Self-Supporting Inspection Bureau

BY PETER BRYAN

In today’s difficult economic times, is it feasible for a fire inspection bureau to be self-supporting financially? Fire prevention bureau, new construction unit, fire safety control, or fire inspection services—most of these names describe the portion of our fire service organization responsible for such activities that include the following:

• new construction plans, renewals, and inspections;
• fire code inspections;
• fire prevention activities; and
• hazard occupancy permits and inspections.

Many activities handled by these functions are aimed at reducing injuries and losses and preventing deaths.

This article focuses on inspections related to the fire code. The information discussed is generic enough to apply to agencies using the International Fire Code; National Fire Protection Association (NFPA) 1, Fire Code; and other fire codes, but it does not apply to the NFPA Life Safety Code.

Those functions that are part of new construction/development programs (including and similar to building, planning, and engineering department) or “code-enforcement” inspections relating to the agency’s municipal code or aimed at education activities preventing or reducing life loss, injuries, and property loss (generally called public education, public relations, and juvenile firesetter counseling) are not part of this article.

BEGINNING THE PROCESS

The agency or governing board/elected officials may have policies that include the following:

• A stipulation that fire code inspections must be conducted as well as the components of these inspections.
• The qualifications of the inspection personnel and the staffing requirements.
• If it has been determined that there should be a charge for the inspection, what level of cost recovery should the fee cover, and should it recover the agency’s full costs for the program (employee salaries, overhead, and so on)?
• Should there be “discounted” rates for particular inspections, occupancies, or permit types?

After determining the political realities, discuss the proposed program with business organizations, the Chamber of Commerce, economic development agencies, the building industry, other internal departments, applicable labor units, and so on. You will need to gain consensus and community support if the program is to be successful. You will experience enough political reality issues without having serious objections from the business community and other interested stakeholders.

IMPLEMENTING A PROGRAM

Implementing fee-generating programs during these economic times will be extremely difficult. It will be necessary to demonstrate that the cost is reasonable. Not accomplishing these two facets can certainly doom the program.

Implementing inspections with cost-recovery or charges for services fees can take several forms or directions, such as in the following examples.

• Determine the type of inspections to be conducted. Fire codes generally define the type of occupancy or process requiring permits. State regulations often stipulate mandatory inspections. Occasionally, local agencies adopt their own legislation mandating certain inspections. Some agencies establish program goals or objectives; they differ from mandates and are more of a “desired standard” or “recommendation.” A policy to inspect all commercial and multifamily residential occupancies is more complex to implement than a policy for inspecting only high-hazard occupancies. It may be more difficult to gain acceptance for inspecting all occupancies vs. inspecting only those requiring permits, depending on the community and the political realities.

• Determine the frequency of the inspections. This used to be more of a fire service “standard concept.” Inspections of target or high hazards were done two to four times per year and light-hazard occupancies once a year. Many agencies seldom were appropriately staffed to meet these frequencies. Many agencies considered it effective and successful to conduct one inspection per year (reinspections were independent and in addition to the initial inspections).

• Determine the quality level, effectiveness, and cost efficiency of the inspection personnel. Whether to use company/shift personnel or specialized fire inspection personnel becomes a key question. Many agencies assign company personnel some inspection responsibilities. Few organizations assign no inspections to company personnel. Fewer agencies assign all their required inspection responsibilities to their company personnel. Agencies with frequent emergency incident responses and comprehensive and time-demanding training programs assign far fewer inspections to company personnel. The complexity of the occupancy types and of the related inspections also determine the inspection responsibilities.

• The number of initial inspections and reinspections personnel can complete varies according to the inspection complexity and the inspection personnel’s capabilities and experience, as well as the community’s attitude toward the inspections and willingness to make corrections in a timely manner. The number of inspections can vary greatly. Check with several other agencies or an experienced consulting firm with regard to the recommended number of inspections levels. Getting outside opinion and survey data is very helpful when talking to business organizations and the governing board.

• Determining the level of cost recovery or fees for service is the trickiest part of the process. If self-support is the goal, what cost will the various occupancy types accept when paying for services? Consider the occupants’ ability to pay. Taking this extra step and being able to demonstrate your “business appreciation” and economic empathy can go a long way. If the inspection program is partially subsidized by the agency’s “general fund,” you are relieved of the burden of trying to make the program self-supporting. However, in today’s economic conditions and with increasing demands for service, there is less likelihood of initiating an inspection program with any significant level of subsidy.

SELF-SUPPORTING

If self-support is the goal, determine the following:

• The number, type, and frequency of inspections.
• The time required for each occupancy type or permit type.
• The level of inspection personnel and any benefits, overhead cost, support cost, and so on.
• The cost for each occupancy or permit inspection.
• The annual revenue for all the inspections.
• If any occupancy or permit types would be “discounted” (if so, determine and assess the political realities and whether the discounts would be address specific or the same for all, which would be more defensible).
• The annual cost for the inspection program personnel, including support personnel.
• The difference between revenues vs. costs, and make adjustments.
• Any agency-specific legislative and legal adoption requirements to make the program self-supporting.

BRINGING IT ALL TOGETHER

After determining these answers, review the proposed program with decision makers, as appropriate, and develop and implement a schedule and plan. You are now ready to develop a review and evaluation plan; build in periodic reviews with various stakeholders and agency policy makers. Do not skip this step, and make it known to everyone; government is not real good at self-evaluation and especially not experienced at lowering fees. Then, review with decision makers, as appropriate, revenues vs. costs, goals, stakeholder evaluations, and so on. Finally, implement and conduct a periodic review of the program, such as the quality and quantity of inspections, personnel development, revenues vs. costs, and stakeholder goals and evaluations.

OUR EXPERIENCE

In Rancho Cucamonga, we developed a program around high-hazard occupancy inspections, which included nonsprinklered multifamily residential buildings, occupancies storing and using flammable and hazardous materials, places of public assembly, and educational and institutional facilities. They were chosen based on their high risks, not necessarily because they represented a high frequency of emergency incidents.

We used a cost-recovery user fee concept for initial implementation. There was a thought that it could be self-supporting someday. Businesses that required a permit and those mandated to be inspected bear the cost of the service (inspection program personnel) as an alternative to increasing taxes.

The fire district’s general fund had not been able to afford to implement a program in many years, and there was no likelihood that it would be able to do so in the future. The general mercantile and professional businesses, which do not require permits, are not charged an inspection fee.

We encouraged stakeholder and business input on the fees. Flat-rate fees were generally more acceptable because businesses could budget for the inspection fee annually instead of paying hourly “time and materials” rates, which can vary.

Sometimes, we have had to meet with businesses and adjust the fee for a particular permit. We were willing to lower the fees instead of losing the program. We realized that the fees charged to each individual occupancy and permit type occupancy might not recover 100 percent of the cost of the inspection service.

During the first 18 months, we lowered the fees for the following occupancy or permit types:

• Dry Cleaning. We created three subcategories with reduced fees for small and medium plants (based on the number of machines).
• Condominiums. We eliminated the per-unit fee, since we do not do smoke alarm checks in condos.
• Fireworks Displays. We created three subcategories with reduced fees for small and medium displays (based on display duration).
• Apartments. We reduced the base rate and made per-unit fees applicable after the eighth unit instead of after the fourth unit.
• Small Industrial Shop. We created a new category for small industrial shops that require several operational permits. One permit and a single fee based on square footage cover all regulated operations. This action was intended to limit fees paid by small shops.
• Nonprofits. Permit fees are half of the regular fee amount. Table 1 shows the financial evaluation.

California law states that the cost-of-services fees are not to exceed the actual and full cost. The Fire Inspection Bureau already was staffed with 1.5 inspection personnel and an office specialist II (clerical), who were not included in the above costs. If those costs were included initially, the difference between costs and revenues would be significantly different. Future-year budgeting would adjust the cost of existing personnel or add new personnel to meet the needs; either would adjust the bottom line.

PETER BRYAN retired from the Rancho Cucamonga (CA) Fire Department as chief in September 2009. He served 36 years in the California fire service, including those as chief in Monrovia and Norco. He was also the interim chief in Wheatland in 2010 and in Norco in 2011.

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