Town officials acknowledged last week that a mistake in the printed fee table used by the Atherton Building Department caused staff to overcharge projects with a valuation of $1 million or more.
The errors were quietly fixed, and town staff chose not to inform either the City Council or building department clients. Councilman Charles Marsala raised the issue and the council is set to discuss it at its next meeting, on Wednesday, Oct. 17.
According to documents provided to the Almanac by Councilman Marsala, the mistake was discussed in November by Finance Director John Johns and Mike Cully, an outside consultant then serving as the town's interim building official.
Mr. Marsala said he heard from Mr. Cully this spring about the overcharges, and filed two public records requests in order to document them.
Anyone who discovers an overcharge may ask for a refund, as long as the request is made within 180 days of the error coming to light, said City Attorney Marc Hynes.
Mr. Hynes said it was unclear how many projects might have been overcharged, and he did not know how long the flawed fee table was in use.
Mr. Johns said that then-city manager Jim Robinson was told about the fee table when it came to light.
"We discussed the matter of possible overcharges extensively with the former city manager and the former building official," said Mr. Johns.
Mr. Robinson agreed that any corrections should be done on a go-forward basis, and that the amount of the overcharges was likely to be immaterial, based on extensive fee validations conducted during the audit of the building department, Mr. Johns told the Almanac.
Mayor Alan Carlson said the council should have been told about the problem with the fee table.
'Tolerable level of error'
The discovery of the overcharges is documented in an e-mail dated Dec. 1, 2006 between Mr. Cully and Finance Director John Johns.
Mr. Cully wrote, "I am troubled by our discussion on Wednesday wherein you elected to dismiss the inaccuracy of the existing printed fee tables as insignificant."
He goes on to say, "A quick calculation I did on a $2 million project showed it was about $800 (over) on the permit fee alone. If you did a quick calculation for a $5 (million) project you would discover that we are assessing the permit holder about $3,300 more than we should. This is 10.7 percent too much."
Mr. Cully ends the e-mail by saying, "I strongly suggest you rethink your position and we make these corrections as quickly, and quietly, as possible."
Mr. Cully did not return the Almanac's phone calls seeking comment.
"I can't think of single project that had a permitted value of $5 million. That would have been a 20,000-square-foot house," Mr. Johns told the Almanac.
When validating building department fees, he found variations on average ranged from $100-$500, Mr. Johns said.
"I considered it to be a tolerable level of error. Again, we're talking about permit fees in the tens of thousands of dollars," he said. A $2 million project would have been assessed permit fees of about $40,000 he said.
The building department is entitled to recoup its costs by charging fees, but legally, it cannot make a profit. "This happened at a time when the building department had a net operating loss for the year of $200,000," Mr. Johns said. "Despite any apparent minor overcharges, the building department wasn't making a profit."
The problem with building fees is the latest revelation in a series of unflattering events for Atherton.
Atherton's building department is undergoing a major overhaul following numerous problems turned up during a three-phase internal audit led by Mr. Johns last year. Among the issues: sloppy practices, poor record-keeping and lack of accountability. One of many changes in its practices is the dropping of preprinted fee tables in favor of using a computer spreadsheet program to calculate building permit fees.
The San Mateo County Civil Grand Jury recently concluded its investigation of the building department with a report that singled out City Manager Jim Robinson, accusing him of lack of supervision and failing to keep the City Council informed of significant issues within the building department.
And another grand jury investigation may be getting underway. In recent weeks, several Atherton residents said they have been interviewed by the grand jury, apparently in connection with the town's treatment of Mr. Johns.
Mr. Johns was suspended at the end of August and is currently on paid leave while a hostile workplace complaint against him is investigated. Mr. Johns denied the allegation against him and has said that he is the one who has suffered hostility and threats as a result of his work for the town.