and so, one of the things that we have suggested doing is creating a new work order and this will be a project for them and an in-law project and they will hire new staff and put in the permit and that is an ongoing work order of $1.3 million while we are in the building boom, once things slow down they can keep up with their standard staff and it would not be need to be an ongoing thing at that point.. and the last thing and the segway about what i want to talk about as part of the director's report is we budgeted half a million dollars to go into the expansion project to continue planning and design for whatever option we decided we wanted to do. and as those options have gotten a lot cleaner and we have a better idea of where we think that the city is going to go, we upped that to one and a half million and we can do the deposit and the design, that is a one-time cost that is coming out of the fund balance.

and so with the space study. and so, we had originally looked at four options of ways that we could get more space, things that basically stay where we are and expanding over the parking lot and taking over some of the 1680 building that is on the corner so that we have one complex of an operation, for dbi. and then, the other thing that we were looking at was a new site to be determined that would give us kind of our perfect floor plate and so we will take the dbi and put it on three floors and give us about 104,000 square feet. and that will be a perfect template and a perfect adjacent of all of the different divisions. and so, the map that i have up there are the four options for using our existing space, and option one a will be staying in our existing building in 1660 which is yellow and then building an addition over the parking lot next to us between 1660 and 1680. and because of the way that the

property is zoned, that can only be a four-level building, and it can't go the full six levels of our existing building. and without getting a variance, and so, if we did that, it would take our square footage from 70,000 to 90,000 square feet which is less than the opt mal needs that we have and the other departments that sit with us to do the one stop center. and 1 b, would be to take over the 1680, building, and dpw would need to move out of that building and do renovation and add a little bit of a bridge between 1660 and 1680 and just be for the staff use to go back and forth between the two buildings. and that gives us more space and it is just slightly less than 1,000 less than the opt mal but could work. >> what is that square footage, of what it would be.

>> 103,590. >> and so, if we were to do that, it gives us the square footage but puts us on ten floor of building, it does not give you adjacent and it is not all that convenient for customers you are going all over the place in two buildings. and so it is an option, but not a great one, really for us. option 1 c, would be to build the info between 1660 and 1680 and it will connect to 1660, on all four floor. s, and they will do the remodel on the first floor that would open it up so that it would flow all the way through 1660, 1670 and 1680, that will give us a large floor plate. >> the problem is that you still have cut outs for the parking, underneath the building would need a cut out for people to go under. and this kind of remodel would probably trigger the city's ordinance to have a child care

facility on the first floor. if we were to do that, the child care facility and the cut outs take a lot of space on the first floor, it gives us a bigger floor plate but it is not ideal but it is an option. >> option, 1 d is the most expensive, which we will get to next. we will knock down current 1680 building and rebuild the building and the infill at 1670 so that all four plates will flow from the entire property, of 1660, to 1680. and it gives us a little more space, and you will see the gray areas on the top three floors for another city department to be in and gives us more space than dbi would actually need. >> could you give any those numbers of square foot in the cand d options? >> sure. so cand d, and option 2 a, which i have not talked about are all 104,405 for square footage and all of those options would include a daycare

facility. which is about and required to be about 3,000 square feet. >> so the next slide which i will get to, gives you the pros and cons for each option and also gives you the approximate cost for each. >> and the last item that we studied was what we called 2 a and that was an ideal site that will give us the floor plate that we needed and off site somewhere and location to be determined. and so, they would need to find a property, that would have the appropriate size and be able to purchase it and develop it in a way that is penciled out for the city and department. at this point the city has an option for 2 a, but it looks quite promising and it looks like it is going to work and a tentative agreement on that property right now. and the agreement is not public yet, so i can't talk about what site that is here. but it does... >> is in the area. >> it is in the area.

>> so, for 2 a does look like a viable action for us. and if the option does work out correctly they are going to know in july, right now there is a tentative agreement and it is schedule to go before the board of supervisors in july. and if all goes well, then the real estate department is going to come back here, as we are going to be one of the major stake holders in this building and give a detailed presentation on that option. but i did want to let you know that there is an off site option that is viable at this time. the last piece of paper that i handed out, gives you all of the different options and some of the pros and cons, and i have mentioned some of the major for each option is i went through with the diagram and 1 a does not give us enough space and 1 b is just efficient, inefficient with that space. and c, works fairly well, but as you will see it is estimated to be $70 million and still is not ideal and it is very

expensive. 1 d knocks down the building and gives us space flow and it is expensive at 88 million. and so if the new city building build works out it is projected to be 65 million, and it will be a larger building and there is a lot of debate of whether we will pay the capitol cost in front or if we will pay rent like another department, but because the deal is just so flexible, we don't know where it is going to go. so, to in terms of a comparison, i want to make sure that what the dbi portion of that new building will be was in there so that we could compare it, and all of the options together. >> and on the 2 a, option, is planning in the same building scheme? >> the scheme would have several departments together. >> and planning would... >> planning and dpw and a few others would be part of that option. >> thanks. >> so that we would maintain

the departmental adjacent that works relevant for our one stop center and we don't want to change our building and lose that functionality. >> yeah. >> it would be inconvenient for our customers, too. >> and so with the budget, there are a couple pieces of budget legislation that are separate on the agenda. >> i did want to mention that there are two pieces of legislation and we will talk about them as we move forward. >> great. thank you. >> is there any public comment on the director's report item 4 a, through e? >> seeing none, item 5, discussion and possible action regarding an ordinance amending the building code to reduce all fees for staff services by 7 percent for a 6-month period and affirming the planning department's determination under the california environmental quality act. >> >> okay, so this is the first piece of legislation that i mentioned. and as you saw in the finance report, our revenue is quite

high. and we are seeing that we are going to come in much higher than projected. and we are doing a fee study and there is going to be an update on the process of that later in this ago agenda and it is not schedule to be complete until august and as you know, once we have the result of the city study we need to amend the code to change whatever fees we decide to change after the fee study. and so the, and in the discussion with the controller's office and the mayor's office, because we are continuing to bring in so much money and we don't need to bring in that much additional money for our ongoing one time projects like the building and technology. and the recommendation is that we do a interim fee discussion and we have a lot of discussions about what that amount should be and a 7 percent is a discussion point that we had back and it points to about 1 and a half million dollars in the 6-month period and it is not a lot of money, but it does know sha we are looking at our fees and that we

acknowledge that our fees probably are a little too high. if you compare the money that we bring in from the fees to the cost of providing the service and we are bringing in too much money, and the fee study is the best method of looking at each fee, and the cost of providing each service, and all of that, to really determine what the appropriate fee level is, but we don't want to continue to bring in so much money, and so we would like to do is to have this interim fee reduction, and it will expire in six months, and once we will have the fee study results and we will then come forward with the appropriate fee levels across every single fee. >> and i had a little comment on this. i feel a little bit hesitant about approving just a cost of a fee reduction. for a couple of reasons, one is that i what anterior wait to see what the fee study says and

if we are going to do a fee reduction based on what it actually costs us then let's do it beyond, and for the 6-month period until, you know, the cost of our work goes up or something, and so that is number one. and the only thing is that i think that we and this department has waved the permit fees or lowered the permit fees and usually as an incentive and as the carrot, using, you know, commissioner walker's analogy from before, for good behavior and so i will be much more open to raising permit fees and lowering permit fees for businesses who want to improve their facade and the land lords who want to improve their earthquake safety and you know, legalizing the laws, and whatever, that carrot, would be, but just to do it automatically for six months does not make a whole lot of sense to me. that is my general comment.

>> we have discussed some of those options with the controller's office. we had similar feelings that it would be good. and we do wave the awning fee to do the similar things for soft story and we were told that that was not an appropriate use of our funds and that the fees really need to be used for the purpose that they were collected. so, their recommending that we not do that on a large scale. and that they really recommend that we do an interim across the board. fee cut and then adjust on a fee to fee and which we agree to set an appropriate fee level. >> supervisors? i am sorry, commissioner melgar. i keep promoting you. >> and i, i wanted to point out

a couple of things the fees that we collect have to have a relationship to the cost of the service provided which is why we need to do a fee study. and so, i think that if we keep bringing in this much higher, level of income and it puts us at risk because we are at mercy of the budget office and the projects that we are trying to get done and despite, i think that the following the advice, which i think is and i think that you did a lot of number crunching to me seems like a prudent thing to do, because it gets away from the risk that we

incur of continuing the situation that we have been in. commissioner walker? >> i tend to agree with commissioner mar going one thing now and one thing when the data gives us more direction is sort of, counter to the directive. because, we have been charging two glasses, and not going to cover our cost and continuing to move, the needle is some what confusing to the public. if this passes it gets us a seven percent decrease, but i feel like we have, we find ourselves in a building boom that followed a huge decrease in building, because of the

economy, so, i think that we delayed a lot of necessary infrastructure commitments and we have layed off and then hired back staff, so there was some savings involved, and we were prudent in responsible with our budget. so not anticipating the volume of work that is actually coming in the past several months. knowing that we are going to be dealing with moving, and finding more space, because we are squished, and have a situation where our employees don't have, you know, adequate space to do the work, and knowing that we are on the verge of making a commitment to expand our space, i am reluctant to do this, at this point. and i am looking forward to seeing the data, based on the permits that we are offering, but i don't think that we

should be doing this now, knowing what we have delayed committing our finances to over the past five years, because of the economy, and we have the delayed and we have the, and we have an extended need that we have delayed filling over the past years. that we would have spent some of that money on, had we not been so prudent. now we are in a space find, and i feel like we need to save our money, and make the decision about what the fees are based on the real cost and for the expanded space when we commit to it. >> correct me if i am wrong, and i learned from your presentation. i am sorry. >> that is okay. >> okay. >> and more now, than estimated because the real estate costs are about double what they were when we... >> i understood from your presentation, that all of those project costs were already taken into account, all of the budgeted costs and the projections, and above and beyond that, we are collecting

more money than we need, did i hear you correctly? >> that is correct, we have budgeted what we think that we need to move, and for the one time capitol projects we want to be sure that we continue to be fiscally responsible and that we can cover the things that we do see coming >> so we will have the information about what our actual costs are related to each specific permitting process, in six months, so this is basically, asking for six-month reduction, just because, it seems like a lot of money sitting there. >> we are asking for six months, reduction, because we do expect the fee study is going to come back with a reduction in fees and we do expect that reduction in fees will be higher than 7 percent, we did make sure that this interim fee reduction is less than we expect so that the fee reduction will happen in stages, and the one piece that you are definitely correct in the fee study is that it is going to adjust each fee separately and this is an across the board reduction,

where everything is reduced, by 7 percent. and when the fee study comes out, some things will probably go up a little bit and a lot of things will go down a bit and it is not going to be across the board, once the fee study is complete, but we are as commissioner melgar mentioned, collecting way too much money, and that it is a legal liability for us because the fee is supposed to recover the cost to providing the service. so we want to be responsible in showing that we are, or that we know that we are collecting too much money and that we are working on, doing a long term fix to make sure that we are collecting the actual cost of providing the service and at this point, we just don't have enough information to adjust each fee separately, but we are in a budgeting process where we are budgeting less money based on a projected fee reduction, that will be long term. and because, we will not have the long term fix for about six months, we are asking for an

interim reduction, of what we believe will be less than the long term reduction. >> i want to let commissioner lee and mccray jump in, if they would, or if they want to. >> commissioner lee? >> okay. >> and this is a funny situation, but i, and the one thing that struck me was, how do we become so efficient? >> well, i am serious about this. i like to know, how we take into account that we are, providing the service, at an adequate, speed. are we doing what we need to do in a speedy manner, and we are asking, do we have vacancies to fill? and how are we doing in the time and in terms of providing service for our customers? are we on target and i know that some of these fees are paid now, for service months, or years down the line. and have we taken that into

account? >> we do still have vacancy and we are still working to fill those vacancies and we do have some backlog, and which filling the vacancies will definitely address, and this fee reduction is right now, we are budgeted to be fully staffed. we have savings because we are not fully staffed, but we are budgeted to be fully staffed and we are collecting the revenue by the end of the year and a little over 30 percent more than we are budgeted. if, we were fully staffed, which would take care of the backlog that would take our responses up to equal our budget, and so to have our revenue that much over our budget, really knows that we have more revenue, than we need to spend to provide the service, even at full staff. when you ask about we look back and say that also, our large permits are valid for three years and so we have a deferred credit program that we administer in finance, and so

if you have a million dollar project and your permit is good for three years, we collect all of the money when you get your permit but on the finance side, we call and we recognize the funds as being used. and in thirds, and so we will take it and we will take two-thirds of the permit fees that you have paid and we will put it in a deferred credit program and we will recognize it over the life of the program. and so if the permit is good for one year we will recognize the entire fee in one year and if it is good for two years we will recognize it over two years, so that we don't have what happened last time where all of the revenue goes away and we still have work because we have made the commitments but we don't have the staff because we don't have the revenue coming in to cover that and that was one thing that we wanted to make sure that we did after the last down turn. >> last year we worked with the controller's office to set up an economic reserve of 30 percent of the operating budget and so we have the deferred credit and plus the

stabilization reserve and unfortunately oddly, we were in a situation where we still have too much money. >> is there anything else from the commissioners? commissioner mccray? >> i am trying to think about too much money. >> and it is a odd problem to have. >> and yet, earlier i asked question that more fees are going to be raised and what are they used for? what is the relationship between too much money at this time, and the statement in these ordinances or in these ordinance that the planning department has weighed in and the board of supervisors has weighed in, what are they trying to tell us that we need to do in terms of too much money? >> and so the board of supervisors has to approve a change in the code. and in terms of the 7 percent fee reduction. and so, that is where they are weighing in and they are weighing in with our budget and they also have to weigh in and

improve the code and the planning department, and i may have to have the city attorney help me here, but it is a, it is a technical requirement, for the california environmental quality act and because they have to evaluate the legislation related to our code, but they don't have anything to do with our fees. >> so, is this a political... what kind of a... what is generating now, verses finishing this study, that we need to make this reduction? i mean... is this a political problem? is this a budgetary? what kind of a problem are we trying to address by doing this now rather than finishing the work and making it measured determination of how this ought to be accomplished? >> it really has... >> i am just trying to think about, if i had too much money,

what problem would i have? >> with whom. >> the biggest problem is really on a finance loan, because a fee is supposed to cover the cost of providing the service when you are collecting more than the cost of providing the service and sometimes that are legitimate reasons to do that for the one time expenses like the building inexpansion. and there is a debate about whether or not the money that you are bringing in is a fee or a tax. >> okay. >> we want to make sure that our fees stay in proportion with the cost of providing the service, not just the actual here is your permit, but all of the related expenses of the building, department related to that permit which takes into account all of those one time things and so we are reaching the level of have too much money where could you have a legitimate debate whether it is a fee or a tax and so we want to be sure that we are showing good faith and addressing the issue of have too much money,

and before we have a liability of being sued, for charging too much, and whether or not that charge is a tax, and not a fee. >> okay. >> so, i guess that i have a related question, and now, i will let that and the other commissions go. and so, i appreciate with this problem, from both of yourself and commissioner melgar, however, because it seems like the fee assessment is so close, which is in august, should be done, right? and it should be done around august and we will be here in the middle of june, why would we, because i am thinking in terms of fairness now for the buildings and developers out there. why would we lower across the board for the 7 percent for just the people who happen to be lucky to be submitting the permits in the 6-month window, when in august, or some time in

august we will know the actual cost, which i think would then be fair to adjust it, like i said, for some permits maybe a little higher, and some permits quite a bit lower, because that would be to me, address this question of fees, for service, and as well as fairness to the builders out there. because i don't want to leave it up to just luck. so, is it possible for example for us to even lower, or agree to the 7 percent, but once the fee report comes out in august, then we will readjust to what ever that report says, rather than the 6-month blanket thing? >> we chose a 6-month period because even though the report will come out in august, once that report is out, we then have to do a code change. and so we are going to have to take that report, determine that we are going to implement all or some of their recommendations, and then you have to amend the code, and then the code has to come back

through the process through here and the board of supervisors and that process is going to take a few months. and so, if we are able to do it faster, than that, whatever new legislation we put forth to amend the code will supercede this and so this could end faster than six months, if we are able to finish our fee study and amendment faster than six months, but if we are or if we don't do it, then this will expire in 6 months. so, we thought that ix months gave us a window of time to realistickly get the report and amend the code and have it go through all of the approval processes and the 30 day grace period after it is signed before it becomes effective. >> commissioner melgar? >> i think that kelley you are very measured in your words that is one of the great things about you. so i, you know, do have a little bit of experience with these fees and in the city departments. and i think that it is both a,

well, it is three things, it is a finance problem and a legal problem, and it is a political problem. because i am sure that you guys know in the last couple of years i have been approached, in conversations with folks you know, at the mayor's office and the board of supervisors and it is like you guys are sitting on this, you know, so i think that people start eying our department, and we are an enterprise department and people are eying the department for you know, where there is pots of money that somehow could be swapped and you know, there is and that happens, and you know, and so i, i think that taking this very, small step i don't think that 7 percent is all that much, compared to you know, what the revenue is, as gale said. the legal problem is, i think, significant, so, but i think that building and development runs this town. you know? and i think that there is, if there is a perception that we have all of these resources when there is all of these

problems out there. then attached to development and building, i think that there is several constituency groups that would or that might, look at what we are doing, so, for a whole bunch of different focuses. so, i think that at 6 months, is not that long but it actually is. >> commissioner lee? >> i also feel that since it is now brought to our attention, it is our obligation to make sure that the fees collected are for the service that they provide and that they are collecting too much and i think that it is our responsibility to do something about it. but, so, i am okay with this, but one more question, how much money are we looking at when we talk 7 percent.

it is only 1.5 million dollars and if you look at our surplus, we are going to bring over 21 million over budget, for charges for service and we are adjusting our budget obviously next year. but the 1.5 million is not all that much money, and it shows, as i said, earlier, a good faith that addressing the finance and the legal jeopardy in collecting too much money. >> okay, any other comments from the commissioners? >> okay. >> thank you. >> seeing none. >> is there public comment on this item? >> >> okay. >> and is there a motion to approve it? >> i make a motion to..., what is it? >> to support the recommendation, the ordinance, as written. >> and i second that. >> there is a motion and a he