City of Encinitas
Development Services Planning, Engineering
Land Development, and Fire Prevention
User Fee Results & Recommendations
August 26, 2026
City Council Meeting
2 • City Sponsor: Finance Department
• Participating Departments: Development Services: Planning, Engineering: Land Development, and Fire Prevention • Data Years: Analysis uses FY25 actual expenditures and annual activity volumes, and FY27 budgeted staffing costs. • Guardrails: Compliant with California Proposition 26 (Fees must not exceed the estimated reasonable cost of providing the service); and Proposition 218 (This study supports fee treatment by calculating service costs, allocating costs to the benefiting or burdening user, and capping recommendations at no more than 100% of estimated reasonable cost. Final adoption and legal compliance remain subject to City Attorney and City Council review and approval.) • Deliverables: Department fee models, proposed fee schedules, final report, fully burdened rates & benchmarking summary Purpose: Align fees with the documented cost of service, set clear cost-recovery targets, project revenue impacts, and confirm fairness via peer benchmarking.
Introduction & Project Background
Project background and foundational context for the fee study 3 Establishing a fair, transparent, and sustainable fee structure for the City of Encinitas Scope of Services
Purpose of the User Fee Study
Adjust outdated or unclear fee
amounts & structures
Add / remove fees
Ensure compliance with
reasonable cost standard
DETERMINE FULL COSTS UPDATE & ALIGN FEES
Provide fiscal projections
of fee changes
Benchmark against peers
Support informed Council
adoption
Analyze staff time, resources,
overhead
Establish true cost of each
service
Identify subsidy levels
GUIDE POLICY DECISIONS
4 Scope & Planning Defined objectives, assembled team, gathered key documents.
Data Collection Current fee schedules & volumes; actual expenditures; salaries/benefits & FTEs; org charts; CAP Rate Development
Time Estimation
Compute fully burdened hourly rates (direct labor + dept. indirect + external overhead).
Staff time spent per fee activity × volumes to calculate per-unit & annual costs User Fee Modeling Compare full costs vs. current revenues, identify subsidies/over-recoveries & propose fees Legal & Policy Lens Prop 26 and 218 compliance; community vs. private benefit; demand elasticity; competition Peer Benchmarking Five San Diego County peers: Carlsbad, Vista, Solana, Del Mar, San Marcos Implementation Each Department targets 50% - 100% (with a select few fees coming in below 50%) Project Methodology & Approach
Evidence - based methodology aligned with California standards 5 Current recovery levels, revenue gaps, and key fee structure changes by department Executive Summary of Findings
Department Snapshot — Recovery & Signals
Department Full Cost Current
Revenue
Current
Recovery
Recommended
Revenue
Recommended
Recovery
Annual
Change
Planning $3,789,349 $1,735,967 46% $2,231,250 59% $495,283 Engineering $4,131,491 $1,789,271 43% $2,580,291 62% $791,020 Fire $744,571 $243,797 33% $417,523 56% $173,726
Total $8,665,411 $3,769,036 43% $5,229,064 60% $1,460,028 6 Operational roadmap to implement cost-of-service findings across all divisions.
Policy-Aligned Next Steps
Continuous Fee Governance
Align Fees
With Cost
To Serve
Adopt Updates
• Update Planning, Engineering, and Fire
• Set fees to estimated reasonable cost
Year 1 Approach
• Year 1: fees recovering under 50% are
set to 50%, fees under 80% are set to
80%
• Not all fees set to 100% in year 1
• Eases impacts; improves predictability
Annual CPI Index
• Apply during the budget process each year
before the next full fee study
• Maintains chosen cost-recovery level
3–5 Year Study Cycle
• Full study every 3–5 yrs
• Minor updates in off-years
7 Recommendations
FOUR ACTIONS TO STRENGTHEN ENCINITAS FEE STRUCTURE
1 Establish an online Master Fee Schedule
Implement a comprehensive master fee schedule page on the City website. Creating a centralized online database for all adopted City fees, charges and recovery polices will improve customer experience and streamline adoption practices.
2 Set Target Cost Recovery Levels
Use this analysis to set Council-approved cost recovery targets by department or service category, recognizing where private benefit warrants 100% recovery and where community benefit justifies subsidy.
3 Refresh Every 3–5 Years
Conduct a full cost-of-service refresh every three to five years, with minor adjustments in non-study years to reflect changes in staffing, service delivery, and demand.
4 Apply Annual CPI Adjustment
Apply an annual inflation adjustment (CPI or equivalent) during the budget process so fees keep pace with rising costs and maintain Board-adopted recovery levels.
Thank you