Los Altos Hills committee sends proposed fee schedule back to staff after questioning steep increases for small permits and ADUs

The Los Altos Hills committee paused consideration of a consultant‑driven development services fee study on concerns staff and members raised about methodology, distribution of overhead and the effect on small permits and accessory dwelling units (ADUs).

Staff presented the study and said it retools permit fees by using three fully burdened hourly rates for planning, building and engineering. "With the changes that we've worked with the consultant MBS... we'll be hoping to achieve about $2,000,000 in additional revenue," the staff presenter said, noting a recalibrated valuation multiplier intended to align fees with current construction costs.

Residents and committee members repeatedly asked whether the new schedule charges true incremental costs of permits or reallocates expenses already covered by property taxes. "Since most of these allocated costs are already covered by property tax payments, why are we using allocated costs for the incremental cost of providing the services?" resident John O'Connell asked, pressing staff to show which specific departmental costs are being included in fee calculations.

A central area of dispute was the plan‑check fee. Staff described plan check as largely a pass‑through expense paid to an outside contractor (CSG) while the town would add an administrative component. Committee members said the proposed approach makes small projects much more expensive while reducing fees for very large projects. "If you continue with this methodology, you're gonna see a drastic reduction in applications for permits for bathroom remodels," O'Connell warned.

Alan (committee member) urged hard invoice testing: "If you look at the cost today for a $50,000 project... under the new fees you're gonna be paying 3 or 4 times that amount of money," he said, calling for staff to pull actual CSG invoices and cycles to assess whether the contractor would simply be paid more or if the town's allocation changes the contractor's share.

Staff said the cost allocation plan (CAP) isolates development‑related portions of broader department budgets and that the consultant modeled historic permit volumes and task times to estimate hourly burdens. The presenter noted the town currently aims for near‑100% cost recovery but that council direction has included subsidizing some safety‑related items and ADU plan checks at 80% recovery to encourage housing and protect public safety.

Several members asked for concrete before‑and‑after examples showing how the new schedule would change fees on representative projects — for example a $50,000 bathroom remodel, a $250,000 alteration and a $500,000 ADU — and asked staff to show where the revenue delta would come from. One member highlighted a comparison the staff provided: "To build an ADU in [a neighboring city] the total fees are $2,000; to do it in Los Altos Hills it's almost $14,000," underscoring the potential policy and equity implications.

After discussion, the committee made and seconded a motion to withhold acceptance of the fee schedule in its present form and return it to staff for revision. The motion asked staff to provide revised options that could include phased implementation, alternative recovery targets (committee discussion suggested a range of roughly 80–95%), line‑by‑line reasonableness checks on plan‑check costs, and example permits showing pre/post impacts.

The committee directed staff to report back with targeted options (for example, subsidizing ADUs, heat‑pump or water‑heater safety work) and revenue‑impact tables showing phased approaches so both the council and the public could compare tradeoffs. Staff said it will use the committee feedback to refine the schedule and to incorporate plan‑check contract validation or an RFP if the pass‑through assumptions prove misaligned with contractor invoices.

The committee scheduled follow‑up work and asked staff to produce clearer spreadsheets and example projects for the next review.

The meeting adjourned with a clear request that staff return with revised materials and specific revenue‑impact scenarios before the item proceeds to the City Council.