Citywide User Fee and Cost Recovery Studies
City Council Meeting– April 18, 2023
Discussion Topics
2 • Background Information
• Citywide User Fee and Cost Recovery Study – Methodology and Status • Study Results by Department with Departmental Recommendations:
Police Department
Fire Department
Health and Human Services (Environmental Health Bureau) 3 Background Information
What are the City’s Fees and Charges?
4 • Two categories of fees and charges:
• Rent and penalties are included by convenience in the master fees and charges schedule but are not fees, and rents and penalties are set at the City’s discretion
Charged for the use
of a public service or
program
User Fees
Charged to recover
costs to regulate or
mitigate fee payer’s
activities
Regulatory
Fees
How Rates for Fees and Charges are established
5 Cost of
Service
Rates (per Propositions 218 & 26) may not exceed the
“estimated reasonable cost” of providing the service,
program, etc.
Above Cost
of Service
Below Cost
of Service
City policy requires fees to be set at the cost of the service, except where there is a greater public benefit through the use of a lower fee
In many instances, the City sets fees lower than cost of service to achieve other goals such as program participation, being competitive, maximizing of revenues, residents’ needs, and ability to pay, etc.
What is the Process to Adopt and Update Fees Rates?
6 • To capture annual cost increases the City has implemented an annual inflation adjustment, subject to annual review for appropriateness • Master Fees and Charges Schedule typically adopted each year with the Budget
• Mid‐year minor adjustments are usually made in a periodic fee adjustment Council Letter either submitted by the Budget Office or a department • The next citywide fee adjustment letter is anticipated for May 2023 Fee Rate Changes Impact to Revenue Budgets
7 • Fee adjustment Council Letters include estimated theoretical revenue impacts of any proposed fee change
• The amounts budgeted in a year are not necessarily the same as the theoretical impact
• Changes to budgeted revenues are evaluated holistically as part of the proposed budget process and take into account a variety of factors such as the stability and certainty of revenue source and anticipated volume 8 Citywide Fee Study Methodology and Status
Citywide Fee Study Project Overview
9 • In FY 19, at the City Council’s direction, staff initiated an updated citywide fee study to conduct a comprehensive cost of service analysis to determine the full business cost of providing each service and the subvention (subsidy) rates for services
• Am u l t i‐year project with all City fees evaluated, but there will be exceptions such as where there are separate rate studies or rates are set by external agencies • For each department, the study will:
Identify and review the fees charged by each department Calculate the full service cost, with indirect and direct costs associated with the fees Determine the subvention rates (subsidy level) by comparing the fee revenue to the full cost of service
Provide recommendations
Project Status
10 • The project is moving forward on a “rolling ‐basis” with multiple departments at any one time. The project status is as follows, and is anticipated to conclude by 2024:
Project
Round
Departments City Council Presentation
1 • Development Services
• Parks, Recreation and Marine
• Health & Human Services (Physicians Services Bureau)
April 6, 2021
2 • Energy Resources
• Public Works
February 1, 2022
3 • Fire
• Police
• Health & Human Services (Environmental Health Bureau) April 18, 2023
4 • City Manager (includes Special Events & Filming)
• Financial Management
• Airport
• Library Services
TBD
Anticipated for 2024
Methodology Overview
11 • Identify service centers and the cost components including:
Direct Cost – Salaries, benefits, and operating expenses Indirect Costs – General and departmental overhead, including administration and citywide indirect costs (from Indirect Cost Plan)
• Calculate the fully burdened hourly rates (FBHR) per position that includes direct and indirect costs
• Determine positions and staff time spent supporting each service • FBHR is then multiplied to the time spent by position to allocate costs to the service • Identify subvention rates by comparing the fully allocated service costs to current fee revenues received
Study Results and Department Recommendations
12 • Each of the studies found that departments were generally under recovering for calculated service costs.
• A summary of cost recovery and subvention rates at both current fee levels and revenue is as follows:
Department Total
Calculated
Service Cost
Current Fee
Revenue
Total Surplus/
(Subvention)
Cost
Recovery
%
Subvention
%
Police Department $15,591,063 $815,946 ($14,775,117) 5% 95% Fire Department 96,883,298 19,339,449 (77,543,849) 20% 80% Health & Human Services (Environmental Health) 6,080,655 4,046,511 (2,034,344) 67% 33% TOTAL $118,555,016 $24,201,906 ($94,353,310) 20% 80%
Cost Recovery and Subvention Rates Based on Current Fee Levels Study Results and Department Recommendations
13 • Study recommends fee levels to provide full cost recovery where appropriate for services
• Each department has reviewed the Study results and has made specific recommendations for their fees that include:
No changes to current fees
Rate increases and decreases to current fees
New and revised fee structures to align with services • While the majority of departments’ recommendations align with the study’s recommendations, the department may deviate based on various factors
Overall Impact of Department Recommendations
14 Fund Group Theoretical Revenue Impact*
General $1,371,382
Tidelands Operating $9,440
CUPA $116,568
Health $675,982
Total $2,173,072
Table 1: Summary of Department Recommendations
* Theoretical annual impact – budget and actual revenue may vary ‐ budgeted amount will be determined during the budget process Table 2: Summary of Theoretical Revenue Impact from Department Recommendations Department Total Department
Recommendations
No
Changes
Decreased Increased Restructured Deleted New
Police 27 76 50 5 4
Fire 230 74 11 115 15 10 5
Health & Human
Services
336 80 41 152 10 19 34
Next Steps
15 • Departments will present an overview of their studies and proposed fee recommendations for the City Council’s feedback
• On May 23, 2023, a City Council item to amend the Citywide Master Fees and Charges Schedule will include all recommended fee changes as a result of the Study and as presented to the City Council today 16 POLICE DEPARTMENT
Cost of Services Study & Summary of
Recommendations
Cost of Services Study Introduction
• The Police Department has 29 fees covering the following service areas:
o Police Records (access to police reports, clearance letters) o Jail
o Police Investigations and backgrounds
• Of the department’s fees, the Cost of Service Study excluded board ‐up fees where the actual cost is charged to requestor .
• Fees and charges related to Special Events and Filming are excluded from Police Department’s recommendations, and are currently under evaluation in a separate study of the citywide program involving various departments. 17 Study Findings Summary: Revenue & Cost by Service
18 *Reported subvention for “Police Other” includes Special Events and Filming services. Special Events and Filming is under review in a separate study.
Service Total
Calculated
Service Cost
Current Fee
Revenue
Total Surplus/
(Subvention)
Cost
Recovery
%
Subvention
%
Police Records $2,825,300 $644,792 ($2,180,508) 23% 77% Police Jail 11,360,365 70,000 (11,290,365) 1% 99% Police Investigations 83,068 101,154 18,086 122% ‐22% Police Other* 1,322,330 ‐ (1,322,330) 0% 100% TOTAL $15,591,063 $815,946 ($14,775,117) 5% 95%
Cost Recovery and Subvention Rates Based on Current Fee Levels Proposed FY 23 Mid-Year Recommended Changes Overview
19 • Department recommendations include a variety of changes including reducing or increasing fees to align with actual costs as calculated by a consultant, eliminating fees where services are now performed by other departments, and restructuring fees to create greater transparency and equity for the service recipient. • The total estimated theoretical annual revenue impact from the recommended c h a n g e si sa sf o l l o w s :
• Estimated annual revenue reduction due to rate decreases to align with the cost of service and department recommendations for no changes for certain services.
Fund Group Theoretical Revenue Impact
General Fund ($18,478)
Key Items & Considerations
20 • Per City of Long Beach Financial Policy #4, LBPD fee recommendations are based on full cost recovery for the services provided except where there is a greater public benefit use of a lower fee:
o Fees related to background investigations recommended to decrease and increase to full cost recovery in accordance with cost of service recommendations.
o The fee study included 100 percent of service costs related to PD staff operating the LBPD Jail. New fees proposed to meet cost recovery for these activities, but are not anticipated to be fully recovered by fee revenue. o For fees that would have had disproportionately negative impact on the low income or marginalized community, such as rummage sales, booking fees and the crime and arrest report fees, a larger subvention amount is recommended.
Summary of Proposed FY 23 Mid-Year Recommendations
21 Department Recommendations Example Service Area(s)
No changes (fees and charges are currently
set at cost recovery and operational need)
Paid Solicitors Fee, Electronic Extraction, Academy
Facility Rental
Fee changes recommended by study but not
proposed changes by department at this
time to allow equitable access to Police
services
Inmate Booking, Background Clearance Letter, Rummage
Sale, Traffic, Crime, and Arrest Report fees
Summary of Department Recommendations
Total Department
Recommendations
No Changes Decreased Increased Restructured Deleted New 27 76 50 54
Summary of Proposed FY 23 Mid-Year Recommendations
(continued)
22 Department Recommendations Example Service Area(s)
Rate Decreases to align with cost
recovery
Cannabis Background Investigation, Live Scan, Tow Truck Driver, Taxi Driver & Taxi Owner biennial permits fees, Repossession Rate Increases to align with cost
recovery and operational need
Various Taxi Owner supplemental permit fees, Pedicab Operator, Charitable Solicitation
New Fee Structures (to align with
Service Provision and clarify fee
structure)
Police Report Request restructured into three new fees: Traffic, Crime, and Arrest report requests (no changes effective rates, will remain below cost recovery), inmate detention fees (not charged to the public, but reimbursed by other government agencies) Fee deletions for services no
longer provided by the
department
Services provided by other departments:
‐ Special Events and Filming: Special events‐related fees for exclusive event , PD processing, promoter registration
certificate and bond
‐ Housing Authority: Section 8 background check.
Comparisons to Other Jurisdictions & Agencies
23 • Long Beach PD conducted research into other regional law enforcement agency fees.
Department recommendations are generally within or below the fee ranges charged by comparable jurisdictions including Los Angeles County Sheriff, Los Angeles PD, Orange County Sheriff, Beverly Hills PD, Downey PD, Bell Gardens PD, and Garden Grove PD:
Fee Department
Recommendation
Comparable Fee Range
Traffic Report Request $25.10 $16 ‐ $30 or by page
Arrest Report Request $25.10 $16 ‐ $75 or by page
Crime Report Request $25.10 $10 ‐ $25 or by page
Live Scan $35 $23 ‐ $71
Rummage Sale $19.60 $20/event or $152/year
Paid Solicitors Permit $35 $34.50
Clearance Letter $35.95 $5 ‐ $41
Repossession $15 $15
Tow Truck Driver ‐ Biennial $155 $125 ‐ $416
Taxi Driver ‐ Biennial $155 $135 ‐ $250
24 FIRE DEPARTMENT
Cost of Services Study & Summary of
Recommendations
Cost of Services Study Introduction
• The Fire Department has nearly 300 fees, with 264 fees assessed as part of the Cost of Service study.
• The Fire Department’s fees presented in the study are categorized to the following major service areas:
o Certified Unified Program Agency (CUPA) Services for hazardous materials storage o General Fire Prevention Services
o Emergency Medical Services
o Marine Safety Operations
o Fire Administrative and Facility Fees
o Fire Prevention and Fire Operations Services to support Special Events • Special Event Fees are continuing to be evaluated as part of a citywide review of all special event and filming services. Results and recommended changes will return following completion of the study.
25 Study Findings Summary: Revenue & Cost by Service
26 *Reported subvention across various service areas includes Special Events and Filming services. Special Events and Filming is under review in a separate study
**Subvention for Fire Operations primarily related to the City’s 23 fire stations (staff, equipment, vehicles, facilities)
Service Total
Calculated
Service Cost
Current Fee
Revenue
Total Surplus/
(Subvention)
Cost
Recovery
%
Subvention
%
Fire Prevention $2,727,833 $1,553,559 ($1,174,274) 57% 43% Fire CUPA 1,427,090 1,157,327 (269,763) 81% 19% Fire Operations 90,081,989 15,852,634 (74,229,355) 18% 82% Fire Administration/Support 2,646,386 775,929 (1,870,457) 29% 71% TOTAL $96,883,298 $19,339,449 ($77,543,849) 20% 80%
Cost Recovery and Subvention Rates Based on Current Fee Levels Proposed FY 23 Mid-Year Recommended Changes Overview
27 • The Long Beach Fire Department recommends a variety of fee changes:
o Increasing and decreasing fees to align with full service costs o Reclassifying fees to improve the units of measurement in the way the fees are applied
o Deleting fees for services that are no longer being provided by the department or the City.
• The total estimated theoretical annual revenue impact from the recommended changes is as follows and represents a phased‐in approach to many of the fee increases:
Fund Group Theoretical Revenue Impact
General Fund $1,389,860
CUPA Fund $116,568
Tidelands Operating $9,440
Total Theoretical Revenue Impact $1,515,868
Key Items & Considerations
28 • Department recommendations include adjusting fees to meet the cost of service associated across various fees for fire permits and plan check services • A3 ‐year phase ‐in approach is recommended for certain services including CUPA, various annual permits and general fire inspection fees • Emergency Ambulance rates are proposed for adjustment and will closely align to those charged by Los Angeles County Emergency Medical Services Agency:
• Basic Life Support: Proposed increase from $1,702 to $1,738 • Advanced Life Support: Proposed increase from $2,550 to $2,603 • Services and related Special Event fees are not being proposed for adjustments at this time and will return following a citywide cost of service study for the program Summary of Proposed FY 23 Mid-Year Recommendations
29 Department Recommendations Example Service Area(s)
No changes (fees and charges are currently
set at cost recovery and operational need)
Various plan checks and inspection for under‐and above
ground storage tanks, reinspection fees , late payment
fees, First Responder Fee (study recommendation to
keep below cost recovery)
Fee changes recommended by study but
not proposed changes by department at
this time
Fire Training Academy Equipment/Prop Rental and Fire
Training Facility Rental (recommended by the study at
market rates)
Deleted Fees for services no longer
managed/provided by the department
Oil/Gas Well inspections, asbestos removal, fumigation
or thermal insecticidal fogging operation
Summary of Department Recommendations
Total Department
Recommendations No Changes Decreased Increased Restructured Deleted New 230 74 11 115 15 10 5
Summary of Proposed FY 23 Mid-Year Recommendations
(continued)
30 Department Recommendations Example Service Area(s)
Rate Decreases to align with cost recovery
and operational need
Cannabis Testing Facility Permit, annual fire permits
(explosives/pyrotechnic devices, tank vehicles,
distilleries, natural gas plant), fire inspection fees for hotel/motel inspection fees based on size.
Rate Increases to align with cost recovery
and operational need
Various Fire Plan Check and Inspection Fees,
Emergency Ambulance Fees, multi ‐family residential
fees
New Fee Structures (to Align with Service
Provision)
New permit fee categories for additive
manufacturing, energy storage systems, and lithium
batteries (new fees set below cost recovery), penalty
charges from a flat rate to a percentage of applicable
permit fee
Summary of Proposed FY 23 Mid-Year Recommendations
(continued)
31 Department Recommendations Example Service Area(s)
Partial rate increases phased ‐in over time or
rates recommended by the Study to remain
below cost recovery to encourage program
participation and promote equitable access
to services
Certain CUPA fees (maintained below full cost recovery
and phase ‐in increases over 3 ‐year period), fire
clearance inspection fees for convalescent hospitals,
nursing homes boarding & children’s homes, general
annual permits charged to various types of businesses
based on occupancy
Comparisons to Other Jurisdictions & Agencies
32 • The comparison of General Fire Prevention Services, CUPA, and Medical Services among regional or similar sized entities varied across the State. o Fire fees have been updated at various published dates, with many fees not reflecting recent updates.
• Fire fees are delivered through a diversity of units across the State that differ from the City of Long Beach.
o Other entities charge fees based on number of building floors, or number of alarm units.
o City of Long Beach charges many of its fees based on units, lineal foot, or occupancy.
• Overall, the fee changes bring the Fire Department in line with similarly ‐sized cities and the fire service industry.
Comparisons to Other Jurisdictions & Agencies (continued) 33 • Medical services are provided by the City and County levels through various models that differ from the City of Long Beach.
• Various entities have updated or published their ambulance and medical fees at varying dates.
• Models include cities providing their own services, to cities being covered by the county agency, to utilizing contracted ambulance service providers. • Sample ambulance transport FY 23 fees include the following:
o City of San Francisco BLS and ALS transports are posted as $2,405. o City of Pasadena BLS and ALS transports are posted as $2,900 o County of Kern’s fees range depending on geographic location. BLS Fees range from $1,646 to $3,700 in FY 23.
34 HEALTH AND HUMAN SERVICES DEPARTMENT
Cost of Services Study & Summary of
Recommendations
Cost of Services Study Introduction
• The Health and Human Services Department has over 300 environmental health fees, across various programs:
• Of those fees, the cost of service study includes no changes for nine surcharges set by and collected on behalf of the State of California:
• Eight CUPA surcharges for California Environmental Protection Agency (CalEPA) • One Soft Service surcharge for the California Dept of Food & Agriculture (CDFA) 35 • Recreational Water Quality • Food
• HazMat/CUPA • Vector Control
• Noise Control • Commercial Cannabis
• Tobacco Retail Enforcement • Miscellaneous Services (e.g., general reinspection & health materials)
Study Findings Summary: Revenue & Cost by Service
36 Service Total
Calculated
Service Cost
Current Fee
Revenue
Total Surplus/
(Subvention)
Cost
Recovery
%
Subvention
%
Water Program $686,097 $423,500 ($262,597) 62% 38%
Food Program 3,051,280 2,231,530 (819,750) 73% 27% Hazardous Material s/CUPA Program 1,361,380 786,435 (574,945) 58% 42% Vector Control Program 119,751 98,501 (21,250) 82% 18% Noise Control Program 98,964 3,075 (95,889) 3% 97% Commercial Cannabis Program 296,931 198,286 (98,645) 67% 33% Tobacco Retail Enforcement Program 333,607 304,640 (28,967) 91% 9% Miscel laneous Services 132,645 544 (132,301) 0.41% 99.59% TOTAL $6,080,655 $4,046,511 ($2,034,344) 67% 33%
Cost Recovery and Subvention Rates Based on Current Fee Levels Proposed FY 23 Mid-Year Recommended Changes Overview
37 • Department recommendations include a variety of changes including rate increases, rate decreases, and restructuring of fees to meet cost recovery and better align with service operations.
• Department recommendations include maintaining rates for certain services under cost recovery, including phasing-in increases over a three-to- four year period to lessen the financial burden of increased fees to operators.
• The total estimated theoretical annual revenue impact from the recommended changes is as follows:
Fund Group Theoretical Revenue Impact
Health $675,682
Key Items & Considerations
38 • Some recommended proposed fees are restructured to simplify and align services provided. Restructure fees include:
Establishing different risk categories for Restaurant and Bar/Tavern permits and plan check fees to align with the increased level of inspection required for higher risk categories
Simplifying the water backflow prevention device and bed & breakfast permit fees Aligning seasonal temporary food stand permit fees with existing temporary food stand fees
Establishing plan check fees for Cannabis dispensaries, manufacturers, distributors, and cultivation facilities to align with the service provided • R a t ea d j u s t m e n t s( i n c r e a s e sa n dd e c r e a s e s )f o rs h a r e d‐use cannabis facility fees, which were established at the onset of the program in FY22
• No changes recommended for those CUPA fees, adjustments recently approved by City Council during FY 23 budget adoption:
Final study validated changes required to address fund imbalances Department will continue to subsidize costs and phase in rate increases over 3 years to reduce the impact on operators
• Department recommendations include no changes or only partial increases to recognize financial barriers to operators and create more equitable ownership opportunities:
No rate changes include permit fees for host facility, food warehouse, and plan check fees for a mobile food facility. These rates will be maintained below cost recovery. Partial and phase‐in rate increases over a three ‐to‐four‐year period across various fees including food stand fees charged to non ‐profits, licensed healthcare facility kitchens permit fees, public school kitchen permit fees, and health permit and plan check fees for high risk restaurants and bars/taverns.
Key Items & Considerations (continued)
Key Items & Considerations (continued)
40 • Establish a new Technology Surcharge fee of 2.3 percent applied to permit and plan check fees to support the maintenance of the Environmental Health database management system:
Efficiently administer program operations
Increase access to Environmental Health data
Improve customer service including application submissions, forms, and complaints
Improve online payment system and billing inquiries
Summary of Proposed FY 23 Mid-Year Recommendations
41 Department Recommendations Example Service Area(s)
No changes (fees and charges are currently
set at cost recovery and operational need)
Various fees for low risk restaurant health permits and plan check, farmer’s market organizer quarterly permit, mobile food facility plan checks fees
Rate increases phased ‐in over time or rates
recommended by the Study to remain
below cost recovery to encourage program
participation and promote equitable access
to services
Various annual permits fees (temporary food permits for non ‐ profits, high risk restaurants & bars/taverns, food market retail permits (food warehouse) and CUPA fees to continue phase ‐in over 3 ‐year period previously approved as part of the FY23 budget
Summary of Department Recommendations
Total Department
Recommendations
No
Changes
Decreased Increased Restructured Deleted New
336 80 41 152 10 19 34
Summary of Proposed FY 23 Mid-Year Recommendations
(continued)
42 Department
Recommendations
Example Service Area(s)
Deleted Fees for services no
longer managed/provided by
the department
Product market wholesale annual permits (under California Department of Public Health), vehicle food permit transfer (no longer available), mosquito and bee abatement (referred to outside vendors)
New Fee Structures to Align
with Service Provision
(includes proposed new fees
and deletions)
Establish risk categories for restaurants and bar/taverns, new Technology Surcharge, and Food and Water inspection & plan check programs: water backflow prevention device, bed & breakfast, temporary food stands, restaurants, food
commissary
Summary of Proposed FY 23 Mid-Year Recommendations
(continued)
43 Department Recommendations Example Service Area(s)
Rate Increases to full cost
recovery and operational need
E s t a b l i s hl a t ep e n a l t i e sa n dr a t e sf o ro n‐field licensing services, rate increases for various annual permits (shared food facilities, tobacco retail, temporary body art), various plan check fees (shared & temporary food facilities, low ‐ impact development system)
Rate Decreases to align with cost
recovery and operational need
Annual permits for commissary mobile food facilities,
unpackaged food facilities and private school kitchens, wholesale food processors, adult use cannabis cultivator (6,000+ square feet) and shared use cannabis
manufacturing facilities
Comparisons to Other Jurisdictions & Agencies
44 • Comparison of some fees for services can be difficult:
Services provided by the City may be delivered differently, or at a higher or lower level of service. Below are a few examples:
Restaurant inspection permit fees for other jurisdictions are based on different risk categories.
Licensed Healthcare Facility Kitchen permit fee for other jurisdictions is based on square footage and not on the number of beds.
Swimming pool/spa plan check fee for other jurisdictions is based on size while we assess one fee per body of water regardless of pool/spa size. Food Warehouse Plan Check fee is based on square footage while we assess one fee regardless of the size of the warehouse.
• Differences in regulatory requirements and local policies • T h eC i t yi sg e n e r a l l yu n d e r‐recovering for costs within the Police, Fire, and Health & Human Services Departments
• The recommendations proposed by departments generally align with Study recommendations for full‐cost recovery, where appropriate • Deviations from the Study recommendations include setting fees lower than cost of service to achieve other goals such as residents’ needs and ability to pay, etc. • Theoretical revenue increases resulting from proposed changes will be evaluated as part of proposed budget processes
• Proposed changes to the Master Fees and Charges Schedule, inclusive of these recommendations, is scheduled to return to the City Council on May 23, 2023 Presentation Wrap-up
45