Honorable Mayor and Members of the Hermosa Beach City Council
Regular Meeting of November 14, 2017
Title
REBATES AND FEE WAIVERS FOR GREEN BUILDING AND
SUSTAINABILITY INCENTIVES RE-AUTHORIZATION/UPDATE
(Environmental Analyst Leeanne Singleton and
Community Development Director Ken Robertson)
Body
Recommended Action:
Recommendation
It is recommended that the City Council take the following actions:
A. Authorize staff to offer the following fee waivers, reductions, and incentives to further facilitate community investment in new and innovative technologies;
1. Waive preferential parking permit fees for 100% alternative fuel vehicles (no change)
2. Rebate 50% of building permit fees for Zero Net Energy buildings as verified through participation in the Savings By Design or California Advanced Homes programs. (no change to rebate, proposed change to standard from LEED or Build it Green to Zero Net Energy, and proposed change to the verification method to rely on existing programs by the utilities that can offer additional incentives)
3. Rebate 50% of building permit fees - Energy Upgrade California or HERO program funding (no change)
4. Rebate 50% of electrical permit fees for 100% alternative fuel vehicles (change from 100% rebate to 50% - see item 7)
5. Rebate 50% of planning and building permit fees for installation of photovoltaic systems (including 50% of roofing permit fee when roofing permit includes solar tile roofs or green roofs) (change from 100% rebate to 50% - see item 7)
6. Rebate 50% of electrical permit fees for battery storage units (new incentive offering)
7. Rebate 100% of planning and building permit fees when installation includes all of the following: photovoltaic solar or wind, electric vehicle charging, and battery storage (new incentive offering)
8. Rebate 50% of Planning and Building permit fees associated with installation of a small wind energy systems (change from 100% rebate to 50% - see item 7)
9. Rebate 50% of fee for Unusual Architectural/Building Review for demonstration of new technology, materials, or construction methods designed to reduce water, waste, or energy use and agreement to share results/ feedback (new incentive offering)
10. Waive landscape plan review fee (or equivalent value waived from planning permit fees when application is for a project that includes other planning permits) for installation of trees beyond current code or replacement requirements. (new incentive offering)
B. Direct staff to report back to City Council in conjunction with the next building code adoption cycle anticipated in late 2019; and
C. Direct staff to explore options for establishing or joining a green business program and reduce business license fees for certified green businesses.
Body
Background:
History of Sustainability Incentives
In 2008 the City Council provided direction to staff to waive permit fees associated with the installation of solar photovoltaic systems as a means to encourage businesses and residents to install solar and reduce their energy consumption.
In 2010 additional incentives to support greater deployment of electric vehicles and energy efficiency projects were recommended by the Green Task Force and adopted by City Council to include:
• Waiving preferential parking permit fees for 100% alternative fuel vehicles
• Waiving building permit fees for service upgrades for 100% alternative fuel vehicles
• Rebate 50% of building permit fees for energy efficiency/LEED or Build-It-Green certification
• Rebate 50% of building permit fees for energy efficiency improvements that qualify for Energy Upgrade California or PACE programs
In 2011, Council further authorized waiving or rebating planning and building permit fees for installation of small wind energy systems. These incentive programs were renewed by Council in 2013 and 2015, each with direction to staff to return to Council after two years for evaluation.
As a sustainability and economic development incentive, Council has also previously authorized staff to waive parking meter fees at silver post meters and provide complimentary electric vehicle charging at several stations located in commercial areas throughout the city. This incentive was initially approved in April 2010 and most recently re-authorized by Council in November 2014. This incentive has previously been considered separately from the other listed sustainability incentives included in this report.
Building Code Adoption 2016 Cycle
The City of Hermosa Beach is also required to adopt the minimum California Building Code Standards every three years. The California Building Codes include residential, housing, mechanical, plumbing, fire prevention, electrical, green building, and energy codes. As part of the triennial building code updates the City has the ability to adopt the minimum standards or consider additional local amendments. When the City adopts its building codes, Council must make specific findings required under the Health and Safety Code that allow the City to adopt regulations that are stricter than the uniform codes. Council adopted the 2016 edition of the California Building Code, with local amendments related to the fire code, on October 27, 2016 and the new codes went into effect beginning January 1, 2017.
The Green Building and Energy sections of the code have been updated with each code cycle to facilitate greater levels of energy efficiency and phase-in the statewide goal of net zero energy (NZE) buildings for the residential sector beginning in 2020 and non-residential buildings in 2030. As part of the 2016 Building Code Cycle update, staff established a working group consisting of local architects, builders, residents and other stakeholders, primarily to consider local amendments to help the City meet its commitment to sustainability (as well as other possible local amendments). The group discussed ideas for mandatory or incentivized energy saving measures beyond the California Building Code, such as rooftop photovoltaic and water reuse systems. However, after several meetings and email exchanges, the consensus was to encourage, rather than mandate, such systems and with the changes to the 2016 Green Building and Energy Codes, staff recommended not adopting any additional requirements beyond the minimum code.
Analysis:
Following the 2016 California Building Code adoption, staff reconvened the working group that included representatives from the City’s energy providers, Southern California Edison and Southern California Gas Company, and the South Bay Cities Council of Governments which administers several energy efficiency and green building programs, to discuss options related to green building and sustainability incentives. The working group discussed the extent to which the existing incentives have been used since 2009 (Table 1), and considered whether new technologies such as solar tile roofs or battery storage should be incentivized. SCE’s Savings by Design program was discussed as a tool to verify compliance and reduce the amount of staff time needed to confirm projects are eligible for incentives.
Existing Incentives Evaluation
Since 2008, the City has offered various incentives and rebates to encourage the community to adopt sustainability initiatives. The waiving of parking permit fees for the preferential parking program for 100% alternative fuel vehicles (105 in 2016/124 in 2017) and rebating planning and building permit fees for solar photovoltaic systems (33 in 2016) are the most frequently used programs. The fee waiver for electrical circuit upgrades associated with EV charging infrastructure has been used sparingly (2 in 2016) and is expected to increase as more drivers purchase electric vehicles. All other existing incentive programs have not been utilized since they were approved.
Proposed Updates to Incentives Program
Based on the input provided and the assessment of the existing incentives, staff is proposing updates to the previously authorized incentives to focus on new or emerging technologies and relying upon established and verified programs or standards offered by the California Energy Commission through the local utilities (Southern California Edison and Southern California Gas).
Staff is seeking Council approval to authorize staff to offer the following fee waivers/rebates, - with changes from the existing incentive program noted in parenthesis - to further facilitate community investment in new and innovative technologies:
1. Waive preferential parking permit fees for 100% alternative fuel vehicles (no change)* It should be noted that replacement permits will be charged full price.
2. Rebate 50% of building permit fees for Zero Net Energy buildings as verified through participation in the Savings By Design or California Advanced Homes programs. (no change to rebate, proposed change to standard from LEED or Build it Green to Zero Net Energy, and proposed change to the verification method to rely on existing programs by the utilities that can offer additional incentives)
3. Rebate 50% of building permit fees - Energy Upgrade California or HERO program funding (no change)
4. Rebate 50% of electrical permit fees for 100% alternative fuel vehicles (change from 100% rebate to 50% - see item 7)
5. Rebate 50% of planning and building permit fees for installation of photovoltaic systems (including 50% of roofing permit fee when roofing permit includes solar tile roofs or green roofs) (change from 100% rebate to 50% - see item 7)
6. Rebate 50% of electrical permit fees for battery storage units (new incentive offering)
7. Rebate 100% of planning and building permit fees when installation includes all of the following: photovoltaic solar or wind, electric vehicle charging, and battery storage (new incentive offering)
1. Rebate 50% of Planning and Building permit fees associated with installation of a small wind energy systems (change from 100% rebate to 50% - see item 6)
2. Rebate 50% of fee for Unusual Architectural/Building Review for demonstration of new technology, materials, or construction methods designed to reduce water, waste, or energy use and agreement to share results/ feedback (new incentive offering)
3. Waive landscape plan review fee (or equivalent value waived from planning permit fees when application is for a project that includes other planning permits) for installation of trees beyond current code or replacement requirements. (new incentive offering)
Authorization Timeframe
City staff is further requesting Council to authorize these incentives through the end of the 2019 calendar year and provide direction to staff to return with an update or modifications in conjunction with the next California Building Code cycle. By aligning the sustainability incentive updates with building code cycles, staff can consider changes to the minimum building code requirements in determining whether to continue, modify, or offer new incentives.
Maximum Solar Permit Fees
Through legislation, SB 1222 in 2013 and AB 1414 in 2017, the State of California has placed a requirement that local permit fees for rooftop solar energy systems cannot exceed the estimated reasonable cost of providing the service for which the fee is charged. A summary of the legislation is provided below:
• SB 1222 - local permit fees cannot exceed $500 plus $15 per kilowatt for each kilowatt above 15kW for residential rooftop solar energy systems, and $1,000 plus $7 per kilowatt for each kilowatt between 51kW and 250kW, plus $5 for every kilowatt above 250kW, for commercial rooftop solar energy systems, unless certain conditions are met. This law and maximum fees apply until January 1, 2018.
• AB 1414 - amended the law enacted under SB 122 so that the local permit fees cannot exceed $450 plus $15 per kilowatt for each kilowatt above 15kW for residential photovoltaic systems. This law also expands the definition of “solar energy system” to specify that a design feature additionally includes any photovoltaic device or technology that is integrated into a building, including, but not limited to, photovoltaic windows, siding, and roofing shingles or tiles. This law and maximum fees apply until January 1, 2025.
Although the City has waived payment of the solar permit fee since 2009, the City of Hermosa Beach has established a fee that is based on the estimated amount of staff time needed to process the application and issue a permit. The fee established (effective 12/1/16) following the comprehensive user fee study, was set at $539 per system. Since the City Council has provided previous direction to waive the fee, the City can be considered in compliance with the state law. In the event there is direction to no longer waive the permit fee, staff will review and update the solar permit fee as part of the next fee schedule update to go into effect 12/1/17 to ensure it is compliant with state law.
Green Business Incentives
While the above-mentioned incentives are available to both residents and businesses, they are primarily utilized by residents. Staff and the working group expressed interest in identifying additional opportunities to encourage businesses to implement sustainable initiatives in the workplace. One potential initiative identified was to offer reductions or rebates on annual business licenses for businesses that participate in a certified green business program.
Hermosa Beach currently has a Clean Bay Certification program in which the city’s 60+ restaurants participate, however the program is limited to restaurants or establishments that serve prepared food. Hermosa Beach does not currently have a green business certification program, although there are many nearby Southern California cities that offer a similar program.
Staff has conducted a cursory review of options for a local green business program and examples from other jurisdictions, but is seeking Council direction on whether there is interest in establishing such a program prior to investing additional staff time in designing a program for Hermosa Beach. Most nearby jurisdictions with green business programs are participants in the California Green Business program, which has a minimum annual cost of at least $3,000 to join, and cities may or may not charge a fee for businesses to participate in the program. The California Green Business Program currently has 3,500 businesses certified through their program. Nearby participants in the California Green Business Program include:
• Manhattan Beach established a green business program in 2012 and has approximately 30 businesses certified through the program.
• Santa Monica has partnered with Santa Monica Travel and Tourism, the Chamber of Commerce, Arts Earth Partnership, and Sustainable Works to cover the cost of participation. There are approximately 50 businesses participating in the Santa Monica Program.
• Culver City launched their sustainable business certification program in 2017 and partners with the Culver City Chamber and Culver City Downtown Business Association to cover the cost of the City’s participation, and charges businesses a nominal annual fee to cover the cost of verification (fee waived for the first 15 businesses annually).
• Los Angeles, Thousand Oaks, Laguna Beach, Irvine, and Huntington Beach also participate in the California Green Business Program.
General Plan Consistency:
PLAN Hermosa, the City’s General Plan, was adopted by the City Council in August 2017. As part of that document, the City set community wide greenhouse gas reduction goals that are consistent with California statewide goals to reduce emissions 66% below 2005 levels by the year 2040. As part of the plan approval process, Council expressed preference for and adopted policies that focus on an incentive and voluntary measures to reducing greenhouse gas emissions rather than mandatory requirements for new buildings.
Continuation and refinement of these green building and sustainability incentives helps to implement the following General Plan goals and policies:
Mobility Element:
• 5.1 Prioritize development of infrastructure. Prioritize the development of roadway and parking infrastructure that encourages private electric and other low carbon vehicle ownership and use throughout the city.
Sustainability + Conservation Element:
• Goal 2. Hermosa Beach is a low-carbon community meeting State greenhouse gas reduction goals by 2040.
• 2.3 Grants and incentives. Seek additional sources of funding to support implementation of greenhouse gas reduction projects for the City, as well as residents and businesses.
• 2.7 Emerging technologies. Regularly evaluate new and emerging technology changes that can help to reduce greenhouse gas emissions and encourage the use of such technology when it is demonstrated to be effective at reducing greenhouse gas emissions and a fiscally responsible investment.
• 3.5 Clean fuels. Support increased local access to cleaner fuels and cleaner energy by encouraging fueling stations that provide cleaner fuels and energy to the community.
• 4.1 Renewable energy generation. Support or facilitate the installation of renewable energy projects on homes and businesses.
• 6.8 Recycled building materials. Where cost effective and structurally feasible, maximize the use of recycled building materials in new construction projects.
Parks + Open Space Element:
• 10.2 Non-invasive landscapes. Encourage the planting of native, non-invasive, and drought-tolerant landscaping and trees, and encourage the planting of edible landscapes and fruit trees.
Fiscal Impact:
In the 2016 calendar, the City waived approximately $23,500 in permit fees associated with the existing incentives. Table 2, provided below, estimates the number of permits to be waived or reduced for each incentive. With the revised incentives, it is estimated that the City would waive approximately $22,700 in permit fees annually, a slight decrease from previous years.
Since it is unknown exactly how many permits may be issued associated with these incentives, Council could also elect to institute an annual cap on the total amount of fees to be waived to ensure the fiscal impact does not exceed certain levels.
Respectfully Submitted by: Leeanne Singleton, Environmental Analyst
Concur: Kristy Morris, Environmental Analyst
Concur: Bob Rollins, Building Official
Concur: Ken Robertson, Community Development Director
Noted for Fiscal Impact: Viki Copeland, Finance Director
Approved: Sergio Gonzalez, City Manager