CITY COUNCIL STAFF REPORT
Meeting: April 21, 2026
Subject
Fiscal Year (FY) 2026‐27 Fee Schedule Update
Recommended Action
Adopt Resolution No. 26‐XXX approving FY 2026‐27 Fee Schedules A, B, C, and D. If adopted, new fees will be effective by July 1, 2026.
Reasons for Recommendation
On February 6, 2024, City Council received the results of a comprehensive 2023 Cost Allocation Plan (C AP) and User Fee Study. The City historically conducts fee studies in conjunction with a Cost Allocation Plan (CAP) approximately every seven years. The study evaluated the full cost (both direct and indirect) of providing City services and informed a more accurate and equitable fee structure. Fee updates based on that study along with the newly developed User Fee Cost Recovery policy were adopted on May 14, 2024.
The FY 2026‐27 proposed fee schedules continue to use the full cost recovery methodology developed in the 2023 study and apply the latest inflationary adjustments to the FY 2025‐ 26 rates: Consumer Price Index (CPI) increase of 2.477%, the Bay Area Construction Cost Index (CCI) decrease of .121%, and/or budgeted labor costs increase of 3.847%, excluding state regulated fees.
The adjusted schedules ensure alignment with the Council‐approved User Fee C ost Recovery Policy ( Attachment J) while maintaining fairness, clarity, and fiscal transparency. The proposed fee increases are estimated to generate approximately $874,296 in additional annual revenue, primarily benefiting the General Fund.
Fee Schedules and Notable Changes
Schedule A – General: This schedule includes fees not specific to a department or division that would require a dedicated schedule, such as code enforcement permits, City Clerk services, database requests, business license applications and related fees, and other fees for service.
A CPI adjustment is also proposed for all relevant fees using the full cost recovery rate included in the fee stud y. The adjustments to these fees are primarily influenced by changes in the cost of materials or external factors beyond the City's control.
Schedule A has been updated to align the dangerous dog sign fee with actual costs and to reflect staff time associated with massage business- related services. Additionally, three community festival fees have been removed, as they are now included in the Parks and Recreation – Schedule D.
Schedule B – Engineering: Utilized by t he Development Services Division within the Public Works Department, t his schedule covers fees necessary for the division to review plans and applications for private developments (onsite grading and drainage operations), issuance of encroachment permits, inspections of work performed within the Public Right of Way, along with other permits, and services. Engineering fees are typically adjusted annually by CCI and Budgeted Labor Costs.
The schedule continues the practice of not charging for Block Party services and Bi-Annual Parking Permit.
Schedule B has been updated to clarify the “Environmental Programs” plan review fee to reflect its expanded scope, which now includes both stormwater and waste-related review activities.
Additionally, a commercial category has been added to the plan review fee structure to provide greater specificity, supplementing the existing single -family and multi-family classifications in place of the previous general fee.
Schedule C – Planning: This schedule is utilized by the P lanning Division , which administers all required review and evaluation processes for proposed land use projects and maintains the goals and objectives of the City’s General Plan and Zoning Ordinance.
Planning fees are typically adjusted annually by CPI and Budgeted Labor Costs.
Schedule C has been updated to include clarifying language and the addition of a new fee for “Required Mailing Postage,” to be charged at actual costs plus an administrative fee for required noticing activities. Additionally, the “Two -Story Permit without Design Review” fee has been removed, as it is no longer applicable.
Schedule D – Building: Utilized by the Building Division of the Community Development Department, this schedule includes fees for providing the following services: plan review and permit issuance of all proposed construction ; code, ordinance, requirements, and regulation explanations ; building inspection services; and other building and development‐related services. Building fees are typically adjusted annually by Budgeted Labor Costs.
The proposed schedule includes Year 2 of a 3 ‐ year phase ‐ in of full cost recovery for Additions Plan Check and Inspection Fees. As a result, these fees will increase by approximately 50–75% compared to last year’s rates, continuing the planned adjustment initiated in FY 2024
‐25.
N
o new fees are being proposed in Schedule D.
Index-Based Adjustments
Depending on the user fee, the CPI, CCI, or change in budget cost adjustment is applied based on the user fee’s underlying cost driver. For FY 2026‐27 , the CPI increase is 2.5%
per the Bureau of Labor Statistics, the CCI decrease is ‐
0.1% per the Engineering News
Record, and the labor cost increase is 3.8%, as shown in the table below.
February
2025
February
2026
Index
Increase
Percent
Increase
Consumer Price Index for
All Urban Consumers
(CPI‐U)
354.432 363.211 8.779 2.477%
Construction Cost Index
(CCI) 15,404.88 15,386.20 ‐ 18.68 ‐ 0.121%
Budgeted Labor Costs $ 45,637,0001 $ 47,392,4742 $1,755,474 3.847% 1 Base Salary and Benefits (FY 2025‐26 Estimated Budget) 2 Base Salary and Benefits (FY 2026‐27 Estimated Budget)
The net 3.8 % increase in estimated Budget Labor Costs is primarily comprised of the inclusion of total pension costs, including mandatory annual payments towards the Unfunded Accrued Liability (UAL), as well as increases for employees progressing to higher salary steps and negotiated benefits.
T
he following table summarizes the current year’s application of indexes to Schedules A‐ D, al
ong with the rate increases for the previous four years.
Fiscal Year Schedule A –
General Fees
Schedule B –
Engineering
Fees
Schedule C –
Planning Fees
Schedule D –
Building Fees
2026‐27 2.5% CPI
‐.12% CCI,
3.8% Estimated
Labor Cost
increase
2.5% CPI
3.8% Estimated
Labor Cost
increase
3.8% Estimated
Labor Cost
increase
2025‐26 2 .7% CPI
‐.79% CCI,
9.7% Estimated
Labor Cost
increase
2.7% CPI
9.7% Estimated
Labor Cost
increase
9.7% Estimated
Labor Cost
increase
Fiscal Year Schedule A –
General Fees
Schedule B –
Engineering
Fees
Schedule C –
Planning Fees
Schedule D –
Building Fees
2024‐25
F Y 2023 ‐24 c ost‐
re covery plus
2.4% CPI
FY 2023‐24 cost‐
recovery plus
0.7% CCI,
1.0% Estimated
Labor Cost
increase
FY 2023‐24 cost ‐
recovery plus
2.4% CPI
1.0% Estimated
Labor Cost
increase
FY 2023‐2 4 cost ‐
re
covery plus
1.0% Estimated
Labor Cost
increase
2023‐24 5.3% CPI
7.1% CCI,
9.0% Estimated
Labor Cost
increase
5.3% CPI
9.0% Estimated
Labor Cost
increase
9.0% Estimated
Labor Cost
increase
2022‐23 5 .2% CPI
9.8% CCI,
1.0% Estimated
Labor Cost
increase
5.2% CPI
1.0% Estimated
Labor Cost
increase
1.0% Estimated
Labor Cost
increase
P
arks and Recreation fees (Schedule E) are not part of the proposed fee increase because they are set by current market rates per Resolutions No. 04‐350.
S
ustainability Impact
No sustainability impact.
Fiscal Impact
If Council approves the proposed fee updates with an effective date of July 1, 2026 , the proposed fee schedule adjustments are anticipated to generate additional revenues totaling $874,296 for Fiscal Year 2026
‐
27. The fiscal impact of approving these fees have
been updated to approximately ten of twelve months of the fiscal year, as the effective date had been delayed. A decision to forego implementing these increases would result in the General Fund absorbing a greater share of service costs, placing additional financial strain on the City’s primary operating fund. Over time, this subsidization could limit the City’s ab ility to fund other essential services and programs that benefit the broader community.
T
he recommended increase in fees and estimated revenue are summarized as follows:
Fee Schedule Additional Revenue Factor and Basis
Schedule A – General $722 2.5% CPI
Schedule B – Engineering $139,769 ‐ 0.12% CCI,
3.8% Labor Costs
Schedule C – Planning $144,799 2.5% CPI,
3.8% Labor Costs
Schedule D – Building $589,005 3.8% Labor Costs
City Work Program (CWP) Item/Description
None.
Council Goal
Fiscal Strategy.
California Environmental Quality Act
Not applicable.
_____________________________________
Prepared by: Jonathan Orozco, Acting Director of Administrative Services Reviewed by: Kirsten Squarcia, Deputy City Manager
Approved for Submission by: Tina Kapoor, City Manager
Attachments:
A – FY 2026‐ 27 Proposed Fee Schedule A – General (Redline) B – F
Y 2026‐27 P
roposed Fee Schedule B – Engineering (Redline)
C – F
Y 2026
‐27 P
roposed Fee Schedule C – Planning (Redline)
D – F
Y 2026‐27
Proposed Fee Schedule D – Building (Redline)
E – F
Y 2026‐27
Proposed Fee Schedule A – General (Clean)
F – F
Y 2026‐27
Proposed Fee Schedule B – Engineering (Clean)
G – F
Y 2026‐27
Proposed Fee Schedule C – Planning (Clean)
H – F
Y 2026‐
27 Proposed Fee Schedule D – Building (Clean)
I – Dr
aft Resolution No. 26‐XXX approving FY 2026‐
27 Fee Schedules A, B, C, and D
J
– User Fee Cost Recovery Policy