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Los Altos Hills finance committee backs fee‑study direction but presses staff on ADU, vendor and deposit risks
Summary
Staff told the Finance & Investment Committee that a consultant fee study would move the town to fully burdened hourly rates and a tiered valuation model, and could raise about $2 million a year in user‑fee revenue. Committee members asked staff to validate ADU impacts, test vendor market responses and clarify the cash‑flow effects of removing utility deposits before council adoption.
Staff presented a consultant-backed user fee study to the Finance & Investment Committee on May 11, outlining a move to fully burdened hourly rates, new plan‑check administrative fees and a tiered valuation method the consultant modeled with a roughly 2.25 multiplier.
Baruiz, the presentation lead, told the committee that the study would split planning, engineering and building into separate fee streams and remove several legacy deposits and redundant fees. "This new fee study, if approved, will bring in about an additional $2,000,000 in fee collections per year, taking us from about $1,400,000 to about $3,400,000," Baruiz said during the presentation.
Why it matters: Staff said the changes are designed to improve transparency and reach a near‑full cost‑recovery target, reducing the general‑fund subsidy now used by planning in particular. Committee members cautioned that the distributional impact—especially on accessory dwelling units (ADUs) and small remodels—could run counter to town policy goals to encourage smaller housing types.
Committee concerns and requests - ADU and proportionality questions: Several members flagged that the tiered table produces higher per‑project charges for smaller projects (including many ADUs) while larger projects would pay proportionally less under the model. Members asked staff and the consultant to run spot checks against actual historical projects and to provide the underlying hours data used as model inputs.
- Vendor and plan‑check market risk: Staff proposed breaking the plan‑check charge into an administrative portion (kept by the town) and a plan‑check portion that goes to the third‑party vendor. Committee members asked whether current vendors will accept lower plan‑check revenues under the new schedule; staff said they plan to issue an RFP and test market responses before finalizing contract arrangements.
- Deposits and cash‑flow: The study would remove or reduce large utility/deposit requirements (examples cited include $20k and $40k utility deposits). Committee members noted the town currently holds roughly $4 million in deposits and earns interest on those balances; removing deposits would reduce the town’s interest earnings and affect cash flow. Staff acknowledged the tradeoff and said deposit policy and implementation (including vesting for pending permits) require further work.
Timing and next steps Staff recommended the council adopt the fee schedule with a minimum 30‑day delay between council action and implementation; the team suggested July 1 as a plausible effective date. Committee members asked staff to draft a vesting/implementation policy for existing applications, to include a short public communications plan, and to provide the committee with revised analyses that incorporate the spot checks and RFP feedback before the item goes to council.
Bottom line: The committee signaled general support for the direction of the fee study and the cost‑recovery objective but asked staff for additional validation—particularly on ADU impacts, vendor capacity and the financial effects of reducing deposits—before urging council adoption.
