Finance and Audit Committee
April 9, 2026

ITEM II:

Single Audit Report for the
Year Ended
June 30, 2025
(Draft)
1 Agenda Item X.X

CPMS CONSENT CALENDAR
Meeting Date: April 21, 2026
TO: Mayor and Councilmembers
SUBMITTED BY: Luke Rioux, Finance Director
PREPARED BY: Tony Gonzalez, Accounting Manager
SUBJECT: Single Audit Report for the Fiscal Year Ended June 30, 2025 RECOMMENDATION:

Accept the Single Audit Report for the Fiscal Year Ended June 30, 2025.

BACKGROUND:

The Single Audit, previously known as the Office of Management and Budget (OMB) Circular A-133 audit, is an organization-wide financial statement and federal awards audit of an entity that expends $750,000 or more in federal funds in one fiscal year. It is intended to provide assurance to both the Federal and State Governments that the City has adequate internal controls in place and is generally in compliance with program requirements. Local governments are required to obtain an audit pursuant to the Federal Single Audit Act Amendments of 1996 and prepare a reporting package that is submitted to:

California State Controller’s Office (SCO), which serves as the Single Audit oversight agency for most California local governments.

Caltrans, if the city has received federal funding specifically from Caltrans for transportation-related projects.

Federal Audit Clearinghouse (FAC), which acts as an executive agent for the OMB.

The City’s Single Audit Report must be prepared and submitted in compliance with the financial reporting requirement in accordance with Title 2, Code of Federal Regulations (CFR), Part 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). The reporting package is a collection of several documents, which includes the Annual Comprehensive Financial Report (ACFR), associated auditor letters and the Single Audit Report. The ACFR was previously accepted at the February 17, 2026 City Council meeting. To comply with this mandate, the City’s annual contract with its independent auditors, Rogers, Anderson, Malody, & Scott, LLP (RAMS) includes Single Audit services, should it be required for the fiscal year. e Audit Report for the Fiscal Year Ended June 30, 2025
ngle Audit Report for the Fiscal Year Ended June 30, 2025. , previously known as the Office of Management and Budget (OMB) 133 audit, is an organization-wide financial statement and federal of an entity that expends $750,000 or more in federal funds in one fiscal year. It is intended to provide assurance to both the Federal and State Governments that the City has adequate internal controls in place and is generally in compliance with program requirements. Local governments are required to obtain an audit pursuant to the Feder Amendments of 1996 and prepare a reporting package that is submitted to California State Controller’s Office (SCO), which serves as the Single Audit oversight agency for most California local governments.

Caltrans, if the city has received federal funding specifically from Caltrans for transportation-related projects.

Federal Audit Clearinghouse (FAC), which acts as an executive agent for the OMB.

Single Audit Report
financial reporting requirement in accordance with Title 2, Code of Federal Regulations (CFR), Part 200 Uniform Administrative Requirements, Cost Principles and Audit 2 Meeting Date: April 21, 2026

Beginning with fiscal years starting on or after October 1, 2024, federal regulations increase the Single Audit expenditure threshold from $750,000 to $1 million. Because the City’s fiscal year ended June 30, 2025, and began prior to October 1, 2024, the $750,000 threshold remains applicable for this audit year. The higher $1 million threshold will apply to the City in future fiscal years.

DISCUSSION:

In FY 2024/25, the City had expended $12,105,549.92 in federal funds and had the required Single Audit performed in conjunction with the City’s annual audit. At the time of reviewing the FY 2024/25 annual independent auditor’s report and ACFR in February 2026, staff informed the Finance Committee and City Council that the Single Audit was in progress and would be brought back as a separate item after it was finalized and submitted. The Single Audit Report is due March 31 of each year.

The Single Audit Report is provided as Attachment 1 and includes a Report on Internal Controls and Compliance, a Schedule of Expenditures of Federal Awards and Schedule of Audit Findings and Questioned Costs, if any. Generally, findings are areas of improvement for the City when it comes to the internal controls that are designed to manage the risk with which the City’s assets are safeguarded, and its finances are accurately reported which then translates into the proper administration of federal funding.

In summary, the City’s auditors, RAMS, reports the following within the Single Audit Report:

Unmodified opinion as it pertains to both the Financial Statements and to Federal Awards.

No material weakness or significant deficiencies in internal controls over financial reporting.

No material weakness or deficiencies in internal controls over major programs.

The Single Audit and reporting package has been submitted to the respective agencies, SCO, Caltrans and FAC before the March 31, 2026 deadline.

Other Information
The Singe Audit is available for viewing at City Hall, and the City’s website.

FINANCE AND AUDIT STANDING COMMITTEE REVIEW:

The Finance and Audit Standing Committee met to review the Single Audit Report on April 9, 2026.
in federal funds and had the
required Single Audit performed in conjunction with the City’s annual audit. At the time of annual independent auditor’s report and ACFR in February staff informed the Finance Committee and City Council that the Single Audit was as a separate item after it was finalized and
The Single Audit Report is due March 31 of each year.
ingle Audit Report is provided as Attachment 1 and includes a Report on Internal Controls and Compliance, a Schedule of Expenditures of Federal Awards and Schedule of Audit Findings and Questioned Costs, if any. Generally, findings are areas of ement for the City when it comes to the internal controls that are designed to manage the risk with which the City’s assets are safeguarded, and its finances are accurately reported which then translates into the proper administration of federal funding. ummary, the City’s auditors, RAMS, reports the following within the Single Audit odified opinion as it pertains to both the Financial Statements and to Federal No material weakness or significant deficiencies in internal controls over financial reporting.

No material weakness or deficiencies
e Single Audit and reporting package has been submitted to the respective agencies, SCO, Caltrans and FAC before the March 31, 202
her Information
inge Audit is available for viewing at City Hall,
NANCE AND AUDIT STANDING COMMITTEE REVIEW:
3 Meeting Date: April 21, 2026

FISCAL IMPACTS:

There is no direct fiscal impact associated with accepting the Single Audit Report. The cost of the independent audit services and related reports for the single audit provided by Rogers, Anderson, Malody & Scott, LLP for FY 2024/25 was approximately $5,150 and was included in the Finance Department's adopted budget for FY 2025/26.

ALTERNATIVES:

The City Council could decide not to accept the presented report; however, this is not recommended as the reports have been prepared in conformance with a variety of accounting, federal and state reporting requirements and represent the professional evaluation and analysis by the City’s independent auditors.

APPROVED BY: Robert Nisbet, City Manager
ATTACHMENTS:

1. Single Audit Report for the Fiscal Year Ended June 30, 2025 ity Council could decide not to accept the presented report; however, this is not recommended as the reports have been prepared in conformance with a variety of accounting, federal and state reporting requirements and represent the professional tion and analysis by the City’s independent auditors.

Robert Nisbet, City Manager
ngle Audit Report for the Fiscal Year Ended June 30, 2025 4 ATTACHMENT 1
Single Audit Report for the Fiscal Year Ended June 30, 2025 5 City of Goleta
Single Audit Report on Federal Awards
Year Ended June 30, 2025
6 CITY OF GOLETA

SINGLE AUDIT REPORT ON FEDERAL AWARDS

TABLE OF CONTENTS
Year Ended June 30, 2025
Page
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 1
Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 3
Schedule of Expenditures of Federal Awards 6
Notes to the Schedule of Expenditures of Federal Awards 7 Schedule of Findings and Questioned Costs 8
Summary Schedule of Prior Audit Findings 10
7 -1-

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
City of Goleta, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Goleta (the City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 22, 2025.

Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. 8 -2-
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

San Bernardino, California
December 22, 2025
9 -3-
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM;
REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND

REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

REQUIRED BY THE UNIFORM GUIDANCE
Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
City of Goleta, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Goleta’s (the City’s) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2025. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2025.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City’s federal programs.
10 -4-
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:

Exercise professional judgment and maintain professional skepticism throughout the audit.

Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.

Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance.

Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. 11 -5-
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements.

We issued our report thereon, dated December 22, 2025, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

San Bernardino, California
March 24, 2026 (except for our report on the Schedule of Expenditures of Federal Awards, for which the date is December 22, 2025)
12 CITY OF GOLETA

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Year Ended June 30, 2025
See accompanying notes to the schedule of expenditures of federal awards. -6-
Federal Grantor / Assistance Program Amount
Pass-through Grantor / Listing Identification Federal Provided to Program Title Number Number Expenditures Subrecipients U.S. Department of Agriculture Passed through from GreenLatinos:

Inflation Reduction Act Urban &
Community Forestry Program 10.727 24-CA-11132544-013 1,794 $ - $ Total Assistance Listing 10.727 1,794 - Total - U.S. Department of Agriculture 1,794 - U.S. Department of Housing and Urban Development Direct assistance:

CDBG-Entitlement/Special Purpose Grants Cluster
Community Block Development Grants/
Entitlement Grants 14.218 B-09-MC-06-0597 121,510 40,276 Total Assistance Listing 14.218 121,510 40,276 Total CDBG-Entitlement/Special Purpose Grants Cluster 121,510 40,276 Total - U.S. Department of Housing and Urban Development 121,510 40,276 U.S. Department of Transportation
Passed through from the State of California,
Department of Transportation:

Highway Planning and Construction 20.205 BRLS-5481(013) 10,078,809 - Highway Planning and Construction 20.205 0518000229l-N 31,014 - Total Assistance Listing 20.205 10,109,823 - Passed through from the State of California, Office of Traffic Safety:

Highway Safety Cluster
State and Community Highway Safety 20.600 PS24015 68,292 - Total Assistance Listing 20.600 68,292 - Total Highway Safety Cluster 68,292 - Total - U.S. Department of Transportation 10,178,115 - U.S. Department of the Treasury Direct assistance:

Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A 1,051,360 - Total Assistance Listing 21.027 1,051,360 - Total - U.S. Department of Treasury 1,051,360 - U.S. Department of Homeland Security Passed through from the State of California,
Office of Emergency Services:

Disaster Grants - Public Assistance
(Presidentially Declared Disasters) 97.036 FEMA-4683-DR-CA 116,320 - Disaster Grants - Public Assistance (Presidentially Declared Disasters) 97.036 FEMA-4699-DR-CA 473,180 - Disaster Grants - Public Assistance (Presidentially Declared Disasters) 97.036 FEMA-4482-DR-CA 1,126 - Total Assistance Listing 97.036 590,626 - Total - U.S. Department of Homeland Security 590,626 - Total Expenditures of Federal Awards 11,943,405 $ 40,276 $ 13 CITY OF GOLETA

NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended June 30, 2025
-7-
(1) Basis of Presentation
The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal awards activity of the City of Goleta (the City) under federal programs of the federal government for the year ended June 30, 2025. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the City, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the City.
(2) Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Under the modified accrual basis of accounting, expenditures are incurred when the City becomes obligated for payment as a result of the receipt of the related goods and services. Expenditures reported include any property or equipment acquisitions incurred under the federal program. Effective October 1, 2024, the Office of Management and Budget (OMB) revised the Uniform Guidance under 2 CFR Part 200 to increase the de minimis indirect cost rate from 10% to 15% of Modified Total Direct Costs (MTDC).

Awards issued prior to October 1, 2024 (and not subsequently amended) continue to apply the 10% de minimis rate. Awards issued or amended on or after October 1, 2024 apply the revised 15% de minimis rate. The City has elected not to use the de minimis indirect cost rate for any federal awards.
(3) Subrecipients
The City passes certain federal awards received from the U.S. Department of Housing and Urban Development through to subrecipients. The City has certain compliance responsibilities, such as monitoring its subrecipients to help assure they use these subawards as authorized by laws, regulations, and the provisions of contracts or grant agreements, and that subrecipients achieve the award’s performance goals. 14 CITY OF GOLETA

SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2025
-8-
SECTION I: SUMMARY OF AUDITOR'S RESULTS
Financial Statements
accordance with GAAP: Unmodified
Internal control over financial reporting:

Material weakness(es) identified? Yes X No
Significant deficiency(ies) identified? Yes X None Reported Noncompliance material to financial
statements noted? Yes X No
Federal Awards
Internal control over major programs:

Material weakness(es) identified? Yes X No
Significant deficiency(ies) identified? Yes X None Reported Type of auditor's report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that
are required to be reported in
accordance with section 2CFR
200.516(a)? Yes X No
Identification of major federal programs:

AL Number

20.205
Dollar threshold used to distinguish
between type A and type B programs: $750,000
Auditee qualified as low-risk auditee? X Yes No
Name of Federal Programs
Type of report the auditor issued on whether the financial statements audited were prepared in Highway Planning and Construction
15 CITY OF GOLETA

SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended June 30, 2025
-9-
SECTION II: FINANCIAL STATEMENT FINDINGS
No matters to report.

SECTION III: FEDERAL AWARD FINDINGS
No matters to report.
16 CITY OF GOLETA

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
Year Ended June 30, 2025
-10-
CURRENT STATUS OF PRIOR YEAR FINDINGS:

No matters to report.
17 ITEM III:

Cost Recovery and
User Fee Setting Policy
(Draft)
18 Agenda Item X.X

CPMS DISCUSSION/ACTION ITEM
Meeting Date: April 21, 2026
TO: Mayor and Councilmembers
SUBMITTED BY: Luke Rioux, Finance Director
PREPARED BY: Tony Gonzalez, Accounting Manager
SUBJECT: Cost Recovery and User Fee Setting Policy
RECOMMENDATION:

Adopt Resolution No. 26-_ entitled “A Resolution of the City Council of the City of Goleta, California, Adopting a Citywide Cost Recovery and User Fee Setting Policy.”
BACKGROUND:

The City of Goleta is simultaneously accountable for maintaining a sustainable budget that benefits the overall community and one that also responds to the interests of the individuals who live here. While the primary mission of government is to satisfy community needs, many City services solely benefit specific individuals or businesses. It is the intention of this policy to establish cost recovery levels so that the public at large is not subsidizing activities that benefit individual recipients through general tax revenues. The foundation of effective cost recovery is a well-conceived, regularly reviewed policy. Such a policy provides a guideline for setting equitable fees given the full cost of each service, allowing optimum cost-recovery rates for defined services, and alleviating unintended subsidization of these services from General Fund resources.

A cost recovery policy provides guidelines for setting fees given the full cost of service. It does not bind policymakers to increasing or decreasing fees but does provide rationale for doing so. The lower fees are set, relative to full cost recovery, the more General Fund dollars are required to maintain the service. This additional support must then be weighed against the other needs for resources, including needs which may not have similar cost recovery options.

The City charges fees for many services and annually evaluates fees to ensure that they do not exceed the reasonable cost of providing the service. Staff are recommending this cost recovery policy to create a standard methodology for setting fees in relation to these costs.

Setting Policy
_ entitled “A Resolution of the City Council of the City of Goleta, California, Adopting a Citywide Cost Recovery and User Fee Setting is simultaneously accountable for maintaining a sustainable budget that benefits the overall community and one that also responds to the interests of the individuals who live here. While the primary mission of government is to satisfy community needs, many City services solely benefit specific individuals or businesses. It is the intention of this policy to establish cost recovery levels so that the public at large is not subsidizing activities that benefit individual recipients through general tax revenues. The foundation of effective cost recovery is a well
a policy provides a guideline for setting equitable fees given the full cost of each service, allowing optimum cost-recovery rates for defined services, and alleviating unintended subsidization of these services from General Fund resources.

A cost recovery policy provides guidelines for setting fees given the full cost of service. It does not bind policymakers to increasing or decreasing fees but does provide rationale for doing so. The lower fees are set, relative to full cost recovery, the more General Fund dollars are required to maintain the service. This additional support must then be weighed against the other needs for resources, including needs which may not have similar cost 19 Meeting Date: April 21, 2026

DISCUSSION:

The Government Finance Officers Association (GFOA) makes the following key recommendations to guide the process of setting fees and charges:

A formal policy regarding charges and fees should be adopted.

The full cost of services should be calculated in order to provide a basis for setting the charge or fee. Along with direct costs, this means including indirect costs for central services such as legal services, human resources, accounting, insurance and information technology, use of city facilities and equipment, and program administration costs.

Charges and fees should be periodically reviewed and updated based on factors such as the impact of inflation, the adequacy of cost coverage, and current competitive rates.

Information on charges and fees should be made available to the public.

Policy for Cost Recovery
The foundation of effective cost recovery is a well-conceived, regularly reviewed policy on fee recovery. This policy framework should be adopted before considering full cost of services. A fee recovery policy should establish:

A procedure for evaluating the full costs of specific services and programs that may be all or in part supported by fees.

A target proportion of fee revenue recovery for each program and service A schedule for the update or revision of the cost of service analysis and revenue recovery policy.

Fee and Charge Setting: Three Different Types
There are important differences in the nature of public services and programs, and these differences are often reflected in the kinds of revenues that may be used to fund the services and programs. When considering the design of fees and charges for cost recovery, there are essentially three broad categories, which related to the kind of service being funded: User Fees, Regulatory Fees, and Fines and Penalties.

1. User Fees (e.g., utility fees, recreation fees). User fees apply to services where the user receives some or all of the benefits of the service. The level of cost recovery depends on a variety of considerations, including the effect on use, level of general community benefit, and ability to pay.

2. Regulatory Fees (e.g., planning review, building permits, business licenses).

Regulatory fees are paid by those conducting the regulated activity to ensure health and safety of the community. Although the general community benefits from the regulatory program, the “driver” of the need for the service should pay most or all of the costs.

3. Fines and Penalties. Fines and penalties are not fees in that they are not voluntary and the service beneficiaries are really the general public, as a result of the charge or fee. Along with direct costs, this means including indirect costs for central services such as legal services, human resources, accounting, insurance and information technology, use of city facilities and equipment, and program Charges and fees should be periodically reviewed and updated based on factors such as the impact of inflation, the adequacy of cost coverage, and current Information on charges and fees should be made available to the public. recovery is a well-conceived, regularly reviewed policy on fee recovery. This policy framework should be adopted before consider services. A fee recovery policy should establish:

A procedure for evaluating the full costs of specific services and programs that may be all or in part supported by fees.

A target proportion of fee revenue recovery for each program and service A schedule for the update or revision of the cost of service analysis and revenue recovery policy.

Fee and Charge Setting: Three Different Types
There are important differences in the nature of public services and differences are often reflected in the kinds of revenues that may be used to fund the services and programs. When considering the design of fees and charges for cost recovery, there are essentially three broad categories, which related to the kind of service being funded: User Fees, Regulatory Fees, and
User Fees (e.g., utility fees, recreation fees). User fees apply to services where the user receives some or all of the benefits of the service. The level of cost recovery depends on a variety of considerations, including the effect on use, level of general community benefit, and ability to pay.
20 Meeting Date: April 21, 2026

discouraging illegal or otherwise undesirable activity, and their revenues may be used to fund other related programs. While recovering the costs of related programs is a goal, fine and penalty rates should be primarily set to discourage the behavior.

Implementation
The fee recovery policy provides a guideline for setting fees given the full cost of service.

It does not bind policy makers to increase or decrease fees but provides a rationale for doing so. The policy can be changed at any time to account for unintended results, but these surprises will be easier to deal with at a policy level if the foundation and framework can be articulated first. A local agency governing board may decided that policy should be revised, but in doing so, it should recognize the effect on General Fund resources and programs.

The lower fees are set relative to full cost recovery, while the more general purpose dollars are needed to maintain the service. This general revenue support is de factor measure of the “public benefit” of the service. This general revenue support of the program should be weighed against other needs for these general revenues, including needs which may not have similar cost recovery options.

Considerations of Setting Recovery Levels
Should a fee be set in order to fully recover the costs of the service for which it is being charged?
What are the reasons a public agency might have to set it lower? Policy considerations that are important in setting fees to recover costs include:

User Versus Communitywide BenefitTo what degree does the community, that that are not direct “users” also benefit from the service or program? Effect of Fees on Service
Use
Do you want to discourage use of the service? Do you want to encourage use of the service?
Feasibility of Collection Can the charges be collected efficiently? Discounted Rates Are reduced rates justified for certain categories of users? Cost Allocation Plan An analysis of the costs of a service or program should identify all the costs, direct and indirect.

Rate of Return Cost recovery can include a reasonable rate of return for many types of services.

Making Comparisons with
Other Communities
How do your rates compare with others and does it matter? Rate of Return
It does not bind policy makers to increase or decrease fees but provides a rationale for doing so. The policy can be changed at any time to account for unintended results, but these surprises will be easier to deal with at a policy level if the foundation and framework n be articulated first. A local agency governing board may decided that policy should on General Fund resources and
The lower fees are set relative to full cost recovery, while the more general purpose dollars are needed to maintain the service. This general revenue support is de factor measure of the “public benefit” of the service. This general revenue support of the program should be weighed against other needs for these general revenues, including needs which may not have similar cost recovery options.

Considerations of Setting Recovery Levels
Should a fee be set in order to fully recover the costs of the service for which it is being What are the reasons a public agency might have to set it lower? Policy considerations that are important in setting fees to recover costs include:
ersus Community- wide BenefitTo what degree does the community, that that are not direct “users” also benefit from the service or program? Effect of Fees on Service
Use
Do you want to discourage use of the service? Do you want to encourage use of the service?
Feasibility of Collection Can the charges be collected efficiently? Discounted Rates Are reduced rates justified for certain categories of users? Cost Allocation Plan
21 Meeting Date: April 21, 2026

User Versus Community-wide Benefits
If a service doesn’t recover its full costs from fee revenues, what is paying the rest? Usually it’s the General Fund.

When the General Fund is spent on a service, the entire community is supporting it financially.

The extent that a program or service is supported by the General Fund, the amount of community financial support, is effectively a measure of the value of that service to the community.

If a City sets its senior recreation fees at 50 percent of full cost recovery and provides the rest of the funding from general revenues, it is effectively measuring the community benefit of the service at that level, a level equal to the direct-user benefit paid by the fee.

Determining the appropriate level of general revenue subsidy for each program or service is an essential part of good cost recovery policy. It may be appropriate to subsidize some services, however, each agencies governing body should determine which services should be subsidizes and which should not.

For example,
o It may be appropriate to subsidize youth or senior recreation programs, but it may not be appropriate to subsidize adult recreation programs. o It may be appropriate to subsidize special permit appeals to ensure that constituents have access to due process, but it may not be appropriate to subsidize inspections for development.

Always be aware that, if General Fund revenues are being used to support services that might reasonably have higher cost recovery levels, then fewer resources are available for essential services like police, fire, street maintenance, and flood protection, which typically do not have significant cost recovery options available to them.

The Effect of Fees and Service Use
To the extent that the users of a service have a choice, the amount charged for a service can affect the demand for the service. Higher rates will discourage use of the service and encourage alternatives. Lower, more subsidized rates will encourage the use of the service and discourage alternatives. For example:

Fines and penalties should be set high to discourage unlawful or undesirable behavior. However, those who attend community and public education events should be charged little or no fees to encourage participation.

Of course, people differ in their ability and willingness to pay. In considering the effects of fee levels on the use of a service, particular focus should be given to lower income groups whose decisions are more likely to be affected. Fees for municipal recreation programs are often set at substantially less that full cost recovery in order to make these programs available to all residents.
of community financial support, is effectively a measure of the value of that service If a City sets its senior recreation fees at 50 percent of full cost recovery and provides the rest of the funding from general revenues, it is effectively measuring the community benefit of the service at that level, a level equal to the direct Determining the appropriate level of general revenue subsidy for each program or service is an essential part of good cost recovery policy. It may be appropriate to subsidize some services, however, each agencies governing body should which services should be subsidizes and which should not. t may be appropriate to subsidize youth or senior recreation programs, but it may not be appropriate to subsidize adult recreation programs.

It may be appropriate to subsidize special permit appeals to ensure that constituents have access to due process, but it may not be appropriate to subsidize inspections for development.

Always be aware that, if General Fund revenues are being used to support services that might reasonably have higher cost recovery levels, then fewer resources are available for essential services like police, fire, street maintenance, and flood protection, which typically do not have significant cost recovery options available to them.

The Effect of Fees and Service Use
To the extent that the users of a service have
can affect the demand for the service. Higher rates will discourage use of the service and encourage alternatives. Lower, more subsidized rates will encourage the use of the service and discourage alternatives. For
Fines and penalties should be set high to discourage unlawful or undesirable behavior. However,
should be charged little or no fees to encourage participation.

Of course, people differ in their ability and willingness to pay. In considering the effects of 22 Meeting Date: April 21, 2026

Feasibility of Collection
Although a high level of cost recovery may be appropriate for specific services, it may be impractical or too costly to establish a system to identify and charge the user. The feasibility of assessing the collecting shares should be considered in developing user fees.

Discounted Rates
Rates may be discounted to accommodate lower income groups or groups who are the target of the service, such as senior citizens or residents. However, such discounts must be funded by non-fee revenues such as taxes and not by other service users.

Indirect Cost Allocation Plan
To maximize cost recovery and to make good rate-setting decisions, you need an accurate understanding of the full costs of programs. Whether the policy goal for a particular public program is full or partial cost recovery, the rates that are chosen should be based on the total cost of providing services. The full cost of providing a service includes not only the direct costs (e.g., labor and materials directly used to provide the service) but also the indirect costs such as accounting, legal services, purchasing, insurance, building maintenance, technology support, and the use of equipment and facilities.

Indirect costs also include department and agency-wide indirect costs for program management, support and oversight.

A cost allocation plan is a study of the full direct and indirect costs of services. The study distributes indirect costs in a logical and consistent manner to all services, such as building permits and recreation programs. In addition, they identify and justify appropriate reimbursement transfers to the General Fund from special revenue funds (and other funds where applicable) for indirect services. Of course, programs and costs change, so cost allocation plans should be updated on a regular basis.

Rate of Return
Cost of service may include a reasonable rate of return except in case of property-related fees under Proposition 218.

Making Comparisons with Other Communities
Comparison and seeking best practices can help us find more efficient and effective ways to provide public services.

Although governments generally do not operate in a competitive market, policy makers often find information on the amount of fees charged by other communities for similar discounted to accommodate lower income groups or groups who are the . However, such discounts must
fee revenues such as taxes and not by other service users. and to make good rate-setting decisions, you need an
accurate understanding of the full costs of programs. Whether the policy goal for a public program is full or partial cost recovery, the rates that are chosen should the total cost of providing services. The full cost of providing a service includes not only the direct costs (e.g., labor and materials directly used to provide the but also the indirect costs such as accounting, legal services, purch insurance, building maintenance, technology support, and the use of equipment and Indirect costs also include department and agency-wide indirect costs for program management, support and oversight.

A cost allocation plan is a study of the full direct and indirect costs of services. The study distributes indirect costs in a logical and consistent manner to all services, such as building permits and recreation programs. In addition, they identify and justify appropriate reimbursement transfers to the General Fund from special revenue funds where applicable) for indirect services. Of course, programs and costs change, so cost allocation plans should be updated on a regular basis.

Rate of Return
Cost of service may include a reasonable rate of return except in case of property fees under Proposition 218.

Making Comparisons with Other Communities
23 Meeting Date: April 21, 2026

services to helpful when determining rates. It’s important to go beyond the numbers and find out why rates differ.

Why is the comparison agency’s policy about fee recovery level from the particular service? If your fee is $100 and theirs is $75, perhaps the difference is simply that your cost-recovery goal is 100 percent and theirs is 75 percent.

How do service levels and performance standards differ? If you provide a higher level of service, your costs and related fees, are likely to be higher.

Has the comparison agency done a recent complete cost allocation plan and are they including full costs in computing their fees? Even if your cost recovery goals are otherwise the same, perhaps they are considering only direct costs.

When was the last time their fees were comprehensively evaluated? Do they adjust their fees on an ongoing basis? If not, they may be significantly out of date.

Is your rate structure comparable to theirs?
Although comparisons may provide some helpful supportive information, the rates charged by others should, in the end, be a secondary consideration to the financial management policies of City of Goleta and its own unique circumstances.

Factors Favoring Limited Cost
Recovery
Factors Favoring Full Cost Recovery
Services should be funded primarily
through general-purpose tax revenues
when:

The public at large benefits from
the service even if they are not the
direct “users of the service.”
Collecting fees is not cost effective
or will significantly impact efficient
service delivery.

You don’t want to discourse or limit
the use of the service. Examples
include public safety emergency
response, use of parks and special
fares for children and seniors.

The service is nonrecurring,
generally delivered on a “peak
demand” or emergency basis ,
cannot reasonably be planned for
on an individual basis and is not
readily available from a private
sector source. Most public safety
services fall into this category.

Collecting fees would discourage
compliance with regulatory
requirements. For example, a high
cost recovery for landfill disposal
Services should be funded primarily
through full-cost fees when:

The individual user or participant
receives the benefits of the
service. Those who don’t directly
use the service don’t benefit from
the it being provided to others.

Private or public sector alternatives
could or do exist to provide the
service.

Users of the service should pay
the full costs relative to their
degree of use so as to discourage
overuse of the service or resource.

The use of the service is
specifically discouraged. For
example, police response to
disturbances or false alarms.

The service is regulatory in nature.

Building permits, plan check and
subdivision review fees for large
projects fall into this category.
level of service, your costs and related fees, are likely to be higher.

Has the comparison agency done a recent complete cost allocation plan and are they including full costs in computing their fees? Even if your cost recovery goals are otherwise the same, perhaps they are considering only direct costs.

When was the last time their fees were comprehensively evaluated? Do they adjust their fees on an ongoing basis? If not, they may be significantly out of date.

Although comparisons may provide some helpful supportive information, the rates a secondary consideration to the financial
City of Goleta and its own unique circumstances.

Factors Favoring Full Cost Recovery
Services should be funded primarily
purpose tax revenues
The public at large benefits from
the service even if they are not the
direct “users of the service.”
Collecting fees is not cost effective
or will significantly impact efficient
service delivery.

You don’t want to discourse or limit
the use of the service. Examples
include public safety emergency
response, use of parks and special
fares for children and seniors.

The service is nonrecurring
generally delivered on a “peak
demand” or emergency basis ,
cannot reasonably be planned for
Services should be funded primarily
through full-cost fees when:

The individual user or participant
receives the benefits of the
service. Those who don’t directly
use the service don’t benefit from
24 Meeting Date: April 21, 2026

may encourage illegal dumping on
streets and vacant lots.

High-cost recovery for small-scale
licenses or registration (pets,
bicycles) may encourage evasion
and increased enforcement costs.

FISCAL IMPACTS:

Cost recovery does not imply that the target is total recovery of the cost; however, a target is established according to a variety of considerations and may ranges from 0% to more than 100% of direct costs. The fiscal impact is indefinite as it relates to the specific fees that may or may not be recommended for less than 100% recovery. Although the City may not receive the revenue correlated with the costs, the impact to the community may outweigh the revenue loss.

ALTERNATIVES:

The City Council could take no action, thereby maintaining the current user fees and charges, resulting in specific fees that represent 100% of full cost recovery instead of a subsidized amount.

LEGAL REVIEW BY: Isaac Rosen, City Attorney
APPROVED BY: Robert Nisbet, City Manager
ATTACHMENTS:

1. Resolution No. 26-_ entitled “A Resolution of the City Council of the City of Goleta, California, Adopting a Citywide Cost Recovery and User Fee Setting Policy.”
Cost recovery does not imply that the target is total recovery of the cost; however, a target is established according to a variety of considerations and may ranges from 0% to more than 100% of direct costs. The fiscal impact is indefinite as it relates to the specific fees that may or may not be recommended for less than 100% recovery. Although the City may not receive the revenue correlated with the costs, the impact to the community The City Council could take no action, thereby maintaining the current user fees and specific fees that represent 100% of full cost recovery instead of a Isaac Rosen, City Attorney
Robert Nisbet, City Manager
TTACHMENTS:

Resolution No. 26-_ entitled “A Resolution of the City Council of the City of Goleta, California, Adopting a Citywide Cost Recovery and User Fee Setting Policy.”
25 ATTACHMENT 1
Resolution No. 26-__ “A Resolution of the City Council of the City of Goleta, California, Adopting a Citywide Cost Recovery and User Fee Setting Policy” 26 Attachment 1
1 RESOLUTION NO 26-__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

GOLETA, CALIFORNIA, ADOPTING A CITYIWDE COST

RECOVERY AND USER FEE SETTING POLICY
WHEREAS, the City of Goleta (the “City”) charges fees for various services, permits, licenses, and regulatory activity provided by the City (collectively, the “Fees”); and
WHEREAS, in order for the Fees to cover the costs of providing the services, permits, licenses, or regulatory activity for which the Fees are imposed, many of the Fees must be adjusted to reflect reasonable estimated costs of service; and
WHEREAS, certain services satisfy community needs, but others solely benefit specific individuals or business;
WHEREAS, the City aims to set equitable and fair fees to effectively recover costs for services provided;

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GOLETA, AS FOLLOWS: SECTION 1. Findings
a. Funds are needed to support the cost of providing programs and services furnished by the City.
b. The funds needed to support such operating expenses can and should be obtained by setting fees and charges for these programs and services.
c. The setting of fees and charges for these programs and services is exempt from compliance with the requirements of the California Environmental Quality Act (CEQA) under Public Resources Code Section 21080(b)(8)(1)-(4) and Title 14 of the California Administrative Code, Section 15273(a)(1)-(4).
d. Levels of cost recovery targets should take into account the full cost of each service, allowing optimum cost-recovery rates for defined services and alleviating unintended subsidization of these services from General Fund resources.

SECTION 2. Action
The City of Goleta establishes a Citywide Cost Recovery and User Fee Setting Policy set forth in Exhibit A, identifying cost recovery factors and concepts that should be considered to setting cost recovery target levels for each program offered by the City, attached hereto.
(collectively, the
in order for the Fees to cover the costs of providing the services, permits, licenses, or regulatory activity for which the Fees are imposed, many of the Fees must be adjusted to reflect reasonable estimated costs of certain services satisfy community needs, but others sol the City aims to set equitable and fair fees to effectively recover

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GOLETA, AS FOLLOWS: Findings Funds are needed to support the cost of providing programs and services furnished by the City.
b. The funds needed to support such operating expenses can and should be obtained by setting fees and charges for these programs and services.
c. The setting of fees and charges for these programs and services is exempt from compliance with the requirements of the California Environmental Quality Act (CEQ
Section 21080(b)(8)(1)
Administrative Code, Section 15273(a)(1)
d. Levels of cost recovery targets should take into account the full cost of each
defined services and alleviating unintended
27 Attachment 1
2 SECTION 3. Effective Date
The revenue policy shall be effective July 1 , 2026, unless otherwise indicated.

SECTION 4. The City Clerk shall certify to the adoption of this resolution and enter it into the book of original resolutions.

PASSED, APPROVED AND ADOPTED this 21st day of April 2026. __________________________ PAULA PEROTTE, MAYOR ATTEST: APPROVED AS TO FORM: _________________________ __________________________ DEBORAH S. LOPEZ ISAAC ROSEN

CITY CLERK CITY ATTORNEY
April 2026. __________________________ PAULA PEROTTE, MAYOR APPROVED AS TO FORM: _________________________ __________________________ DEBORAH S. LOPEZ ISAAC ROSEN

CITY CLERK CITY ATTORNEY
28 Attachment 1
3 STATE OF CALIFORNIA )
COUNTY OF SANTA BARBARA ) ss.

CITY OF GOLETA )
I, DEBORAH S. LOPEZ, City Clerk of the City of Goleta, California, DO HEREBY CERTIFY that the foregoing City Council Resolution No. 26-__ was duly adopted by the City Council of the City of Goleta at a regular meeting held on the 21st day of April 2026, by the following vote of the Council:

AYES:

NOES:

ABSENT:

ABSTENTIONS:
(SEAL) __________________________
DEBORAH S. LOPEZ

CITY CLERK
adopted by the City Council of the City of Goleta at a regular meeting held on the DEBORAH S. LOPEZ
29 Attachment 1 – Exhibit A
Cost Recovery and User Fee Setting Policy
Adopted by Resolution No. 26 - _____
and User Fee Setting Policy
Adopted by Resolution No. 26 - _____
30 City of Goleta – Cost Recovery and User Fee Setting Policy

Table of Contents
Table of Contents ............................................................................................................ 2

1.0 Purpose............................................................................................................. 3

2.0 Background....................................................................................................... 3

3.0 Principles, Definitions, and Criteria ................................................................... 3

3.1 Definition of Terms ............................................................................................ 4

4.0 Target Cost Recovery Levels ............................................................................ 6

5.0 Procedures for Fee Changes............................................................................ 7

6.0 Rounding of Fee Amounts................................................................................. 7

7.0 Comprehensive Fee Review and Update ......................................................... 8

8.0 Exceptions to this Policy ................................................................................... 8 ................................................................... ............................................................................................ ............................................................................ ............................................................................ ................................................................................. Comprehensive Fee Review and Update ......................................................... ................................................................................... 31 City of Goleta – Cost Recovery and User Fee Setting Policy

1.0 Purpose
This policy aims to establish a citywide cost recovery policy by identifying cost recovery factors and concepts that should be considered for setting cost recovery target levels for each program offered by the City. This Policy allows the City services users, staff, and taxpayers to better understand the philosophy behind the pricing of a program or service. The policy is based on the cost recovery goal for the service established by the City to provide the service and whether the service is a public, public and individual, or primarily an individual benefit service. This policy will be a management tool for establishing, implementing, and evaluating fees and charges. This policy ensures that the City’s fees and charges are managed in a manner that will:

Provide for the delivery of quality services
Maintain and enhance service delivery
Support a balanced budget through a evaluation and review of the City’s total estimated and reasonable cost of providing services Set fee amounts in accordance with local goals as pertains to code compliance, cost recovery, economic development, and community values Ensure that any action to establish, increase, or impose a fee is conducted in a manner that satisfies the requirements of state law.

The City of Goleta is authorized to adopt and implement fees and charges for certain municipal services, provided the fees and charges do not exceed the reasonable cost of providing such services. This policy sets forth cost recovery targets, timelines for fee increases, annual cost inflation adjustments, and frequency of comprehensive review for all city fees and charges.

2.0 Background
The City’s fees for services, products, and regulatory activities are not taxes requiring voter approval under California State Constitution, Article XIII C, Section 1 (a voter initiative added by Proposition 218 and amended by Proposition 26) if fees do not exceed the reasonable cost of the services, products, or regulatory activities. In addition to the Constitution, state and local laws also provide the authorization to charge fees for services. For example, in Government Code 66014 governs many fees as it pertains to development approvals. The language of Government Code 66014 mirrors the reasonable cost limitation expressed by the Constitution.

3.0 Principles, Definitions, and Criteria
The guiding principles for the creation of an effective cost recovery policy are as follows:
pricing of a program or service. The policy is based on the cost recovery goal for the service established by the City to provide the service and whether the service , or primarily an individual benefit service.
a management tool for establishing, implementing, and evaluating City’s fees and charges are
Provide for the delivery of quality services
Maintain and enhance service delivery
Support a balanced budget through a evaluation and review of the total estimated and reasonable cost of providing services Set fee amounts in accordance with local goals as pertains to code compliance, cost recovery, economic development, and community values Ensure that any action to establish, increase, or impos in a manner that satisfies the requirements of state law.

The City of Goleta is authorized to adopt and implement fees and charges for certain municipal services, provided the fees and charges do not exceed the reasonable cost of providing such services. This policy sets forth cost recovery targets, timelines for fee increases, annual cost inflation adjustments, and frequency of comprehensive review for all city fees and charges.

Background The City’s fees for services, products, and regulatory activities are not taxes requiring voter approval under California State Constitution, Article XIII C, Section 1 (a voter initiative added by Proposition 218 and amended by Proposition 26) if fees do not exceed the reasonable cost of the services, products, or regulatory activities. In addition to the Constitution, state and local laws also provide the authorization to charge fees for services. For example, in Government Code 66014 s many fees as
Government Code 66014 mirrors the reasonable cost limitation expressed by the 32 City of Goleta – Cost Recovery and User Fee Setting Policy

Accessibility, fairness, and affordability based on the category of service and benefit level.

Effective and appropriate funding strategies from City funds, user fees and other sources.

Improve efficiency in the cost of providing programs, services and facilities.

Financial sustainability by achieving established cost recovery targets.

3.1 Definition of Terms
Public Services: are services the City offers that provide all users the same level of opportunity to access the service. The level of benefit is the same to all users. Public Services normally have low or no user fees associated with their consumption. The cost for providing these services is borne by the General Fund. These services are categorized as Tier 1: Mostly Community Benefit.

Public and Individual Benefit: are services whereby the user receives a higher level of benefit than the general taxpayer. The taxpayer benefits as a whole because the service provides a more livable community and the service has a good public benefit as well. Public and Individual Services can be priced using either a partial overhead pricing strategy or a variable cost pricing strategy.

Partial overhead pricing strategies recover all direct operating costs and some determined portion of fixed indirect costs. Variable cost pricing strategies recover a determined portion of the fixed direct costs by adding a markup to the variable costs. The expectation is that the markup will contribute to meeting all or a part of fixed direct costs and generate some level of indirect cost recovery. The portion of fixed indirect costs not recovered by the price established represents the subsidy. Whatever the level of subsidy, staff needs to inform the users by letting them know that the City is investing a certain dollar amount and/or what percentage level of investment they are making in their experience. These services are categorized as Tier 2: Individual and Community Benefit.

Individual Benefit Services: are services where only the user benefits. For these services, the City should implement a pricing strategy to achieve full cost recovery. The price of this service is intended to recover all direct and indirect costs associated with providing the service. These services are categorized as Tier 3: Mostly Individual Benefit.

Direct Expenses: are City costs associated with staff, materials and supplies, and other resources associated with providing the program, service, or operating the facility. Direct expenses also include the proportional cost of the program or facility supervisor, coordinator, or administrative personnel based on the time Financial sustainability by achieving established cost recovery targets are services the City offers that provide all users the same level of opportunity to access the service. The level of benefit is the same to all users. Public Services normally have low or no user fees associated with their consumption. The cost for providing these services is borne by the General Fund. These services are categorized as Tier 1: Mostly Community Benefit. are services whereby the user receives a higher
level of benefit than the general taxpayer. The taxpayer benefits as a whole because the service provides a more livable community and the service has a good public benefit as well. Public and Individual Services can be priced using either a partial overhead pricing strategy or a variable cost pricing strategy.

Partial overhead pricing strategies recover all direct operating costs and some determined portion of fixed indirect costs. Variable cost pricing strategies recover a determined portion of the fixed direct costs by adding a markup to the variable costs. The expectation is that the markup will contribute to meeting all or a part of fixed direct costs and generate some level of indirect cost recovery. The portion of fixed indirect costs not recovered by the price established represents the subsidy. Whatever the level of subsidy, staff needs to inform the users by letting them know that the City is investing a certain dollar am percentage level of investment they are making in their experience. These services are categorized as Tier 2: Individual and Community Benefit.

Individual Benefit Services:
these services, the City should implement a pricing strategy to achieve full cost recovery. The price of this service is intended to recover all direct and indirect costs associated with providing the service.
33 City of Goleta – Cost Recovery and User Fee Setting Policy

required to plan, organize, and direct the operation of that program, service, or facility.

Indirect Expenses: are the cost of the City Departments to provide the program or facility. Indirect expenses include department administration, marketing, information technology, and facility or maintenance staff. Indirect expenses also include City wide functionalities such as Human Resources, Information Technology, Fleet, Facilities, Finance, City Manager, and City Attorney time associated with supporting the operation of the program or facility, among other expenses.

Cost Recovery Percentage: outlined in this Policy is based on Direct Expenses only and does not include Indirect Expenses. It is generally recommended that an additional 5%-10% be added to the fees established for Tier 1 and 2 programs, services, and facilities, and 0%-5% for Tier 1 programs, services, and facilities, to attempt to offset some portion of the Indirect Expenses associated with providing those activities.
include City wide functionalities such as Human Resources, Information , and City Attorney time
associated with supporting the operation of the program or facility, among other outlined in this Policy is based on Direct Expenses
only and does not include Indirect Expenses. It is generally recommended that 10% be added to the fees established for Tier 1 and 2
programs, services, and facilities, and 0%-5% for Tier 1 programs, services, and facilities, to attempt to offset some portion of the Indirect Expenses associated 34 City of Goleta – Cost Recovery and User Fee Setting Policy

4.0 Target Cost Recovery Levels
Cost Recovery
Level Group
Cost Recovery
Percentage Range Policy Considerations
Low
Mostly
Community
Benefit
0% - 30%
Public at-large benefits
No intended relationship between fee and
benefit received
Fee collection not cost-effective and
would discourage compliance.

No intent to limit the use of service
Affordability of service to low-income
residents
Could be essential to community safety
Services mandated by law or obligated by
agreement
Medium
Individual and
Community
Benefit
31% - 80%
Services share factors of both low and
high recovery levels
User receives a higher level of benefit
than the general taxpayer, but where the
city has an interest in encouraging
compliance by subsidizing the cost of the
service
Service may be conditional upon how it is
paid for or funded
Service helps generate income/revenue
that offsets some/all of its operating cost
and/or is deemed to provide an
economic, social, or environmental
outcome within the community
Affordable housing
High
Mostly
Individual
Benefit
81% - 100%
Mostly individual benefit
Individuals primarily and directly receive
most of the benefits from the service, not
the community at large
Other alternative service providers
(private or public sector)
The services benefits commercial uses
and activities
Use is regulatory
Use is specifically discouraged
The service benefits commercial
uses/activities
31% - 80%
-effective
would discourage compliance.

No intent to limit the use of service
Affordability of service to low-income
Could be essential to community safety
ervices mandated by law or obligated by
agreement
Services share factors of both low and
high recovery levels
User receives a higher level of benefit
than the general taxpayer, but where the
city has an interest in encouraging
compliance by subsidizing
service
Service may be conditional upon how it is
paid for or funded
Service helps generate income/revenue
that offsets some/all of its operating cost
and/or
economic, social, or environmental
High
35 City of Goleta – Cost Recovery and User Fee Setting Policy

5.0 Procedures for Fee Changes
On an annual basis with the City’s budget process, department staff will propose changes to existing fees, new fees, and deleting obsolete fees in line with this policy. The proposed fee changes will be presented to the Finance Committee for initial consideration. Proposed fee changes will also be presented to the City Council prior to the adoption of the annual budget.

Fee changes may be considered as part of a fee study as well as being annually adjusted based on a commonly used index for a specific type of fee or service, such as a consumer price index (CPI) inflationary assumption.

Fee changes can be considered outside of the annual budget review process as necessary and coordinated with the Finance Director and City Manager.

6.0 Rounding of Fee Amounts
To ensure operational efficiency and simplify cash handling for both the public and City staff, all user fees shall be established to the nearest five cents ($0.05) when applicable. When a fee is calculated based on cost recovery principles or other formulas, the final fee amount to be adopted in the Comprehensive User Fee Schedule shall be rounded according to the following standard:

Fee amounts calculated to end in $0.01 or $0.02 shall be rounded down to the nearest amount ending in $0.00.

Fee amounts calculated to end in $0.03 or $0.04 shall be rounded up to the nearest amount ending in $0.05.

Fee amounts calculated to end in $0.06 or $0.07 shall be rounded down to the nearest amount ending in $0.05.

Fee amounts calculated to end in $0.08 or $0.09 shall be rounded up to the nearest amount ending in $0.10.

If Calculated Fee Ends In... Action
Rounded Amount
Ends In...
$.01 or $.02 Round Down $0.00
$0.03 or $0.04 Round Up $0.05
$0.06 or $0.07 Round Down $0.05
$0.08 or $0.09 Round Up $0.10
$.01 or $.02
hanges may be considered as part of a fee study as well as being adjusted based on a commonly used index for a specific type of fee or service, such as a consumer price index (CPI) inflationary assumption. hanges can be considered outside of the annual budget review process as necessary and coordinated with the Finance Director and City Manager. ure operational efficiency and simplify cash handling for both the public and City staff, all user fees shall be established to the nearest five cents ($0.05) . When a fee is calculated based on cost recovery principles or other formulas, the final fee amount to be adopted in the Fee Schedule shall be rounded according to the following standard:
ounts calculated to end in $0.01 or $0.02 shall be rounded down to the nearest amount ending in $0.00.

Fee amounts calculated to end in $0.03 or $0.04 shall be rounded up to the nearest amount ending in $0.05.

Fee amounts calculated to end in $0.06 or $0.07 shall be rounded down to the nearest amount ending in $0.05.

Fee amounts calculated to end in $0.08 or $0.09 shall be rounded up to the nearest amount ending in $0.10.

If Calculated Fee Ends In...
36 City of Goleta – Cost Recovery and User Fee Setting Policy

7.0 Comprehensive Fee Review and Update
A comprehensive analysis of City costs and fees should be conducted at least once every five years. In the interim, fees will be adjusted by annual percentage changes equal to the change in the Consumer Price Index based on the preceding calendar year annual average.

8.0 Exceptions to this Policy
There may be times when the highest rate a market will bear for a particular fee is not within range of the target cost recovery level group for the type of activity. In instances where the market rate is below the target cost recovery, Department management should assess whether the program should be continued and/or modified to reduce costs or increase participation. There may also be situations where the market rate exceeds the target cost recovery level. In those cases, management should assess whether setting fees at market rate will adversely affect participation from the target audience and if not, may set fees above the target cost recovery level.
e may be times when the highest rate a market will bear for a particular fee is not within range of the target cost recovery level group for the type of activity. In instances where the market rate is below the target cost recovery, Department nt should assess whether the program should be continued and/or modified to reduce costs or increase participation. There may also be situations where the market rate exceeds the target cost recovery level. In those cases, management should assess whether setting fees at market rate will adversely affect participation from the target audience and if not, may set fees above the 37 ITEM IV:

Annual Adjustments for User Fees
and Charges for FY 2026/27
(Draft)
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40 41
42 43
44 45
46 47
48 49

95 96
97 98
99 100
101
102
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105
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Attachment 1
1 RESOLUTION NO 26-__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GOLETA, CALIFORNIA, RESCINDING RESOLUTION 25-12,
APPROVING AND ADOPTING THE FISCAL YEAR 2026/2027

USER FEES AND CHARGES
WHEREAS, the City of Goleta (the “City”) charges fees for various services, permits, licenses, and regulatory activity provided by the City (collectively, the “Fees”); and
WHEREAS, in order for the Fees to cover the costs of providing the services, permits, licenses, or regulatory activity for which the Fees are imposed, many of the Fees must be adjusted to reflect reasonable estimated costs of service; and
WHEREAS, the City Council desires to reclassify its Fees and repeal resolutions to accomplish this goal, and now wishes to readopt the Fees as set forth in Exhibit A, effective July 1, 2026; and
WHEREAS, the City has previously authorized the use of credit card for its customers to pay for City services; and
WHEREAS, there are certain transactional costs associated with the use of this payment method; and
WHEREAS, pursuant to Government Code Section 6159, the City may impose a charge for the transactional costs associated with the use of such method; and
WHEREAS, such a charge or fee is subject to the procedures set forth in Government Code section 66018; and
WHEREAS, in accordance with Government Code section 66018, the City Council called a public hearing for April 21, 2026, for the purpose of receiving public comments on the proposed fees. Notice of the public hearing was given by publication in a newspaper of general circulation within the City once a week for two weeks commencing at least 10 days prior to the public hearing, with at least 5 days intervening between the first and last publication. On April 21, 2026, at the time and place set for the public hearing, the City Council heard and considered all oral and written presentations and comments made regarding the proposed fees.
various services,
permits, licenses, and regulatory activity provided by the City (collectively, the in order for the Fees to cover the costs of providing the services, permits, licenses, or regulatory activity for which the Fees are imposed, many of the Fees must be adjusted to reflect reasonable estimated costs of the City Council desires to reclassify its Fees and repeal resolutions to accomplish this goal, and now wishes to readopt the Fees as set , 2026; and
the City has previously authorized the use of credit card for customers to pay for City services; and
there are certain transactional costs associated with the this payment method; and
REAS, pursuant to Government Code Section 6159, the City may impose a charge for the transactional costs associated with the use of such method; and
WHEREAS, such a charge or fee is subject to the procedures set forth Government Code section 66018; and
WHEREAS, in accordance with Government Code section 66018, the City Council called a public hearing for
public comments on the proposed fees. Notice of the public hearing was given by publication in a newspaper of general circulation within the City once a week for two weeks commencing at least 10 days prior to the public hearing, with at least 5 days intervening between the first and last publication. On 121
Attachment 1
2 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GOLETA, AS FOLLOWS: SECTION 1. Findings.

The above Recitals are true and correct and by this reference incorporated herein.

SECTION 2. Adoption of User Fees.

The City Council hereby adopts the full City of Goleta Comprehensive User Fees and Charges Schedule described in Exhibit A attached hereto and incorporated herein by this reference. The Fees imposed by this Resolution shall take effect on July 1, 2026 and are subject to a 3.2% CPI increase and supersede any prior fees or charges imposed by resolution or otherwise by the City Council, to the extent such prior fees or charges conflict herewith.

SECTION 3. Comprehensive Fee Resolution.

This resolution shall be known as the Comprehensive Fee Resolution.

SECTION 4. The City Council called a public hearing on April 21, 2026, for the purpose of receiving public comments to the proposed fees. Notice of the public hearing was given by publication in a newspaper of general circulation within the City once a week for two weeks commencing at least 10 days prior to the public hearing, with at least 5 days intervening between the first and last publication. On April 21, 2026, at the time and place set for the public hearing, the City Council heard and considered all oral and written presentations and comments made regarding the proposed fees.

SECTION 5: The City Council finds and determines that:
(a) The Fees established by this resolution:
(1) are imposed for a specific government service provided directly to the payor, or for reasonable regulatory costs of the City for issuing licenses and permits, performing investigations, inspections, and administrative enforcement of the City’s Municipal Code or other rules or ordinances.
(2) are no more than necessary to cover the reasonable costs of the governmental activity for which the Fee is imposed; and (3) the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity for which the Fee is imposed; and
(b) The Fees are not taxes within the meaning of California Constitution article XIII C, section 1(e).

SECTION 6. If any section, subsection, clause or phrase in this resolution or the application thereof to any person or circumstances is for any reason Comprehensive
Fees and Charges Schedule described in Exhibit A attached hereto and incorporated herein by this reference. The Fees imposed by this Resolution are subject to a 3.2% CPI increase and
supersede any prior fees or charges imposed by resolution or otherwise by the City Council, to the extent such prior fees or charges conflict herewith.

Fee Resolution. This resolution shall be known as the Comprehensive Fee Resolution.

The City Council called a public hearing on April
the purpose of receiving public comments to the proposed fees. Notice of the public hearing was given by publication in a newspaper of general circulation within the City once a week for two weeks commencing at least 10 days prior to the public hearing, with at least 5 days intervening between the first and last publication. On April 21, 2026, at the time and place set for the public hearing, the City Council heard and considered all presentations and comments made regarding the proposed fees.

SECTION 5: The City Council finds and determines that:
(a) The Fees established by this resolution:
(1) are imposed for a specific government service provided directly to the payor, or for reasonable regulatory costs of the City for issuing licenses and permits, performing investigations, inspections, and administrative enforcement of the City’s Municipal Co
(2) are no more than necessary to cover the reasonable costs of the governmental activity for which the Fee is imposed; and (3) the manner in which those costs are allocated to a
fair or reasonable relationship to the payor’s burdens on, or 122
Attachment 1
3 held invalid, the validity of the remainder of this resolution or the application of such provision to other persons or circumstances shall not be affected thereby. The City Council hereby declares that it would have passed this resolution and each section, subsection, sentence, clause, or phrase thereof, irrespective of the fact that one or more sections, subsections, sentences, clauses, or phrases or the application thereof to any person or circumstance be held invalid.

SECTION 7. Should the City accept payment of any fee identified in Exhibit A of this Resolution, as it may be amended from time to time, by means of credit card in lieu of check or cash, the City shall impose a separate fee equal to three percent (3%) or actual cost charged to the City of the transaction amount as a convenience fee for processing the payment. The City Council finds and determines that accessibility to the library, parks and recreation programs, and train depot facilities, benefit the community and serve a public purpose. Accordingly, a credit card convenience fee shall not be charged for library, parks and recreation, and train depot related fees.

In no event shall the convenience fee exceed the actual transactional costs incurred by the City in providing for the payment by credit card. When the City accepts payment by means of credit card, it shall also accept payment by means of check or cash.

SECTION 8. The City Manager and Director of Finance are hereby authorized to take all actions necessary to implement and collect the Fees and the credit card convenience fee. Additionally, City Manager and Director of Finance are authorized to amend the Comprehensive User Fees and Charges Schedule as it relates to typographical errors made during the preparation of the Schedule, so as long as the CPI increase does not exceed 3.2%.

SECTION 9. Resolutions 25-12 is hereby repealed.

SECTION 10. The City Clerk shall certify to the adoption of this resolution and enter it into the book of original resolutions.

Should the City accept payment of any fee identified in Exhibit A of this Resolution, as it may be amended from time to time, by means of credit card in lieu of check or cash, the City shall impose a separate fee or actual cost charged to the City of the
transaction amount as a convenience fee for processing the payment. The City Council finds and determines that accessibility to the library, parks and t facilities, benefit the community and
serve a public purpose. Accordingly, a credit card convenience fee shall not parks and recreation, and train depot related fees.

In no event shall the convenience fee exceed the actual transactional costs incurred by the City in providing for the payment by credit card. When the City accepts payment by means of credit card, it shall also accept payment ck or cash.

The City Manager and Director of Finance are hereby
authorized to take all actions necessary to implement and collect the Fees and the credit card convenience fee. Additionally, City Manager and Director of Finance are authorized to amend the Comprehensive and Charges Schedule as it relates to typo
preparation of the Schedule, so as long as the
exceed 3.2%.

SECTION 9. Resolutions 25-12
SECTION 10. The City Clerk shall certify to the adoption of this resolution and enter it into the book of original resolutions.
123
Attachment 1
4 PASSED, APPROVED AND ADOPTED this 21st day of April 2026. __________________________ PAULA PEROTTE, MAYOR ATTEST: APPROVED AS TO FORM: _________________________ __________________________ DEBORAH S. LOPEZ ISAAC ROSEN

CITY CLERK CITY ATTORNEY
__________________________ PAULA PEROTTE, MAYOR
APPROVED AS TO FORM: _________________________ __________________________

ISAAC ROSEN

CITY ATTORNEY
124
Attachment 1
5 STATE OF CALIFORNIA )
COUNTY OF SANTA BARBARA ) ss.

CITY OF GOLETA )
I, DEBORAH S. LOPEZ, City Clerk of the City of Goleta, California, DO HEREBY CERTIFY that the foregoing City Council Resolution No. 26-__ was duly adopted by the City Council of the City of Goleta at a regular meeting held on the 21st day of April 2026, by the following vote of the Council:

AYES:

NOES:

ABSENT:

ABSTENTIONS:
(SEAL) __________________________
DEBORAH S. LOPEZ

CITY CLERK
adopted by the City Council of the City of Goleta at a regular meeting held on the DEBORAH S. LOPEZ
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ATTACHMENT 2
Consumer Price Index Sheet
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127
ATTACHMENT 3
Presentation
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