HomeMy WebLinkAbout02/24/2009, B2 - COST OF SERVICES AND USER FEE STUDY C
Cost of Services and User Fee Study Page 3
following is an excerpt from the report on service costs, current fee recovery and proposed fee
recovery based on the City's user fee cost recovery policies.
Cost Recove Pro ram
Cost Relcovery S-urri-mary -----
Cost Recove Revenue Potential
At Policy/
Proposed Full Cost Based on
Total Cost Current Levels Recovery Policy
Police 474,261 318,098 323,096 156,163 4,998
Fire 1,231,346 502,330 811,399 729,016 309,069
Recreation 3,887,755 1,163,930 1,177,514 2,723,825 13,584
Development Review- Planning 1,471,143 986,043 1,452,417 485,100 466,374
Building &Safety 1,549,392 1,049,878 1,549,392 499,514 499,514
Engineering 923,011 528,106 923,011 394,905 394,905
General Government 296,100 258,275 296,100 37,825 37,825
Total General Fund 9,833,008 4,806,660 6,532,929 5,026,348 1,726,269
Water Fund 231,768 179,921 231,768 51,847 51,847
Sewer Fund 89,395 71,744 89,395 17,651 17,651
Total Water&Sewer Funds 321,163 251,665 321,163 69,498 69,498
TOTAL 10,154,171 5,058;325 6,854,092 5,095,846 1,795,767
Note: Given the current construction market, it is likely that increases in development review fees; which total about
$1.4 million, will generate less than shown in the table above. Based on mid years estimates,,we estimate that fee
revenues would be 67%of this amount($938,000).
The complete analysis of cost recovery and other considerations for the City's user fee services
are presented by program area in Sections 2 through 6 of the Maximus report; and detailed
schedules are provided in the Technical Appendix.
Key Changes
The study reviews 185 fees. Of these:
• 107 are recommended for increase
15 are recommended for decrease
• 63 stay the same
The following summarizes the key changes from a policy perspective.
1. Building Permits: Change in Methodology. The City currently bases building permit and
plan check fees on construction valuation tables published periodically by the building
officials' national organization (ICBG). Consequently, the City building and safety fee
revenue largely correlates with construction valuation. Based on recommendations from
Maximus, the study proposes an alternate method of calculating building-related fees that
more accurately links the fee charged to the community and the cost of providing the
services.
Maximus recommends a methodology "nexus" that builds cost structure based upon
establishing time estimates for each phase of project plan check and inspection for each
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Cost of Services and User Fee Study Page 4
building type and size. The result for new construction permits is a unit cost per square foot
and in the case of miscellaneous permits and sub-trade items, a cost per unit. The resulting
fees are intended to be fair to both the applicant and the jurisdiction—definitive, practical and
legal while remaining revenue neutral compared with the prior valuation fee methodology.
While the Council may want to consider changing the current policy for full cost recovery
from building permit services, it is important that we move to the "nexus" rate structure in
ensuring that our fee structure meets State cost recovery guidelines.
2. Engineering Development Review Services. Engineering Development Review provides
support to both the Planning and Building functions. The current fee structure does not
provide cost recovery for these services, and as such, the study recommends adding a
surcharge for these services to be collected at time of building permit issuance. On the other
hand, by better allocating costs, the study recommends a significant reduction (about half) in
encroachment permits.
3. Fees at less than 100% Cost Recovery. In compliance with its adopted policy, the City has
set a number of its fees at less than 100% cost recovery to promote certain policy objectives;
for example the community benefits of the program, such as recreation activities; or to
encourage regulatory compliance, such as fire and life safety inspections of multi-dwelling
properties. These are identified in Section 1. In addition to these, the following fees are
recommended for less than 100% cost recovery because they are also fees for services where
we want to encourage voluntary compliance or there are community-wide benefits:
• Police. Property Return Fee, Massage Technician Permit, Massage Technician Permit
Renewal, Taxi Permit and Taxi Permit Renewal.
• Building Permits. Water Heater Replacements, Forced Air Unit Replacement, Electrical
Service Upgrade (200 amps or less), Photovoltaic Unit Installation (residential only) and
Gas Fire Inserts (retrofit from wood-burning fireplaces).
4. Appeal Fees. Included in the group of fees where the City policy is low'or no cost recovery
are appeals. Currently, the City's policy is to charge $100 for planning related appeals; and
no fee for all other appeals to the Council. The Council may wish to revisit its policy on
planning-related appeal fee cost recovery, because the cost of processing appeals is far more
than $100. Whatever level is judged appropriate, we recommend that the appeal fee be the
same amount for all appeals of staff or advisory body decisions to the Council, not just
planning related ones. Appeals of Tree Committee decisions are the most recent examples
where significant staff costs have been incurred in processing non-planning appeals and
where a modest fee would be appropriate. The fee to file an appeal should be set at a level
such that frivolous appeals are discouraged, yet meritorious ones are not discouraged. Staff
thinks an appeal fee of $200 — $250 would be appropriate. If City Council indicates an
interest in increasing or otherwise modifying appeal fees, staff will return in mid-April with
additional information for Council consideration.
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Cost of Services_and User Fee Study Page 5
5. Recreation Fee Designations. As part of this fee study, Parks & Recreation staff reviewed
the current fee descriptions and corresponding recovery levels currently approved in the
City's fee policies. Staff recommends a small number of changes to the recreation
classifications and descriptions in the City's fee recovery policy to more accurately reflect the
current environment and practices. These changes are proposed in order to bring the policy
into alignment with the current and historic cost recovery levels. Staff reviewed the
community-wide versus individual benefits of these programs as well as market price
sensitivity and determined that in a few cases there are circumstances that warrant revision of
the cost recovery policy. In special events, staff recommends that major community events
(such as parades) and departmental events (such as Christmas in the Plaza) be revised from
mid range cost recovery to low cost recovery; reflecting the overall community-wide benefits
from such events. They are also recommending that the annual Triathlon be set at high rather
than mid range cost recovery due to this event being predominately targeted toward adults.
and current policy reflects a high cost recovery level for other adult sports. Staff also
recommends that childcare be set at mid-range rather than high cost recovery. A complete
list of cost recovery levels is provided in Section 4 of the Maximus report.
Costs Are Reasonable
As noted above, a key element of Maximus' workscope was not only to determine the cost of
providing various City services, but also to form an opinion as to the reasonableness of those
costs. A fair criticism of many cost studies in setting fees is that they are solely revenue-driven:
if revenues are not recovering costs, then the solution must be to increase revenues. However,
the problem may not be that revenues are too low, but that costs are too high. The Maximus
study concludes that City costs are reasonable.
Implementation
As noted above, the purpose of this report is to review and discuss the information developed by
Maximus: no Council action is recommended at this time.
However; as part of our budget-balancing strategy in closing the General Fund $10.4 million gap
identified in the five-year fiscal forecast presented to the Council in December 2008, with
Council concurrence, recommendations regarding its implementation will be made to the Council
in the "Strategic Budget Direction" meeting scheduled for April 14, 2009. We recommend that
any fee increases be adopted with the 2009-11 Financial Plan, which is scheduled for June 16,
2009. In most cases, any fee increases adopted at that time would become effective on July 1,,
2009. A key exception includes development review fees: under Government Code Section
66010 (AB1600), increases in these types of fees cannot go into effect until 60 days after their
adoption. As such, we recommend that any develop review fee increases become effective
September 1,2009.
CONCURRENCES
All appropriate City departments have been extensively involved in completing the Cost-of-
Services Study. In terms of other stakeholders, over 60 organizations and individuals have been
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Cost of Services and User Fee Study Page 6
notified of this first presentation of the Study, including banks, planning consultants, ECOSLO,
Residents for Quality Neighborhoods, San Luis Obispo Property Owners Association, the Sierra
Club, and the Chamber of Commerce. The notice sent to these stakeholders is provided as
Attachment 2.
FISCAL IMPACT
There are no direct fiscal impacts associated with this review of the study findings. The decision
to revise fees based on the City's adopted cost recovery policies should be made in the larger
context of the 2009-11 Financial Plan. However, it should be noted that even if the full
recommendations of the study relating to the General Fund were implemented (generating an
added $1.3 million, after adjusting for decreases in development related fees due to current
market conditions), it would represent a modest 12% of the $10.4 million gap facing us.
ENCLOSURE
1. Cost of services study prepared by Maximus (hard copy provided to Council and
available in City Clerk's office)
2. Public notice
G: Cost of Services Study/2008/Council Agenda Report,2-24-09
Attachments
- city of
gii!U' san tuns oBispo
February 17, 2009
Results of Cost of Services Study
In accordance with the City's user fee cost recovery policies, the City reviews and updates service charges on
an ongoing basis to ensure that they keep pace with changes 'in the cost-of-living as well as changes in
service levels and delivery methods. In implementing this policy, the City has adopted a strategy of
periodically analyzing all City service costs and related revenues on a comprehensive basis, with interim
changes on an annual basis as noted above. The primary purpose of-this comprehensive analysis is to answer
four basic questions:
® What does it cost the City to provide various services?
® Are these costs reasonable?
■ What are current cost recovery levels?
® What fee changes are necessary to achieve cost recovery policies?
The City has contracted with a nationally-recognized cost accounting firm—Maximus—to help us prepare a
comprehensive evaluation of a broad range of City service costs and related revenues, including public
safety, development review and recreation services. This review also includes a new fee structure for the
City's building permits, moving away from fees based on permit valuation to one based on the specifics of
the project, including occupancy type and scale of the project. The results provide us with technically sound
cost-of-service information in setting fees in accordance with State guidelines and the City's user policies.
In conjunction with the mid-year budget review, we will present the results of this study to the Council on:
Tuesday,February 24,2009
7:00 pm (Meeting Start Time)
Council Chambers,990 Palm Street
Next Steps. No action will be taken by the Council at the February 24 meeting: its purpose is solely to
present the results of this study. However, it is likely that recommendations regarding its implementation
will be made to the Council as part of the "Strategic Budget Direction meeting scheduled for April 14,
2009. It is likely that any fee increases will be adopted with the budget, which is scheduled for June 16,
2009. In most cases, any fee increases adopted at that time would become effective on July 1,2009.
For More Information. As noted above, we will be presenting the results of this study to the Council on
February 24,2009. Additionally, upon request, I will be happy to meet with you or your organization at your
convenience to discuss this study and the City's user fee policy with you. The study in its entirety is
available on the City's web site at: www.slociiy.or finance/reports.asp. Please call me at 781.7125 or email
me at bstatler@a,slocitv.org if you have any questions concerning the study or the community review process.
Sincerely,
�lict%Q+z�'
Bill Statler, Director of Finance&Information Technology _
® The City of San Luis Obispo is committed to including persons with disabilities in all of our services, programs and activities.
Telecommunications Device for the Deaf(805)781-7410.
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SUBJECT: Appeal Fees �ti „� (�' R�
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Although staff is not recommending any specific action by Council on appeal fees in next
Tuesday's Cost of Services report (other than that staff return with recommendations), we
have developed a little more information about appeal fees that we would like to pass on at
this time. The following is a chart comparing the fees that were charged by San Luis Obispo
County cities in 2003 at the time the City first adopted its fee of$100 with what the cities are
currently charging:
— city 2003 Fees 2009 Fees
Arroyo Grande $195 $250
Atascadero $200 $460
Grover Beach $150 $300
Morro Bay (*Originally charged 50% of $250
application fee w/a minimum $120 charge.
No charges a flat fee.
Paso Robles $100 $200
Pismo Beach $300 $730
San Luis Obispo County (Fees are less for $474 $552
reconsideration of environmental ($404 plus a $148
determinations [$67] and curb/gutter/sidewalk noticing fee.)
waiver denials [$73].)
Attached is a comparison of Planning Commission appeal fees obtained through the City
Clerk's ListServe. While this comparison was made in August of 2007, it is unlikely that the
fees listed would have decreased since the comparison was made. This comparison reveals
that San Luis Obispo's fees were considerably lower than the majority of cities which are
included in the survey.
Given this information, when staff returns in April, we are likely to recommend that Council
consider adoption of a $250 appeal fee and also extend the appeal fee to Tree Committee
appeals as well. (In 2008, the City received a total of nine appeals. Six of those were for
Tree Committee actions.)
GACity Clerk Agenda Reports-General Correspondence\02-24-09 Red File Appeal Fees.doc
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COMPARISON OF PLANNING COMMISSION APPEAL FEES AS OF 8/27/07
City Fee Comments
Alban $340
Anaheim $350 both PC and Zoning Administrator items
Arroyo Grande $240
Atherton $750
Bakersfield $675 includes advertising,staff time, mailed notice
effective FY 07-08; previous fee was 301.60for first single appellant and$134.20 for each
additional appellant-, BH did a huge fee recovery study last year and new fees started 07-01
Beverly Hills $4,730 07
Brentwood $118 use a universal form that needs to be filed along with the appeal fee
Ceres $507 for a PC decision appeal
Chino $2,527
Chino Hills $1,200 no fee if two Councilmembers call an item up for review
Citrus Heights $250
if Council wants to review the project based on PC's determination and within the time
Costa Mesa $1,070 frame allowed for an appeal 7 days),they can call it forward and the appeal fee is waived
Councilmembers are exempt from paying fees; covers cost of mailing notices to a 300 foot
Cupertino $156 radius
Dana Point $250 SFR
Dana Point $500 multi-unit dwellings
Unfortunately,we have tried to raise this a few times to bring it to a level more equal to
what it costs to process, but the Council's view is that they did not want the appeal fee to
Delmar $100 interfere with someone's ability to file.
Downey formula 50%of the application fee that was paid to the Planning Department
Duarte $0 no fee to appeal a PC decision
to appeal discretionary action of PC (or other commission relating to land use)-based on
cost of publication, mail notifications, and other costs involved with bringing the appeal to
Eureka $590 Council
Femdale formula same as original application fee
Fort Bra $900
Fountain Valle $800 $800 for residents; $1,800 for others
Fremont $50
Fresno $0
Glendora $2,000 City Clerk, Fountain Valle
Hercules $500 administrative staff appeal (application item minimum 5 staff hours included
Hercules $1,500 PC appeal-SF residential (application item minimum 19 staff hours included
Hercules $2,500 PC appeal-other than SF residential (application item minimum 31 staff hours included
Hercules $2,500 Council appeal-exclusive) residential (application item minimum 31 staff hours included
Council appeal-non-residential or mixed-use(application item minimum 31 staff hours
Hercules $2,500 included
Irvine $245
Jackson $200
Lafayette formula 50%of initial fee
Laguna Beach $620
Lakeport 150
Lakewood $300
Lancaster $700
Lathrop $555
Lawndale $350 may change after completion of cornrehensive fee stud
City Fee Comments
Loma Linda $100 for an owner of a SFR
Loma Linda $815 for all non SFR
Los Altos formula $500 to$1,500 depending on the noticing requirements
Mill Valle $250
Milpitas $100
Monterey $140 other appeal fees are dependent on the kind of decision board or staff)
Morgan Hill $2,530 Commission and Board decision appeal fee
Newark $100'
Newport Beach $340
Novato $100
Oakley $85 minorappeal;appeal fee for non-appellant
Oakley $7,185 regular aeal-this is a deposit; appellant is billed at time and materials
Orinda $455
nonadvertised administrative approval/denial appeals(deposit only);final billing will include
Paradise $75 staff time plus actual costs i.e. publication, postage, supplies and copies
advertised approval/denial appeals (deposit);final billing will include staff time plus actual
Paradise $140 costs i.e. publication, postage, supplies and copies
Pico Rivera $175 for SFR, owner occupied; $1,735 for all others
Pinole $100
Pittsburg $50
Placentia $65
Rancho Cordova $3,376 Councilmembers are exempt from paying fees if they want to contest PC decision
Riverside $286 administrative cases; appeal of a Zoning Administrator decision
Riverside $1,232 appeal of ALUC at City Council hearing
Roseville $319 PC or Design Review Committee appeal
Roseville $341 appeal of Planning Director's decision
Salinas $57 for SF home
Salinas $600 for all other appeals except SF home
San Dimas $100 if Council appeals,there is no fee
San Juan Capistrano $100
San Leandro $260 for PC or Board of Zoning Adjustments decision appeal
San Luis Obispo $100
San Marino $150
San Ramon $350
Santa Barbara $360
based on actual costs for staff time to prepare the material for Council consideration; if
Santa Clarita $2,190 appellant resides within 500 ft of theproject;the fee is reduced 50%
Santa Maria $277
Santa Monica $406.37
Sebastopol $150
Signal Hill $315
Stockton $372.10
Tracy $276
Truckee $504
Vacaville formula 25%of original application fee; not less than $28 or more than$218
Vista $500 if Council appeals,there is no fee
West Sacramento 50-100
Wheatland $50
Woodside $400
for Zoning and Design Review Board appeals; may be higher based on evaluation of staff
Yountville $500 time to respond to the appeal
Yuba Ci $620
rev. 08-28-07