Results of the
Cost Allocation Plan & User Fee Study
City of Manhattan Beach
April 15, 2025 – City Council Meeting
2 Overview
1. What is a Cost Allocation Plan
2. What are User Fees
3. Objectives and Scope of the Study
4. Fee Changes by Department
5. Review Comprehensive Fee Schedule
6. Comparative Analysis of other Cities
7. Policy Considerations
8. Cost Recovery Results
9. Next Steps
3 What is a Cost Allocation Plan
The purpose of a Cost Allocation Plan (CAP) is to:
1. Ensure the City is maximizing the recovery of indirect costs from operating departments, as well as enterprise and other chargeable funds and capital projects
2. Set a solid foundation for the User Fee Study as the CAP captures the full cost of services (including internal
overhead) which gets factored into the user fees
3. Achieve the maximum cost recovery by identifying and distributing administrative costs in a fair, comprehensive, well documented, and fully defensible method
4 What are User Fees
▪ Provide private benefit with limited or no
community benefit
▪ State law requires that:
1) Individual use of the service must be voluntary, and 2) Fees must reasonably relate to the services provided ▪ Fee levels & cost recovery determined through
City Council fee adoption
▪ Does not include development impact fees, utility
rates, taxes, etc.
5 Why Update User Fees
▪ Subsidies in services impact the General Fund
o Private & specific benefit services are subsidized by unobligated funding sources
o Reduces ability to fund general & community benefits
▪ Decreased department funding typically results in
understaffing and reduces service quality
▪ Cost recovery knowledge and planning
o Provides clarity pressures on City resources
o Enables City to strategize and set fees to benefit of the City and community
o State requirements for reasonable cost-based fees
6 User Fee Objectives & Steps
▪ Determine full cost of providing services or programs o Review fee schedules based on service delivery
o Identify potential new fees (not currently collected) o Reduce or remove fees
o Using fully-burdened rates, calculate full cost recovery ▪ Update fees for services based on cost analysis
o Incorporate or establish cost recovery goals
✓ Subsidies allow access to services and facilitate compliance o Identify appropriate fee levels that:
✓ Enhance reasonability and applicability
✓ Maintain consistency with local policies and objectives ✓ Maintain legal compliance with state law
7 Data & City Staff Participation
▪ Primary types of data used:
o Expenditure data
o Staffing structures
o Central service/Indirect overhead
o Productive/billable hours
o Time estimates to complete tasks
o City/Department input, feedback and policies
▪ Staff support throughout process is essential to ensure analysis fidelity
8 Summary Steps of the Study
Model
Development
Data
collection
Build fee
model
Overhead
and FBHR
Calculation
Cost Analysis
Staff
meetings
Update fee
schedules
Staffing and
time data
Full cost for
services
Set Cost
Recovery
Current cost
recovery
Target cost
recovery
Fee Study
Report
Create draft
report
Staff report
review
Finalize
report
Updated Fee
Adoption
Public
Hearing
9 Scope of the Study
▪ Review and calculate cost of providing services
and related fees charged by the following:
1. Finance Department
2. Parks and Recreation
Fees (Non-program /
Activity Related)
3. Management Services -
City Clerk
4. Citywide Fees
5. Police Department
7. Public Works Department
8. Community Development
Department - Traffic
Engineering
9. Community Development
Department - Planning
10. Community Development
Department - Building
10 Factors that Affect Fees
Various factors affected the City’s fees as follows:
• Increased fees - Caused by results of the comprehensive review of all personnel and external costs involved in providing a service.
Staff identified missing costs that were not captured in last Study. • Decreased fees - Caused by efficiencies identified (services require less time to complete) and by changes in personnel providing the services.
• New fees - Identified as services that had no previous cost recovery mechanism and were otherwise fully subsidized by the City. • Eliminated fees - Identified by evaluating fees that are no longer applicable or otherwise obsolete.
• Fees with no change - Resulted from no change in methodology or are fees set by state statue/law, are market driven, are deposit based, or previously set to recover “actual costs” in which the method remains the same.
11 Fee Changes by Department
Number of Fees
Department / Fee Group Increasing Decreasing New
Not
Changing Eliminating
TOTAL
(excluding
Eliminated)
Finance 5 1 0 11 0 17
Parks and Recreation 6 0 0 5 1 11
MS - City Clerk 0 0 0 8 0 8
Citywide Fees 1 0 1 1 0 3
Police 18 1 0 5 2 24
Fire 5 29 14 7 0 55
Public Works 13 4 2 6 8 25
CD - Traffic Engineering 4 2 1 2 0 9
CD - Planning 63 23 33 9 3 128
CD - Building* 90 27 28 10 8 155
Total 205 87 79 64 22 435
*Combination Fee table would be set at full cost recovery 12 Review Comprehensive Fee
Schedule
Will review Comprehensive Fee Schedule one
Department at a time, along with Schedule of
New Fees and Eliminated Fees
13 Comparative Analysis of other
Cities
Will review Survey of other City Fees at this time
14 Policy Considerations
▪ General standard: individuals or groups who receive
private benefit from service should pay 100% of cost
▪ In certain situations, subsidization is an effective
public policy tool:
o Encourage participation
o Ensure compliance when cost is prohibitive to residents o Promote access to services
▪ Recommend that City utilize compensation factor or
CPI to annually adjust fees
▪ Comprehensive analysis every 5 years
15 Policy Considerations
Fees Set by previous Council Policy
Category Description Current Full Cost Annual
QTY
POLICE
Block Party Permit Review an application for a block party. $50.00 $209.00 24
COMMUNITY DEVELOPMENT - TRAFFIC ENGINEERING
Parking Request Administrative Review of a parking-related issue, such as a request for a red zone or disabled parking space. $100.00 $674.00 235 Traffic Request Administrative Review of a limited scale traffic-related issue, such as a request for installation of a crosswalk or traffic calming measure. $100.00 $701.00 0 Stop Sign Request
(2nd Request) Processing a request to install a stop sign following initial denial / approval.$500.00 $2,783.00 0
COMMUNITY DEVELOPMENT - PLANNING
Appeal to CC - Administrative
Decision Appeal of an administrative decision to the City Council $500.00 $3,983.00 0 Appeal to CC - PC Decision Appeal of a Planning Commission decision to the City Council $500.00 $2,925.00 1 Appeal to CC - PPIC Decision Appeal of a traffic-related or encroachment-related decision of the Parking and Public Improvement Commission to the City Council $500.00 $1,772.00 0 Appeal to PC - Administrative
Decision Appeal of an administrative decision to the Planning Commission $500.00 $4,055.00 0 16 Policy Considerations
Fees Set by previous Council Policy
Category Description Current Full Cost Annual
QTY
COMMUNITY DEVELOPMENT - PLANNING
Conservation District Designation Application to create a conservation district $1,000.00 $8,935.00 0 Economic Hardship Exception Planning Commission review of a request for an Economic Hardship Exception $0.00 $3,737.00 0
Historic Landmark Designation Application for historic landmark designation $1,000.00 $6,567.00 0 Historic District Designation Application to create a historic district $1,000.00 $8,935.00 0 COMMUNITY DEVELOPMENT – BUILDING
Solar Permit Plan Check and
Inspection
Residential (State Max is $450 - Government Code 66015 - Maximum) $100.00 $450 plus
$15 per
kWth over
10kWth
117
Commercial up to 50 kw (State Max is $1,000 - Government Code 66015 - Maximum) $100.00 $1,000.00
28 Commercial 51-250 kw (State Max is $1,000 - Government Code 66015 - Maximum) $100.00
$1,000
plus $7
per kW
51-250kw
17 Cost Recovery Realized
▪ Past and projected fee activity and revenues were used to estimate revenue impacts of the fee changes
Based on results from the User Fee Study, adjusting citywide user fees would allow the City to realize an estimated $1,502,284 in additional user fee revenue recovered annually that would have otherwise been subsidized by the City
*The above table does not include revenue effects of new fees as participation is unknown Department/Division
FY 24/25
Budgeted
Cost
Indirect
Overhead Total Cost
FY 24/25
Budgeted
Revenue
Current
Cost
Recovery
Projected
Revenue
Change
Updated
Cost
Recovery
MS - City Clerk 999,445 - 999,445 5,000 1% - 1% Citywide Fees NA NA 768,339 459,551 60% 308,788 100% CD - Building 3,647,153 1,250,941 4,898,094 4,622,868 94% 275,226 100% CD - Planning 1,844,250 632,561 2,476,811 593,805 24% 517,636 45% CD - Traffic Engineering 490,570 168,261 658,831 70,000 11% 188,626 39% Fire 700,894 404,195 1,105,089 403,386 37% (125,484) 25% Parks & Recreation 7,275,018 3,853,601 11,128,619 4,718,407 42% 6,397 42% Police 26,953,913 16,040,664 42,994,577 2,827,250 7% 35,636 7% Public Works 8,782,509 2,245,118 11,027,627 975,700 9% 295,459 12% TOTAL 50,693,752 24,595,341 76,057,432 14,675,967 19% 1,502,284 21% 18 Next Steps
▪ If adopted, the new Citywide and building related fees will go into effect July 1, 2025
▪ Pursuant to Resolution No. 25-0020, the user fees will set to adjust on July 1st in the years going forward
based on any salary increase/decrease per the future
Memoranda of Understanding with City Employee
bargaining groups
Questions
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20 Disclosure