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File #: 25-336    Version: 1 Name: Receive a presentation City’s User Fee Study and provide feedback
Type: Minute Order Status: Action Item
File created: 9/26/2024 In control: City Council Meeting Agenda
On agenda: 10/28/2024 Final action:
Title: CC - ACTION ITEM: (1) Report and Presentation on the City's User Fee Study; and (2) Direction to the City Manager on the Cost Recovery Goals and Proposed Fee Updates.
Attachments: 1. ATT_1_2024_10_28_Citywide User Fee Study, 2. ATT_2_2024_10_28 Summary Cost Recovery Table, 3. ATT_3_2024_10_28_Summary of Fees Recommended for Subsidy
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CC - ACTION ITEM:  (1) Report and Presentation on the City’s User Fee Study; and (2) Direction to the City Manager on the Cost Recovery Goals and Proposed Fee Updates.

 

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Meeting Date:                                          October 28, 2024

 

Contact Person/Dept:                     Michael Towler/Finance Department

  

Phone Number:                                            (310) 253-5865

 

Fiscal Impact:  Yes [X]    No []                                           General Fund:  Yes [X]     No []

 

Attachments: Yes [X]    No []  

 

Public Notification:   (E-Mail) Meetings and Agendas - City Council (10/23/2024); (E-Mail) Meetings and Agendas - Finance Advisory Committee (09/19/2024)

 

Department Approval: Lisa Soghor, Chief Finance Officer (10/22/2024)

_____________________________________________________________________

 

 

RECOMMENDATION

 

Staff recommends the City Council (1) receive a presentation on the City’s 2024 Cost of Services User Fee Study; and (2) provide direction to the City Manager on the cost recovery goals and proposed fee updates.

 

 

BACKGROUND

 

In Fiscal Year 2005-2006, the City Council adopted Resolution No. 2006-053 to consolidate the City’s fees and charges into one document for improved fee assessment and streamlined management. In Fiscal Year 2006-2007, Council approved funds to hire a consultant to conduct an updated comprehensive study of the City’s programs to ensure that the City was utilizing the most current and best practice methodologies, analyze cost recovery across all departments as well as to ensure that the City was recovering recovery an appropriate amount of revenues to support ongoing operations. The final comprehensive report was submitted and presented to Council on May 7, 2007, where Council ultimately adopted Resolution No. 2007-R024 establishing and amending the various fees and charges for services. The study conducted in Fiscal Year 2006-2007 was the first study conducted by the City in more than 15 years. Consequently, the fee adjustments adopted by City Council were significant in some cases, in other cases the fee increases where phased in over time to reduce the impact to the customer base, and in some limited cases the fees were not increased to full cost recovery due to economic and policy considerations related to the residents, individuals and businesses utilizing those services as well as the community.

 

Prudent financial management recommends that cost of services user fee studies be conducted every five to seven years. This ensures that cities use the most up to date methodologies, incorporate program process improvements and organizational and financial changes, and remain compliant with new regulations.  On June 23, 2008, Council received and adopted a revised cost recovery policy for Fiscal Year 2008-2009 and an implementation schedule to phase in the user fee increases over the next few years.

 

Between Fiscal Year 2008-2009 and Fiscal Year 2012-2013, staff adjusted fees annually achieve the cost recovery goals adopted by City Council. On May 13, 2013, Council adopted a resolution that made minor changes to various fees and charges for services as recommended by staff to address operational changes that occurred since the last fee study.

 

In Fiscal Year 2013-2014, the City entered into an agreement with a consultant to assist with conducting an updated comprehensive user fee and cost of services analysis. However, due to staff turnover at the executive management levels across multiple City departments, coupled with the later disruption caused by the 2020 pandemic, staff did not complete an updated comprehensive user fee study during the recommended five-to-seven-year period. During this time, staff also did not update the fees by Consumer Price Index (“CPI”) to align the fee increases with the increased cost of doing services, thus further exacerbating the gap between the City’s actual cost recovery and Council adopted targets.

 

The City Council’s Adopted 2018-2023 strategic planning goals included addressing the long-term financial stability of the City by reviewing existing revenue sources. This strategic goal was carried forward into the City’s Adopted Strategic Goals for 2024-2029. As key General Fund revenue sources, program user fees and regulatory permits were identified as revenue sources to be analyzed. In the past 10 years, the City has experienced significant increases in program costs coupled with changes in operational structure. In Fiscal Year 2022-2023, staff engaged NBS Government Finance Group (NBS) to assist the City with conducting an updated comprehensive user fee and cost of services analysis.

 

 

DISCUSSION

 

California municipalities may impose user and regulatory fees for services through provisions set forth in the State or California Constitution, Article XIII C 1(e). Under this legal framework, a fee may not exceed the reasonable cost of providing the service or performing the activity. In addition, Culver City Council Policy No. 5002 calls for a comprehensive user fee and cost of services study to ensure that fees continue to meet cost recovery targets.

 

The purpose of the User Fee Study is to calculate the full cost of providing each fee activity (including direct and indirect costs), and to provide Council with the data that supports a realignment of fee amounts with localized cost recovery policy recommendations. The full cost, or actual cost, as calculated by NBS, is the maximum that the City can legally charge for each fee related activity.

 

Calculating the true cost of providing city services is a critical step in the process of establishing user fees and corresponding cost recovery levels. While it is important to fully recover the total costs of service delivery with appropriate fees, there are some services that the City provides for which the Council may not want to seek full cost recovery to promote local policy goals and other community considerations. For example, some of the common reasons for subsidies as outlined by the Government Finance Officers Association (GFOA) combined with other commonly adopted policies by neighboring jurisdictions include, but are not limited to, the following:

 

                     address broader City objectives such as economic development goals and local social values

                     encourage compliance with a specific activity

                     provide increased access to lower income groups to participate in services that they may not otherwise be able to afford

                     elasticity of demand / price sensitivity as a factor when developing final fee amounts (reducing the price of services increases the demand for the services, and conversely increasing the price of the services could reduce the demand)

                     support recovery from economic disruptions

                     attract and retain successful businesses in the City

                     consideration of visibility and impact of the service to the broader City community

                     price comparison to private service providers and neighboring jurisdictions

                     recognition of State and federal caps on fees

                     implement an incremental phased-in fee increase to reduce the upfront price shock and ease impact to customer base

 

City Council Policy 5002 states that the City shall establish appropriate cost recovery targets for its fee structure. This Policy allows Council to adopt fees up to 100% cost recovery and allows for the subsidizing of fees based on the factors listed above. For example, a recent City Council policy decision to subsidize program costs was made on January 22, 2024 as part of the sidewalk vending new application and renewal permit fee consideration. Council determined that it was important to heavily subsidize the fee to support State requirements to reduce barriers and create pathways to regulatory compliance for marginalized microenterprise entrepreneurs.  Ultimately, the City Council must decide the appropriate cost recovery targets for the City’s fee structure as there may be other, local policy considerations that support adopting fees at less than the calculated full cost recovery amount.

 

 

Finance staff worked with NBS and representatives from all City departments to prepare the User Fee Study. The current draft User Fee Study is attached to the staff report for review (Attachment 1). The report includes the estimated total cost of providing each service, as calculated by NBS based on inputs from City departments, and a comparison to the City’s current fee structure. It also includes new, proposed fees and information on the proposed cost recovery rates as recommended by staff from each department. In most cases, staff recommended 100% cost recovery. However, there are some cases where staff recommended some level of the subsidy for reasons mentioned above and recommended a fee less than 100%.

 

Summary of Departmental Fee Study Results

 

The study identified over $24.4 million in eligible cost for recovery from fees for services, compared to about $13.3 million in revenues collected from fees. This results in a 54% Citywide cost recovery effective rate as shown on page six of Attachment 1.

 

Parks, Recreation, and Community Services

As can be seen in the Summary Cost Recovery Table (Attachment 2), the Parks, Recreation and Community Services (PRCS) Department accounts for lion’s share of the costs that are subsidized by other General Fund revenues. Subsiding recreation programs with General Fund revenues is a common practice across most cities as PRCS programs inherently provide some of the greatest and most visible benefits to the community. However, staff also recognizes the need to ensure prudent fiscal management, and with the Parks Master Plan being published for public review, PRCS is currently rethinking its cost recovery targets and subsidy policies. This fee study launched the evaluation of the department’s full costs for services for each primary program offered by PRCS. Now PRCS will review all their programs to develop and recommend policy goals for cost recovery versus subsidy. PRCS will undertake this robust process in calendar year 2025, will engage the PRCS Commission to ensure that the needs of the community are considered, and will return to City Council with recommendations on cost recovery rates and policy recommendations for their varied program offerings. To ensure timely implementation of the rest of the cost recovery proposals and allow PRCS staff time to thoughtfully approach its proposed fee changes, staff recommends that City Council consider the remaining department proposals in tonight’s presentation.

 

Excluding PRCS from the cost recovery calculation, there are approximately $13.9 million in eligible costs, compared to $10.2 million in revenues currently collected from user fees (See Attachment 2). This results in a 73% cost recovery effective rate City-wide. Staff is recommending increasing the cost recovery rate to 92%, resulting in an additional $2.6 million in annual revenues. While many of the programs are being recommended to increase to 100% cost recovery, there are still some programs that staff believes warrant subsidies totaling $1.1 million, or about 8%, for specific programmatic reasons, which are discussed in more detail in the below Departmental subsections of the staff report. Staff has also prepared a summary chart outlining fees recommended for some level of subsidy (Attachment 3).

 

Finance Department - Revenue / Treasury Division

The Finance Revenue Division is responsible for comprehensive management of the City revenue programs from tax monitoring to collections, including audits and on-site visits to business taxpayers, utility companies, and hotels. The Division provides several services for which a user or regulatory fee may be charged, including business tax certificates and permits, cannabis business permits, taxi permits, sidewalk vending permits, as well as tobacco retailer licenses.

Using the current fee structure, staff anticipates that the City will recover approximately 89% of eligible costs. Staff proposes increasing its anticipated cost recovery target to 98% by realigning its fee structure to capture recent changes in business operations. Staff recommends reducing fees for business license new applications and renewals to reflect the anticipated cost reductions related to contracted services with HdL Software LLC for business license tax certificate processing. While there is still City staff involvement in the overall administration, customer services, and permitting processes, the bulk of the daily new application and renewal permitting process is now handled by HDL.

Credit Card Fees: Staff is also recommending the City impose a new fee for credit card transactions and electronic check (“e-check”) processing to recover costs to the City that are charged by third parties. The State of California Government Code Section 6159 (h) (1) authorizes cities to impose what is commonly referred to now as a “convenience fee” to recover the cost of providing credit or debit card or electronic funds transfer transactions. The convenience fee model is consistent with practices of several neighboring municipalities, such as the City of Los Angeles, West Hollywood, El Segundo, and Santa Monica. Customers currently use credit cards to pay for a variety of services, including in-person over the counter transactions, online payments for refuse billings, online payments for various tax payments, and online payments for various regulatory permits. The City pays third-party fees for credit card transactions (credit card payment gateway and credit card merchant account payment processor) and e-check processing. The City’s costs for providing credit card payment options continue to increase as the demand for online and contactless payment options has grown in recent years. In Fiscal Year 2023-2024, the City paid approximately $600,000 in credit card fees. Approximately 82%, or $500,000, of this amount is related to payments for general City services, with the remaining 18%, or $100,000, related to citywide on-street parking services.

On-street and off-street parking transactions tend to be small and incur higher processing fees as a percentage of the actual transaction amount. These parking related transactional costs are covered by the Parking Authority Fund and do not impact the General Fund. Therefore, staff does not recommend establishing a convenience fee for these types of parking transactions at this time.

Preliminary analysis reflects that the new credit card convenience fee will be in the range of 2.5% to 3.5% per transaction to cover credit card costs. This is based on an analysis of the various services that customers make payments via in person and online credit cards. Staff is currently analyzing the credit card transactions by the different payment activities to ensure that the final proposed convenience fee is set at or below the City’s actual costs. Staff will finalize the analysis and return to Council on November 11 with the final proposed credit card convenience fee amount for consideration and adoption. To reduce the burden of imposing credit card convenience fees on the residents and business community, the City will enable an option for customers to make payments by online e-check as an alternative to credit card transactions. Preliminary analysis reflects that the e-check fee would be in the range of $0.75 to $1.25 flat rate per transaction.

To avoid any charges, customers may continue to use traditional payment methods such as checks or money orders, which can be mailed or submitted in person at City Hall. Customers may also continue to pay in person with cash at City Hall during the City’s normal business hours.

Finally, Finance staff recommends that Council continue to subsidize the Sidewalk Vending Program Permit fees to comply with State regulations that require cities to reduce barriers and create pathways to regulatory compliance. Staff also recommends that Council subsidize the Special Event Permit Fees for non-profits to encourage special event activity in the City while reducing the financial burden on the non-profit business community. These recommended subsidies result in a combined anticipated total of approximately $14,000, or 2.0% of total recoverable Departmental costs.

 

Finance Department - Cannabis Business Permit Program

The Cannabis Business Permit Program was established in 2018 as described in more detail in CCMC 11.17 and 11.32. Regulatory efforts of the program are shared amongst Building Safety; Current Planning; Enforcement Services, Environmental Programs and Operations Division; Fire Department, Police Department, and the Finance Department. The original permit fee was based on a labor intensive process in setting up this new regulatory program. Now that staff has experience with administering the program, staff has identified efficiencies that streamlined the permitting process, ultimately resulting in less staff time spent on issuing the permits.

Using the current fee structure, staff anticipates that the City will recover approximately 334% of eligible costs. Therefore, staff recommends reducing the fees to recover 100% of the anticipated future costs of the program.

 

Planning and Development Department - Current Planning Division

The Current Planning Division serves the residents and businesses of Culver City by regulating the use of land based on the General Plan and Zoning Ordinance, which contain the City’s adopted policies and regulations. The Division’s responsibilities include administering the California Environmental Quality Act (CEQA) as it pertains to new development projects and regulations, monitoring and analyzing the impact of regional planning issues, and providing staff support to the Planning Commission and City Council through the processing of site plan reviews, subdivisions, rezoning, use permits, and other entitlements.

 

Using the current fee structure, staff anticipates that the City will recover approximately 33% of eligible costs. The fee activities processed by the Current Planning Division impact developers proposing new developments both large and small, small business owners trying to expand their business, as well as residents remodeling and adding living spaces to their homes. Staff recognizes the need to increase cost recovery across various permits and programs to maintain fiscal responsibility. Planning staff worked with NBS to delete obsolete fees and reorganized some of its fee categories to streamline the administration of the fees. Staff proposes to increase its current anticipated cost recovery from 33% to 68% in year one by increasing about half of the Division’s fees to 100% cost recovery, and incrementally increasing the remaining fees over the next five years with a goal of achieving up to 100% cost recovery by 2030. This phased approach will reduce first year price shock to the impacted customer base and allow staff the time to understand the impact of the increases before returning to Council in subsequent years. The proposed first year subsidies are primarily focused on reducing the financial impact on programs that impact single family residents, micro enterprises, and small businesses. Subsidies are also recommended for permits related to restaurants and outdoor dining to provide continued support to businesses still recovering from the economic disruptions caused by the pandemic with the goal of retaining existing businesses and attracting new businesses to the City. These recommended subsidies result in a combined anticipated total of approximately $700,000, or 32% of the total recoverable Current Planning Division costs.

 

Planning and Development Department - Advance Planning Division

The Advance Planning Division is recommending a new General Plan Maintenance Fee to recover costs associated with preparing and updating the General Plan and Housing Element Update. The proposed fee is recommended to be 4.97% charged on top of the fees collected by the Planning and Building Safety Divisions for various permit applications and would apply to projects with the largest relative impact on the maintenance, updates, and use of the City’s General Plan for development approval decisions. The remaining unfunded amount would be subsidized for the general community benefit received from the plan, as well as for the use of the Plan by other Departments such as public safety and utilities. The anticipated subsidy is approximately $67,800. The new 4.97% General Plan Maintenance Fee is in line with other neighboring westside cities, including Santa Monica (7.3%), West Hollywood (3.0%) and Burbank (10% of all building permit and planning permit fees).

 

Planning and Development Department - Building Safety Division

The Building Safety Division was established to protect those individuals who live and work in the City by enforcing building safety standards set forth in the State’s building codes, as well as the City’s municipal codes. It is the responsibility of the Building Safety Division to review and approve plans and perform field inspections to ensure that the work performed under an issued building permit is done according to the approved plans.

 

Using the current fee structure, staff anticipates that the City will recover approximately 109% of eligible costs. To achieve a full cost recovery target, staff recommends that the scaled fees based on building permit valuation (BPV) be adjusted to accommodate larger projects. These recommendations include adding tiers between $1 million and $50 million, decreasing fees for higher building permit values (BPV), and increasing fees for lower BPV. The costs of external department review of plans were updated to be reflected in those other department schedules. Staff is also recommending new fees be added including but not limited to permit extensions, construction management plans, job card replacement and soft story seismic retrofit screening form. Staff anticipates that the recommended fees would recovery 99.9% of the Division’s total recoverable costs.

Staff recommends subsiding the Solar Permit fee structure to align with State of California Government Code maximum fee regulations. This recommended subsidy results in $6,400, or 0.1% of the total Division’s recoverable costs.

 

Housing and Human Services - Enforcement Services Division

The Enforcement Services Division is responsible for protecting, preserving, and improving the quality of life of the citizens of Culver City through effective, appropriate, and proactive enforcement of the City’s municipal codes.

 

Using the current fee structure, staff anticipates that the City will recover approximately 24% of eligible costs for recovery through user fees. The Enforcement Services Division typically under-recovers costs as the primary goal is compliance rather than cost recovery. Therefore, staff is not recommending any major changes to the fee structure to reduce the burden on its customer base, which in most cases are property owners and occupants, with the goal of encouraging compliance with City regulations. The recommended fee subsidies total $4,200, or 24% of recoverable costs. Staff will monitor activity, and if necessary, will return to Council in subsequent years to recommend adjustments to the cost recovery targets.

 

Public Works - Engineering Division

The Public Works Engineering Division reviews infrastructure improvements for private developments, processes encroachment and utility permits, and develops and implements the City’s Capital Improvement Program (CIP).

 

Using the current fee structure, staff anticipates that the City will recover approximately 41% of eligible costs for recovery through user fees.  As part of the updated study, staff worked with NBS to delete obsolete fees, reorganize some fee categories to streamline the administration of the fees, and create new fees to address changes in operations. Some of the new fee categories include but are not limited to street use permits (encroachment permits); utility permits for excavation; annual utility permits, and film production support. Staff proposes increasing its anticipated cost recovery target to 100% with no proposed subsidies in the first year to ensure efficient cost recovery of City services.

 

Public Works - Mobility and Traffic Engineering Division

The Mobility and Traffic Engineering Division maintains the City’s traffic engineering and mobility planning, processes transportation and parking permits, provides in depth analysis for traffic impact reports, as well as develops and implements the City’s mobility infrastructure.

 

Using the current fee structure, staff anticipates that the City will recover approximately 53% of eligible costs for recovery through user fees. To increase cost recovery targets, staff recommends deleting obsolete fees, reorganizing fee categories, clarifying fee names to streamline fee administration, and adding new fees to address new operations. Staff anticipates that the proposed fee changes would result in an increase of cost recovery from 53% to 83%. Staff recommends maintaining subsidized fees totaling about $13,000, or 17% of total eligible cost, primarily to reduce the financial burden on city residents and small businesses as well as to encourage compliance with city programs and regulations. Some of the recommended subsidies include fees for Block Party Street Closure Permits, Small Business Annual Valet Renewal Fees and Sign Fees, Curb Painting Fees, Temporary No-Parking Signs, and Encroachment into the Public Right of Way (PROW) Fees. Additionally, to improve the management of the on-street residential parking permit program, staff is also recommending adjusting the tiered fee structure to provide a discount for the first two parking permits, thereby encouraging compliance with the program, and escalating the tiered pricing structure to incrementally increase the cost recovery on additional parking permits to discourage the purchase of additional permits at the same residence. This escalated tier approach assists with the management of the limited on-street resource by providing regulated and convenient access to valid parking permit holders, benefiting both the residents and broader community.

 

Public Works - Environmental Program Operations (EPO)

The EPO Division manages both the collection of trash / recycling / organics and the stormwater programs, provides street sweeping services, and champions the City’s green educational opportunities and initiatives to improve resource conservation, protect public health, prevent pollution, and divert solid waste.

 

Using the current fee structure, staff anticipates that the City will recover approximately 2.9% of eligible costs for recovery through user fees. This is primarily due to fees for services had not previously been established. Staff recommends increasing the anticipated cost recovery target to 100%. To achieve cost recovery targets, staff recommends deleting obsolete fees, reorganizing fee categories, clarifying fee names to streamline fee administration, and adding new fees to address new operations. Some of the new fees include but are not limited to trash enclosure plan review, storm water plan check, container cleaning/exchange, extra pick-up, and C&D administration.

 

Transportation Department

The Transportation Department is responsible for the planning, delivery, and monitoring of mobility services for the City. Additionally, the Department provides staff support for citywide events and committees, assists the Current Planning and Building Safety Divisions with Plan Reviews, manages bus stop closures and repairs, and oversees regional transportation projects.

 

The total annual cost of the Transportation Department is approximately $25 million. However, most of these costs are associated with non-fee related activities, and therefore only a small percentage of the costs are eligible for recovery from fee for services activities. Using the current fee structure, staff anticipates that the City will recover approximately 1.7% ($35,000) of eligible costs for recovery through user fees. Transportation staff is recommending increasing cost recovery to 100% by adding new fees for trip reduction plan review, filming permit and event support, special event permit and event support, review of planning and building applications, and bus stop closures, among others.

 

Fire Department - Community Risk Reduction

The scope of this fee study analysis for the Fire Department was focused solely on the Community Risk Reduction Division, which provides fire prevention related fees for service. The Division is responsible for protecting the City from fire hazards, explosion and hazardous materials by providing construction plan reviews, issuing detection and suppression system permits, conducting annual fire inspections, and ensuring hazardous material compliance.

 

The total costs eligible for recovery are approximately $2.0 million. Using the current fee structure, staff anticipates that the City will recover approximately 63% of eligible costs for recovery through user fees. Fire staff is recommending to significantly restructure its fees to reflect current practices and achieve 100% cost recovery. This includes increasing the fees for some development related services, increasing special fire permits, and decreasing a few fees including annual fire inspection fees for apartment complexes with less than 40 units. Staff is also recommending adding some new fees for planning application review and approval and hazardous materials.

 

Police 

NBS evaluated fees charged by the Police Department for alarm permits, film permits, report copies, vehicle impound releases, and citation sign-off fees, as well as pet licensing actives performed by the Animal Control Services.

 

The total cost eligible for recovery from fee for service activities in the Police Department, including Animal Services Division is about $800,000. Based on the current fee structure the Department is anticipated to recover about $400,000, or 50%.  Department staff is recommending restructuring fees to delete obsolete fees, reorganizing fee categories to simplify fee administration, and adding new fees to reflect current practices, with a goal of increasing cost recovery for fee for services activities from 50% to 73% in the first year of implementation. Most Police Department fees are recommended to recover 100% of the cost of providing services with the exception of a few, including false alarm charges, correctable citation sign off, vehicle impound fees, and conceal and carry permits. These fees are recommended at less than full cost recovery to encourage compliance with the respective regulations and to assist people with getting violations cleared. Other fees set to less than 100% cost recovery are the Clearance Letters Fees and the Conceal and Carry Permit Fee that are both capped by the Department of Justice Penal Code.

 

Comparative Survey of Fees in Neighboring Jurisdictions

Best practice suggests that cities conduct a comparison of their fees to the neighboring jurisdictions as well as cities with comparable size and scope of services to provide a sense of the local market pricing for services, and to use that information to gauge the impact of recommendations for fee adjustments. As part of this process, NBS conducted comparative surveys to Beverly Hills, Santa Monica, West Hollywood, Burbank, and City of Los Angeles. Appendix B of Attachment 1 presents the detailed results of the Comparative Fee Survey. While fee comparisons can provide some high-level insights, direct comparisons are challenging since every city has its own definition of the services provided, cost allocation plan, and cost recovery goals making like-to-like comparisons particularly elusive.

 

Communications with Committees

On September 25, 2024, the Finance Advisory Committee received a presentation on the Draft Fee Study and provided the following recommendations:  1) moving forward, the City should adopt an updated fee schedule annually with appropriate increases for CPI; 2) agreed that PRCS policy setting needs a more robust process; and 3) ensure that the final staff report to City Council includes a clear rationale for fees not recommended at 100% cost recovery.

 

On October 3, 2024, the Audit, Financial Planning and Budget Subcommittee received a presentation on the Draft Fee Study and provided the following direction: 1) agreed that PRCS fees warranted more in depth review and study; 2) staff should clearly present which fees are being subsidized and how those subsidies benefit the community as a whole; 3) indicate how cost recovery rates tie to community values; 4) update the Report Summary chart from the Executive Summary of the Draft Fee Study to include recommended cost recovery change in dollars not just percentages (See Attachment 2); 5) after adoption of new fees, on an ongoing basis, monitor activities in the City to determine if new fees have a chilling effect.

 

 

FISCAL ANALYSIS

 

Staff recommends that City Council provide direction on the User Fee Study and the proposed cost recovery rates.  Based on preliminary analysis, staff anticipates that the recommended changes to user fees and charges would result in an additional $2.7 million in annual revenues. Staff included approximately $1.0 million in the Fiscal Year 2024-2025 Adopted Budget to account for six months of additional revenues with the anticipated implementation of fee increases in January 2025. Based on Council direction, staff will work with NBS to update the User Fee Study and return to Council at the November 11, 2024 meeting with final user fee proposals, revenue impacts, and enabling Comprehensive Fee Resolution(s).  If approved, the new user fees would become effective January 11, 2025.

 

Annually thereafter, the Finance Department will bring an updated Comprehensive Fee Schedule and Resolution to the City Council for approval and will include Consumer Price Index (CPI) increases where applicable to ensure that cost of service increases are incorporated into the fee adjustments.

 

 

ATTACHMENTS

 

ATT_1_2024_10_28_Citywide User Fee Study

ATT_2_2024_10_28_Summary Cost Recovery Table

ATT_3_2024_10_28_Summary of Fees Recommended for Subsidy

 

 

MOTION


That the City Council:

Provide direction to staff on the draft User Fee Study and cost recovery recommendations.