HEALTH AND HUMAN SERVICES AGENCY - T. BELTON
(To Be Heard at 9:30 a.m. or soon thereafter as the matter may be heard)
1. Receive informational presentation regarding establishing revised Fees for Environmental Health Services and Replacing Ordinance No. 915; and
2. Introduce and waive the first reading on "An Ordinance of the Board of Supervisors of the County of San Benito Establishing Revised Fees for Environmental Health Services and Replacing Ordinance No. 915" to better align program costs with cost recovery goals, update master fee schedule, and ensure sustainable services; and
3. Move to select either a 3-year, 5- year, or 7- year cost recovery fee schedule; and
4. Continue Ordinance to be adopted during the second reading on the Consent Agenda on November 17, 2026.
SBC FILE NUMBER: 142.9
ORDINANCE NO.:1099
PUBLIC HEARING
OVERVIEW
This item returns to the Board of Supervisors following the Board's initial review in November 2025. At that meeting, the Board directed staff to complete additional analysis prior to returning with a recommendation. Specifically, the Board requested that the Agency:
- Conduct outreach and survey regulated businesses regarding the proposed fee adjustments;
- Develop three-, five-, and seven-year phased implementation options for Board consideration; and
- Expand the fee comparison to include similar sized California counties in addition to surrounding counties.
Since that direction, staff have completed the requested cost-of-service analysis, developed multiple implementation scenarios, conducted business outreach, reviewed and revised the master fee schedule in partnership with the Planning Department, and performed an expanded county comparison. The results of those efforts are presented in this report as well as an update on the Microenterprise Home Kitchen Operations (MEHKOs) program.
The proposed fee schedule is based upon a comprehensive cost recovery methodology that calculates the actual cost of providing Environmental Health regulatory services. Environmental Health is allowed by law to charge for administration related to applying and enforcing code.
BACKGROUND
The Health & Human Services Agency - Environmental Health Division was established in the late 1950s to support the County's responsibility for regulating food safety, hazardous materials, wastewater systems, recreational health, body art facilities, and other environmental health programs that protect public health. Importantly Environmental Health is responsible for permitting, inspecting, and regulating food operations to protect public health and ensure compliance with California food-safety laws. This includes restaurants, markets, mobile food facilities, temporary food facilities, Cottage Food Operations (CFOs), and Microenterprise Home Kitchen Operations (MEHKOs). Environmental Health reviews permits and facility requirements, conducts inspections, responds to food-safety complaints, and can require corrective action when violations are found. For CFOs and MEHKOs, Environmental Health also oversees the applicable home-based food-safety requirements and may conduct inspections or take enforcement action when necessary.
In 2005, recognizing the need for financial sustainability, the Board of Supervisors retained Muni-Financial to prepare a comprehensive User Fee Study. The resulting report, completed in May 2006, recommended fee increases ranging from approximately 55 percent to over 200 percent to achieve full cost recovery.
Rather than adopting the recommendations in full, the Board directed HHSA to develop an alternative approach that considered staffing and budget constraints. This resulted in Ordinance No. 814 (2007), which implemented phased fee increases tied to the San Francisco Bay Area Consumer Price Index (CPI). Those increases were implemented between 2008 and 2012.
In 2013, the Board repealed Ordinance No. 814 and adopted Ordinance No. 915, establishing a revised fee structure based upon cost recovery principles. A one-time fee adjustment occurred in 2014. However, subsequent annual adjustments anticipated by the ordinance were not implemented due to administrative turnover and inconsistent tracking, resulting in Environmental Health permit fees remaining largely unchanged for more than a decade.
At its November 2025 meeting, the Board reviewed a proposed 52% fee update but requested additional information prior to acting. Specifically, the Board directed staff to:
- Survey of regulated businesses regarding the proposed fee adjustments;
- Present alternative implementation schedules over three, five, and seven years; and
- Compare San Benito County's fee schedule to similarly sized counties in addition to neighboring jurisdictions.
The Agency has completed the requested work and now returns with updated analysis and implementation options for the Board's consideration.
ANALYSIS
The proposed Environmental Health permit fees were developed using a comprehensive cost-of-service analysis designed to determine the actual cost of providing Environmental Health Services associated with each permit type. The objective of the analysis was to establish permit fees that recover the County's cost of administering mandated Environmental Health programs while maintaining fiscal sustainability. The proposed fees are intended solely to recover the cost of providing regulatory services and are not intended to generate revenue beyond the cost of service.
The analysis utilized Calendar Year 2024-2025 permit activity because Environmental Health tracks permit issuance and program workload on a calendar-year basis. Historical Environmental Health tracking workbooks and permit records were reviewed and reconciled to identify the number and types of permits processed within each program area. Permit volumes were then compiled by individual permit type to establish the annual workload used in the cost recovery analysis.
Program costs were based on FY 2024-25 financial information. Fully loaded personnel costs, including salaries and benefits, were provided by the HHSA Fiscal Division for the Environmental Health Manager, three Environmental Health Specialists, and one Office Assistant III. Non-personnel operating expenditures were obtained from the FY 2024-25 Budget Performance Report. Together, these personnel and operating expenses represent the total annual cost of operating the Environmental Health Services.
The total annual personnel and non-personnel costs were divided by the estimated annual productive program hours to calculate a fully loaded hourly cost of providing Environmental Health Services.
Working collaboratively with the Environmental Health Manager, each permit type was evaluated individually to estimate the staff time required to complete all activities associated with administering that permit throughout its lifecycle. Additionally, corrections and updates to the Master Fee Schedule were identified and corrected. Time estimates included application review, plan review, permit issuance, routine and follow-up inspections, compliance and enforcement activities, customer assistance, administrative processing, record maintenance, and permit renewals. Because permit types vary significantly in complexity and workload, each permit category was analyzed independently to ensure the proposed fee accurately reflected the level of effort required to provide that specific service.
The estimated staff hours for each permit type were multiplied by the fully loaded hourly cost to calculate the total cost of providing the service. The resulting cost was then compared to the current fee schedule to determine the degree of cost recovery and establish proposed fees that more accurately reflect the actual cost of service.
Recognizing the financial impact that immediate full cost recovery may have on regulated businesses, staff developed illustrative three-year, five-year, and seven-year implementation schedules. Each phase-in option incorporates an annual Consumer Price Index adjustment of up to three percent and demonstrates alternative approaches for gradually achieving full cost recovery while reducing the immediate financial impact on permit holders.
This methodology provides a consistent, transparent, and defensible framework for aligning Environmental Health permit fees with the actual cost of providing mandated regulatory services.
BUSINESS SURVEY RESULTS
Staff conducted outreach to regulated businesses in accordance with the Board's direction from November 2025. As part of that outreach, Environmental Health solicited feedback regarding current interactions with the program, existing permits, and potential approaches for phasing in proposed permit fee increases via a survey sent out through email with a two-week response window.
Survey Summary
- Number of businesses contacted: 806
- Number of surveys not received due to email error: 47
- Number of responses received: 57
- Overall response rate: 6.2%
Respondents represented a broad cross-section of regulated businesses, including restaurants and food facilities, mobile and temporary food vendors, retail food stores, cottage food operations, agricultural and farming businesses, hazardous materials facilities, hospitality facilities, and other regulated businesses. The survey asked regulated businesses to identify their business type, prior and current interactions with Environmental Health, the permits they currently hold, and their preferred approach for phasing in proposed permit fee increases. Respondents were also provided with an opportunity to submit additional comments or feedback regarding Environmental Health Services and the proposed fee changes.
Of the 57 respondents:
- 3 respondents (5.3%) selected a three-year phase-in;
- 10 respondents (17.5%) selected a five-year phase-in;
- 24 respondents (42.1%) selected a seven-year phase-in; and
- 20 respondents (35.1%) indicated that they were not sure or needed additional information.
Key Themes
- Preference for a longer, more gradual phase-in. The seven-year phase-in was the most frequently selected option. Respondents generally expressed concern about the impact of larger increases over a shorter period, particularly given current operating costs and the financial constraints faced by small businesses.
- Affordability and business sustainability. Several respondents expressed concern that increased Environmental Health fees could disproportionately affect small businesses, including Microenterprise Home Kitchen Operation (MEHKOs), cottage food operations, mobile food vendors, and temporary food vendors. One respondent specifically noted that MEHKOs have limits on production and annual revenue, which may make it difficult for those businesses to absorb substantial increases. Another respondent cautioned that significant increases could encourage some businesses to operate without permits rather than remain in the regulated system.
- Predictability, clarity, and connection between fees and services. Respondents requested greater clarity regarding how fees are calculated; whether temporary food vendor fees apply per event or annually, and how annual increases would be structured. One respondent questioned why annual increases would vary during a phase-in if the intent were to apply a consistent percentage increase. Another indicated that the fee structure was acceptable if the fees are justified by the services provided.
- Temporary and seasonal businesses expressed particular sensitivity to fee levels. Several temporary food vendors indicated that they participate in only a small number of events in San Benito County and that increasing permit costs could affect their decision to participate in local events. One respondent also raised concerns regarding delays in receiving permits after payment, noting that timely issuance is particularly important for businesses operating at scheduled events.
- Stakeholders recognized the value of Environmental Health Services. While some respondents expressed opposition to increases, other comments were supportive of Environmental Health staff and services. Respondents described staff as helpful, friendly, and responsive, and one respondent stated that the department does a great job.
Analysis of Written Comments
The written comments reflect a range of perspectives regarding the proposed fee changes. Several respondents expressed strong opposition to any increase, primarily because of concerns regarding business viability and the potential for increased costs to discourage compliance. Other respondents did not oppose increases outright but emphasized that fees should be proportional to the services provided and appropriate to the scale and earning capacity of the regulated business.
The comments also identified operational concerns that are separate from the amount of the fee itself. In particular, respondents requested clearer information regarding the timing and calculation of increases and raised concerns about timely receipt of permits following payment. These comments indicate that stakeholders value not only reasonable fees, but also predictability, transparency, and efficient permit processing.
Staff also received positive feedback regarding Environmental Health personnel and their interactions with regulated businesses. This feedback suggests that, notwithstanding concerns regarding fees, stakeholders generally recognize the importance of Environmental Health oversight and the value of professional customer service.
COUNTY FEE COMPARISON
Consistent with Board direction, staff expanded the comparison beyond neighboring jurisdictions to include similar sized California counties specifically Tuolumne and Nevada Counties. The comparison provides useful regional context; however, direct comparisons should be made with caution because the three counties do not use identical fee categories or fee structures. In many instances, a comparable fee is not listed for all three counties, and individual jurisdictions may define services differently or combine multiple services into a single fee.
Food Facilities and Retail Facilities
San Benito County's food facility fees range from $397 to $782, depending on seating capacity. The comparable Nevada County fees shown in the data are $953 for facilities with 76–100 seats and $1,191 for facilities with more than 100 seats. No Tuolumne County fees are identified for these food facility categories in the comparison.
For retail facilities under 2,000 square feet, San Benito County's base fee is $324, compared with $596 in Nevada County. For facilities under 2,000 square feet with one food permit, San Benito County's fee is $397, compared with $833 in Nevada County.
For retail facilities between 2,000 and 5,999 square feet, San Benito County's base fee is $445, compared with $983 in Nevada County. For facilities 6,000 square feet or greater, San Benito County's base fee is $541, compared with $1,228 in Nevada County.
The comparison indicates that San Benito County's base retail facility fees are generally lower than the comparable Nevada County fees shown in the data. San Benito County also uses a tiered structure that increases fees based on the number of food preparation or food permit activities associated with a facility.
Mobile and Temporary Food Facilities
San Benito County has a relatively detailed fee structure for temporary and mobile food operations. Temporary food facility permits range from $124 for one to two days to $344 for eight to 25 days, with an annual permit fee of $442.
San Benito County's listed mobile food fees include $397 for a Mobile Food Prep unit, $276 for a Food Vehicle, $201 for a Mobile On-Site Food Cart, and $174 for a Compact Mobile Food Operation (CMFO) with prepackaged, non-potentially hazardous food.
Nevada County's comparable fees include $614 for a Mobile Food Prep unit, $368 for a Non-Motorized Unit, $298 for a prepackaged CMFO, and $123 for a CMFO with limited food preparation. Tuolumne County's listed comparable fee is $362 for an Organizer Permit.
The comparison demonstrates that there is no uniform pattern across mobile food categories. San Benito County is lower than Nevada County for several comparable mobile food permits, while Nevada County is lower for certain CMFO categories. The differing categories make a direct overall comparison difficult.
Cottage Food Operations
San Benito County's Class A and Class B Cottage Food registrations are $62 each, compared with $191 and $302, respectively, in Tuolumne County and $246 and $491, respectively, in Nevada County for the corresponding registration categories shown in the table.
San Benito County's Class B plan check is $397, and the Class B permit is $201. Tuolumne County's listed fee for Class B plan check is $647, while Nevada County's corresponding listed fee is $737.
These figures show substantial variation among the three counties and demonstrate that San Benito County's current Cottage Food registration fee is significantly lower than the comparable fees identified for Tuolumne and Nevada Counties.
MEHKO
San Benito County currently offers a MEHKO program. Tuolumne County and Nevada County do not currently offer MEHKO programs; therefore, a direct comparison of MEHKO programs and associated fees is not applicable
Liquid Waste
Liquid waste fees demonstrate significant variation among the three counties. San Benito County's listed fees include $855 for an individual system, $980 for an engineered system, $2,148 for an alternative/innovative system, and $1,100 for a commercial system.
The comparison data show that Tuolumne County lists $1,314 for an alternative/innovative system and $970 for a commercial system, while Nevada County lists $1,228 and $307, respectively, for those categories.
For another liquid waste category, San Benito County lists $1,510 for an individual system, compared with $930 in Tuolumne County and $953 in Nevada County.
These figures illustrate that San Benito County's fees are higher for some liquid waste services but not necessarily across all categories. The significant differences may reflect differences in the services included in each fee and therefore should not be viewed solely as differences in the cost of the underlying permit.
Water Systems and Recreational Health
For local small water systems, San Benito County's listed fee is $306, compared with $326 in Tuolumne County. San Benito County's water system evaluation fee is $192, compared with $397 in Tuolumne County.
For public pools under 2,000 square feet, San Benito County's fee is $367, compared with $784 in Tuolumne County. For pools between 2,000 and 4,999 square feet, San Benito County's fee is $439, compared with $1,216 in Tuolumne County.
These examples show San Benito County's current fees are lower than the comparable Tuolumne County fees in the categories shown.
Certified Unified Program Agency /Hazardous Materials
CUPA/HazMat fees also vary significantly. San Benito County's listed fees range from $343
for Range 1 to $897 for Range 6. Nevada County uses a different fee structure based on chemical inventory, with fees ranging from $491 for 1-9 items to $982 for 20 or more items. Tuolumne County's listed fees include $379 for an annual HazMat Materials Business Plan.
UST fees provide a more direct basis for comparison. San Benito County's current UST operating permit is $779, compared with $543 in Tuolumne County and $1,044 in Nevada County. For UST repairs, San Benito's minor and major repair fees are $367 and $560, respectively, compared with $710 and $1,189 in Tuolumne County and $614 and $2,456 in Nevada County.
CUPA/HazMat fees vary among the three counties, with different fee structures limiting direct comparisons; UST fees provide the clearest basis for comparison.
Overall Comparison
The comparison demonstrates that San Benito County's current Environmental Health fees are not uniformly higher or lower than those of Tuolumne and Nevada Counties. San Benito County's fees are lower than the comparison counties for several food, retail, cottage food, MEHKO, water system, and recreational health services. In other program areas, particularly certain liquid waste services, San Benito County's fees are higher than the fees shown for Tuolumne and/or Nevada Counties.
It is important to recognize that the comparison is not a direct apples-to-apples analysis. The fee schedules contain different categories, and many services do not have a corresponding fee listed for all three counties. Additionally, the amount of a fee alone does not establish whether one county is charging more or less for the same level of service because the scope of work, inspections, reviews, and other activities included within each fee may differ.
Accordingly, staff used the comparison to provide regional context rather than as the sole basis for establishing proposed fees. The regional comparison was considered along with the County's cost-recovery objectives, the services provided by Environmental Health, and feedback received from regulated businesses through the stakeholder outreach process.
FISCAL IMPACT
The absence of regular fee adjustments has resulted in a significant structural funding imbalance within the Environmental Health Services. While personnel costs, employee benefits, supervision, indirect overhead, and operating expenditures have steadily increased, permit revenues have remained largely static.
During Fiscal Year 2024-25, this resulted in an estimated structural funding shortfall of approximately $340,865 (36%), requiring Public Health Realignment funds to subsidize Environmental Health regulatory services. Continued reliance on these limited funds is not financially sustainable and reduces resources available for other core public health activities, including disease prevention, emergency preparedness, and community health initiatives.
Additionally, uncertainty surrounding future Public Health funding, including potential impacts associated with HR 1, further underscores the importance of establishing a financially sustainable Environmental Health program supported by appropriate user fees.
PROPOSED FEE ADJUSTMENT
To balance fiscal sustainability with the financial impact on regulated businesses, staff have prepared three implementation alternatives for Board consideration:
- Option 1: Three-year phase-in to full cost recovery.
- Option 2: Five-year phase-in to full cost recovery.
- Option 3: Seven-year phase-in to full cost recovery.
Each phased option incorporates annual CPI adjustments of up to three percent and provides a gradual transition toward full cost recovery while reducing the immediate impact on permit holders. Staff recommendations are to implement the five-year phase- in to full cost recovery as this strikes a balance between business impact and ability to maintain operations with a known structural deficit.
CONCLUSION AND RECOMMENDATION:
Environmental Health permit fees have not been comprehensively updated in more than a decade despite steadily increasing costs to provide mandated regulatory services. As a result, the County has increasingly relied upon Public Health Realignment funding to subsidize services that are appropriately supported through user fees. In response to the Board's direction provided in November 2025, staff completed additional stakeholder outreach, expanded county comparisons, developed multiple implementation schedules, update master fee schedule, and performed a comprehensive cost-of-service analysis.
The proposed fee schedule and implementation options provide a transparent and equitable framework for achieving long-term fiscal sustainability while ensuring the Environmental Health Services can continue providing the critical public health protections required by state law. Adoption of a revised fee schedule will better align permit fees with the actual cost of service, reduce reliance on limited General and Public Health resources, and position the Environmental Health Services to continue protecting the health and safety of San Benito County residents and businesses.
The Agency recommends adoption of a revised Environmental Health Fee Ordinance and updated Environmental Health Fee Schedule as the proposed revisions are intended to align permit fees with the actual cost of providing mandated Environmental Health Services, update and correct errors in the master fee schedule, improve long-term fiscal sustainability, maintain compliance with state regulatory requirements, and reduce reliance on limited Public Health Realignment funding. Further, the Agency is recommending the BOS adopt the proposed five-year master fee schedule in an effort to balance cost recovery for Environmental Health and reduce fee increase impacts to local businesses.
ATTACHMENTS
The following documents provide further details and supporting analysis for the proposed fee adjustments:
A. Current Section 5.01.091
B. Redlined Amendment to Section 5.01.091
C. Proposed Section 5.01.091
D. Master Fee Schedule (2019)
E. Redlined Amendment to Master Fee Schedule (2019)
F. Proposed Master Fee Schedule
G. Proposed 3 Year Master Fee Schedule
H. Proposed 5 Year Master Fee Schedule
I. Proposed 7 Year Master Fee Schedule
The Environmental Health Division’s continued reliance on Public Health Realignment funds poses a significant risk to the County’s overall public health infrastructure. These funds are already strained and are critical for services such as outbreak investigations, maternal and child health programs, chronic disease prevention, and emergency response coordination. With the implementation of HR1, additional budgetary strain is anticipated with Public Health Realignment.
Implementing the proposed fee adjustments will eliminate the structural deficit; without the fee adjustment the Environmental Health Division will remain underfunded, resulting in ongoing budget shortfalls. These shortfalls threaten the division’s ability to maintain staffing levels, perform mandated inspections, process permits, and enforce state and local regulations. Over time, service reductions and delays in Environmental Health Division operations could increase public health risks and reduce regulatory compliance.
There will be no impact on the County General Fund.
1. Receive informational presentation regarding Establishing Revised Fees for Environmental Health Services and Replacing Ordinance No. 915; and
2. Introduce and waive the second reading on "An Ordinance of the Board of Supervisors of the County of San Benito Establishing Revised Fees for Environmental Health Services and Replacing Ordinance No. 915" to better align program costs with cost recovery goals, update master fee schedule, and ensure sustainable services;
3. Move to select either a 3-year, 5 - year, or 7- year cost recovery fee schedule; and
4. Continue Ordinance to be adopted during its second reading on Consent Agenda on November 17, 2026.