cost recovery proposal. DEHQ also factored in non-discretionary costs, which fluctuate annually and are beyond the department’s direct control, such as County utilities costs.
Today’s proposal reflects the current standard assumptions made by the County and cost increases based on negotiated labor agreements and enterprise-wide costs that went into effect in FY 2022-23. Approximately 75% of the DEHQ's costs are fixed, such as salary and benefits, retirement, enterprise-wide services, and facilities, while 25% of the department’s costs, such as services and supplies, and salary savings when positions are vacant are discretionary, meaning costs that are determined by DEHQ based on operational needs. The cost recovery proposal reflects known costs as accurately as possible and ensures full cost recovery to continue to deliver programs and services to customers and communities, make data-driven decisions, and continue industry and community outreach. By reviewing and updating fees on an annual basis, DEHQ can recover costs in a consistent and predictable manner, while also providing businesses an opportunity to plan for smaller, more incremental fee increases, as stakeholders have requested.
DEHQ works to contain costs through innovation, efficiencies, and streamlining so that those savings can be applied where possible. Since FY 2016-17, DEHQ has applied $836,000 in ongoing savings from cost containment measures such as:
• Implementing digital review portal for plan check and plan check inquiry from for food programs;
• Modifying permit fees to separate out non-routine services like additional inspections or investigations from those included in the annual permit cost;
• Consolidating offices to one location;
• Expanding publicly available documents online, which reduces staff time to respond to Public Records Act requests by the public;
• Converting to electronic applications which improves document management and access;
• Streamlining the Aboveground Petroleum Storage Act (APSA) Program;
• Streamlining hazardous materials program billing;
• Digitizing the Local Enforcement Agency inspection tracking log;
• Achieving accreditation, allowing for DEHQ to provide mandated continuing education credits to Registered Environmental Health Specialists reducing training costs;
• Streamlining report writing and workflow processing;
• Removing office phones;
• Converting mobilehome park inspection reports to No Carbon Required paper, reducing the amount of time used to create reports while still allowing copies to be left with property owners; and,
• Creating plan check templates for mobile food facilities.
The practice of continuous improvement, implementing operational efficiencies, and prioritizing resources has positioned DEHQ to respond to evolving program and regulatory changes. In addition to the efforts made in prior years, this fiscal year DEHQ has approximately $195,740 in additional operational savings from efficiencies or streamlining measures that were implemented since the last cost recovery proposal. The efficiencies that have been applied include development of new methods to track and manage data in multiple programs, automation of data tracking and forecasting for various hazardous materials programs, implementation of a streamlined process for certain hazardous materials enforcement orders, creation of a landfill gas monitoring spreadsheet that can be accessed online by inspectors, rather than navigating paper reports and creation of a digital inspection tracker in the Local Enforcement Agency. Combining prior year efforts, along with the efficiencies implemented this year, DEHQ has been able to apply a total of $1,031,740 in savings from all cost containment measures to this proposal, reducing costs by 2.6%. DEHQ is in the process of reducing its office space footprint, which will have long term cost savings in future years. Additionally, DEHQ is also proposing to use $1,129,714 in one-time department funding to limit the amount fees would need to increase and provide continued relief for businesses in the food, body art, organized camps, state small water system, and hazardous materials programs. This focused use of available funding will help benefit nearly 130,000 customers and help reduce costs by 2.9%. Without this cost containment (2.6%), and use of one-time department funding (2.9%), fees would have needed to increase an additional 5.5%.
In order to continue to meet program objectives, provide a level of service expected by stakeholders and customers, and fully recover costs except where the Board has previously authorized the waiver of fees, DEHQ is proposing to adjust program fees for FY 2024-25, which will be effective July 1, 2024. The fees proposed for FY 2024-25 will be necessary to address cost increases and to ensure compliance with Board Policy B-29, except where the Board has previously authorized the waiver or reduction of cost-based fees. The average DEHQ fee adjustment in this cost recovery proposal for the majority of DEHQ fee programs is equivalent to an increase of 7.9% since the unanimous Board approval of the last cost recovery proposal on May 24, 2023 (10).
The proposed adjustments to fees resulted from a comprehensive review and analysis. This cost recovery proposal produces service and funding levels that allow DEHQ to continue to balance community, economic and environmental interests to enhance the health and safety and quality of life in San Diego county. Full cost recovery allows departments to operate efficiently and provide essential services to the residents and visitors of San Diego County. If this cost recovery proposal is not approved, DEHQ would require one-time alternative County funding in the amount of $2,549,464 to ensure full cost recovery to continue delivering programs and services to customers and the communities, using data analysis to make data-driven decisions, and continue community outreach. If the proposal is not approved and alternative funding is not identified, DEHQ would have several impacts to both operations and customer service such as reduced services, increased processing times, reduced ability to conduct community outreach, and decreased opportunity to perform research and data analysis to support data-driven decision-making. Resources would be shifted away from innovation and data analysis to front-line operations, and we anticipate a backlog would be created. There would be longer processing times for reviews and inspections, including not being able to meet the Board directed guaranteed review time for the septic and discretionary program as part of the Removing Barriers to Housing initiative, creating an unfunded backlog in application reviews, permitting, and inspections. Additionally, DEHQ would need to shift staff from cost-saving innovations to focus on front-line work, which would negatively impact future fee proposals due to reduced ability to continue with cost containment efforts. Additionally, DEHQ would need alternative funding identified that could reduce the impacts of not moving forward with a cost recovery proposal this year as it would impact customers by increasing overall costs to applicants as well as reduce our ability to focus on innovation, streamlining, and meeting operational goals. In addition, there will be a cumulative impact and the change in future fee updates will be even higher based on the need to cover the increases in this proposal, plus fee increases in future years.
Fee Development Process
The methodology used to develop fees for DEHQ is an approach that is consistent across the County enterprise and followed by other groups with fees, such as the Health and Human Services Agency and the Public Safety Group. DEHQ analyzed programs, including a review of State mandates, program operations, inspection frequencies, service levels, and how DEHQs fees compare to other local jurisdictions. The fee development process combines a determination of the staff time required to provide specific regulatory program services, and a determination of the hourly rate that will recover County costs for those services. Determining time requirements begins with an evaluation of current legal requirements for mandated service levels and new requirements. The next step consists of an assessment of public health risks, necessary public health risk management interventions, and the impact of process improvements on time requirements. Time studies for each permit type were also conducted. This information, as well as forecasted changes in the number of DEHQ facilities and projects, was used to determine workload and associated staffing needs.
The hourly rate is the foundation of how the County enterprise recover costs for their services. The hourly rate is comprised of many components, including the labor rate paid to staff, their benefit costs, equipment and supply costs, and a share of the administrative costs of the department and County, such as services provided by County Counsel and the Department of Human Resources. The hourly rate was then used to calculate each fee based on the number of actual hours of documented time required by staff to perform each service.
DEHQ also conducted an analysis of its programs as part of developing this cost recovery proposal. This analysis included a review of program operations and inspection frequencies, service levels, and comparing programs and fees to other programs in the State. In order to obtain a comprehensive understanding of how DEHQ’s programs and fees compare to other similar programs in the State, staff reached out to other counties and statewide industry working groups, email list servers, and direct contacts. Comparisons were compiled in each of the major DEHQ program areas and shared with stakeholders during cost recovery proposal presentations.
The Auditor and Controller has reviewed and approved the methodology and supporting documentation used to determine the proposed hourly rates and fees in this proposal. The Auditor and Controller found that the methodology used is consistent with Board Policy B-29 and in conformance with existing cost policies and procedures.
Cost Recovery Proposal
The following provides an overview, by DEHQ programmatic division, of the fee adjustments proposed for FY 2024-25. If approved, the cost recovery proposal (Attachments A and B, Ordinances) will be effective beginning in FY 2024-25. The proposed fees would remain in place until further adjusted by ordinance and approval of the Board. After comprehensive analysis, it was determined that DEHQ fees need to be adjusted to achieve full cost recovery in FY 2024-25, except where the Board has approved alternative funding or authorized the waiver of fees.
DEHQ evaluated 237 fees for this cost recovery proposal, and proposes to increase 199 fees, decrease 5 fees, modified 23 fee, and add 2 new fees. Additionally, 8 fees are proposed to not change. If approved, this proposal will increase individual fees by an average of 7.9% since the unanimous Board approval of the last cost recovery proposal on May 24, 2023 (10).
Food Program Fees
In the Food Program, which represent restaurants, mobile food facilities, temporary events, and any required plan check for permanent and mobile food facilities, 65 fees are proposed to increase, and 2 fees are proposed to be modified into additional 6 fees. The modified fees will separate out an existing plan check fee for mobile food facility operators and divide the fee category to include multiple lower cost, more specific plan check fees for these various types of operation. Catering facilities will now have a designated fee that is a lower cost option that is being split out from a previously used general plan review fee. The Temporary Event Limited Beverage Service fee, which was further analyzed this year based on stakeholder feedback, will now include all full-service bar operations, decreasing the permit cost for bars operating at temporary events.
An additional ordinance revision included in this cost recovery proposal for the food program is a more flexible modification to the existing local Food Handler Training program to allowing food facilities 30 days, rather than 10 days, to obtain required food safety training. This change reflects stakeholder feedback and continues to protect public health by educating food handlers to handle food safely into their onboarding process for new employes by increasing the time employees have to obtain their Food Handler Certification from 10 days to 30 days. This change is also in line with what is currently required in the statewide food handler training program requirements.
A waiver of Board Policy B-29 is requested for food fees because the proposed fees do not cover all operating costs. The County has maintained a DEHQ restricted fund balance in the General Fund since February 24, 2004 (23). This allows for the designation of any revenue over cost each fiscal year to be used in subsequent fiscal years if needed. State law restricts the use of these funds only to the programs that the funds were generated from. Every year DEHQ analyzes the program cost and evaluates if the funds should be used to offset certain program cost increases. DEHQ proposes to use $517,414 in restricted General Fund fund balance to provide a one-time offset of fees associated with the food program. Without this offset, fees would have needed an additional increase on average of 4%.
Water Program Fees
In the water programs, which represents swimming pools, water and monitoring wells, state small water systems, recycled water and any required plan check for these programs, 27 fees are proposed to increase, and 10 fees are proposed to be modified. The wells program has identified 8 tasks from 10 fees, which will be modified to hourly rate fee charges. These fees are proposed to remove tasks that are not required for all permits from the flat fee permit tasks, thus minimizing fee increases for standard permits. These proposed hourly rate tasks will include: resubmittals, water well plan check inspections/re-inspections, monitoring well variance requests, monitoring well complaint response, miscellaneous water well activities, monitoring well complaint response, and both monitoring well and water well enforcement.
A waiver of Board Policy B-29 is requested for fees for state small water system fees because the proposed fees do not cover all operating costs. Every year DEHQ receives $1.39 million fund related 1991 Health Realignment revenue from the state which will support the health officer programs. Every year DEHQ analyzes the program cost and evaluates if the funds should be used to offset certain program cost increases. DEHQ proposes to use $34,500 in 1991 Health Realignment revenue to provide a one-time offset of fees associated with 16 state small water system. State small water systems provide safe drinking water for communities with 5 to 14 service connections, that serve a population fewer than 25 persons, like at a small mobilehome park with 10 lots. Without this offset, fees would have needed an additional increase on average of 109%.
Housing Program Fees
In the land use and housing programs, which represent rental homes, onsite wastewater treatment systems, discretionary land use projects, mobile home parks, massage, body art facilities, organized camps, the Local Enforcement Agency, any required plan check for these programs, 62 fees are proposed to increase, 2 fees remain unchanged, 1 new fee and 9 modified fees. In an effort to support the Septic Program in meeting layout review deadlines, it was determined that there was a need to annually review our qualified professionals list and ensure listed professionals are actively working in the County and also providing quality submittals. To cover the administrative costs for review and outreach, a new fee was created. The septic program has also identified 6 tasks from 9 fees, which will be modified to a flat fee and hourly rate fee charges. These fees are proposed to remove tasks that are not required for all permits from the flat fee permit tasks, thus minimizing fee increases for standard permits. These proposed flat fee and hourly rate tasks will include percolation test/soil profile permit, septic tank destruction stand-alone permit, septic tank destruction repair permit, holding tank/vaulted-privy/other sanitation facilities project review, holding tank/vaulted-privy/other sanitation facilities installation permit and a qualified professional consultation review.
Over the past year, there were significant program improvements that occurred in the onsite wastewater treatment (septic) and discretionary land use programs, including overcoming a 63% vacancy rate and reducing the plan review time from 6 months to 2 months. In FY 23-24, while the programs were rebuilding, one-time reserve funding was utilized to offset the fees by 13.6%. On May 24, 2023 (12), the Board approved Removing Barriers to Housing, which provided staffing to the onsite wastewater treatment system and discretionary land use program to further improve efficiencies and guarantee plan review timelines, which vary from 5 days for 100% affordable housing to 30 days for workforce housing. DEHQ is currently maintaining all projects at a 30-day review time. Funding for these positions was not provided as the positions are revenue offset by fees. Due to enterprise service and supply increases, the 13.6% increase deferred in FY 23-24 and increases associated with Removing Barriers to Housing staffing, the average fee increase for the onsite wastewater treatment program is 41.5% and for the discretionary program is 51.7%. A waiver of Board Policy B-29 is requested for body art facilities and organized camps fees because the proposed fees do not cover all operating costs. DEHQ proposes to use $10,707 in restricted General Fund fund balance to provide a one-time offset of fees associated with the body art and organized camps program. Without this offset, fees would have needed an additional increase on average of 1%.
Hazardous Materials Program Fees
For hazardous materials program fees, which includes medical waste fees, DEHQ is proposing to increase 31 fees, and 2 fees are being modified to incorporate an hourly rate for certain inspections that will require longer than average times, such as complex Underground Storage Tank closures.
A waiver of Board Policy B-29 is requested for the hazardous materials program fees because the proposed fees do not cover all operating costs. DEHQ proposes to use $567,093 in the Environmental Health Trust Fund for one-time program costs, efforts to guide potentially unpermitted facilities towards compliance, and IT improvement projects. The Environmental Health Trust Fund can only be used for hazardous materials programs. A total of $350,000 will be used to offset one-time program costs ($50,000), and 100% of the cost of 2.0 FTEs ($300,000) to continue the work to help bring unpermitted hazardous materials facilities under permit and guide them toward compliance to ensure safe communities and consistent regulation of all facilities. Using Environmental Health Trust Fund will cover the cost of staff time reaching out to potentially unpermitted facilities to guide them to compliance, which could include revenue following issuance of a new permits. A total of $217,093 will be used for IT improvement projects. Without these offsets, fees would have needed an additional increase on average of 5%.
Radiological Health Program Fees
DEHQ is proposing to increase 1 fee associated with plan check in the Radiological Health Program.
Vector Control Program Fees
DEHQ is proposing to keep 2 fees unchanged and add condition language in ordinance for 1 fee associated with vector laboratory services in anticipation of rabies-related work transferring to the County’s Public Health Services.
Miscellaneous Department Fees
For the miscellaneous department fees, DEHQ is proposing to increase 3 fees, decrease 5 hourly rates due to program changes, and add 1 new hourly rate fee. Additionally, 4 fees are proposed to remain unchanged, Miscellaneous department fees include the fee for duplicate permits, health-related business name changes, and various technical job classification hourly rates. Hourly rates are primarily used when a customer requests a technical service for which no fee is specifically indicated, such as an hourly rate for an Environmental Health Specialist, Vector Control Technician, or Disease Research Scientist. The new hourly rate is for Ecologist staff who are subject-matter experts in vector control. Although vector control hourly rates are rarely used, this addition would be beneficial in situations where vector ecologists are needed for technical consultation work or for cost recovery situations.
The proposed fee adjustments for this cost recovery proposal are shown in Attachment C and the proposed ordinance changes are summarized in Attachment D.
Waiver of Board Policy B-29 for Nonprofit Organization Permits
Over the years, the Board has taken action to support nonprofit organizations by exempting (May 8, 1984 (38)) or reducing permit fees (April 4, 2001 (21)) for operating food facilities, public housing and pools, and temporary events. The Nonprofit Organization permit waivers have been very successful, with applicants expressing gratitude for the fee waiver, enabling them to plan more events and allowing DEHQ to provide education to the community on food safety for their events. Through January 31, 2024, DEHQ assisted 301 ($100,547) temporary event organizers, 189 ($41,163) temporary event vendors, and 398 organizations ($111,193) totaling $252,903 in economic relief for Nonprofit Organizations. The success of this Board action has seen an increase of 74% in permit waivers since FY 2021-22.
Without General Purpose Revenue (GPR) as a funding source, this cost recovery proposal would result in higher fees for nonprofit organizations who provide low or no cost services to the community, such as, swim lessons, recreational swimming, drowning prevention classes, housing for seniors or substance abuse treatment, charitable feeding to vulnerable populations, and fundraiser events where the food sold funds the organization’s annual operational costs in order to continue serving the community. Each year DEHQ experiences an increase in the volume of non-profit organizations requesting temporary event fee waivers, which we anticipate will occur again in FY 2024-2025. DEHQ anticipates that the GPR in the FY 2024-2025 proposed budget is sufficient to cover the anticipated increase, however modifications to the implementation of the fee waivers or increased GPR may be required in future years.
DEHQ Restricted Fund Balance
The County has maintained a commitment of fund balance in the General Fund for DEHQ since February 24, 2004 (23) and continued this practice as part of the department’s cost recovery proposal adopted on April 27, 2022 (8). In FY23-24, this committed fund balance is reclassed by Office of Financial Planning as restricted fund balance based on Prop 26.
DEHQ has been building its restricted fund balance by annually setting aside any revenue received by DEHQ in excess of the amount of full cost in each Division, for use in subsequent fiscal years when costs exceed revenue in that Division. DEHQ, in consultation with the Auditor and Controller and County Counsel, ensures that excess fee revenues are used for proper and legally allowable purposes. Given the potential uncertainty of future regulatory changes in environmental health programs at the State level, public or environmental health emergency response needs, or changes in economic conditions that influence permit volumes, DEHQ will apply these funds to balance costs and minimize funding impacts. Included in this cost recovery proposal is the one-time use of one-time restricted General Fund fund balance in the amount of $528,121 to provide continued relief for businesses impacted from the current economic conditions that are regulated in the food, body art and organized camps programs.
In prior years, this restricted fund balance enabled the department to respond to uncertainties during the COVID-19 pandemic and provide one-time cost offsets to aid businesses impacted by closures or mandated reductions in service operations. DEHQ’s goal is to build its restricted fund balance to the Government Finance Officers Association recommended minimum of two months operating capital for each Division and after the proposed one-time use in this proposal, is currently at 75% of this goal.
Customer/Stakeholder Engagement
DEHQ continues to value its partnership and collaboration with customers and stakeholders. To encourage participation, engagement, and feedback on DEHQ programs and the proposed cost recovery proposal, DEHQ posted notices of when virtual stakeholder meetings would be held on the DEHQ website, sent emails directly to specific stakeholders or groups, and via GovDelivery for permit holders who have provided their email addresses. The DEHQ website is enabled with Google Translate and all GovDelivery emails distributed were translated into all eight threshold languages. Affected permit holders and members of the public were also invited to review the proposal on DEHQ website and designated DEHQ staff email and telephone contact information was made available during public meetings, posted on the website, and included in email notifications for businesses or members of the public to submit comments, feedback, or ask questions. DEHQ included language that identified translation services would be available on all notifications of stakeholder meetings were able to accommodate all language translation and interpretation requests.
DEHQ met with stakeholders at meetings and workshops held in March and April 2024. A list of stakeholder meetings as of April 16th, 2024 is included in Attachment E. Some stakeholder associations DEHQ met with includes California Restaurant Association San Diego Chapter, San Diego Event Coalition, Industrial Environmental Association, and San Diego County Disposal Association. The majority of stakeholders expressed a neutral position and indicated an understanding of the need for the cost recovery proposal, expressed a continued desire for regular cost recovery analysis and updates, an appreciation for DEHQ’s continued approach to pursue innovation, program improvements, reduced turnaround times, and streamlined service delivery.
The proposed adjustments for permit fees, deposits, and hourly rates resulted from a comprehensive review. This proposal creates service and funding levels that will allow DEHQ to continue to balance community, economic, and environmental interests to enhance the health, safety, and quality of life in the San Diego region. Approval of the recommendations will allow DEHQ to provide services to its customers, comply with State mandates, and ensure that fees, deposits, and hourly rates recover the County’s costs where feasible in alignment with Board Policy B-29. The proposed fee adjustments for this cost recovery proposal are shown in Attachment C.
ENVIRONMENTAL STATEMENT
The proposed project is exempt under California Environmental Quality Act (CEQA) Section 15273(a) of the CEQA Guidelines because it proposes fee adjustments that will fund the enforcement of environmental laws in San Diego county. As stated under statutory exemption 15273(a), CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates by public agencies which the public agency finds are for the purpose of meeting operating expenses, including employee wage rates and fringe benefits as described in the Environmental Findings required under CEQA, included in Attachment F.
LINKAGE TO THE COUNTY OF SAN DIEGO STRATEGIC PLAN
Today’s proposed actions support the Sustainability, Community, and Equity initiatives of the County of San Diego’s 2024-2029 Strategic Plan. These proposed fee adjustments further the goals of the Strategic Plan and ensures DEHQ can accomplish its mission of protecting the environment and enhancing public health. Aligning services to available resources to maintain fiscal stability and ensure long-term solvency is ensured through achieving full cost recovery for services provided to external customers where feasible, as directed in Board Policy B-29: Fees, Grants, Revenue Contracts - Department Responsibility for Cost Recovery.
Respectfully submitted,
DAHVIA LYNCH
Interim Deputy Chief Administrative Officer
ATTACHMENT(S)
Note: Due to the size of the attachments, the documents are available online through the Clerk of the Board's website at www.sandiegocounty.gov/content/sdc/cob/bosa.html. <http://www.sandiegocounty.gov/content/sdc/cob/bosa.html>
Attachment A - Ordinance Amending the San Diego County Code of Regulatory Ordinances to Adjust Department of Environmental Health and Quality Regulatory Program Fees and Associated Ordinance Revisions (Clean)
Attachment B - Ordinance Amending the San Diego County Code of Regulatory Ordinances to Adjust Department of Environmental Health and Quality Regulatory Program Fees and Associated Ordinance Revisions (Strikeout/Underline)
Attachment C - DEHQ Proposed Fees
Attachment D - Summary of Ordinance Changes
Attachment E - Stakeholder Meetings
Attachment F - Findings Pursuant to CEQA Guidelines Section 15273(a)