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P. This 1999 fee study reported that funding the cost of the required staff and operational costs associated with the continuation of the Proactive Rental Enforcement Program would amount to an estimated $608,410. The 2003 fee study for PREP reports an increase in required staff and operational costs from $608,410 to $617,360. Q. In 1999, business license records indicated an inventory of 28,500 rental units generating $498,750 in revenue. Business license records for calendar year 2003 indicated an inventory of 27,231 rental units, 958 less than in 1999 which, at $17.50 per unit, generated annual revenue of $476,542. R. From 1999 to 2003, the decrease of 958 rental units and increase in staffing and operational costs created a further widening of the deficit between program costs and revenue generated by the Rental Inspection Fee. S. To offset a percentage of the revenue versus costs deficit in the 1999 program budget, and given that inspection emphasis for the extension was to be placed primarily on the exterior of the rental properties, PREP staffing was reduced from six to five inspectors. T. Staffing for the PREP program during the extension period of calendar years 2004 through 2007 was reduced from five to four. U. It is anticipated that, for the 2008-2011 extension, the Proactive Rental Enforcement Program will generate $454,158.73 a year in revenue based upon the $17.50 fee per unit and the estimated number of units (approximately 25,951). V. A fee study conducted for the calendar year 2006-2007, found that the Proactive Rental Enforcement Program will cost the City of Santa Ana $641,923.92 a year. W. It is anticipated that the deficit for the Proactive Rental Enforcement Program will be $187,765.19 a year for the extension period of 2008-2011. Currently, the PREP program continues to have four inspectors and based upon the revenue and costs projection, that is not expected to change. X. Continuation of Proactive Rental Enforcement Program is essential to the neighborhoods in Santa Ana to provide assurances that the rental housing will not be allowed to revert to the condition which led to the initial concerns for the implementation of an inspection program in 1992. Y. Recurrent poor management by rental owners has become a challenge for the Proactive Rental Enforcement Program inspectors in maintaining improvements gained in the previous areas while conducting inspections in the next neighborhood. Ordinance No. NS-2757 Page 3 of 6