Bogus Argument by City about Fee Waiver Costs

L.A. City Adminstrative Officer Yolanda Chavez
Photo: David Sprague

The vote by City Council to waive permit building fees on December 2 was put on hold, largely because Yolanda Chavez of the L.A. City Administrative Officer, who testified, warned of dire financial consequences for the city.

Circling the News reached out to Chavez for budget clarification after receiving an email from a reader who wrote “When evaluating anything the city/state says/does about the Palisades, it must be viewed with the mindset: They DO NOT want to rebuild the Palisades as it was! — Instead, they want to build as much low income, single and multifamily affordable housing as possible.  To that end, they’re concocting fictitious rationales for NO FEE WAIVERS and other obstacles to further discourage rebuilding.”

The excuses Chavez offered include: Prop 218; the millions of dollars it will cost the city based on estimates; this is regular building (not a federal disaster declaration); and the city does not want to show favoritism for one area of the city over another.

CTN asked Chavez about the Department of Building and Safety upcoming fiscal year’s budget which predicts operating costs increase by $8.1 million and represent broad service enhancements with only a fraction estimated at $1 to $2 million possibly attributed to the Palisades Fire. She was asked how many additional employees were hired by the Department to deal with rebuilds.

Chavez responded, “Under state law, Proposition 218, the City can only charge a fee for the reasonable cost of the specific service. Providing fee waivers to certain customers would create the perception that other customers are overpaying for services to subsidize the cost of the fee waivers.  This is why the City has to ensure that a fee waiver or fee reduction is covered by an unrestricted source (General Fund), which mitigates legal liability associated with Proposition 218.”

CTN asked Chavez “Providing fee waivers to certain customers would create the perception that other customers are overpaying for services to subsidize the cost of the fee waivers which you link to Prop. 218?”

Prop 218’s purpose is to specify how fees could be increased within the confines of Prop 13 limitations on property related taxes and fees, but that does not apply to the General Fund to cover fee waiver cost.

Additionally, the county has waived permit building fees, so the City’s refusal to waive fees has nothing to do with Prop 218

In that same email, Chavez was asked how the $80 million figure was reached and reminded her that the City waived building fees after the Northridge Earthquake for residents. She was asked “Why are not Palisades treated equally? Frankly, it seems discriminatory.”

Chavez no longer argued Prop. 218, but responded, “If the City is waiving or reducing fees, these must be covered by a flexible funding source such as the General Fund.  The services (staff) provided by LADBS and other departments are paid for by these fees and therefore must be covered even if the City chooses to waive or reduce the fees.

She explained how the city figured out the cost of waiving permit fees for rebuilding.

“The current estimated General Fund impact is between $86 and $278 million based on the LADBS assessment of the number of properties damaged, the extent of the damage, the type of damage, and a projection on the number of rebuilds for each property type,” Chaves said. “The estimated range encompasses rebuilding between 110 and 150 percent of the footprint of the original property.”

In other words, the City does not know how many homes will rebuild or the size, so they are estimating that everyone will rebuild.

“Although the current draft ordinance does not include a limit to the potential scale increase for each project, the estimate includes an assumption of up to a 150 percent scale increase based on the projects anticipated by LADBS,” Chaves said, but did not answer how many additional employees were hired by LADBS to handle Palisades Fire rebuilds.

And why were the fees waived after one major disaster declaration [earthquake] and not another [fires]?

Chavez explained, “After the Northridge Earthquake, FEMA and the California Office of Emergency Services (Cal OES) provided the reimbursement for the fee waivers, not the City.  At present, FEMA will not reimburse the City for services considered normal and customary for the building process.”

A major federal disaster declaration is not normal and customary.

Initially FEMA did not pay for the Northridge Earthquake, it was strictly the City waiving the fees. Then later the city was reimbursed by FEMA.

Chavez was asked, “Why would you think the same would not happen here? Is the City not expecting to receive any FEMA funding? Or does the city not plan to use FEMA funding towards rebuilding and instead use it to help the City’s budget gap?”

There was no response.