User Fee Study
City of Barstow
2 What are User Fees
• Provide private benefit with limited or no community benefit • State law requires that 1) individual use of the service must be voluntary, and 2) fees must reasonably relate to the services provided
• Fee levels & cost recovery determined through City Council fee adoption
• Does not include development impact fees, utility rates, taxes, etc.
3 Why Update User Fees
• Subsidies in services impact the General Fund
o Private & specific benefit services are subsidized by general fund o Reduces ability to fund general benefit activities like public safety & community events/programs
• Decreased department funding can impact service quality/delivery • Cost recovery knowledge and planning
o Provides clarity of pressures on City resources
o Enables City to strategize and set fees to benefit of the City and community
o State requirements for reasonable cost-based fees
4 User Fee Objectives & Steps
• Determine full cost of providing services or programs o Review fee schedules based on service delivery
o Identify potential new fees (not currently collected) o Remove or restructure obsolete fees
o Using fully-burdened rates, calculate full cost recovery • Update fees for services based on cost analysis
o Incorporate or establish cost recovery goals
ü Subsidies can promote participation
o Identify appropriate fee levels that:
ü Promote local policies and objectives
ü Maintain legal compliance with state law
5 Scope of the Study
• Review and calculate cost of providing services and related fees charged by the following departments and divisions:
· Building & Safety
· Planning
· Engineering
· Business License
· Code Compliance
· Wastewater
· Fire
· Miscellaneous - Finance
· Parks & Recreation
· Police
*No analysis was made of the Film Office and Animal Services fees and are recommended to remain as currently set 6 Data & City Staff Participation
• Primary types of data used:
o Expenditure data
o Staffing structures
o Central service/Indirect overhead
o Productive/billable hours
o Time estimates to complete tasks
o City/Department input, feedback and policies
• Staff support throughout process essential to ensure analysis fidelity 7 Summary Steps of the Study
Model
Development
Data
collection
Build fee
model
Overhead and
FBHR
Calculation
Cost Analysis
Staff meetings
Update fee
schedules
Staffing and
time data
Full cost for
services
Set Cost
Recovery
Current cost
recovery
Target cost
recovery
Fee Study
Report
Create draft
report
Staff report
review
Finalize report
Updated Fee
Adoption
Public Hearing
8 Fee Structures
Flat Fees
• Reasonable time estimates for providing service
Actual Cost / Deposit Based Fees
• Services are billed using Fully Burdened Hourly Rates Fees determined by project size
• Programmic analysis determines the cost relationship between project size and cost of service
Parks and Recreation Activities / Programs / Rental / Use Fees • Fees can be set based on policy, usage characteristics, comparison, and market based Fines / Penalties
• Not a cost-based fee, set to deter activity, without being overburdensome 9 Cost of Service Calculation
• Primary types of data used:
o Salary & Benefits
o Services and supply costs
o Indirect support costs
o System and maintenance costs
• Hourly rates structured to account for direct work hours Salary &
Benefits
Productive
Hours
Salary &
Benefit
Rate
Direct and
Indirect
Overhead
Fully
Burdened
Hourly
Rate
10 Fee Cost Composition Example
§ Fully Burdened Hourly
rates predominately used
to calculate full cost for
fees
§ Important to keep in mind
all processes, personnel,
cross department, and
indirect support involved
to calculate full cost for
services
Fee or
Service
Permit
Reviewer
Inspector
City
Engineer
City Clerk
Clerical Staff
Department
Director
11 Building & Safety
• Program cost analysis for Building fees and analysis determined current cost recovery is at 33%
• Time based analysis using fully burdened hourly rates and the time it reasonably takes to provide service for several fees • Suggested fee notes:
o An increase for 114 fees and the building permit fee table o 3 new fees would be added
o 21 fees would remain as currently set
o There would be an increase of 208% for the building permit fee table and an average fee change of 176% for all other existing fees
12 Planning
• Time based analysis
• Analysis found that services are not in line with the cost of providing service
• Suggested fee notes:
o An increase for 28 fees
o 3 fees would decrease
o 17 new fees would be added
o 2 would change from a flat fee to actual cost
o 22 fees would remain as currently set
o the average fee change would be an increase of 18% for current fees 13 Engineering
• Program cost analysis
• Analysis found that the current Engineering fees on average result in around 8% cost recovery for services
• Suggested fee notes:
o An increase to 82 fees
o 3 fees would remain as currently set
o the average fee change would be an increase of 24% for current fees 14 Business License
• Time based analysis
• Analysis found that services are currently below the full cost of providing them
• Suggested fee notes:
o An increase to 75 fees
o 1 fee would decrease
o 27 fees would remain as currently set
o the average fee change would be an increase of 39% for current fees 15 Code Compliance
• Time based analysis
• Analysis found that services are currently below the full cost of providing them
• Suggested fee notes:
o An increase to 3 fees
o 1 new Rental Inspection – Reinspection would be added o 3 fees would remain as currently set
o the average fee change would be an increase of 53% for current fees 16 Wastewater
• Time based analysis
• Analysis found that services are currently below the full cost of providing them
• Suggested fee notes:
o An increase to 22 fees
o 1 fee would decrease
o 12 fees would remain as currently set
o the average fee change would be an increase of 31% for current fees 17 Fire
• Time based analysis
• Analysis found that services are currently below the full cost of providing them
• Suggested fee notes:
o An increase to 49 fees
o 109 fees would remain as currently set
o 1 fee would decrease
o 3 new fees would be added
o 2 fees would change from a flat fee or no cost to actual cost o the average fee change would be an increase of 32% for current fees 18 Miscellaneous - Finance
• Time based analysis
• Analysis found that services are currently below the full cost of providing them
• Suggested fee notes:
o An increase to 3 fees
o 30 fees would remain as currently set
o the average fee change would be an increase of 2% for current fees 19 Parks and Recreation
• Most fees are use of government property and should be set based on policy considerations, usage factors, and market factors
• Department is currently operating at around 22% direct cost recovery
• Staff are not suggesting any change to the fee schedule and are to remain as currently set
20 Police
• Time based analysis
• Analysis found that that fees are not recovering the cost of providing service
• Suggested fee notes:
o An increase to 13 fees
o 3 new fees would be added
o 1 fee for DUI Emergency Response would change from a flat fee to actual cost o 19 fees would remain as currently set
o the average fee change would be an increase of 45% for current fees 21 Policy Considerations
• General standard: individuals or groups who receive private benefit from service should pay 100% of cost
• In certain situations, subsidization is an effective public policy tool:
oEncourage participation
oEnsure compliance when cost is prohibitive to residents oPromote access to services
• Recommend that City utilize inflation factor to annually adjust fees based on CPI, MOU, or another factor
• Comprehensive fee study every 5 years
Questions
23 Disclosure
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