That the City Council approve a $274,000 increase in funding for the Community and Economic Development Department’s existing Purchase Order with True North Compliance Services, Inc. for contract plan check and building inspection services, which will increase the total Purchase Order to an amount not to exceed $884,000 for these services.

The Community and Economic Development Department is responsible for providing plan check and building inspection services to ensure the safety and quality of development within the City. The adopted budget for Fiscal Year 2024-25 (FY 24/25) included an initial allocation of $360,000 for these contract services on an as needed basis, which assumed that staff positions within the Building and Safety Division would be filled during the year. The City Council subsequently approved increasing this purchase order to $610,000 during the mid-year budget review process to address both increased workload and due to vacancies in the Division.

Despite this mid-year adjustment, current cost projections indicate that the existing purchase order amount will be insufficient to continue necessary service levels through the remainder of the fiscal year. This shortfall is primarily attributed to higher than anticipated building activity in the City, which is also resulting in higher than anticipated plan check and building fees compared to budget estimates. This, combined with the City's continuing efforts to recruit full-time internal staff, has placed more workload on contract staff and has utilized funding in the purchase order a rate faster than anticipated.
 

The City's current reliance on contract plan check and building inspection services has been necessary to ensure the continuity of quality and timely service to residents, property owners and the business community. However, contract services are significantly more expensive than utilizing permanent internal staff, which is why the City's Human Resources Department is continuing its efforts to advertise and interview for these key positions. If approved by City Council, the additional funding for the Purchase Order will allow the City to continue using contract services to process plan check applications, conduct timely building inspections and avoid delays in plan review and inspections that could be disruptive to project applicants.

It should be noted that the fees collected for plan check services and permits directly offset the expenditures associated with these services, mitigating the overall financial impact on the City’s General Fund.  As of early April, the City had already collected $1,271,860.16 in building permitting and plan check fees. In addition, the Department has salary savings from the budgeted staff positions that have been largely vacant this past fiscal year. The additional funding request for the purchase order will allow the Department to continue providing timely and efficient plan check and building inspection services through the end of the current fiscal year. In the meantime, the City will continue to actively advertise and recruit to fill staff vacancies so that the City can reduce its reliance on contract services in the long term. 

If the City Council approves increasing the existing Purchase Order for contract plan check and building inspection services by $274,000, the total value of that purchase order will increase to $884,000. As noted above, the fees collected for plan check services and permits directly offset the expenditures associated with these services, mitigating the overall financial impact on the City’s General Fund. As of early April, the City has collected $1,271,860.16 in building permitting and plan check fees. In addition, the Department has salary savings from the previously described staff vacancies that will also help offset the additional contract services costs. As a result, staff is not requesting an additional appropriation of funding for the Community Development Department's General Fund budget at this time.

General Plan Relevance:
LU 4.3 Public Safety and Community Design
LU 5.1 Regulating Sustainable Development
LU 5.2 Sustainable Building Practices
LU 5.3 Existing Structure Reuse
LU 5.6 Building Rehabilitation
LU 7.10 Code Enforcement
ED 6.1 Small Project Review
H 2.11 Regulations and Enforcement for Maintenance
H 2.13 Energy Conservation
E 2.2 Title 24 Energy Efficiency
E 2.3 California Green Building Standard Code
E 2.4 California Energy Code
NH 1.1 Safety Standards
EP 1.6 Automatic and Mutual Aid
N 3.5 Construction Activity Hours

City Council Goals and Objectives:
Goal 7, Objective D: Consistently provide the highest level of customer service to both our internal and external customers.