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$4M free ride for business & builders?
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Over a third of Manteca’s pending $11.3 budget deficit project for the fiscal year starting July 1 could be tracked back to businesses, builders, and individuals not being charged enough to cover the cost of various municipal services tailored to their specific needs ranging from processing building permits to the use of park facilities.

A study of Manteca’s cost recovery efforts ordered shortly after City Manager Steve Pinkerton came on board this past summer shows Manteca is spending $5,968,416 this fiscal year on services they can legally charge fees for but is receiving only $1,953,338 to cover municipal costs. That is a $4,015,078 annual gap between expenses and revenue.

Five departments analyzed show they are allrunning a deficit for such services. The deficits  are:

•$1,726,242 for the fire department that is recovering nothing of its costs currently.

•$934,286 for the planning department that is recovering 23% of costs currently.

•$783,570 for the building department that is recovering 56% of its costs currently.

•$288,830 for the engineering department that is recovering 70% of its costs currently.
•$282,150 for the parks department that is recovering nothing its costs currently.

The bulk of the costs not being recovered are building related ranging from the processing of plans for buildings such as the new Best Buy Store opening a week from Friday to permits issued to homeowners for swimming pools. The costs reflect staff time in processing and inspecting projects as required by law.

“It’s become very clear to us that we’ve not charged any fees at all or have fees that are 10 to 12 years old,” said Community Development Director Mark Nelson who is in charge of the internal review of how the city does business when it comes to users’ fees.

The municipal attitude for not trying to aggressively seek to recover the cost of doing business with user fees is rooted in the early to mid 1990s when the council was dominated by members who viewed any fee as a tax so therefore it was politically unacceptable.

It got to the point that former City Manager David Jinkens was conditioned not to bring fee increases to the elected leaders during election cycles.

Previous City Manager Bob Adams took another tact which was to have the general fund recover costs for general city assistance for enterprise accounts such as sewer, water, golf, and solid waste. That put in place a 20 percent internal cost recovery fee for other municipal services such as garbage, general city administrative services, vehicle maintenance staff time,  and such that may have been used by an enterprise operation such as the water department.

Prior to Pinkerton arriving, many fees weren’t being given a serious look including fire facilities fees that have remained unchanged for more than a decade despite construction costs soaring.

The fees addressed in Nelson’s presentation, though, are those charged for the cost of doing everything from processing building plans to state-mandated fire inspections required of some businesses that handle toxics and chemicals. Every other municipal and independent fire department in San Joaquin County charges such fees Manteca doesn’t.

Another example is the fire sprinkler system inspections done by the fire department for new commercial and retail construction. The Bass Pro Shop alone in terms of city staff time and resources cost over $12,000. Bass Pro wasn’t billed a penny because there was not adopted policy by previous city councils that allowed it.

Councilwoman Debby Moorhead was concerned that the Building Industry Association in the Delta may not be in the loop if the city is considering taking steps to raise the fees.

Nelson said the BIA was alerted to the fact the study was being done and that it will be brought to them for review but staff wanted to make sure it went to the council first now that the preliminary study has been done.

Vice Mayor Steve DeBrum said private business would have taken the necessary steps long ago to make sure their prices were in line with their actual costs.

Pinkerton said staff’s suggested approach would be to phase in justified fee increases to make sure that they can be absorbed without having a negative impact on job generation in the private sector.

“We do not want to raise the fees put in place (so that) our city is pushed out of the market,” Pinkerton said.