1 TO: Patti Garibay, Director of Community Development, City of Lancaster Nicole Jones, Beautification Manager, City of Lanc aster FROM: Michael Medve, Principal Consultant, Willdan
DATE: June 18, 2026
SUBJECT: Calculation of Full Cost for New Minor Use Permit Fee
In June of 2026, the City of Lancaster (the “City”) engaged Willdan to calculate the full cost of processing a Minor Use Permit (MUP) with the intention of establishing a new fee category.
Background
As part of a general cost recovery strategy, local governments adopt user fees to fund programs and services that provide limited or no direct benefit to the community as a whole.
Fees in California are required to conform to the s tatutory requirements of the California Constitution, Proposition 218, Proposition 26, and the California Code of Regulations. The Code also requires that the City Council adopt fees by either ordinance or resolution, and that any fees in excess of the estimated total cost of rendering the relate d services must be approved by a popular vote of two-thirds of those electors voting because the charge would be considered a tax and not a fee. There are no fees suggested to be set above the cost of service and as such a public vote is not required.
State regulations require that municipalities update their fee schedules to reflect the actual costs o f certain public services primarily benefiting users. User fees recover costs associated with the provision of specific services benefiting the user, thereby typically reducing the use of General Fund monies for such purposes.
In addition to collecting the direct cost of labor and materials associated with processing and administering user services, it is common for local governments to recover reasonable support costs.
Support costs are those costs relating to a local g overnment’s central service departments that are allocable to the local government’s operating departments. Central services were incorporated using the resulting indirect overhead percentages determined through the City’s cost allocation plan. This plan was developed prior to the calculation of the MUP fee. The City has provided Willdan with a list of Fully-Burdened Hourly Rates (FBHRs) to reflect these all-in cost estimates for labor.
As labor effort and costs associated with the provi sion of services fluctuate over time, a significant element in the development of any fee schedule is t hat it has the flexibility to remain current.
Therefore, it is recommended that the City include an inflationary factor in the resolution to adopt the fee schedule to allow the City to annually incr ease or decrease the fees by changes in a pre-
2 approved inflationary index, as described below. Ho wever, such inflationary increases shall not exceed the reasonable estimated cost of providing the services each year.
Minor Use Permit Full Costs Calculation
The methodology used for calculating the full cost of the MUP is the standard unit cost build-up approach. This approach estimates the actual labor and material costs associated with providing a unit of service to a single user. This analysis is suitable when City staff time requirements do not vary dramatically for a service.
After consulting with the City regarding the activi ties and hours involved with processing an MUP, the full cost calculation is presented below.
The full cost of processing an MUP is $1,058.09. Th e fee for this service may be set at a rate at or below the full cost. Willdan recommends setting the fee at the full cost of the service unless there are compelling reasons not to do so, such as to facilit ate compliance or recognize broader community benefits inherent in the service.
Willdan also recommends that the City perform a full Cost Allocation Plan and User Fee Study, which is generally recommended every five years. Since us er fees are a form of cost recovery, any amount not recovered through the collection of fees is effectively subsidized by taxpayers through the general fund. Given the importance of providing these servi ces without unduly burdening the City’s general fund, updating user fees is one of the most important actions a city can take to maintain fiscal balance and minimize taxpayer burden.
If you have any questions about this memorandum, pl ease feel free to contact Mike Medve at (951) 587-3575.