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F. A 2010 fee study reported the total projected expenditures for the PREP would amount to an estimated $675,000.00, which includes an estimated $386,856.00 for required staff and an estimated $288,144.00 in operational costs. G. On June 20, 1994, the City Council adopted Resolution No. 94 -026 which approved and adopted the "Gold Seal Incentive Program" whereby particular residential properties or residential apartments may be certified as having met standards of excellence in property maintenance and as certified, would be exempted from payment of the residential rental surcharge fee for a three -year period; and H. The funding for the Gold Seal Incentive Program is $110,000.00, which currently provides for 6,285 units to receive exemptions from the existing $17.50 per unit annual fee. Based on the proposed fee increase to $19.50 per unit, up to 5,641 units can be approved to participate in the Gold Seal Incentive Program. According to the 2010 fee study, records indicate an inventory of 31,227 rental units licensed for inspection. Subtracting out the 5,641 units qualified for the Gold Seal Incentive Program, 25,586 units will be accountable for the $19.50 per unit fee, thus generating annual revenue of $498,927.00. J. Even with an increase of the annual fee from $17.50 to $19.50 per unit, it is anticipated that the deficit for the PREP will be $176,073.00 a year for the remainder of the PREP term based on the estimated $675,000 in expenditures and $498,927.00 in revenues. K. Continuation of the 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. Section 2. In accordance with the California Environmental Quality Act, the recommended action is categorically exempt from further review per section 15321, Class 21, as the project involves an enforcement action by a regulatory agency for an inspection program. A Categorical Exemption for Environmental Review No. ER -2010- 128 will be filed for this project. Section 3. Section 21- 120r.1 of the Santa Ana Municipal Code is hereby amended to increase the residential rental surcharge and extend the sunset date. Said Section 21- 120r.1 shall read in full as follows: Ordinance No. NS- 11 A -2 Page 2 of 5