Skip to main content

tv   [untitled]    May 30, 2015 4:00am-4:31am PDT

4:00 am
good morning today is wednesday, may 20th. 2015, regular meeting of the building inspection commission, i would like to remind everybody to please turn off electronic devices, the first item on the agenda is roll call. president mccarthy here. mar here clinch here, lee? here mccray present. melgar here. walker here. >> we have a quorum next item is president's announcements. >> good morning web to the may 20th. 2015 bic, meeting, forgive me if i mispronounce any names, as follows, tom hui briefed san francisco committee may first, and gave them an overview of the
4:01 am
dbi, current responsibility in building load. we also talked about the retro fit program, noise, policy for adding dwelling units shg where they can be added with the existing building. chief inspector ron tom, joined them on a workshop may 11th. that attracted over 40 participants, on the focus on preparing your home and property for the next earthquake, this is the second held of the four that dbi is hosting, during the safety month. the first workshop was held may 6th chief commissioner vas kwez-to-for
4:02 am
fife safety tips and the library. dbi staff participated in over site committee, and follow up of the city response to june 2014 civil grand jury, report on rising sea levels the board reject the modifying building and planning code because extensive research and study, to cope with rising sea levels are under way, by multiple city department including planning the port puc and dbi as mentioned last month dbi is participated in the annual project poll high school internship program. this is an eight week program which high school students are mentored by dbi staff, and in june 15th august and 7th. in the past two
4:03 am
year, dbi has 8-10 project poll interns, they have provided invaluable assistance to staff. for the program that begins to june. dbi will have 12 interims up from last year, that is very good. a reminder, june is building safety month. and dbi is in the national reminder why building codes help ensure public safety through well built buildings, as part of safety month, they're running ads, on muni, and brown bag workshop on elements, with four topics discussed each week in may two of which have been completed, two more left, one focusing on water, and one on solar next week wednesday 5-27. check the
4:04 am
website, www.fdbi.org for educational events, and to watch where other workshops are held. with respect to the may 8th. issue of the department magazine, with a focus on what building inspection serviceses, and code enforcements to do to ensure life safety especially fire safety elements and how they're monitored and maintained, the article is timely with the recent spat of multiple alarm fires in the mission tamber line neighbors, with the owners of apartment buildings, key action items, that are owner responsibility for resident safety. kudos to dbi staff, ron dicks, and eliver
4:05 am
si. for -- may second, on the twenty-first, and twenty-second street. -- to help our customers, better understand what is involve involved to obtaining permits and inspections, madame secretary, that concludes my announcements. >> any public comments on the announcements? seeing none, public comment that are not part of this agenda. seeing none. item four. discussion and possible act to adopt the notice of decisions, and finding for appeal regarding 1142 a guerrero
4:06 am
street satish k give up ta appellant. is there any discussion? >> yes i would like to point out, two directions need to be made on the first and third page the vote counts refer to 6 to one, it was actually 5 to 1, it was not here. >> okay i will correct that on the vote 5 to 1. okay. >> good catch commissioner lee. [laughter] [laughter]. >> any other? is there a motion to adopt the finding? >> i move that we adopt the findings with commissioner lee's correction. >> there was a motion, is there a second. >> second. >> is there any public comment
4:07 am
on these? seeing none i will do a roll call vote. mccarthy yes. mar? yes. clinch? yes. lee? yes. mccray? yes. melgar? yes. walker? no. >> the motion carries 6 to 1. thank you. item five, update on the department five inspection, from our april meeting. >> good morning commissioners and director hui, members of the audience, my name general, is randy mclure i'm a project manager at the controller
4:08 am
office we ask that the next items be pushed into one line item for the sake of this presentation. >> i forgot about that we will be calling 5 and 6 together, item six and possible action, to amend building code fee tables tables one a-a-one a-0, and 1 a-s. >> thank you. i'm here with the dbi, fee study project, as well as discuss impacts and changes on the fees going forward. quick overview of the presentation. a little bit of background how we got to the fee study in the first place to start. followed by a little bit of discussion, of dbi's, revenues and expenditures, over the last 5-6 year period. discussion of the report findings, and recommendations to
4:09 am
follow that. further discussion of some of the impacts and post changes to provide solutions for the findings and recommendations, and the discuss of the implementation time line. brief background. in fy 13, the controllers office did an analysis, of expenditures and fund balance of dbi, coming up with four basic recommendations from the analysis the first is to establish and maintenance a reserve with four months of costs, next is to make additional systems fleet and capital, further increased staffing to increase workload demands, and a work study to better match feeses to cost. the first three at this point are done or continuing and ongoing, the fee study is of course why i'm here today. a little bit of
4:10 am
discussion about the fund balance status is important for today's presentation as we know, dbi has been over collecting for a number of years, and under spending relative to revenue and expenditures, causing over the course of the 5-6 year, the fund balance to rise so what you see here today is a financial snapshot table from 2009, to 2015 numbers. 2015's numbers are currently projected, you see the revenue has risen from $49.5 million figure in 09 which is the following of the start of the recession, to 228 million, which is an increase. started taking up after 2009 and
4:11 am
has grown since. total expenditures were equivalent to 2009's revenues and went down as a result of recession, in 2009 and 11, and started to pick back up in 2012, where we are now, an additional 21 million, and 2016, projected at 23 million. in regard to the balance, 2010, and the next five years, is a significant surplus, which speaked at 2014, of the revenue surplus, when you compare revenues versus expenditures, this year it's projected to be a surplus of 16.6 million >> does that include the 7% decrease? >> it does. what we see is both
4:12 am
a revenues and expenditure, to account for the fact that we have a significant surplus situation. this is just the visual the graphic form of the information you just saw. if you think of it in terms of, the top line is dbi's revenue over the six year period and the bottom like is expenditures the surplus is the space between the two lines so we do have the surplus that is built up and acomeulated over the past five years. as part of trying to understand and provide solutions for how to deal with this surplus, mgt america hired a firm based out of sacramento california, to do a pee study, that is completed at this point,
4:13 am
you should have it within your packetses in front of you. the industry standard, a note on methodology, the industry standards for the fee studies in terms of buildingspections is they're done as a snapshot usually one year at a time. san francisco, is unique in terms of construction activity you see in terms of the revenues growth over the past five years, it's difficult to say what a typical year is for us we're in a boom bust cycle. is a 79 million revenue a typical year or a 36 million year? that hard to say. that is the thinking behind the big picture, what the fee study does is take a snapshot that has to be a consideration in
4:14 am
terms of they were looking at mostly fy 14 data, which as you know was a high year for construction activity their findings? overall dbi cost of service is less than the overall fee's revenue, creating that surplus. large projects which are $5 million inspection and above, are a key of that surplus. other fees, interest and so forth account for $5.7 million in revenue, that was an fy 14 figure. there is not much associated cost in terms of administrative time ewed for the fees that is almost all $5.7 million, is almost all just revenue. the next slide gives you a
4:15 am
snapshot of what our large project picture has been over the past five years this is fy 10-14, to give us more context to the study. as you can see, the volume over five year period is two year projects most fell into the 5-50 million category, there was a significant number. that fell into a 50 million evaluation or above category as one, we know was significant at 330 million in the past five years, you also can see the average valuations for these for further context. yes? >> does this aggregate project? or do you combine them for one project. >> it's each project. >> the low on this again, sort
4:16 am
of squaring what we know about the construction activity the low year was fy ten of this grouping. where there were 19 large projects and the higher the last two years, fy 13 and 14, was approximately 16. it goes to show, when the activity is up, more large projects more revenue. fee study recommendations are listed on this slide. given, again, the volatility of san francisco's construction activity the previous fee study had been performed in fy 07 and fy 08. this is currently fy 15 almost to the end. the notion is we should be doing this more often, because we do have quite a bit of volatility in our market, every 3-5 years, the control's office is conducting one fy 17 to implement into fy
4:17 am
18 >> commissioner melgar has a question. >> i'm curious as to how we calculate the cost of service. so is it just that, you know, that individual permit provided to the owner, or project sponsor, or is it you know the cost of the department? i guess my question is, because there are portions of our department that don't generate revenue, like inspection, are the costs of that included when we figure out what the costs are? >> sure. in the fee study their methodology would consider costs to the department. so salaries benefits, all of that would be. >> overall -- >> so the cost for providing that particular service. >> just that particular service or all of the services? like she's saying, we do a lot of
4:18 am
activity related to housing inspection, that are effected by the number of people that live here. so each building that gets built, kind of contributes to our need to do that work so. is it like our full administrative -- >> with the exception of what i mentioned before what we call the other revenues which are things like interest fees and surcharges i believe it was what the fee study consultant fount is 61-$62 million in cost for fy 14, that does include the activities you are describing. >> thank you. >> commissioner? >> this is a follow up question, maybe this is included the fund balance does that include -- we continue to have vacancies, so not enough inspectors let's say, we're not fully staffed up
4:19 am
in housing, so does it account for those aspects? there is areas, we should be doing that we're not doing. >> right so expend chers, were planned to be spent but not actually spent, that rolls into the fund balance as well. that is one reason the recommendation and fy 13, was to ramp up spending, to get the vacancies, filled it would help to draw down some of that as the revenue continues to flow in. but at the end of the year the capper the financial city records, can aaccount for what the actual number of revenueses are, so yes. the second recommendation here by the fee consultant is staff track projects over $50 million, we're talking about staff projects based in a five year window we can expect a handful at a minimum. we believe
4:20 am
this will be more accurate than the time estimate spent, there are economy scale to be found the bigger projects get, so tracking will help with that in the future right sizes, what should the fees cost for these really large projects. further more they added more inspections to the dib, plan revenue, i will show you what that looks like in terms of four fee categories essentially, what we have a $5 million and above category. the new categories would split that up, based on the fact that we have a lot of project that are over $5 million, we showed rite sizing those, tearing those better, help with economies of scale, decrease with the revenue, especially at the higher end. finally, review the revenues, undirect to the provision of
4:21 am
services, we talk about fees, surcharges penalties, and fy 13, that was $6 million of revenues, that didn't have a lot of associated costs with them. the summary proposed changes slide, this is based on taking the fee study recommendations from the consultant recommendation that it is a snapshot in time view discussions with the director the staff the controller and his staff, that would make the most sense to draw down the surplus, while putting dbi in a position where they're not scrambling to find funds, like they have had to do so far. so really three recommendations for changes here. the first is a 7% reduction, expending the 7% reduction, and making that permanent, so a one year revenue impact would be $3.3 million,
4:22 am
again, this is based on fy 14 numbers and volume but you could probably expect it wouldn't be too much different from that going forward. additionally, i mentioned the fee categories at the high end, we are suggesting four of though, 50 to 100, 100 to 200, and 200 +. what this would do in terms of impact would be 5-$6 million a year it achieves economies of scale, we don't currently have in our system finally, there is a 2% charge. it's just tacked on and the estimated impact there isyear, the department would be willing to eliminate that permanently going forward to help with the issues. the combine impact is in the
4:23 am
neighborhood of $12 million, with further increased spending by the department as well as an expected plateauing of the construction market and activity this will help over the next several years, for the fund balance. so the next slide shows a picture of that. and these are based on the previous changes going into effect as well as what we know is true for the existing fund balance. so one of the ideas that came out of the discussions and something the city is basing within autoof it's departments is how to fund it's other postemployment benefits, health liabilities and such in the future. the controllers office did an aanalysis of what that would cost and came up with $31.6 million, which can be set aside with an oped liability
4:24 am
one time, from the balance i believe the only other department that has done this fully is the airport, and they have set it aside, and they have made it to cover future liabilities with ope d. it's something that the controller's office is recommending, all departments do, because it's out there, we know it's coming. and we want to make sure as much as possible, we will have this covered for health care and other liabilities in the future, that is one piece of that that is line item 31.6, that goes across. the rest is used as a contingency stable reserve, in fy fir teen it's $31 million, with the new changes in effect which again, i was around total million dollars, in decreased revenue, increased spending, we get closer to the flat line. we would draw down to the
4:25 am
contingency substantialzation reserve, to the point where fy 18, based on the projections, we have approximately, the four month operating cost reserve for operations. >> commissioner melgar. question? >> what does oped stand for? >> other post employment ben you fits, this is liability health care in the future this is something that the city has a large liability looking forward, so each department we're trying to -- >> thank you. >> thank you. >> commissioner? >> one other question on the fund balance, i know the department looking down the road is thinking about relocating or the city is thinking of relocating us, so there is going to be a lot of i guess infrastructure cost in terms of renting or paying for reconstruction of different
4:26 am
offices, and the other thing that's come before the commission is because a lot of our staff drive, we constantly have to struggle with replacing older vehicles because we want to get more fuel efficient and greener vehicles which is a lot of cost. but we can kind of deferred some of that because of our budget in the past so is that also part of the fund balance? how many vehicles we have every year, moving into new offices, expanding or offices because of staff things like that. >> i'm sorry, is it included in the fund balance? >> yes. >> i'm not sure i would be able to answer that that would be a question for the department, i'm not sure -- are you suggesting it's projected into these. >> right. >> in other words, we cut back on those yearses, when we were in a recession, on upgrading expanding, in some ways. so now
4:27 am
we get penalized for it because we didn't spend it so we have to -- >> good morning, -- department building inspection, yes, it's part of it now, because we had expenditure savings moving forward, because of the last physical year we're doing vehicle replacement, so with the budget included ten new cars and replacement in the budget that has been taken into consideration, in doing the vehicle replacements on the actual move side we know we are going to try to move into a new permit center. at this point, we don't have a cost of what that is going to be shg so that is not budgeted yet, but we have a fund balance, when we get to that point, that's when the fund balance will be used to cover some of those things. >> i just have one -- forgive
4:28 am
me you probably answered it but the 31 million. >> yes. >> when it's moved over, can any other department -- >> no this is a dbi fund. obviously, we would hope it would never be touched until needed, there say flexibility in case offage emergency where it could be used. >> by another -- >> no by dbi. >> just db i.? >> that is correct. >> just when you move funds around. >> it would be a dbi fund. >> okay. >> and the interest? >> i'm sorry? >> the interest on 31 million? >> i would have to get back to you on that [laughter]. so what we have on this slide is where are we now? today, first line
4:29 am
item is the discussion of findings and recommendations made to you what we are also simultaneously moving forward on is trying to get these changes, implemented as a rider to the next physical year's budget. so dbi's staff, with the help of taras taras, and tom, which is in your packet, so you can review it and the city attorney's office is currently working with dbi staff is to get that ready for the june 1st deadline to present as part of the budget then you can sort of see how it goes there july 1st for the mayor, it may not be august 1st, when the mayor signs 30 days after that it would go into effect for most of fiscal year 16. so that ends the presentation. i do want to
4:30 am
thank a couple dbi's taras, and her staff, for providing a great deal of detail and back and forth with us to understand the financial picture of this department as well as controller staff room deel, and our auditor division to try to answer your questions, i know also the dbi staff can help with the specific departmental question questions as well. >> commissioner question for you. >> do they recognize publicicly funded versus privately funded? >> could you explain that. >> if you have a $3 million private enter rise versus a 300 million public, is there fee structure or the same. >> there was no