STAFF REPORT
Meeting Date:
February 10, 2026
NON APPEAL
13 SUBJECT: ADOPTION OF A RESOLUTION UPDATING THE MASTER FEE SCHEDULE RECOMMENDATION: It is recommended that the City Council:
1. Adopt the Resolution titled, “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LAGUNA BEACH, CALIFORNIA, ADOPTING ITS MASTER FEE SCHEDULE AND
FINDING SUCH ACTIONS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT”; and
2. Find the action exempt from the California Environmental Quality Act pursuant to CEQA Guidelines Sections 15378(b)(4), 15273(a)(1), and 15273(a)(2).
SUMMARY OF THE MATTER
This report recommends that the City Council adopt a Resolution (Attachment 1) updating the City’s Master Fee Schedule (Attachment 2) to include a 2.6% credit card convenience fee. The fee will help offset approximately $600,000 in annual merchant processing costs currently absorbed by the City. A public notice for this public hearing was published in the Los Angeles Times on January 30, 2026.
DISCUSSION
The City incurs substantial costs to process credit card transactions for City services, averaging approximately $600,000 annually. These costs stem from merchant service fees charged by banks and payment vendors. The City currently contracts with Chase and Bank of America for merchant card services and also works with third-party vendors such as HdL and Alarm Program Systems, LLC, who pass through their own merchant fees to the City.
Merchant fees vary based on the credit card type, transaction amount, and volume. Some fees are flat-rate; others are percentage-based. For example, the City’s agreement with Chase Bank includes over two dozen potential fee types. On average, the effective fee across all departments is approximately 5.9%, but when excluding high-fee, low-value transactions, the average fee is 2.6%. Notably, about 85% of the City's merchant fees relate to parking services.
To recoup these costs, the proposed fee schedule adds a 2.6% credit card convenience fee. This would be charged when the City or its vendors cannot collect the merchant fee directly from the customer. For example, HdL, which administers business license payments for the City, has confirmed it can directly collect the merchant fee from credit card payers, eliminating the need to invoice the City. For credit card payments processed by the City or when the City’s payment vendors are unable to collect the actual merchant fee from the customer, the City will charge 2.6% per transaction.
The proposed fee aligns with current practices in other jurisdictions and represents a fair cost recovery approach.
ADOPTION OF A RESOLUTION UPDATING THE MASTER FEE SCHEDULE February 10, 2026
FINANCIAL ANALYSIS
If approved, the City could realize approximately $600,000 in annual revenue across the General Fund, Parking Fund, and Transit Fund.
ALIGNMENT WITH CITY COUNCIL GOALS AND PRIORITIES
The proposed action directly supports the City Council’s fiscal sustainability goal by shifting the cost burden of credit card processing from the City to the customer, promoting equitable cost recovery for services provided.
ENVIRONMENTAL ANALYSIS
In accordance with the requirements of the California Environmental Quality Act (“CEQA”), the proposed action is not considered a “project” for purposes of CEQA. Pursuant to CEQA Guidelines sections 15378(b)(4), 15273(a)(1), and 15273(a)(2), the proposed action 1) involves the creation of a government funding mechanism which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment, and (2) establishes fees to meet operating expenses, including employee wage rates and fringe benefits, and to purchase and/or lease supplies, equipment, and materials. Thus, the action is not a “project” for purposes of CEQA.
ATTACHMENTS
1. Resolution (Pgs. 3-5)
2. Exhibit A to Resolution (Pgs. 6-36)
Submitted By: Michelle Bannigan Approved: .David A Kiff Michelle Bannigan, Finance
Director
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Dante Chegini, Administrative Analyst Patrick Donegan, Assistant City Attorney