DATE:
September 15, 2026
TO:
Mayor and Council Members
Chair and Board Members, Hesperia Water District
FROM:
Rachel Molina, City Manager
BY:
Casey Brooksher, Assistant City Manager
Keith Cheong, Deputy Finance Director
SUBJECT:
User Fee Study Update
RECOMMENDED ACTION
It is recommended that the City Council and the Board of Directors of the Hesperia Water District consider an amendment to the City-wide fee schedule based upon the change in the Consumer Price Index (CPI) by adopting Joint Resolution No. 2026-36 and Resolution HWD 2026-14.
BACKGROUND
The City applies user fees for various services provided. Services such as these are requested of the City’s departments but involve limited or no direct benefit to the community as a whole. Without recovering the cost to provide these services, the City would have to use general tax monies to provide these individualized benefits, in effect subsidizing the cost of providing the service, which would impact the limited funds that might otherwise be available for community-wide benefits.
Proposition 4 (1979) determined the difference between a tax and a fee, wherein a fee must be no greater than the cost of providing the service. As such, the City may only set fees at a level to recover the full estimated cost of providing the service (user fee).
In FY 2022-23, the City engaged a consultant (Willdan Financial Services) to prepare a comprehensive User Fee Study and rate model to determine the full cost of the services provided by the City. The goal of the study was to identify the fee amounts that would allow the City to recoup up to, but no more than, 100% of the cost to provide the service to the individuals or companies that benefit from the services being provided. The resulting fee study and model were presented and adopted by the City Council at the December 19, 2023, City Council meeting, with the changes to the fees effective March 1, 2024.
On September 17, 2024, the City Council approved a revision to the User Fee Schedule that corrected the inadvertent omission of benefit costs related to City staff time that should have been included in the prior version presented by the consultant.
On September 16, 2025, the City Council approved an update to the User Fee Schedule to reflect the recent increases in the Consumer Price Index (CPI).
ISSUES/ANALYSIS
As part of the 2024 Strategic Plan, City Council identified eleven (11) strategies to complete over the next five (5) years. As part of that Strategic Plan, City Council identified the Top 11 Priorities. One of those top priorities is to conduct a regular assessment of the approved City fee schedule to ensure City-related costs are recovered.
Since the City Council’s September 16, 2025, approval of the FY 2025-26 User Fee Study, there has been a change in the CPI, which has impacted the City’s costs to provide services. Using the January-to-January annual change for Riverside-San Bernardino-Ontario, the CPI has increased 3.3% for 2026. The current fee schedule does not reflect the most recent increase in CPI. As such, consistent with the City Council’s Strategic Plan to conduct a regular assessment of the approved City fee schedule to ensure City-related costs are recovered, an update to the City’s Fee Schedule is presented for the City Council’s consideration to ensure that the City recovers the fully burdened costs to provide services.
The proposed update includes the addition of Appendix D for twenty-eight (28) State-established fees applicable to Mobile Home Parks (MHP) and Special Occupancy Parks (SOP) pursuant to Title 25 of the California Code of Regulations collected by the City as the State’s Local Enforcement Agency (LEA). The City does not establish, modify, or retain the funds collected from these fees, and is required to remit these MHP and SOP fees to the State of California. The inclusion of these fees is intended to improve transparency of the User Fee Schedule and identify the applicable regulatory fees collected by the City.
Additionally, the proposed fee schedule update contains the VVWRA board-approved Sewer Connection Fees within Appendix A to include the rate changes effective July 1, 2026, through July 1, 2028. Similar to the MHP and SOP fees, the City does not retain these fees, as they are remitted to VVWRA, and the update to these fees is to provide transparency regarding the current fees required to be collected by the City and sent to VVWRA.
Of the 570 different types of fees, 198 are being recommended to increase, 28 State-established fees are recommended to be added, and there would be no change to the remaining 344 fees. The following table details the changes by area.
Department/Fee Category
No. of Fees Added
No. of Fees Increased
No. of Fees Decreased
No. of Fees with No Changes
Avg. Estimated Fee Increase
Animal Control
0 0
0 123
0.0%
Miscellaneous Fees
0 13
0 42
0.7%
Building & Safety
28 87
0 57
3.0%
Planning
0 58
0 7
3.3%
Engineering
0 23
0 44
2.0%
Business License
0 7
0 30
0.3%
Public Safety
0 0
0 16
0.0%
Water District (Non-Utility Rate)
0 10
0 25
1.3%
Similar to the previously approved User Fee Update for the increases in CPI, the departments with the largest average fee increases are Planning (3.3%), Building & Safety (3.0%), and Engineering (2.0%) as they are the departments with the greatest number of fees that depend on City staff labor to provide the service, and the City has previously elected to recoup the full costs.
To note, the Business License Administration Fees to process new licenses and license renewals are recommended to increase by $8 and $4, respectively, in order to match the City’s cost. The Business License Fee to monitor the program is recommended to remain fixed at $50 (a $65 fee subsidy).
Building fees, not including Developer Impact Fees, charged for new single-family residential homes consist of multiple items, such as plan review, plumbing, inspection, automation, and various administrative fees. Of these building fees, the largest recommended fee increase involves plan review fees, which are recommended to increase by $42 from $1,264 to $1,306 for the first 1,000 square feet (sq ft). The $0.21 per square foot fee for plan reviews over 1,000 sq ft. would remain unchanged. Plumbing fees are recommended to increase by $37 for the first 1,000 sq ft, with the $0.35 per sq ft fee over 1,000 sq ft to remain unchanged. Administrative fees and automation fees are recommended to increase by $13 and $8, respectively. In total, building fees on a 2,000 sq ft house would increase by $99, from $4,391 to $4,490.
Attached to this staff report is the FY 2026-27 User Fee Study report, which provides the details for the fee changes based upon the change in CPI. If approved, the changes to the fees would become effective December 01, 2026.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health - Maintain a balanced budget and adequate reserves.
FISCAL IMPACT
Based upon the FY 2026-27 Revenue Budget, the annualized General Fund revenues are projected to increase by approximately $114,000. The largest General Fund revenue increases would derive from Building Fees ($61,000), Business License Administrative Fees ($28,000), Planning, Architectural Inspections, Conditional Use Permit Fees, and Site Plan Review ($13,000), and Engineering Permit and Plan Check Fees ($12,000).
The annualized Water District revenues are projected to increase by approximately $1,600 annually, based upon the FY 2026-27 Revenue Budget. This is largely due to anticipated increases in Construction Meter Set-up Fees ($500) and Fire Flow Test Fees ($1,100).
The FY 2026-27 General Fund budget was adopted with a $476,000 deficit. At the July 21, 2026, City Council Meeting regarding the consideration of a Sales Tax Ballot Measure, A 7-year General Fund budget projection was provided. This projection included revenue estimates with COLA increases as shown below.
If the amendment to the City-wide fee schedule to reflect the recent COLA are not approved, the 7-year General Fund budget projection would anticipate increased deficits as shown below.
ALTERNATIVES
Provide alternative direction to staff.
ATTACHMENTS
Resolution No. 2026-36 and Resolution HWD No. 2026-14
User Fee Study Report FY 2026-27
City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT
Staff Report to the Mayor, Council Members and Chair and Board Members of the Hesperia Water District User Fee Study Update
September 15, 2026