To: Board of Supervisors
From: Anna Roth, Health Services Director
Report Title: Hearing to Consider Adoption of the Microenterprise Home Kitchen Operation Program and Related Fees
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
1. OPEN a public hearing on the proposed Resolution, which would establish Microenterprise Home Kitchen Operation permit fees to the schedule of fees that fund the Environmental Health Division of the Contra Costa County Health Services Department; RECEIVE and CONSIDER all oral and written testimony; and CLOSE the hearing.
2. ADOPT the Resolution, establishing Microenterprise Home Kitchen Operation permit fees to the schedule of fees set forth in Attachment A to the Resolution.
3. ADOPT Ordinance No. 2024-05, establishing a two-year pilot program for permitting Microenterprise Home Kitchen Operations within Contra Costa County, which was introduced on May 14, 2024.
FISCAL IMPACT:
Staff does not project a fiscal impact from the adoption of Resolution No. 2024- and adoption of Ordinance No. 2024-05.
The costs to administer the Microenterprise Home Kitchen Operations program will initially be absorbed by the existing budget of the Contra Costa Health, Environmental Health Division (EHD) and supplemented by an upcoming Microenterprise Home Kitchen Operations grant program allocated in the 2022 State budget. However, more funds will be needed to continue administering the program. For that reason, adoption of Resolution No. 2024- will create a source of revenue to fund this program. With the adoption of this Resolution, there is no impact to the County’s general fund.
BACKGROUND:
On January 1, 2019, California Assembly Bill 626 (AB 626) went into effect and Microenterprise Home Kitchen Operation was established as a new type of retail food facility that allows an individual to operate a restaurant in their private residence.
In October 2019, California Assembly Bill 377 (AB 377) made some changes to AB 626 and provided regulatory clarity. This Bill provided each county full discretion to authorize the Microenterprise Home Kitchen Operations program within its jurisdiction.
In July 2023, California Assembly Bill 1325 (AB 1325) further modified state law relating to Microenterprise Home Kitchen Operations, increasing the maximum amount of gross annual sales and increasing the limit on the number of individual meals that can be sold by a Microenterprise Home Kitchen Operation.
Currently, the legislation permits counties to authorize individuals to use their home kitchens to prepare, sell and serve up to 30 meals per day, or 90 meals per week, and collect a maximum annual revenue of $100,000. Family members can be employed to help operate Microenterprise Home Kitchen Operations, along with a maximum of one paid non-family employee. Risky food preparation techniques are prohibited, and menus are restricted to items that can be prepared and sold the same day. Meals can be served in the home, picked up by the customer, or delivered by the Microenterprise Home Kitchen operator.
Microenterprise Home Kitchen Operations require an annual valid health permit issued by the Contra Costa Health, Environmental Health Division (EHD), an initial permitting inspection and an annual routine inspection thereafter. Microenterprise Home Kitchen Operation owners are required to obtain a Food Manager certificate and employees are required to obtain a Food Handler card.
Since the state established Microenterprise Home Kitchen Operations in 2019, ten counties have permanently authorized these operations. In addition, three counties have temporarily authorized Microenterprise Home Kitchen Operation pilot programs. As of March 2024, there are nearly 400 permitted Microenterprise Home Kitchen Operations across the state.
On October 24, 2023, the Board of Supervisors directed EHD to return with an ordinance for temporary authorization of Microenterprise Home Kitchen Operations in Contra Costa County as a pilot program.
The attached Ordinance No. 2024-05 would temporarily authorize the permitting of Microenterprise Home Kitchen Operations within the incorporated and unincorporated areas of the County. It establishes a two-year program, ending June 30, 2026. EHD anticipates proposing permanent adoption of the program at the conclusion of the two-year program.
The benefits of authorizing Microenterprise Home Kitchen Operations include:
• Increased economic opportunities;
• Encourages safer and legal home businesses;
• Allows people to learn how to operate small-scale food businesses;
• Enables in-home care for families while still generating income;
• Creates additional family income; and
• Provides food in remote locations and food deserts.
Once this Ordinance is adopted and effective, the Environmental Health Division of the Contra Costa County Health Services Department will begin issuing annual permits to Microenterprise Home Kitchen Operations.
Consistent with Environmental Health Division’s practice, the annual health permit for a Microenterprise Home Kitchen Operation would have an associated fee, intended to fund the new program. Activities required of this new program include, but are not limited to, permit application review, initial permitting inspection, permit issuance, and an annual routine inspection.
Fees to implement this new program are based on an estimate of required staff time and other resources. As the program matures and data is collected through the Environmental Health Division’s data management system, which tracks staff time in significant detail, the fee can be adjusted by a future Board of Supervisors resolution to reflect the program-specific expenditure of resources.
Environmental Health Division recommends $696.00 as the inaugural fee for a Microenterprise Home Kitchen Operation initial permit, which is based on the Board of Supervisors adopted hourly rate of $199.00 per hour (Resolution 2019/521). Attached as Exhibit A is a breakdown of the calculation of the adopted $199.00 hourly rate, previously presented to the Board in July 2019. This initial permit fee would provide for approximately 1.75 hours of application and standard operating procedure review, and the remaining 1.75 hours would be dedicated to an initial permitting inspection.
It should be noted that the Environmental Health Division’s hourly rate incorporates both the direct cost of an employee conducting work as well as other indirect costs related to Environmental Health Division’s administration. Thus, a permit fee based on the Environmental Health Division’s hourly rate is projected to cover the costs of staff time as well as overall program administration.
For renewals, if the information within the application and standard operating procedure has not changed, less time will be necessary for a renewal permit, thus a separate fee is recommended for renewal permits. The Environmental Health Division recommends $345.00 as the fee for a Microenterprise Home Kitchen Operation renewal permit. The renewal permit fee would provide for approximately 1.75 hours of staff time at the hourly rate of $199.00.
Applications submitted with updates to the standard operating procedures will be charged at the adopted hourly rate of $199.00.
The hour estimations were developed by reviewing adopted Microenterprise Home Kitchen Operations fees from other counties of similar size and with similar Microenterprise Home Kitchen Operation programs.
Additionally, if an inspection is made and the operation is found to be in violation, necessitating additional inspections, or if a complaint investigation verifies the operation to be in violation, the local enforcement agency has authority to seek recovery from the operation of an amount that does not exceed the agency’s reasonable inspection costs at the adopted hourly rate.
CONSEQUENCE OF NEGATIVE ACTION:
Failure to adopt the Ordinance and/or approve the proposed permit fees will prohibit authorization and/or implementation of Microenterprise Home Kitchen Operations within Contra Costa County.
THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
and for Special Districts, Agencies and Authorities Governed by the Board
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IN THE MATTER OF ESTABLISHING FEES FOR MICROENTERPRISE HOME KITCHEN OPERATIONS WITHIN THE ENVIRONMENTAL HEALTH DIVIDION OF CONTRA COSTA HEALTH SERVICES
WHEREAS, the Environmental Health Division of Contra Costa Health Services is almost wholly financed by fee revenue; and
WHEREAS, fees for the Environmental Health Division of the Health Services Department were last set by the Board of Supervisors in Resolution No. 2019/521; and
WHEREAS, requirements relating to the permitting and operation of Microenterprise Home Kitchen Operations were added to the California Health and Safety Code and Contra Costa County Ordinance Code; and
WHEREAS, Contra Costa Health Services’ Environmental Health Division is designated as the county Local Enforcement Agency as defined in Health and Safety Code section 113773 and Contra Costa County Ordinance Code section 413-3.408; and
WHEREAS, Health and Safety Code section 114367.2 authorizes the issuance of a permit to operate a Microenterprise Home Kitchen Operation after an initial inspection by the enforcement agency, subject to annual permit renewal and annual inspection to ensure ongoing compliance and public health protection, and authorizes the recovery of reasonable costs for permitting and inspections; and
WHEREAS, new fees are needed to fund the Microenterprise Home Kitchen Operations program; and
WHEREAS, the Health Services Department has submitted a recommendation to adopt new fees to fund the expenses of the Division, as set forth in Attachment A to this resolution; and
WHEREAS, these recommendations have been duly considered by the Board in a noticed public hearing on this day; and
NOW, THEREFORE, BE IT RESOLVED THAT:
1. The schedule of fees for the Environmental Health Division set forth in Attachment A to this resolution is hereby established, effective June 20, 2024.
2. Effective June 20, 2024, Resolution No. 2019/521 is amended to include the Microenterprise Home Kitchen Operation fees in Attachment A.