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  Regular-Community Services   #   32.    
Board of Supervisors Community Services  
Meeting Date: 01/26/2021  
Brief Title:    Fee Waiver for Restaurants Facing Financial Hardships Due to the COVID-19 Pandemic
From: Taro Echiburu, Director, Department of Community Services
Staff Contact: April Meneghetti, Director of Environmental Health, Department of Community Services x8597

Subject
Consider a fee waiver program for the 2020-21 fiscal year for Environmental Health (EH) permit fees for restaurants, bars, restaurant/bar combinations and bakeries to ease the financial burden of permit fees during the COVID-19 pandemic. (General fund impact $200,000) (4/5 vote required) (Echiburu/Meneghetti)
Recommended Action
  1. Consider program design and direct staff on program approach to administer fee waiver for restaurants, bars, restaurant/bar combinations, and bakeries health permit fees;
     
  2. Approve the fee waiver program and adopt the budget resolution to increase the 2020-21 Budget up to $200,000 using COVID-19 Contingency (general) funds to the Department of Community Services budget to backfill the waiver of the fees; and
     
  3. Delegate authority to the Director of Environmental Health and/or the Chief Financial Officer to waive fees under this program for the 2020-21 fiscal year after reviewing applications and finding support that fee payor has a financial hardship and makes a net economic contribution to the County that exceeds the amount of the fee.
Strategic Plan Goal(s)
Thriving Residents
Robust Economy
Reason for Recommended Action/Background
Many restaurants are facing unprecedented financial hardships due to the COVID-19 pandemic.  Since March they have been unable to operate their businesses at full capacity.  For many months during the pandemic they have only been able to offer food for take-out or delivery due to public health restrictions that have fluctuated during the pandemic commensurate with the public health risk of COVID-19 at the time. During the Master Fee hearing on December 15, 2020, the Board of Supervisors directed the Division of Environmental Health (EH) to work with the Department of Financial Services on approaches to provide relief to those restaurants that have been impacted due to COVID-19 on their permit fees to support their ability to continue to operate.

Currently there are 518 food businesses permitted by EH that during normal times would provide a sit down dining experience.  These facilities generate $404,340 (as shown in table below) in fee revenue which funds the retail food safety program.  These fees cover the routine and 1st follow-up inspections that are required by the California Retail Food Code. EH has continued to perform these inspections to ensure that the restaurants are preparing food in a safe and sanitary manner to protect the public health of the citizens of Yolo County.
 
Fee Title  Fee Active Sites Total Fee Revenue
RESTAURANT UNDER 650 SQ FT - YEAR PERMIT  $     672.00 55  $                 36,960.00
RESTAURANT OVER 650 SQ FT - YEAR PERMIT  $     789.00 376  $               296,664.00
BAR - YEAR PERMIT  $     410.00 11  $                   4,510.00
RESTAURANT / BAR COMBINATION - YEAR PERMIT  $     931.00 63  $                 58,653.00
BAKERY - YEAR PERMIT  $     581.00 13  $                   7,553.00
Total   518  $               404,340.00
 
EH has no other revenue source and does not have sufficient reserves to cover a fee waiver program for restaurants, general funds will be needed to backfill the revenue these fees generate, should they be waived. In utilizing general funds to support a fee waiver program, the Board must comply with its policies on Cost Recovery and Fees, which requires a finding that the waiver or reduction in fee does not create a gift of public funds. In addition the board must find that payment of the fee would cause a financial hardship based on the financial condition of the payor, and that the payor is making a net economic contribution to the County that exceeds the amount of the fee, and that the payor engages in activities that advance the Board’s strategic plan.

In designing a program, staff kept these principles in mind but recognized the need to provide a simple and efficient means to support the Board’s request.

Proposed Partial Fee Waiver Program:
County staff of the Environmental Health Division and the Department of Financial Services collaborated on program design as well as looked to lessons learned from the prior small business grant program. In determining the program design, it seemed prudent to have an application that ensures that restaurants have been economically impacted by COVID-19 and that it would be prudent to measure it in a similar way if possible to state and federal grant programs for simplicity of businesses to apply. Under this approach, businesses would need to demonstrate a revenue loss due to COVID-19 to qualify for a fee waiver and businesses that are more substantially impacted should be eligible for a higher percentage waiver of fees.
 
Revenue Loss Fee Waiver Amount
Under 25% 0% of Environmental Health Fees
25%+ 50% of Environmental Health Fees
50%+ 100% of Environmental Health Fees
 
Under the approach mentioned, those businesses that are most impacted by COVID-19 would receive the highest amount of fee waivers. In addition, the County plans to utilize a simple application and request documentation similar to the federal Paycheck Protection Program (PPP) which in the second round is only eligible to businesses that can demonstrate a greater that 25% revenue reduction due to COVID-19. The revenue reduction would be expected to be measured on a calendar quarter in 2020 compared to the corresponding calendar in 2019. For example, a business could compare its performance during the calendar quarter of September – December 2020 and compare that against the September – December 2019 quarter and provide accounting records demonstrating the revenue loss.

Staff are requesting that $200,000 be set-aside for the administration of this program as it is anticipated that many restaurants will qualify due to the significance of the public health measures taken. Businesses that have already paid their fee in the 2020-21 fiscal year would be eligible for a refund of prior fees paid while businesses that may renew their permit in the January – June, 2020 period would be able to apply for the waiver during their renewal. Only previously existing businesses would be able to apply and new businesses would not be eligible for fee waiver. The current recommendation is to use a portion of the COVID-19 contingency that was set aside during the September, 2020 adopted budget hearing. Should the Board approve this budget request, approximately $650,000 would remain in that contingency to continue to address any additional unforeseen costs associated with the pandemic between now and the end of the fiscal year.

Staff are looking for any Board feedback or direction on program design and in addition an approval of the waiver program and related budget resolution.

Should this be adopted, staff from Financial Services, Environmental Health, and County Administrator’s Office would work collaboratively to develop the application and publish the program to eligible businesses. Applications would then be reviewed upon receipt with waiver (or refund) to occur 2-3 weeks after a complete application is received.
Collaborations (including Board advisory groups and external partner agencies)
The Division of Environmental Health has collaborated closely with the Department of Financial Services and the County Administrator’s Office on development of this recommendation.
Competitive Bid Process
N/A

 

Fiscal Information
Fiscal impact (see budgetary detail below)
Fiscal Impact of this Expenditure
Total cost of recommended action $200,000
Amount budgeted for expenditure $0
Additional expenditure authority needed $200,000
One-time commitment     Yes
Source of Funds for this Expenditure
General Fund (COVID Cont) $200,000
Further explanation as needed
The COVID-19 contingency set-aside by the Board as part of the adopted budget would be the general fund source used to fund this expenditure. Should applications exceed board authorized amount, staff will waive fees on a first-come first-served basis and would return to the Board to consider additional authorization, if needed.
Attachments
Att. A. Budget Resolution
Att. B. Presentation

Form Review
Inbox Reviewed By Date
Chad Rinde Chad Rinde 01/14/2021 10:38 PM
Leslie Lindbo Leslie Lindbo 01/15/2021 07:01 AM
Taro Echiburu Taro Echiburu 01/15/2021 08:57 AM
Financial Services Shelby Milliren 01/15/2021 10:06 AM
County Counsel Hope Welton 01/15/2021 10:20 AM
Charlie Tschudin Charlie Tschudin 01/15/2021 11:48 AM
Form Started By: April Meneghetti Started On: 01/08/2021 03:12 PM
Final Approval Date: 01/15/2021
Level double AA conformance,
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