Cost Allocation Plan and Cost of Services Study
City of Hercules
October 10, 2023
PROJECT OVERVIEW
Revenue & Cost Specialists founded in 1980
• Cost Allocation Plans
• User Fee Studies
• Impact Fee Studies
• Long-Term Financial Plan
2 Eric Johnson
President
Chu Thai
Partner
Last Comprehensive User Fee Study – 2011
Project Kick-Off – November 2022
Data Used – FY 2022-23
Scope of work – Cost Allocation Plan & Comprehensive User Fee Update
WHAT IS A COST ALLOCATION PLAN?
A plan which accounts for the FULL COST of a government program by including all associated direct and indirect costs A Cost Allocation Plan distribute indirect costs to ensure that programs pay for all the services it receives Indirect Costs are those which provide supporting services to multiple programs, and none to the public.
Examples include legal counsel, finance, human resources, IT support, insurance, records management and facility operations.
Direct Costs are those directly budgeted and benefiting a specific program.
Program examples include police patrol, park and street maintenance, sewer operations, building plan check and inspections, planning review, and recreation programs. 3 DIRECT versus INDIRECT
Direct Indirect
Police Patrol
Investigation
Dispatch
Animal Control
Finance Bus Passes
Business License
Utility Billing
Accounts Payable
General Accounting
Payroll
Risk & HR Recruitments & Personnel Svcs
Risk Management
4 HERCULESCAP & FEE STUDY ILLUSTRATED
Allocated
Division/Program
Allocate to Departments & Other Funds
Community Development, Public Works
Parks, Recreation & Police. LLD funds & Sewer Enterprise Fund City Council
Boards & Commissions
Human Resources
City Manager
5 Legal Services
Finance
City Clerk
Allocate further toDepartment Staffing (FBHR) and Services $
CAP APPLIED TO DEPTS & FTE
6 NEXT STEP…FEE STUDY
7 HERCULES SERVICES & USER FEES | Administrative/Minor Use Permit | Conditional Use Permit | Wireless Facility Special Use Permit | Combined Live/Work License | Cup Amendment - Minor | Design Review - Administrative | Design Review - Legislative | Planning Staff Pre - Submittal Rev | Zoning Designation Change | Zoning Text Amendment | Planned Development Plan | General Plan Amendment | Development Agreement | Specific Plan | Specific Plan Amendment | Annexation | Development Standards Variance | Tentative Parcel/Subdivision Map | Lot Line Adjustment/Parcel Merger | Tentative Map Extension | Certificate of Compliance | Initial Study/Negative Declaration | Environmental Impact Report | Mitigation Monitoring Program | Minor Modification | Major Modification - Wireless | Landscape Plan Review/Inspection | Time Extension | Temporary Use Permit - PC | Temporary Use Permit - Admin | Private Property Special Event Permit | Public Property Special Event Permit | Special Event Staffing | Appeal to the Planning Commission | Appeal to the City Council | Paving Plan Review | Paving Permit | Zoning Verification Letter | Property History Letter | Preferential Parking District Permit | Extra Plan Review/Inspection | Planning Miscellaneous Review | General Plan Update Cost Recovery | Code Enforce Planning Application | Building Plan Check/Inspection | Final Parcel/Subdivision Map | Public Improvement Plan Check | Public Improvement Inspection | Grading Plan Check | Grading Inspection | Stormwater Plan Review | SWPPP Stormwater Inspection | Utility Encroachment | Encroachment Permit (Non-Utility) | Sewer Lateral Certificate | Temporary Encroachment Permit | Sidewalk Dining Permit | Sidewalk Vending Permit | Housing Moving Permit | Haul Route Permit | Wide Load Permit | Assessment Apportionment Process | Additional Engineering Plan Rev/Inspect | Miscellaneous Engineering Services | Code Enforcement Inspection | Code Enforcement Hearing | Inspection Warrant | Abatement Warrant | Lien And Special Assessment | Nuisance Abatement | Peddler Police Permit | Mobile Food Vendor Permit | Massage Permit - New | Massage Permit - Renewal | Taxi Permit | Annual Taxi Inspection | Live Scan Fingerprinting | Police False Alarm Response | Noise Disturbance Response | DUI Accident Response | DUI Arrest | Curfew Violation Response | Booking Processing | County Jail Access Fee | Vehicle Release | Towed Vehicle Property Release | Non-Resident Citation Sign Off | Vehicle Inspect and Certification | VIN Verification | Vehicle Repossession Processing | Weapon Storage & Release | Property Preservation | Concealed Weapons Permit | Clearance Letter | Police Report Copy | Police Electronic File Copy | Civil Subpoena/Duces Tecum | Non-Digital Police Photocopy | Verification Of Loss Statement | Police Record Review | Alarm Permit | Business License Processing | NSF Check Processing | Check Re-Issuance | Technology Enhancement Surcharge | Document Reproduction | Electronic Document Copy | Agenda Subscription | Local Election Candidate Filing | Local Initiative Processing | Recreation Facility Rental | Day Camp Programs | Childcare Programs | Recreation Classes | Senior Citizen Services | Tiny Tots Program | Swim Center | Sports Programs | Teen Programs | Youth/Teen Resource Center | Police Services | Code Enforcement | Right-Of-Way Maintenance | Capital Engineering Services | Transportation Services | Lighting & Landscape Districts | Sewer Services | Advanced Planning | Planning Counter/Phone Support | Economic Development | Intergovernmental Relations | Library Services
CALCULATING FULL COST OF SERVICES
A
Establish Service &Time Spent
- Identify all fee services
- Allocate staff times
- Estimate number of units
- Allocate 100% of City Services
ALLOCTING PEOPLE AND TIME
Conditional Use Permit ü
Home Occupation Permit ü
New Business Application ü
Wireless Telecom ADD
Payroll Processing ü
Police Patrol ü
- Project Planner (20 hrs), CD Director (2 hrs)
- Project Planner (.5 hrs)
- Accounting Tech (.25 hrs)
- Contract Engineer (2.0 hrs)
- Accounting Tech (6.0 hrs/PY Batch)
- Police Officer (6 FTE)
12/yr
4/yr
20/yr
1/yr
28/yr
365 days
9 A
Establish Service &Time Spent
- Identify all fee services
- Allocate staff times
- Estimate number of units
- Allocate 100% of City Services
CALCULATE FULL COST OF SERVICES
B
Calculate theFull Cost of Services
- Balance positions to 100%
- Apply overheads & FBHR to service times
- Allocate direct costs
- Calculate Full Cost of Services
10 A
Establish Service &Time Spent
- Identify all fee services
- Allocate staff times
- Estimate number of units
- Allocate 100% of City Services
DISCUSS FINDINGS
B
Calculate theFull Cost of Services
- Balance positions to 100%
- Apply overheads & FBHR to service times
- Allocate direct costs
- Calculate Full Cost of Services
C
Review Cost of Services with Staff
- Current fee vs full costs of services
- Fee descriptions & structure
- Legally defensible fees
- Consider cost recovery
D
Public Presentation andAdoption of Updated Fees
- Produce final Study
- Provide Fiscal analysis and suggested policies
- Coordinate updated fee adoption
- Discuss Tax vs Fee
11 Taxes (General Fund)
Community Supported Services
REVENUES
COSTS
Fees &
Charges
Personal
Choice Services
FULL COST OF FEE SERVICES
$207,150
ANNUAL
SUBSIDY
12 Taxes pay forCommunity Support Services
User cannot select the service
Service benefits community as a whole
100% supported by tax dollars
E.g. Patrol, street maintenance, tree maintenance, City special events Fees pay forPersonal Choice Services
User is identifiable
Service is measurable
Benefits an individual or group
E.g. Development permit/inspection, water service, facility rental
POSSIBLE COST RECOVERY
Taxes (General Fund)
Community Supported Services
REVENUES
COSTS
Fees &
Charges
Personal
Choice Services
$99,000
ANNUAL
SUBSIDY
13 110 FEE SERVICES
14 23
18 38
11 16
4 COST OF SERVICES STUDY
APPENDIX A – SUMMARY OF CURRENT AND PROPOSED FEES
COST OF SERVICES STUDY
APPENDIX B – SERVICE COST CALCULATION WORKSHEETS
COMPREHENSIVE UPDATE
Improved Cost Recovery
Add, remove and redefine user fees
Legal Review
Confirm revenue collection
Evaluate market demand
17 COMPREHENSIVE APPROACH
CITY COUNCIL DECIDESFINAL TAX SUBSIDY
Fee studies should be performed every 4-5 years to identify full cost of city services.
This study identified the full costs of services using FY23 data, compared to latest fees of 2022.
RCS and City Staff have made fee recommendations based on best practice.
It is now up to the City Council to decide if fee-based services should be charged the full cost, or should they be subsidized with tax dollars. 18 Questions?
Eric Johnson Chu Thai
President Partner
[email protected] [email protected]
(714) 992-9027 (714) 992-9024
www.revenuecost.com