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Staff Report
City Council
Item No. 5.A
Meeting Date: August 23, 2023
From: Kevin Biersack, Financial Services Director
Title: City User and Regulatory Fees Update
City Council
RECOMMENDATION:
Adopt a resolution updating and establishing user and regulatory fees.
BACKGROUND:
This report presents the Schedule of User and Regulatory Fees to be used in Fiscal Year 2023/24, effective 11/01/2023.
On September 8, 2021, the City Council adopted an updated Schedule of User and Regulatory Fees based on the results of a comprehensive cost of service study. During interim years, i.e., during years in between comprehensive studies, the City Council has authorized inflationary adjustments to fees.
This year represents an interim year update, with updates primarily intended to apply the authorized inflationary adjustments and to incorporate feedback received subsequent to the adoption of the City’s current schedule of fees.
User and regulatory fees are established by the City Council. The City’s fee sched ule is a compilation of fees for City services provided to members of the public. The advantages of updating the City’s user and regulatory fees include assuring fees are set based on current costs and approved cost recovery objectives while providing transparency in the fee structure for the City’s development -related and other municipal fees.
The fee schedule identifies fees for services and activities provided at the request of, or on behalf of, a single party as opposed to the public at large. Exampl es of user and regulatory fees collected by Cathedral City and municipalities throughout California include, but are not limited to:
• Planning Fees, such as entitlement review and review for compliance with the zoning code
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• Building Fees, such as permitting of new construction or modifications to existing structures
• Engineering Fees, such as map review, encroachment permitting, and public improvement review
• Fire Prevention Fees, such as fire sprinkler, fire alarm, and other permit review for compliance with Fire Code
• Police Fees, such as vehicle impound and false alarm response
User and regulatory fees specifically exclude:
• Taxes
• Assessments
• Franchise Fees
• Development Impact Fees
• Fines or Penalties
• Utility Rates and Services Charges
Industry best practice a nd California statute are in harmony: User and regulatory fees should be set according to the estimated reasonable cost of service and should bear a fair and reasonable relationship to the payer’s burdens on, or benefits received from the activities and/or services provided by the City. Recovering the costs of providing fee - related services directly influences the City’s goal of maintaining fiscal stability while continuing to provide quality essential services.
Additionally, ongoing review and adjustme nt of fees provides multiple benefits, including:
• Increasing the availability of General Fund revenues to be used for services and activities available to all residents and businesses, such as public safety services.
• Keeping pace with general cost inflation.
• Avoiding fee spikes that are more likely to occur when municipalities leave fees unchanged for a multiyear period.
• Providing fee payers, city staff, and city policymakers with a pattern of consistency that provides information for forecasting and decis ion-making purposes.
• Helps meet fee -payer service level expectations by collecting fees to fund the existing level of services provided.
• Encouraging generational equity among fee payers by avoiding long -term stagnation of fees followed by significant fee increases.
Staff published notices of public hearings on the fee increases on July 19 and July 26 , 2023.
City Staff met with the Desert Valley Builders Association (DVBA) staff on August 9, 2023 to review their items of concern. Subsequently, DVBA provide d a letter (attachment 1 , dated August 11, 2023 ) supporting the adoption of the User and Regulatory Fee Study and the implementation of Phase II and Consumer Price Index increases of the current fees.
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DISCUSSION:
This report includes three attachments:
• Attachment 2 – of this staff report provides the resolution (attachment 3) and fee schedule proposed for adoption.
• Attachment 4 – provides an illustration of current fees, proposed fees, and cost of service.
• Attachment 5 – this attachment provides the co st-of-service analysis to support non-inflationary adjustments to City fees.
FISCAL IMPACT:
With the 4.57% compounded CPI increase, City license, permit, fee and service revenues could provide additional revenue up to $360,000 for the remainder of this fiscal year (FY) 2023/2024. Considering there are certain revenues not impacted by the CPI increase, a conservative estimate would be $250,000.
FIVE-YEAR STRATEGIC PLAN:
This action will further Goal C – Fiscal Stability and Sustainability
Objective - Cathedral City has economically prospered by facilitating the investment of private dollars in high quality development which benefits the community. We remain financially solvent by instituting prudent fiscal policies and transparent financial practices.
ATTACHMENTS:
Cathedral City User and Regulatory Fee Study DVBA final comments August 11 2023 City User and Regulatory Fees Update 08.09.2023
Resolution - Fee Schedule Update FY 2324
Before and After Fee Schedule - 08.09.2023
Cost of Service - 08.09.2023