AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 17-000953
MEETING DATE:	10/31/17
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	OC Public Works (Pending)
Department contact person(s):	Shane Silsby (714) 667-9700
	Kevin Hills (714) 967-0824

Subject: OC Public Works OC Survey Subsidy Reduction Program

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Resolution to Form

Public Hearing

3 Votes Board Majority

Budgeted: No

Current Year Cost: N/A

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: No

Current Fiscal Year Revenue: $902,812

Funding Source: See Financial Impact Section	County Audit in last 3 years: No

Prior Board Action: 09/26/2017 #45, 03/10/2015 #24, 09/09/2003 #54, 06/20/1978 #63

RECOMMENDED ACTION(S):

1.	Conduct Public Hearing.
2.	Rescind Board Resolution 03-306 Geomatics Map Check Fee Schedule, effective January 1, 2018.
3.	Adopt Resolution (Attachment A) updating the OC Survey Fee Schedule with the rates effective January 1, 2018, including approval of a technology surcharge to fund system maintenance and upgrades and find that the revenue resulting from the OC Survey Subsidy Reduction Program will not exceed the estimated reasonable costs to provide the services and that the costs of providing these services are reasonably allocated among the fees established.
4.	Adopt amended Board Resolution 15-017 (Attachment J) for removing the surveyor classifications and associated rates, effective January 1, 2018, from the OC Development Services Fee Schedule approved by the Board of Supervisors on March 10, 2015.

SUMMARY:

Adoption of the proposed OC Public Works Survey Fee Schedule for multiple survey services provided to the community will reduce subsidies currently provided by the OC Road and OC Flood funds.

BACKGROUND INFORMATION:

The OC Public Works-Survey Service Area (OC Survey) provides chargeable services to the general public, private developers and to public agencies including the County of Orange (County). The request for approval of an updated fee schedule for OC Survey services is part of OC Public Works’ larger effort to implement efficiencies in its current processes, to meet Internal Audit findings. Approving this updated fee schedule will allow OC Public Works to develop a template cooperative agreement for local agencies that will include all of the services available into one agreement; thereby, eliminating the need to accommodate individual job requests.

The adopted fee structure for the 2003 OC Survey and 2015 OC Development Services Fee Schedule include flat fees and deposits based upon hourly staff or consultant costs. The fees are intended to fund the costs associated with survey map checks, map reviews, land records reviews, filings and recordings. These map checks, reviews, filings and recordings are a requirement of the County Surveyor by California State Government Codes 27550-27564, County Resolutions and County Policies. The current OC Survey fees do not allow OC Public Works to recover the full cost of the services provided to public, private and municipal customers and are therefore heavily subsidized by OC Road and OC Flood funds.

Previous Board Policy Direction

Resolution 78-946 adopted by the Board of Supervisors (Board) on June 20, 1978, directing County agencies and departments to achieve full cost recovery.

On December 14, 1993, the Board approved Resolution 93-1399 which established fees for Survey map checking services.

On August 6, 2002, the Board approved Resolution 02-255 establishing fees for Geomatics – Map Check services (25 % increase).

On September 9, 2003, the Board approved Resolution 03-306 establishing a Geomatics-Map Check Fee Schedule, which established the current fees for map checking (the total increase was 40% over a span of two years). The first fee adjustment was $108 per hour effective October 14, 2003, to October 10, 2004. The second fee adjustment was $126 per hour effective October 11, 2004, to present.

Table A shows the comparison of OC Survey fee adjustments from 1993 through 2017, as proposed. The proposed fee for 2017 represents an average hourly chargeable rate of Surveyor I, II and III classifications.

Table A

Resolution 03-306 authorized the County Surveyor to charge the blended hourly rate of $126 per hour, which is well below the existing actual cost for the provision of all related services.

Overview of Current OC Survey Subsidy

The costs for services that OC Survey provides for survey map checking, map reviews, land records reviews, filings and recording are currently subsidized. For FY 2016-17, OC Survey subsidized $2,113,372 which is 77.6% of the total actual of $2,722,785 for service performed. The total revenue from existing fees for map check services was $609,413 representing an actual cost recovery of 22.4%. The total revenue included actual and accrual revenue for services. The accrual revenue for services can take up to one year or more to be collected due to the fact that the life span of map reviews can range greatly. The implementation of the recommended fee schedule will update 17 existing fees and establishes eleven new fees.

The subsidized amount of $2,113,372 in FY 2016-17 includes: 1) map checking services for non-billable Records of Survey, 2) review and filing of Corner Records under unfunded State mandates, and 3) utilization of a blended rate of $126 per hour, which includes service and supplies.

Additional information regarding these elements:

· Records of Survey: As a matter of policy, some jurisdictions approve subsidies for their survey and map checking services as incentives for economic development. OC Survey Records of Survey maps have been subsidized to help support building a robust Land Information System, assisting the development community with updated survey records and supporting the Capital Improvement Programs (CIP), ensure timely and cost effective compliance with surveying requirements throughout the County.

Corner Records: OC Survey will continue to heavily subsidize the Corner Record reviews due to Business and Professions Code § 8773.2(e). Corner Record review and filing per this section only allow charges in the amount required for the recording of a deed with the Clerk Recorder. The Clerk Recorder in Orange County charges flat fees of $6.00 for the first page and $3.00 for each additional page to record a deed. A Corner Record consists of two pages; therefore, the cost of filling would be the same for recording a two-page deed, or $9.00 total.

· Blended Hourly Rate: OC Survey currently has to use a blended hourly rate due to the limitations of the Geomatics Land Information Billing System, which can only handle one rate for billing. The current blended rate of $126 per hour is roughly equal to the proposed hourly rate for a Surveyor I and is well below the proposed hourly rate for Survey II and III classifications which are $148 and $173 per hour respectively. The latter classifications generally complete the primary share of the workload.

OC Public Works Subsidy Reduction Program

The OC Public Works Subsidy Reduction Program proposes to address the existing OC Survey fee subsidy in two ways: a) cost reduction through reorganization and efficiencies; and b) revenue.

Cost Reduction/Efficiencies

The 2014 OC Public Works restructuring focused on efficiency and effectiveness. OC Survey reduced the use of consultants for the non-billable map checking subdivision section by approximately $79,000 per year by utilizing OC Survey staff on all non-billable maps (i.e. Corner Records). Organizational structure changes within the Map Check Unit also allowed more efficient use of staff time to cover peaks in seasonal workloads. Workload balancing allows for the unit to continue to deliver services within statutory time requirements utilizing internal staff and external Map Check Architect-Engineering contractors as demands exceed internal capacity. Other cost reductions and efficiencies include:

· A Classification Maintenance Study approved by the Board on September 26, 2017, will allow OC Survey to retain and acquire a highly skilled experienced workforce which will reduce review time and increase the quality of map check reviews while providing the opportunity for OC Survey staff to work on projects from inception through recording. The maintenance study will also reduce staff turnover and will provide a higher level of engagement and communication with the Land Surveyor community.

· One of the results of these organizational changes is increased focus on the service delivery process and simplification of existing regulations. This effort is being accomplished in partnership with the Local Chapter of the California Land Surveyors Association (CLSA), OC Development Services and the Development Processing Review Committee (DPRC) to ensure a business based approach in addressing high impact issues.

· Presently, OC Survey tracks all map checking transactions within a custom SharePoint application and the billing is recorded in the Legacy Geomatics Land Information Billing System which was implemented more than 15 years ago. The systems in use are not integrated with other financial or time tracking systems, have limited function in billing, are cumbersome to use, provide little in the way of statistical information and do not provide the robust cloud based customer-facing interface which is a best practice by jurisdictions today. Implementation of the new Customer Relationship Management System is an essential OC Public Works initiative to increase overall efficiencies and enhance customer service. OC Survey is participating in the new Land Management System which will enable OC Survey staff to track their time and more accurately process billing by classifications instead of one blended hourly rate.

Revenue

Cost reductions and efficiencies will aim to reduce OC Survey subsidies. However, given that the service provided is currently subsidized at 77.6%, additional revenue is also required. Per County Accounting Policy R-3: Revenue Policy, Requirements and Responsibilities, no fee or service charge may exceed the estimated amount required to provide the service for which the fee or charge is levied. OC Public Works has conducted a comprehensive fee study that reviewed the current fee schedules relative to actual cost recovery and compared current fees to those of surrounding jurisdictions. The proposed revenue strategies include the following:

To comply with the Internal Audit Department’s recommendations, OC Survey will charge Time and Materials (T&M) for the services shown within the proposed fee schedule. The projected cost for map checking services in FY 2017-18 is $2,855,633. The projected revenue from map checking services is $1,803,989 and the subsidy is $1,051,644. The resulting cost recovery is 63.2 % with a subsidy of 36.8% remaining.

The proposed fees for map checking New Address/New Street Name, Records of Survey and Corner Records will contribute approximately $581,271 of the projected revenue.

Included with map checking services, OC Survey will extend additional services to County Departments and other Agencies who may require support for their CIP, or programs in the following areas: Right-of-Way Surveying and Mapping, Geographic Information System Services, Unmanned Aerial Vehicle (drone) Mapping and Land Surveying and Mapping Management services. OC Public Works has already received requests for these services and the projected revenue will be based on T&M by position classification.

In addition, OC Public Works worked with the Building Industry Association of Orange County, the DPRC, the Orange County Chapter of CLSA and other key industry representatives on the proposed fee adjustments to reduce the subsidies for OC Survey services.

Table B

Subsidy % Comparison

	Actual Cost	Actual Revenue*	OCPW Subsidy $	OCPW Subsidy %	Cost Recovery %
FY 2016-17 Current Rate	$2,722,785	$609,413	$2,113,372	$77.6%	22.4%
	Projected Cost	Projected Revenue	OCPW Subsidy $	OCPW Subsidy %	Cost Recovery %
FY 2018-19 Proposed Fee Fully	$2,855,633	$1,803,989	$1,051,644	36.8%	63.2%

* The actual revenue includes actual and accrual which requires a minimum of a year to recognize

Recommended Fee Adjustments

As noted, the current fee structure for OC Survey includes a flat fee of $110 per hour for map issuance fees and a blended rate of $126 per hour for calculating the labor costs based on the hours that OC Survey charges for the map review. The collective composition of all map fees has remained generally the same since 2004, with approximately 97.8% charged via the blended rate and 2.2 % via flat fees.

Flat Fee: OC Survey is recommending a flat fee for map issuance. To determine the appropriate recommended adjustment, time studies were conducted to define the actual costs associated with each map issuance.

Hourly Rate: OC Survey is recommending hourly rates based on Human Resource Position Classification hourly rates and incorporation of a multiplier. The hourly rates include burden and overhead costs. To be consistent with OC Development Services, OC Survey incorporated this “multiplier” methodology within the fee study. The purpose of a multiplier is to distribute all applicable departmental costs associated with an employee’s direct chargeable hours. The fee adjustments recommended at this time include a 1.0 multiplier based on the assumption that the OC Flood and OC Road funds will continue to subsidize Corner Records due to the previously citied Business and Professions § Code 8773.2 (e).

Technology Surcharge

OC Public Works recommends adoption of a 3% technology surcharge for services provided to permit applicants for property in unincorporated County territory consistent with OC Development Services Fee Schedule 15-017.

Compliance with Proposition 26

The proposed OC Survey fees are not a tax as defined by Article XIII C of the California Constitution. Article XIII C Provides a specific exemption for "a charge imposed for a specific government service or product provided directly to the payer that is not provided to those not charged, and which does not exceed the reasonable costs to the local government providing the service or product."

Recommendation Summary

OC Public Works is requesting the Board rescind Resolution 03-306 containing the outdated hourly rate; remove all surveyor classifications from the OC Development Services Fee Schedule; and adopt a new resolution and the proposed updated fee schedule for OC Survey services. The proposed schedule is based on current hourly rates that seek to minimize the OC Road and OC Flood subsidies for the services provided by OC Survey. The new fee schedule will be used to charge for Survey services performed through both OC Survey and OC Development Services.

Compliance with CEQA: The subject activity is statutorily exempt from review under CEQA pursuant to Section 21080(b)(8) of the Public Resources Code and Section 15273 of the CEQA Guidelines as the establishment or modification of rates fees and charges which are for the purpose of meeting operating expenses, including employee wage rates and fringe benefits; purchasing or leasing supplies, equipment, or materials.

FINANCIAL IMPACT:

Implementation of the recommended fee resolution is estimated to produce total revenue in the amount of $1,803,989 per fiscal year, which demonstrates an adjustment of approximately $1,194,576 if fully implemented. The hourly labor rates and flat fees are recommended to become effective on January 1, 2018. The increase in revenues will reduce the reliance on Fund 115-OC Road and Fund 400-OC Flood. Funding Sources for ongoing subsidies: Road Fund 115: 48.55% and Flood Fund 400: 51.45%.

Future revenues will be included in the budgeting process for future years based on historical actual recorded revenues.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - OC Survey Fee Resolution, Program and Fee and Deposit Schedule
Attachment B - Fee Study Summary
Attachment C - California Constitutional Provisions
Attachment D - Government Code Section 27550-27564, 66018 and 6062a
Attachment E - Fee Checklist for Existing Fees
Attachment F - Fee Checklist Proposed Fees
Attachment G - Public Resources Code 21080(b)(8)
Attachment H - Professional Land Surveyor's Act Code 8773.2
Attachment I - Fee Comparison to Neighboring Jurisdictions
Attachment J - Amended Resolution 15-017
Attachment K - Redline of Resolution 15-017
Attachment L - County Accounting Policy R-3
Attachment M - Business and Professions Code 8773.2(e)