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Home My WebLink About55B - RESO - SOLAR PERMIT FEE WAIVERREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: APRIL 4, 2011 TITLE: RESOLUTION AUTHORIZING A TWO-YEAR EXTENSION OF THE SOLAR PERMIT FEE WAIVER PROGRAM CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on I" Reading ? Ordinance on 2nd Reading ? Implementing Resolution ? Set Public Hearing For_ CONTINUED TO FILE NUMBER Adopt a resolution authorizing a two year program to encourage solar installations by temporarily waiving permitting fees. DISCUSSION In 2008, the City Council adopted a two-year solar permit fee waiver program to encourage solar installations for both residential and commercial properties Citywide. The two primary uses of solar energy include using the sun to heat water and/or to generate electricity. Both rely on widely tested and proven technologies, however, their application has in the past been limited by the high acquisition/construction costs compared to potential cost savings. This dynamic continues to shift, however, given the ever increasing cost of energy as well as various programs offered by both the State and local utility companies incentivizing solar installations. Additionally, advances in solar energy manufacturing technologies, as well as expanded markets for solar energy products are continuing to improve the cost/benefit equation. Prior to the adoption of the solar permit fee waiver, the city processed relatively few solar energy projects (less than five projects per year). This number has increased substantially, and in 2010, the City processed over 40 solar permit applications, a 227 percent increase from 2009 (Exhibit 1). This increase is consistent with growth in solar projects statewide as California leads the nation in solar installations with nearly 77,000 installations generating 779 megawatts. Amongst California counties, Orange County ranks 6th in Megawatts installed and 4th in number of solar installations. Studies have shown that an average sized residential solar installation will save 50- 65 percent on monthly electricity costs and offset the equivalent carbon dioxide (C02) emissions of driving a car 22,600 miles. The City's review of solar energy projects involves both plan check and inspection services. The amount of time required for these reviews depends primarily on the size and complexity of the solar installation. For example, a passive solar water heater requires an average of one staff- hour to review while a large commercial or industrial solar installation may require as many as ten staff-hours. 55B-1 Solar Permit Fee Waiver Program April 4, 2011 Page 2 A thorough review and analysis of the type of solar installation requests received over the past two years indicates that the vast majority of solar installations in Santa Ana are for single-family residences. Based on this analysis the Building Division has begun implementing several streamlining procedures to reduce the time required to review and issue permits for residential solar projects, as well as reducing the fiscal impact of the fee waiver. As a result, at an average rate of $55/hour the respective permit fees would range from approximately $55 to $550 per project with the majority being in the $275 to $385 range. In a continued effort to promote greater sustainability in the community, it is recommended that the City Council authorize a two-year permit incentive program for solar energy projects. Such a program would waive permit/inspection fees as an incentive to encourage solar installations. Homeowners, business owners, contractors and others would still submit plans and obtain permits and inspections - but the fees for such projects would be waived. While the number of solar energy projects is expected to continue to grow, the environmental and community benefits of the use of solar energy outweighs the impacts to workloads and/or reductions in revenue. Enacting the two-year permit incentive program would require City Council approval of an amended fee resolution. The attached survey (Exhibit 2) of other Orange County communities shows that while three other cities have adopted solar permit fee waivers, most continue to charge for permits and inspections. Through the renewal of this program Santa Ana will remain a leader in promoting the use of solar energy for both commercial and residential applications. FISCAL IMPACT It is estimated that the total cost of the two-year program would be approximately $27,500 in uncollected permitting fees for the general fund revenue accounts for Building Plan Check (no. 0111600253600), Plumbing Plan Check account (no. 011600253602), Electrical Plan Check account (no. 0111600253601), Building Permits account (no. 0111600251601), Plumbing Permits account (no. 0111600251602), and Electrical Permits account (no. 0111600251603). APPROVED AS TO FUNDS AND ACCOUNTS: Ja . Trevino Executive Director Planning & Building Agency MF:rb mNeportsZolar Permits Fee Waiver - RFCA Francisco Gutierrez Executive Director Finance & Management Services Agencyu- Exhibit: 1. Solar Permit Fee Waiver Program Analysis Memo 2. Orange County Solar Installation Permit Costs 55B-2 MEMORANDUM To: From: Executive Director Planning & Building Agency Matt Foulkes, Management Aide Subject: SOLAR PERMIT FEE WAIVER PROGRAM ANALYSIS In 2008, the City Council adopted Resolution No. 2008-027 establishing a 2-year program to encourage the use of solar technology in the City. This memo will provide a brief background of the program and solar energy in California, an overview of the current ordinance and an analysis of Santa Ana's program to date. Backaround: Initial discussion of this program began with the City Council Development Committee as part of a larger effort to broaden the City's environmental agenda. The Committee recommended to the City Council at its February 7, 2008 meeting that the City adopts a pilot program to encourage installation of solar technologies in Santa Ana. The Committee felt that the opportunities to encourage solar technologies are immediate and represent a significant step toward creating a more sustainable community. The two primary uses of solar energy include: • Solar hot water systems - Using the sun to heat water, typically for pools and spas. • Photovoltaic systems - Using the sun to generate electricity. Total Installations - California 60,000 -- ------------ 40,000 L ---- 20,000 -- -- - Date: February 8, 2011 g ener gy prices an improvements in soar technology have resulted in a substantial increase in the number of solar installations in California over the last 3-years to over 50,000. This increase in the number of solar energy systems has occurred primarily at the lower end of the system size spectrum indicating the continued growth in residential solar installations. Ordinance Details: Average System Size (kW) 10.0 -- 8.0 6.0 ----- 4.0 2.0 0.0 00 m O r, N M ? Ln W ? 00 M m M O O O O O O O O O O 0) 0) O O O O O O O O O O N rl N N N N N N N N N N Solar installations require both a building and electrical permit as well as their associated plan checks and inspections. The two-year program waives these fees as an incentive to encourage solar installations. The fee waiver applies to all types of solar energy systems including both residential and commercial. Prior to the adoption of the program, the costs associated with offering free permits, plan check and inspections were calculated. The time required for processing was EXHIBIT 1 Both systems have been available for over 30-years but had seen limited use due to the high cost of installation and lack of efficiency. However, increasin d ' I 55B-3 Solar Permit Analysis February 8, 2011 Page 2 estimated to be between one and ten hours with a majority requiring between five and seven hours. Al an average rate of $55 per hour, the respective permit fees would range from $55 to $550 per project, with a majority falling in the $275 to $385 range. This amount was determined to be minimal compared to the amount of plan check and inspection fees the City receives in a year. Analysis/Conclusions: Prior to the adoption of the resolution in 2008, the City processed very few solar energy projects (less than 5) per year. Information gathered over the last three years has yielded the following: • 2009 - (10) solar permits issued. Double the amount issued in the previous year and more than triple the number of permits issued in 2007. • (41) Solar permits issued in 2010 represents a227% increase in solar permits compared to 2010. • Studies have shown that an average sized residential solar installation will save 50-65 percent on monthly electricity costs and offset the equivalent carbon dioxide emissions of driving a car 22,600 miles. • 98% of solar permits issued in Santa Ana since 2008 have been for residential installations. Recommended Action: Based on the low costs associated with the programs operation and the numerous environmental benefits provided by solar technology, it is recommended that the Solar Permit Fee Waiver program be renewed for an additional two-years. AMatt Foulkes MF:rb rb\rfca\04-04-1 1 \Solar Permit Program Analysis 55B-4 Orange County Solar Installation Permit Costs tr ;` Ctt x r Y x for,l41k1!V Solar.'; ?..? San Clemente $13,818.00 Orange $11,540.00 Fountain Valley $11,179.00 Garden Grove $9,264.00 Laguna Woods $9,119.00 Yorba Linda $7,967.00 Fullerton $7,691.00 Costa Mesa $7,464.00 Westminster $6,735.00 Seal Beach $6,272.00 Newport Beach $6,138.00 Placentia $5,222.00 Aliso Viejo $4,696.00 Tustin $2,730.00 Lake Forest $2,540.00 Rancho Santa Margarita $2,326.00 Buena Park $2,198.00 La Habra $1,861.00 Laguna Niguel $1,400.00 Laguna Hills $1,399.00 Brea $1,350.00 Cypress $1,187.00 Stanton $978.00 Irvine $809.00 Dana Point $778.00 Huntington Beach $730.00 San Juan Capistrano $700.00 La Palma $571.00 Villa Park $275.00 Los Alamitos $250.00 Orange County $16.00 Anaheim $0.00 Laguna Beach $0.00 Mission Viejo $0.00 Santa Ana $0.00 Source: Sierra Club Study, Jan. 2011 Exhibit 2 55B-5 55B-6 ROH - 04/04/11 RESOLUTION NO. 2011-XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AUTHORIZING A TWO-YEAR CONTINUANCE OF A SOLAR INSTALLATIONS PERMITTING FEES PROGRAM TO ENCOURAGE BY TEMPORARILY WAIVING BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. On May 5, 2008, the City Council adopted a two-year solar permit fee waiver program to encourage solar installations for both residential and commercial properties Citywide. The program's initial adoption resulted from discussions with the City Council Development Committee and a desire to broaden the City's environmental agenda. By all accounts the program has been successful over the past two years in incentivizing solar installations and should be renewed in order to continue supporting the City's goals with respect to the environment and sustainability. B. The two primary uses of solar energy include using the sun to heat water and/or to generate electricity. Both rely on widely tested and proven technologies. However, their application has in the past been limited by the high acquisition/construction costs compared to potential cost savings. This dynamic continues to shift, however, given the ever increasing cost of energy as well as various programs offered by both the State and local utility companies incentivizing solar installations. C. Prior to the adoption of the solar permit fee waiver, the city processed relatively few solar energy projects (less than five projects per year). This number has increased substantially, and in 2010, the City processed over 40 solar permit applications, a 227 percent increase from 2009. This increase is consistent with growth in solar projects statewide as California leads the nation in solar installations with nearly 77,000 installations generating 779 megawatts. D. The City's review of solar energy projects involves both plan check and inspection services. The amount of time required for these reviews depends primarily on the size and complexity of the solar installation. A thorough review and analysis of the type of solar installation requests Resolution No. 2011-XXX Page 1 of _ 55B-7 received over the past two years indicates that the vast majority of solar installations in Santa Ana are for single-family residences. Based on this analysis the Building Division has begun implementing several streamlining procedures in order to reduce the amount of staff time required to review and issue permits for residential solar projects. As a result, at an average rate of $55/hour the respective permit fees would range from approximately $55 to $550 per project with the majority being in the $275 to $385 range. E. A two-year permit incentive program for solar energy projects would waive permit/inspection fees as an incentive to encourage solar installations. Homeowners, business owners, contractors and others would still submit plans and obtain permits and inspections, but the fees for such projects would be waived during the program period. While the number of solar energy projects is expected to continue to grow, the environmental and community benefits of the use of solar energy outweighs the impacts to workloads and/or reductions in revenue. Section 2. The City Council hereby waives, for a two year period commencing upon the date of adoption of this Resolution, both plan check and inspection service fees for solar energy projects that generate heat or electricity and for which permits are granted. This wavier shall apply to permits granted no later than two years from the date of adoption of this Resolution. Section 3. This resolution shall take effect immediately upon its adoption by the City Council, and the Clerk of the Council shall attest to and certify the vote adopting this Resolution. ADOPTED this day of , 2011. Miguel A. Pulido Mayor APPROVED AS TO FORM: Joseph Straka, City Attorney By: Ryan O. Hodge Assistant City Attorney Resolution No. 2011-XXX Page 2 of _ 55B-8 AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify that the attached Resolution No. 2011-XXX to be the original resolution adopted by the City Council of the City of Santa Ana on , and that said resolution was published in accordance with the Charter of the City of Santa Ana. Date: Clerk of the Council City of Santa Ana Resolution No. 2011-XXX Page 3 of _ 55B-9 55B-10