Audit Committee
October 22, 2026

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10/22/2026 4:00:00 PM
www.modestogov.com
AGENDA
City of Modesto

SPECIAL AUDIT COMMITTEE

COUNCIL WORKSHOP
2001-40 Del Puerto Room
Tenth Street Place, 1010 10th Street
Modesto, California
Thursday, October 22, 2026 at 4:00 PM
Roll Call: Sue Zwahlen, Chair
Rosa Escutia-Braaton, Vice-Chair
David Wright, Member
Camille Garcia, Public Member
Jovana Lloyd, Public Member
Alternates: Eric Alvarez, Nick Bavaro, Chris Ricci, Jeremiah Williams Council has not delegated directive or final approval authority to the Committees.

Committee actions are recommendations to the full City Council, not final decisions on an issue. * Public Comment will only be in-person. Members of the public who wish to address the Committee, by providing public comment, during the meeting must do so in-person in the 2001-40 Del Puerto Room. As an alternative, members of the public may also provide written public comment submitted via email as indicated in the Submitting Comments by Email instructions on this agenda. Zoom will still be available for viewing and Wordly translation. * Members of the public will be allowed to provide public comment through Zoom if a Councilmember is participating remotely pursuant to the provisions of California Government Code section 54953.8.3.
*If a technical issue arises with Zoom or the phone dial-in option, the Council meeting will continue unless the meeting is being held pursuant to the provisions of Senate Bill 707, California Government Code section 54953.8.3. Alternative viewing options are listed below, and the meeting is physically open to the public.
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PUBLIC COMMENT PERIOD
Three-minute time limit per speaker.

Only interested persons in the audience may present these matters. Under State law, Committee Members may respond to matters being presented under this item only as follows:
a. Briefly respond to statements made or questions raised. b. Ask a question for clarification.
c. Provide a reference to staff or other resources for factual information. d. Request staff to report back at a subsequent meeting. e. Finally, a Committee Member or the Committee itself may take action to direct staff to place a matter of business on a future agenda.
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SUBMITTING COMMENTS BY E-MAIL
Written comments may be submitted via email to: [email protected] (include Agenda Item Number in the subject line). All comments will be shared with the Committee Members and placed in the record but will not be read aloud during the meeting.

Written comments must be received two hours before the meeting.

This Agenda is on file in the City Clerk’s Office, Sixth Floor, 10th Street Place, Posting Board at entry of 10th Street Place, and is available on the City’s Web site at www.modestogov.com.

Materials related to an item on this Agenda submitted to the Council after distribution of the agenda packet are available for public inspection in the Clerk’s office during normal business hours. Such documents are also available online, subject to staff’s ability to post the documents before the meeting, at the following website www.modestogov.com/councilmeetings.

In accordance with the requirements of Title II of the Americans with Disabilities Act (“ADA”) of 1990, the Fair Employment & Housing Act (“FEHA”), the Rehabilitation Act of 1973 (as amended), Government Code section 11135 and other applicable codes, the City of Modesto (“City”) will not discriminate against individuals on the basis of disability in the City’s services, programs, or activities. For more information, please visit the City of Modesto website at https://www.modestogov.com/865/Americans-with-Disabilities-Act-ADA In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk (209) 577-5396. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting
Any and all of the following agenda items are subject to action by the Modesto City Council.

CONSENT ITEMS – ROLL CALL VOTE REQUIRED:

Information concerning the consent items listed below has been forwarded to each Committee Member prior to this meeting for study. Unless some member of the audience or Committee Member has a question concerning an item and asks that it be withdrawn from the consent list, the Committee approves the items at one time. The action taken by the Committee in approving consent items is set forth in the explanation of this individual item.

CONSENT
An item may be removed from consent and discussed at the request of an audience member or Committee Member.

Consent

1. Consider four (4) Grant Audit and Compliance results for the Modesto Police Department and forwarding to Council for approval. (Funding Source: Not Applicable) • Motion recommending the acceptance of the four (4) Grant Audit and Compliance results for the Modesto Police Department and forwarding to Council for approval.
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FINANCE DEPARTMENT; DeAnna Christensen, 209-577-5387,
[email protected]

NEW BUSINESS

2. Consider receipt of the Fiscal Year 2026-27 Internal Audit Status Report dated October 1, 2026. (Funding Source: Not Applicable)
• Motion to receive and file the Internal Audit Status Report dated October 1, 2026.

CITY AUDITOR; Colleen Rozillis, 206-302-6795, [email protected]

3. Consider the Audit Finding Validation Report dated September 28, 2026. (Funding Source: Not Applicable)
• Motion to receive and file the quarterly Audit Findings Validation Report.

CITY AUDITOR; Colleen Rozillis, 206-302-6795, [email protected]

4. Consider the Fee Benchmarking and Cost Recovery Audit report dated October 1, 2026, and forwarding to Council for acceptance. (Funding Source: Not Applicable) • Motion to receive the Fee Benchmarking and Cost Recovery Audit Report dated October 1, 2026, and forwarding to Council for acceptance.

CITY AUDITOR; Colleen Rozillis, 206-302-6795, [email protected]

ADJOURNMENT
Posted pursuant to Government Code Section 54954.2 on the bulletin board at Tenth Street Place on at by
date time signature
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10/22/2026

CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

October 22, 2026
Date: September 21, 2026
TO: Audit Committee
Sue Zwahlen, Chair
Rosa Escutia-Braaton, Vice-Chair
David Wright, Member
Camille Garcia, Public Member
Jovana Lloyd, Public Member

THROUGH: Joseph P. Lopez, City Manager
FROM: Diane Nayares-Perez, City Clerk
Colleen Rozillis, City Auditor
SUBJECT: Grant and Program Audit Results
CONTACT: DeAnna Christensen, Director of Finance,
[email protected], 209-577-5387
DESCRIPTION:

Consider four (4) Grant Audit and Compliance results for the Modesto Police Department and forwarding to Council for approval. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

This recommended action supports the City’s 2025-2026 strategic commitment to:
“Build community trust in City government through responsive, transparent and efficient service delivery.”
BACKGROUND:

Office of Traffic Safety (OTS) Grant Audit – Grant # PT24120 Modesto Police Department (MPD) received a $580,000 Selective Traffic Enforcement Program grant from the California Office of Traffic Safety for October 1, 2023, through September 30, 2024. The grant supported efforts to reduce traffic deaths and injuries through Driving Under Influence (DUI) checkpoints and saturation patrols, targeted traffic enforcement, officer training, and public education. MPD claimed $431,750 in expenditures and received $431,531 after OTS adjustments. #1..
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Audit Committee, October 22, 2026
Grant and Program Audit Results

Department of Justice (DOJ) Community Oriented Policing Services (COPS) Office Monitoring Review
DOJ completed a compliance monitoring review for two (2) federal awards: Technology and Equipment Program award #15JCOPS-24-GG-02089-TECP, providing $3,530,000 for technology and equipment, and Safer Outcomes De-Escalation and Crisis Response Training award #15JCOPS-25-GG-00849-DETX, providing $126,800 for law enforcement training. The technology award’s performance period began March 9, 2024, and was extended through March 31, 2027. The training award runs from October 1, 2025, through September 30, 2027.

California Department of Justice — CLETS Audit
The California Law Enforcement Telecommunications System (CLETS) is a statewide telecommunications network administered by the California Department of Justice (DOJ) that provides law enforcement agencies with access to criminal justice databases, including state and federal criminal history, vehicle and driver records, wanted persons, missing persons, restraining orders, and firearms information.

Agencies that subscribe to CLETS operate under a signed CLETS Agreement and are required to comply with the CLETS Policies, Practices and Procedures (PPP), the Federal Bureau of Investigations (FBI) Criminal Justice Information Services (CJIS) Security Policy, and applicable state law. As a condition of continued access, the DOJ conducts a compliance audit of each subscribing agency at least once every three years.

California Commission on Peace Officer Standards and Training (POST) — Biennial Audit
The California Commission on Peace Officer Standards and Training (POST) sets minimum selection, training, and personnel-reporting standards for California law enforcement agencies that participate in the POST program. Participating agencies are required to maintain an accurate roster of sworn and non-sworn personnel in POST's Electronic Data Interchange (EDI) system, to appoint peace officers who meet POST's established selection standards, and to maintain background investigation files documenting compliance with those standards. POST periodically audits participating agencies to verify compliance with these requirements.

DISCUSSION:

Office of Traffic Safety (OTS) Grant Audit – Grant # PT24120 The California Department of Finance, Office of State Audits and Evaluations, conducted an audit focused on ensuring grant expenditures were in compliance with the grant requirements and grant objectives were completed as defined by the grant agreement. The audit results were issued as part of the final report on June 10, 2026.

Auditors interviewed personnel, evaluated internal controls, and reviewed documentation supporting grant objectives. As part of the audit results, there were two (2) findings captured in the report which are summarized below.

1. The audit identified $22,095 in personnel costs as ineligible and recommended repayment. These personnel cost lacked certain #1..
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Audit Committee, October 22, 2026
Grant and Program Audit Results

documentation to support the hours worked on the grant-related activities.

2. It was identified eleven (11) of 21 grant objectives were determined to be unmet or insufficiently supported, reduced from 12 after the State accepted MPD’s supplemental Standardized Field Sobriety Test (SFST) training documentation.

As part of the audit report, the auditor had defined recommendations focused on documentation, timekeeping reconciliation, independent secondary review, and stronger monitoring of grant objectives to address these two (2) findings.

MPD strongly disagrees with the repayment recommendation. Our April 3, 2026, response provided supplemental CAD activity logs, timekeeping records, payroll documentation, and supervisory verification that we maintain substantiate the questioned grant-related work. Our internal review found no evidence of falsified time or misuse of grant funds. The State concluded that the records did not sufficiently connect the claimed hours to the specific Selective Traffic Enforcement Program (STEP) grant and retained its recommendation. OTS has not requested any repayment. MPD has implemented improvements described in our response, including centralized electronic records, preservation of DUI hotlist documentation, increased supervisory oversight, routine reconciliation, pre-deadline performance reviews, and better alignment of grant objectives with operational capacity.

Department of Justice (DOJ) Community Oriented Policing Services (COPS) Office Monitoring Review
DOJ COPS Office Auditor Michael Loughran conducted the monitoring review on June 17, 2026. The review addressed administrative, financial, and programmatic compliance, award implementation, and community policing efforts. The documentation request included expenditure worksheets, general ledger support, invoices, purchase orders, receipts, applicable personnel and training costs, equipment inventories, and award progress narratives. MPD also prepared a community policing narrative describing its Area Command structure, alternative response programs, community partnerships, and use of technology and crime analysis to support problem solving.

The auditor’s concluding correspondence reported that no issues were identified, and no further information was required. It confirmed timely and accurate programmatic and financial reporting and indicated that MPD was pursuing the community policing strategies described in its award applications. No corrective actions were requested.

California Department of Justice — CLETS Audit
The CLETS audit was conducted by the California DOJ, CLETS Administration Section – the department was notified of the audit on April 14, 2026, final paperwork was submitted on May 30, 2026, and the auditor came on site on June 9, 2026. The audit covered a range of compliance areas, including an administrative review of the Modesto Police Department's policies and procedures governing system use, review of user and #1..
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Audit Committee, October 22, 2026
Grant and Program Audit Results

agency agreements (including agreements with any non-terminal or contracting agencies), verification that personnel with CLETS access completed required training and certification within mandated timeframes, and a review of physical and information security controls protecting CLETS equipment, data, and terminal areas. The DOJ issued a finding of "Compliance." No deficiencies were identified, and no corrective action plan was required. The Modesto Police Department will continue routine internal monitoring of training currency, user agreements, and security practices to maintain compliance in advance of the next triennial audit.

California Commission on Peace Officer Standards and Training (POST) — Biennial Audit
The audit was conducted on November 5, 2025, by Jeffrey Dunn, Law Enforcement Consultant, Region 4 Manager, POST Training Delivery and Compliance Bureau. The audit covered two categories: Agency Roster and Selection Standards. For the Agency Roster category, the auditor compared the roster of personnel in the POST EDI system against the Modesto Police Department's internal agency roster and identified one discrepancy – an employee who had not been added to the agency roster within 10 days of appointment, as required. For the Selection Standards category, the auditor reviewed the background investigation files of all thirty peace officers hired by the Modesto Police Department since the prior audit (October 21, 2024) and determined that all thirty files complied with POST's established selection standards. The auditor further noted that, overall, the files were professionally assembled and well written.

The Modesto Police Department accepts the finding regarding the Agency Roster discrepancy. Corrective action will include reinforcing with Training Unit staff responsible for EDI entries the requirement to add newly appointed personnel to the POST EDI system within 10 days of appointment and implementing a periodic internal cross-check between new-hire paperwork and EDI entries to catch any lapses going forward. No corrective action was required for the Selection Standards category, as all files reviewed were found in compliance.

FISCAL IMPACT:

There are no fiscal impacts associated with these audit reports; however, the City is still waiting for confirmation if $22,095 in personnel costs that were determined to be ineligible as part of the OTS grant will have to be repaid to the grant agency.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion recommending the acceptance of the four (4) Grant Audit and Compliance results for the Modesto Police Department and forwarding to Council for approval. #1..
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Audit Committee, October 22, 2026
Grant and Program Audit Results

Approved by:

DeAnna Christensen, Director of Finance

Joseph P. Lopez, City Manager
Attachments:

1. OTS Grant Report and City Response
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Modesto Police Department
Grant Agreement PT4120
Report No. 25-0521-054
June 2026
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Team Members
Cheryl L. McCormick, CPA, Chief
Jennifer Arbis, Assistant Chief
Marilyn Standing Horse, CPA, Assistant Chief
Andrea Cortez, Manager
Daisy Rose, Supervisor
Kathleen Wong, Supervisor
Jeffrey Neller
Trevor Mattox
Final reports are available on our website at https://oreports.dof.ca.gov/report.html.

You can contact our office at:

California Department of Finance
Office of State Audits and Evaluations
915 L Street, 6th Floor
Sacramento, CA 95814
(916) 322-2985
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June 10, 2026
Jessica Chan, Deputy Director of Administration
California Office of Traffic Safety
2208 Kausen Drive, Suite 300
Elk Grove, CA 95758
Final Report—Modesto Police Department, Traffic Safety Grant Audit The California Department of Finance, Office of State Audits and Evaluations, has completed its audit of the Modesto Police Department’s Grant Agreement PT24120, issued by the California Office of Traffic Safety.

The enclosed report is for your information and use. The draft report was issued March 20, 2026, and the Modesto Police Department's response to the draft report required further analysis. As a result of our analysis, changes were made to Finding 2 to provide further clarification. This report will be placed on our website.

If you have any questions regarding this report, please contact Andrea Cortez, Manager, or Daisy Rose, Supervisor, at (916) 322-2985.

Sincerely,
Cheryl L. McCormick, CPA
Chief, Office of State Audits and Evaluations
cc: Stephanie Dougherty, Director, California Office of Traffic Safety Brandon Gillespie, Chief of Police, Modesto Police Department Felton Payne, Lieutenant, Modesto Police Department
Darien Wilson, Sergeant, Modesto Police Department
Omar Ojeda, Community Service Officer, Modesto Police Department Joseph Lopez, City Manager, City of Modesto
Deanna Christensen, Director of Finance, City of Modesto Original signed by:
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1 Background, Scope,
and Methodology
Background
The California Office of Traffic Safety’s (OTS) mission is to deliver traffic safety programs to prevent people from being killed and seriously injured in California. Through grant funding made available to California by the National Highway Traffic Safety Administration, OTS annually funds over $140 million in innovative, evidence-based education and enforcement programs and technologies designed to make California’s roadways safer.

OTS works with approximately 500 state and local agencies to make the most effective use of federal grant program funds. The ten priority areas of concentration for grant funding include the following programs: Alcohol-Impaired Driving; Distracted Driving; Drug-Impaired Driving; Emergency Medical Services; Motorcycle Safety; Occupant Protection; Pedestrian and Bicycle Safety; Police Traffic Services; Communications and Public Affairs Program; and Roadway Safety and Traffic Records.1 Under the Police Traffic Services program, the Modesto Police Department (Department) received a $580,000 Selective Traffic Enforcement Program (STEP) grant from OTS to conduct best practice strategies to reduce the number of persons killed and injured in crashes involving alcohol and other primary factors. The funded strategies include impaired driving enforcement, enforcement operations focusing on primary crash factors, distracted driving, night-time seat belt enforcement, special enforcement operations encouraging motorcycle safety, enforcement and public awareness in areas with a high number of bicycle and pedestrian crashes, and educational programs. These strategies are designed to earn media attention, thus enhancing the overall deterrent effect.2
Scope
As requested by OTS, the California Department of Finance, Office of State Audits and Evaluations, audited Grant Agreement PT24120 for the period October 1, 2023 through September 30, 2024.

The audit objectives were to determine whether the Department’s:

1. Claimed grant expenditures were in compliance with the grant requirements.

2. Grant objectives were completed as required by the grant agreement. 1 Excerpts obtained from www.OTS.ca.gov.
2 Excerpts obtained from Grant Agreement PT24120.
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2 The Department submitted claims for reimbursement detailing its expenditures by cost category as follows:

Schedule of Claimed Amounts
Cost Category Claimed3
Personnel Costs $ 341,426
Travel Expenses 2,480
Equipment 75,266
Other Direct Costs 12,578
Total Claimed Expenditures $ 431,750
Less OTS Adjustments $ 219
Total Adjusted Claimed Expenditures $ 431,531
Upon receipt, OTS reviewed the claims and made adjustments for ineligible costs. Our audit did not include an evaluation of the validity of the ineligible costs identified by OTS.

The Department’s management is responsible for ensuring accurate financial reporting and compliance with applicable laws, regulations, and grant requirements. OTS is responsible for the state-level administration of the grant program.

Methodology
To plan the audit, we gained an understanding of the grant and respective program, and identified relevant criteria by reviewing the grant agreement, the OTS Grant Program Manual, Code of Federal Regulations, and the City of Modesto (City) Code of Ordinances. Additionally, we interviewed key personnel to gain an understanding of the Department’s procedures performed.

We conducted a risk assessment, including evaluating whether the Department’s key internal controls significant to our audit objectives were properly designed, implemented, and operating effectively. Key internal controls evaluated focused on processes related to review and approval of project expenditures and reimbursement request preparation, accounting, timekeeping, purchasing and procurement, and grant objective monitoring and reporting. Our assessment included conducting interviews with the Department’s personnel, observing processes, and testing transactions relating to grant expenditures and grant objectives.

We assessed the reliability of data from the City’s accounting system, Oracle, and the Department’s timekeeping system, InTime. To assess the reliability of data generated by these systems, we interviewed Department personnel, reviewed information process flows, examined existing reports and source documents, and reviewed system controls.

We determined the expenditure reports from Oracle were sufficiently reliable to address the audit objectives. However, we found the timesheet data from InTime were of undetermined reliability due to inconsistent availability of documentation to support grant-related hours recorded in the system, as detailed in Finding 1. To address the audit 3 OTS awarded $580,000; the Department claimed $431,750 and was reimbursed $431,531. #1..
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3 objective, we used the InTime timesheets in conjunction with stat sheets4 prepared by Department personnel supporting grant-specific activities and hours to determine whether claimed personnel costs were grant-related and supported.

Based on the results of our planning, we developed specific methods for gathering evidence to obtain reasonable assurance to address the audit objectives. Our methods are detailed in the Table of Methodologies.

Table of Methodologies
Audit Objective Methods
Objective 1:

To determine
whether the
Department’s
claimed grant
expenditures were
in compliance with
the grant
requirements.
• Selected items from the significant cost categories to verify compliance with grant requirements. Specifically, we
selected expenditures from the Personnel Costs and
Equipment categories.
• Determined if selected Personnel Costs expenditures were allowable, grant-related, incurred within the grant period, and supported by accounting records by reviewing
employee timesheets in conjunction with employee stat
sheets detailing grant-specific activities and hours, payroll registers, Memorandum of Understanding between the City and the Modesto Police Officers Association, labor analysis report, and employee payroll grade documentation, and
comparing them to relevant criteria.
• Determined if selected Equipment expenditures were
allowable, grant-related, incurred within the grant period, and supported by accounting records by reviewing
expenditure reports, vendor invoices, credit memo,
cancelled check, and equipment photos, and comparing
them to relevant criteria.
• Evaluated whether other funding sources existed and
whether they were used to reimburse expenditures claimed under the grant agreement by reviewing expenditure data generated from the Oracle accounting system to identify possible duplications. We also inquired with key personnel, reviewed project codes in the accounting system to
confirm separate project codes were used for each OTS
grant received and compared total grant expenditures to total cash receipts associated with the grant per the
General Ledger Journal to confirm the grantee did not
have other funding sources for the grant project.
• Determined if lobbying costs were claimed for
reimbursement by interviewing key personnel and reviewing the reimbursement claims, Performance Measures Reports, expenditure reports, vendor invoices, and vendor websites. 4 Stat sheets are forms completed by police department personnel that are specific to the OTS STEP grant activities performed. Each stat sheet specifies the operation type (e.g. “DUI Saturation Patrol”, “DUI/DL Checkpoint”) and indicates the name of the officer completing the form, date of the operation, start and end times the officer worked, total hours worked, location worked, and statistics such as the number of vehicle stops, citations issued, and arrests made during the operation.
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4 Audit Objective Methods
Objective 2:

To determine
whether the grant
objectives were
completed as
required in the
grant agreement.
• The grant agreement included 21 objectives. The
Department reported 10 of the 21 objectives as
incomplete in the Final Quarterly Performance
Report (QPR). Confirmed the incomplete status by
interviewing and inquiring with Department personnel.
• Selected 6 of the remaining 11 grant objectives that were deemed significant due to the purposes of the grant and high-risk nature. See Appendix A for the six grant objectives selected to verify completion.
• Determined if Objectives 3, 4, 12, 13, 15, and 16 were completed as required by inquiring with Department
personnel and reviewing the Final QPR, Department of
Motor Vehicles Hot Lists, stat sheets prepared by
Department personnel during grant operations, training
sign-in sheet, and social media posts, and comparing them to the grant agreement.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
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5 Results
Conclusion
Based on the procedures performed and evidence gathered, we obtained reasonable assurance the claimed grant expenditures complied with the grant agreement requirements, except as noted in Finding 1. Additionally, we obtained reasonable assurance the grant objectives were completed as required by the grant agreement, except as described in Finding 2.

Findings and Recommendations
Finding 1: Ineligible Personnel Costs
The Department claimed and was reimbursed for personnel costs totaling $22,095 that were ineligible for reimbursement. Specifically, the Department claimed $21,400 in overtime costs that lacked stat sheet documents to support that the hours were worked on grant-related activities. Additionally, $695 was claimed for overtime hours that were not worked on grant-related activities. These ineligible personnel costs were primarily due to the timekeeping process.

Prior to the operation, the grant oversight officer pre-populates individual timesheets by manually entering each officer’s anticipated operation hours into InTime, the Department’s timekeeping system. The same grant oversight officer assigns the grantspecific tag identifier to the entered hours. Once operations are completed, the same grant oversight officer reconciles the tags within InTime with each respective stat sheet prepared by officers who worked during the operation. Timesheets are then submitted.

InTime-recorded hours are interfaced with Oracle, the City’s accounting system. Oracle uses the tag identifiers to directly link to project #101540, which determines the costs to be reimbursed by the grant. The timekeeping process identifies grant-related activities and utilizes a grant-specific code to facilitate reimbursement claim preparation; however, we identified portions of the process that indicate a risk due to multiple processes performed by the same individual without a secondary review, as illustrated in Figure 1.
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6 Figure 1: Timekeeping, Accounting, and Reimbursement Claim Process for Grant PT24120 Source: Interviews, document reviews, and process demonstrations by Department personnel.

The ineligible personnel costs claimed were caused by the following:
• The Department did not prepare stat sheets consistently to demonstrate that overtime hours recorded on employee timesheets were grant-related.

Specifically, stat sheets were not available for any overtime hours claimed during October 2023 nor for selected overtime hours claimed during November 2023 and December 2023. This indicates that reconciliations of timesheets with stat sheets could not be completed, nor were they reviewed by another individual to ensure reported overtime hours attributed to the STEP grant were properly supported. The Department’s practice is for officers to complete stat sheets after each STEP grant operation to document their enforcement activities and hours worked during those operations. However, the Department does not formalize this practice in a policy or procedure and, therefore, it was not implemented on a consistent basis to support grantfunded personnel costs. This resulted in questioned costs totaling $21,400, inclusive of benefits.
• For one overtime claim in December 2023, the Department claimed reimbursement for employee hours that were not grant-related. According to the Department, non-grant activity hours were erroneously merged with STEP grant activity hours within Oracle and claimed to the grant. The Department stated this is a rare occurrence, and the employee stat sheet was available to accompany the timesheet. However, due to the lack of a secondary review, the error was undetected and resulted in questioned costs of $695, inclusive of benefits. The Department stated that the City and Department plan to implement additional layers of review to ensure greater accuracy. #1..
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7 The Grant Program Manual, Appendix D General Terms and Conditions, requires the maintenance of records and supporting documentation pertaining to the performance of the grant agreement for a minimum of three years after final payment. Further, the Grant Program Manual, Subrecipient Responsibilities and Procedures section, specifies that personnel costs include only direct compensation of wages and fringe benefits of subrecipient employees for the time and effort spent on grant-related activities.

Claiming unsupported or unallowable costs resulted in the Department receiving reimbursement for personnel costs that may not reflect actual time spent on grantrelated activities. Additionally, claiming costs not authorized or supported by the grant agreement may negatively impact the success of the grant by placing the Department at greater risk of expenditure noncompliance and reduce the overall availability of funding for other grants.

Recommendations:

A. Remit $22,095 to OTS for the ineligible personnel costs.

B. Strengthen grant oversight by developing, documenting, and implementing policies and procedures to complete and review individual stat sheets, reconcile stat sheets to completed timesheets, and implement a secondary review process to ensure claimed personnel expenditures are supported and grant-related.

Finding 2: Eleven Grant Objectives Not Met
The Department did not complete 11 of the 21 grant objectives as required by the grant agreement. This includes 10 objectives self-reported in the Final QPR by the Department as not met, and 1 of the 6 objectives selected for testing. Table 1 details the 10 objectives self-reported as not met.

Table 1: Objectives Self-Reported by the Department as Not Met Grant
Objective
Number Grant Objective Description
Grant
Required
Target
Number
Reported
in Final
QPR Results
2 Participate and report data (as required) in the
following campaigns: National Walk to School
Day, National Teen Driver Safety Week, National
Highway Traffic Safety Administration (NHTSA)
Winter Mobilization, National Distracted Driving
Awareness Month, National Motorcycle Safety
Month, National Bicycle Safety Month, National
Click it or Ticket Mobilization, NHTSA Summer
Mobilization, National Child Passenger Safety
Week, and California's Pedestrian Safety Month.
10 7 Not Met
5 Send law enforcement personnel to the NHTSA
Advanced Roadside Impaired Driving
Enforcement (ARIDE) 16-hour POST-certified
training.
8 3 Not Met
9 Send law enforcement personnel to Drug
Recognition Expert Instructor training. 1 0 Not Met
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8 Grant
Objective
Number Grant Objective Description
Grant
Required
Target
Number
Reported
in Final
QPR Results
10 Conduct Driving Under the Influence (DUI)/
Driver’s License (DL) Checkpoints. A minimum of
one checkpoint should be conducted during
the NHTSA Winter Mobilization and one during
the Summer Mobilization.
12 11 Not Met
11 Conduct DUI Saturation Patrol operation(s). 130 125 Not Met 14 Conduct highly publicized Motorcycle Safety
enforcement operation(s) in areas or during
events with a high number of motorcycle
incidents or crashes.
12 5 Not Met
17 Participate in highly visible collaborative DUI
Enforcement operations. 2 0 Not Met
18 Participate in highly visible collaborative Traffic
Enforcement operations. 4 1 Not Met
20 Conduct specialized enforcement operations
focusing specifically on street racing and
sideshow activities.
12 8 Not Met
21 Deploy DUI and Street Racing Car Crash
Education Trailer and conduct DUI and Street
Racing Presentations with an effort to reach
community members.
4 0 Not Met
Additionally, 6 of the remaining 11 grant objectives reported as complete in the Final QPR, were tested to verify completion. The Department was unable to provide adequate support for the completion of Objective 3, as shown in Table 2.

Table 2: Completed Objective Unsupported
Grant
Objective
Number Grant Objective Description
Grant
Required
Target
Number
Reported
in Final
QPR Supported Results
3 Develop (by December 31, 2023)
and/or maintain a “DUI [Be on the
Look Out] BOLO” program to notify
patrol and traffic officers to be on
the lookout for identified repeat DUI
offenders with a suspended or
revoked license as a result of DUI
convictions. Updated DUI BOLOs
should be distributed to patrol and
traffic officers monthly.
12 12 3 Not Met
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9 According to the Department, competing overtime opportunities and staffing priorities were the main causes of the objectives not being met. Other factors unique to each unmet objective provided by the Department were as follows:
• Objective 2: The Department did not receive the grant until mid-October 2023.

This prevented the Department from participating in campaigns at the beginning of the grant period.
• Objectives 5 and 9: Appropriate individuals on staff were unavailable to send to the training.
• Objective 21: The trailer was not obtained until September 2024, while the grant end date was September 30, 2024, which did not allow enough time to conduct presentations. Additionally, the vehicle planned for use during the presentations was involved in a court appeal and became unavailable for use.

Additionally, the Department did not consistently maintain documentation to support that the grant objectives during the period under audit were monitored, and the Department’s grant oversight officer did not always review and maintain supporting documentation for reported objectives. For example, for Objective 3, the Department provided DUI BOLO “Hot Lists” but only maintained these documents for 3 of the 12 DUI BOLOs reported as complete.

Grant Agreement PT24120, section 7, requires the grantee to comply with the terms and conditions noted in the agreement, including grant goals and objectives. Additionally, the OTS Grant Program Manual’s Grant Requirements section states the goals and objectives outlined in the grant should be accomplished during the grant period. Further, the OTS Grant Program Manual’s Grant Revisions section states that a grantee may request grant agreement revisions, including changes to goals and objectives. Lastly, the OTS Grant Program Manual, Appendix D, states that subrecipients agree to maintain records for possible audit for a minimum of three years after final payment, unless a longer period of records retention is stipulated.

Failure to complete grant objectives impacts the grant’s success and may negatively impact OTS’s ability to fulfill its mission. Further, accurate reporting, including obtaining and retaining supporting documentation, assists OTS in determining the achievement of grant goals and objectives.

Recommendations:

A. Plan and monitor grant activities to ensure grant objectives are completed as specified in the grant agreement and reported accurately.

B. Maintain appropriate supporting documentation evidencing grant objective achievements.

C. Consider amending the grant agreement if changes to the objectives are necessary.
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10 Appendix A
The grant agreement included 21 objectives. We considered 6 objectives significant and/or high-risk to the grant’s goals to verify completion. Objective 3 did not meet the grant agreement requirements as noted in Finding 2. Objective 16 was reported by the Department in the Final QPR as met, but documentation reviewed during testing supported the objective as exceeded. The remaining 3 objectives selected met or exceeded the grant agreement requirements. The following table summarizes the objectives selected for review.

Schedule of Grant Objectives Reviewed
Grant Agreement PT24120
Objective
Number Grant Objective Description
Reported
in Final
QPR Supported Results
3 Develop (by December 31, 2023) and/or
maintain a “DUI BOLO” program to notify
patrol and traffic officers to be on the
lookout for identified repeat DUI offenders
with a suspended or revoked license as a
result of DUI convictions. Updated DUI
BOLOs should be distributed to patrol and
traffic officers monthly. (Target Number: 12)
12 3 Not Met
4 Send law enforcement personnel to the
NHTSA Standardized Field Sobriety
Testing (SFST) (minimum 16 hours) POSTcertified training. (Target Number: 8) 14 12 Exceeded
12 Conduct Traffic Enforcement operation(s),
including but not limited to, primary crash
factor violations. (Target Number: 24)
31 31 Exceeded
13 Conduct highly publicized Distracted
Driving enforcement operation(s) targeting
drivers using handheld cell phones and
texting. (Target Number: 14)
25 23 Exceeded
15 Conduct highly publicized pedestrian
and/or bicycle enforcement operation(s)
in areas or during events with a high
number of pedestrian and/or bicycle
crashes resulting from violations made by
pedestrians, bicyclists, and drivers. (Target
Number: 14)
22 22 Exceeded
16 Conduct Traffic Safety educational
presentation(s) with an effort to reach
community members. Note: Presentation(s)
may include topics such as distracted
driving, DUI, speed, bicycle and pedestrian
safety, seat belts and child passenger
safety. (Target Number: 2)
2 5 Exceeded
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11 Response
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April 3, 2026
TO: California Department of Finance
Office of State Audits and Evaluations
RE: Formal Response - Draft Audit Report
Grant Agreement PT24120 (OTS STEP Grant)
The Modesto Police Department respectfully submits this formal response to the draft audit findings for Grant Agreement PT24120.

Upon receipt of the draft report, the Department conducted a comprehensive internal review utilizing multiple independent systems of record and assembled supplemental documentation to ensure a complete and accurate representation of the work performed under this grant. The Department’s position is grounded in a review of objective, system-generated records and supporting documentation.

In support of this response, the Department is submitting Exhibit A, which contains detailed, operation-level documentation, including CAD activity logs, InTime records, and payroll documentation for each questioned entry. Exhibit A provides a comprehensive and verifiable record of the work performed and directly supports the analysis outlined below.

I. OVERARCHING POSITION
The Department’s review identified opportunities to improve the consistency of documentation management and production practices at the time of the audit.

However, the Department respectfully asserts that:
• The audit findings primarily reflect documentation and process considerations, not substantive noncompliance
• The work associated with questioned costs was performed and is verifiable • The Department has provided sufficient, reliable, and contemporaneous documentation demonstrating that grant-funded activities occurred and were properly executed
The OTS Grant Program Manual requires documentation sufficient to substantiate grant-funded activity but does not mandate a specific format such as stat sheets.

While stat sheets were not consistently available during the audit, the Department has provided multiple forms of documentation that collectively meet and exceed the required standard.

II. RESPONSE TO FINDING 1 – PERSONNEL COSTS
OTS Position
City of Modesto
Police Department
600 Tenth Street
Modesto, CA 95354
(209) 572-9500
(209) 523-4082 Fax
Hearing and Speech
Impaired Only
TDD (209) 526-9211
Office of the Chief
(209) 572-9501
(209) 572-9669 Fax
Support Division
(209) 342-9164
(209) 572-9669 Fax
Operations Division
(209) 572-9565
(209) 572-9656 Fax
Investigations Division
(209) 572-9551
(209) 572-0741 Fax
www.modestogov.com
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April 3, 2026
The audit identified $22,095 in personnel costs as ineligible due to:
• Missing stat sheets ($21,400)
• One instance of non-grant-related time ($695)
Department Response
A. Documentation Standard - Substance Over Form
The Department respectfully asserts that the audit places undue weight on the absence of stat sheets as the sole determinant of eligibility. Stat sheets are an internal documentation tool and represent one method of recording activity; however, they are not the exclusive or required form of documentation under the grant. The Department recognizes that stat sheets are a preferred internal documentation tool.

The governing standard requires sufficient source documentation to substantiate that grant-funded work occurred. The Department has met this standard through multiple independent and verifiable records.

As detailed in Exhibit A, the Department is providing:
• CAD Activity Logs (system-generated, time-stamped activity) • InTime Timekeeping Records (officer-certified work hours) • Payroll Records (processed and approved compensation) • Body-worn camera verification (available if requested) Collectively, these records establish that officers were assigned, performed enforcement activity consistent with grant objectives, and accurately reported their time.

B. Specific Operational Verification
As reflected in Exhibit A, each questioned operation has been reconstructed using independent system records. CAD logs demonstrate continuous enforcement activity, including time-stamped entries, unique incident numbers, and unit identifiers tied to specific officers.

These records are contemporaneous, system-generated, and immutable, providing a high level of evidentiary reliability.

C. Independent Verification of Work Performed
The Department further validated activity through supervisory review, body-worn camera verification (in select cases) and cross-referencing multiple systems. #1..
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April 3, 2026
The Department’s internal review found no evidence of falsified time or misuse of grant funds; any discrepancies identified were administrative in nature.

D. $695 Non-Grant Time
The Department recognizes the identified discrepancy and determined it to be an administrative error resulting from merged or misdated entries. The entry was corrected, no additional hours are being claimed, and documentation confirms only valid grant-related time is included.

Conclusion – Finding 1
The Department respectfully requests reconsideration of the classification of these costs as ineligible. As demonstrated through the documentation contained in Exhibit A:
• The work was performed
• The work was grant-related
• The costs are fully supported
Accordingly, this matter should be considered a documentation and process consideration rather than a basis for disallowance.

III. RESPONSE TO FINDING 2 – GRANT OBJECTIVES
A. Objectives Not Fully Achieved – Context
The Department’s review indicates that certain objectives were not fully achieved; however, these outcomes were influenced by operational and structural constraints, not a lack of effort or disregard for grant requirements.

Key factors included:
• Staffing limitations during the grant period
• Eligibility requirements for specialized training
• Timing of grant award affecting early participation
• Procurement and vendor-related delays
B. Objective-Specific Clarifications
Campaign Participation (Objective #2)
The Department met 7 of 10 campaign objectives. Staffing constraints required prioritization of high-risk DUI and traffic safety operations. The Department #1..
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April 3, 2026
participated in National Teen Driver Safety Week through public messaging and outreach.

DUI Hotlist / Frequent Offender List (Grant Objective #3) The audit identified a lack of retained documentation to verify that the DUI Hotlist/Frequent Offender List was distributed on a monthly basis during the grant period.

The Department confirms that the DUI Hotlist was routinely generated and distributed; however, due to email retention limitations, historical records of distribution were not consistently retained. This resulted in an inability to provide documentation for all instances during the audit review period.

To address this issue and ensure future compliance, the Department has implemented the following corrective measures:
• All DUI Hotlists are now saved as PDF documents at the time of distribution.
• These records are stored in a centralized digital file system organized by grant year.
• This process ensures that documentation is preserved beyond standard email retention periods and is readily accessible for audit and reporting purposes.

These corrective actions establish a reliable and verifiable recordkeeping process moving forward and directly address the documentation deficiency identified in the audit.

Standardized Field Sobriety Test (SFST) Training Objective (Grant Objective #4)
The audit identified insufficient documentation to support the completion of the SFST training objective during the grant period.

The Modesto Police Department confirms that an SFST training course was conducted from August 19, 2024 through August 21, 2024. A total of twelve Modesto Police Department officers attended and successfully completed the training.

To support this objective, the Department is providing the following documentation:
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April 3, 2026
• A completed course sign-in sheet, which was submitted to the Department’s Training Unit, scanned, and retained as an official record.

The sign-in sheet was also forwarded to the California Commission on Peace Officer Standards and Training (POST).
• InTime scheduling records reflecting each officer’s assignment to the training, including timestamped schedule adjustments documenting their participation.

ARIDE Training (Objective #5)
The Modesto Police Department sent three officers to attend the National Highway Traffic Safety Administration (NHTSA) Advanced Roadside Impaired Driving Enforcement (ARIDE) 16-hour POST-certified training during the grant period.

Participation in this training objective was influenced by both operational staffing limitations and eligibility requirements. The number of officers available to attend specialized training was reduced due to staffing needs, and only a limited number of officers met the prerequisites for ARIDE attendance during the grant period.

The Department is positioned to expand participation as staffing improves.

DRE Instructor Training (Objective #9)
The Modesto Police Department was unable to send personnel to Drug Recognition Expert (DRE) Instructor training during the grant period due to eligibility requirements and staffing constraints.

To qualify for DRE Instructor training, an officer must be a certified DRE for a minimum of two years. During the grant period, the Department did not have personnel who met this requirement. As additional officers obtain and maintain DRE certification over time, the Department anticipates meeting this objective in future grant cycles.

DUI Checkpoints (Objective #10)
The Modesto Police Department completed 11 out of 12 planned DUI checkpoints during the grant period.

Operational staffing limitations and external factors, including weather conditions, impacted the Department’s ability to safely and effectively staff all scheduled checkpoints. Three checkpoints were initially canceled due to these constraints.

However, as staffing conditions improved, the Department rescheduled and successfully conducted two of the canceled operations on July 26 and August 9. #1..
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April 3, 2026
During both July and August, the Department conducted two DUI checkpoints per month, demonstrating continued progress toward the objective and a commitment to maintaining DUI enforcement efforts.

DUI Saturation Patrols (Objective #11)
Although 125 DUI Saturation Patrol operations were initially reported, an internal review identified that five additional operations were not documented during the first quarter due to administrative oversight.

The previously unreported operations are as follows:
• October 2, 2023: 1 officer (2000–0300 hours)
• October 3, 2023: 1 officer (1800–0300 hours)
• October 8, 2023: 1 officer (1900–0330 hours)
• October 22, 2023: 1 officer (1700–0100 hours)
• November 27, 2023: 1 officer (1700–0500 hours)
With the inclusion of these additional operations, the total number of DUI Saturation Patrols conducted during the grant period is 130, thereby meeting the established grant objective.

Motorcycle Safety Enforcement (Objective #14)
The Modesto Police Department completed 5 out of 12 planned Motorcycle Safety Enforcement operations during the grant period.

A total of 12 operations were initially scheduled during Motorcycle Safety Awareness Month (May 2023). However, operational staffing limitations reduced the Department’s ability to staff these operations as planned, resulting in only one operation being conducted during that period.

Additional operations were subsequently scheduled during weekends, peak traffic hours, and favorable weather conditions when motorcycle activity was expected to be higher. Despite continued staffing constraints, the Department conducted four additional operations, bringing the total to five.

Collaborative DUI Enforcement (Objective #17)
During the 2023–2024 grant year, there were no established programs within Stanislaus County that facilitated multi-agency collaboration for DUI enforcement operations.
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April 3, 2026
In 2025, the Modesto Police Department implemented a Collaborative DUI Enforcement model, referred to as the “DUI Strike Team” modeled after the Las Vegas Metro Police Department DUI Strike Team. This initiative brought together multiple law enforcement agencies to conduct coordinated DUI saturation patrols within the City of Modesto.

These collaborative operations significantly increased enforcement visibility, improved resource sharing, and enhanced interagency coordination. The success of this program has resulted in broader adoption of similar collaborative enforcement efforts among agencies within the county.

Collaborative Traffic Enforcement Objective (Grant Objective #18) The Modesto Police Department reported 1 out of 4 Collaborative Traffic Enforcement operations during the grant period.

While collaborative enforcement efforts did occur, many of these operations were conducted during regularly scheduled duty hours as part of the county-wide “CITE Team” (County Integrated Traffic Enforcement) program. Because these operations were not conducted as overtime or specifically designated grant-funded activities, they were not reported under the grant.

Additionally, staffing limitations among both full-time Traffic Officers and auxiliary motor officers impacted the Department’s ability to staff and document collaborative operations as grant-funded activities. The one reported operation involved an auxiliary motor officer whose time was funded through the grant, allowing for proper documentation and reporting.

Street Racing / Sideshow Enforcement (Objective #20)
The Modesto Police Department completed 8 out of 12 planned Street Racing and Sideshow Enforcement operations during the grant period.

These operations require specialized training, including completion of the POSTcertified Street Racing and Modified Vehicle course. During the grant period, only a limited number of officers had completed this training, which impacted the Department’s ability to staff all planned operations.

Operational staffing limitations and the availability of trained personnel restricted the number of operations that could be conducted. As additional officers complete the required training, the Department anticipates increased capacity to meet this objective in future grant cycles.

Crash Education Trailer (Objective #21)
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April 3, 2026
The Modesto Police Department was unable to deploy the DUI and Street Racing Crash Education Trailer during the grant period due to delays in procurement, manufacturing, and post-delivery setup.

The trailer is a custom-built unit designed to meet specific departmental needs. Due to the specialized nature of the build, only a limited number of vendors were capable of producing the trailer within the required specifications and budget.

Although the trailer was ultimately ordered, vendor-related delays in materials and production extended the completion timeline. The Department took delivery of the trailer in late September. Following delivery, additional time was required to install necessary equipment and accessories, including a winch system for vehicle loading and audiovisual components necessary for educational presentations.

In an effort to meet the intent of this objective during the procurement delay, the Department explored alternative methods of delivering DUI and traffic safety education. This included an attempt to utilize a previously involved collision vehicle from a fatal DUI-related crash (MP21030217) for educational display purposes. The vehicle was associated with a double fatal collision involving two 19-year-old victims and had potential to serve as a powerful visual tool for community presentations, with support from a victim’s family member.

However, the Department encountered delays and ultimately was unable to obtain approval from the involved insurance carrier to release the vehicle for this purpose.

As a result, despite proactive efforts to implement an alternative educational approach, the Department was unable to deploy either the crash trailer or substitute equipment during the grant period.

Conclusion – Finding 2
The Department recognizes areas where objectives were not fully achieved; however:
• Several objectives were completed but not initially documented • Others were impacted by legitimate operational constraints • The Department has provided clarification and supporting context demonstrating overall performance and compliance with grant intent IV. CORRECTIVE ACTIONS AND IMPROVEMENTS
The Department has implemented enhanced grant management practices, including:
• Increased supervisory and command-level oversight
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April 3, 2026
• Electronic documentation systems and centralized storage • Routine tracking and reconciliation processes
• Pre-deadline performance reviews
• Improved alignment of grant objectives with operational capacity • Expanded Traffic Unit staffing
These measures directly address documentation consistency and program oversight.

V. CONCLUSION
The Modesto Police Department respectfully submits that the audit findings primarily reflect documentation and process considerations rather than a failure of performance or compliance.

The Department has demonstrated that:
• The questioned work was performed and is verifiable
• The matters identified were administrative in nature
• Corrective actions have been implemented and sustained The Department respectfully requests:
• Removal or reduction of questioned personnel costs
• Reclassification of findings as documentation-related • Acceptance of Exhibit A as sufficient supporting documentation Sincerely,

Original signed by:

Brandon Gillespie
Police Chief
Modesto Police Department
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21 Evaluation of Response
The Department’s response to the draft audit report has been reviewed and incorporated into the final report. However, attachments referenced in the Department’s response have been omitted for brevity. We acknowledge the Department’s willingness to implement our recommendations specific to Findings 1 and 2. In evaluating the Department’s responses for Findings 1 and 2, we provide the following comments:

Finding 1: Ineligible Personnel Costs
The Department disagrees with the $21,400 in questioned costs due to unavailable stat sheets. The Department’s position is that questioned costs related to the grant hours are supported by InTime timekeeping records, Computer Aided Dispatch (CAD) activity logs, and payroll records. However, the finding does not question whether overtime hours claimed to the grant were incurred, but whether those hours are related to the STEP grant under audit. The audit team found that the timesheet data from InTime were of undetermined reliability and could not be solely relied upon to verify whether the hours claimed are grant-related. Further, the hours according to InTime were prepared in advance by the grant oversight officer, who then reconciled the InTime hours to the actual hours documented on stat sheets, when available, to verify their accuracy. CAD activity logs show activity that occurred during a shift but not specifically attributed to the STEP grant. Similarly, payroll records provided were documentation of timesheet submission and approval, supporting that the hours were worked and processed through payroll, but with no reference to the STEP grant. Therefore, the InTime timesheets, CAD activity logs, and payroll records provided do not specifically reference the claimed overtime hours to the STEP grant under audit. As such, the finding and recommendations will remain unchanged.

Finding 2: Twelve Grant Objectives Not Met
The Department disagrees that Grant Objective 4 was unmet. The Auditee provided additional documentation, including sign-in sheets, for 12 of the 14 individuals reported as attending the training applicable to Grant Objective 4, which required 8 individuals to attend these trainings. As a result, Finding 2 was modified to incorporate the new documentation, and Grant Objective #4 was removed from Finding 2 accordingly.

Additionally, the Department disagrees that Grant Objective 11 was unmet. The Department agrees that 125 operations were reported as completed, which did not meet the objective of 130 operations. The Department noted an additional 5 operations that were not reported. However, because no documentation was provided to support the additional 5 operations, the finding and recommendations will remain unchanged. #1..
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

October 22, 2026
Date: October 1, 2026
TO: Audit Committee
Sue Zwahlen, Chair
Rosa Escutia-Braaton, Vice Chair
David Wright, Member
Camille Garcia, Public Member
Jovana Lloyd, Public Member
FROM: Colleen Rozillis, City Auditor
SUBJECT: Receipt of the Fiscal Year 2026-27 Quarterly Internal Audit Status Report CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider receipt of the Fiscal Year 2026-27 Internal Audit Status Report dated October 1, 2026. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

The recommended action supports the City’s 2025-2026 Strategic Plan Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved five (5) projects for FY 2026-27’s Internal Audit work plan, plus program management. All projects are currently within budget and on track for delivery within the planned timeline. The attached report details the status of projects in progress and upcoming projects.

DISCUSSION:

Internal Audit projects are proceeding as planned.

FISCAL IMPACT:

The status of City Auditor activities is updated quarterly and is funded via the annual $40,000 Internal Audit Program Management budget in FY2026-2027. This was funded as part of the General Fund budget.
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Audit Committee, October 22, 2026
Receipt of the Fiscal Year 2026-27 Internal Audit Status Report

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COMMITTEE ACTION:

Motion to receive and file the Internal Audit Status Report dated October 1, 2026.

Approved by:

Colleen Rozillis, City Auditor
Joseph P. Lopez, City Manager
Attachments:

1. Internal Audit Status Report 10-01-26.
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CITY OF MODESTO INTERNAL AUDIT STATUS REPORT 10-01-26
October 1, 2026
To: City of Modesto Audit Committee
From: Baker Tilly Advisory Group, LP
Subject: Internal Audit Status Report July 9, 2026 through October 1, 2026 _____
FY 25-26 INTERNAL

AUDIT PROJECTS

FEE BENCHMARKING & COST

RECOVERY AUDIT
Schedule January – September 2026
Budget Status: Total
Budget and % Expended
through 10/1
$40,000
100%
Project Description
Review the City’s fee schedule,
compare fees to peers, and assess
the extent to which fees cover costs.

Activities for This
Period
Conducted additional analysis,
developed draft and final reports.

Activities for Next
Period None
Issues None
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CITY OF MODESTO INTERNAL AUDIT STATUS REPORT 10-01-26
FY 26-27 INTERNAL

AUDIT PROJECTS

RISK MANAGEMENT

OPERATIONAL REVIEW

INVENTORY MANAGEMENT

INTERNAL CONTROLS REVIEW

MEASURE H PERFORMANCE
AUDIT

REVENUE RECOVERY

OPERATIONAL REVIEW

TRAFFIC SAFETY

PERFORMANCE AUDIT
Schedule July – October 2026 August – November 2026 October 2026 – February 2026 December 2026 – April 2027 February – May 2027 Budget Status: Total
Budget and % Expended
through 10/1
$35,000
35%
$40,000
7%
$50,000
0%
$45,000
0%
$40,000
0%
Project Description
Assess the current state and identify
opportunities for improving the
efficiency and effectiveness of the
City’s risk management function.

Assess processes and conduct
targeted testing of internal controls
related to inventory management
across the City.

Evaluate the City’s progress toward
Measure H goals over a three-year
period. Assess the economy,
efficiency, and effectiveness of
relevant operations and compare City
practices to industry best practices.

Review the City’s revenue recovery
function and benchmark against peer
cities to identify opportunities to
collect revenue.

Assess the economy, efficiency, and
effectiveness of the City’s traffic
safety programs and initiatives.

Review staffing, processes, policies,
and systems related to traffic safety
and compare to industry best
practices.

Activities for This
Period
Kicked off project, conducted
fieldwork, completed analysis.

Kicked off project and began
conducting department interviews. Scoped project. None. None.

Activities for Next
Period Develop draft and final reports. Complete interviews and fieldwork and develop draft and final reports.

Kick off project, conduct fieldwork
and analysis, develop draft report. None. None.

Issues None. None. None. None. None.

BASIC INTERNAL

AUDITOR SERVICES

ONGOING INTERNAL AUDIT

SERVICES

ETHICS HOTLINE STATISTICS
Schedule July 2026 through June 2027 Complaint Type Complaints Received During the Period
Under Review Referred to Appropriate City
Official(s)
Closed
Budget Status: Total
Budget and %
Expended
$40,000
17%
Compliance & Ethics 3 0 3 3
Fraud 1 0 1 1
Employment Matters 3 0 3 3
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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

October 22, 2026
Date: October 1, 2026
TO: Audit Committee
Sue Zwahlen, Chair
Rosa Escutia-Braaton, Vice Chair
David Wright, Member
Camille Garcia, Public Member
Jovana Lloyd, Public Member
FROM: Colleen Rozillis, City Auditor
SUBJECT: Receipt of the Audit Findings Validation Report CONTACT: Colleen Rozillis, City Auditor, [email protected], 206-302-6795 DESCRIPTION:

Consider the Audit Finding Validation Report dated September 28, 2026. (Funding Source: Not Applicable)
STRATEGIC PLAN ELEMENT:

The recommended action supports the City’s 2025-2026 Strategic Plan Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved an ongoing project to validate the corrective actions of audit findings and recommendations issued since 2016.

DISCUSSION:

The review incorporates all audit findings and recommendations dating back to 2016, a total of 33 findings. In the last quarter, Baker Tilly was able to verify that three (3) findings have been closed. To date, Baker Tilly has verified that 252 findings have been closed, indicating that the issue is resolved.
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Audit Committee, October 22, 2026
Receipt of the Audit Findings Validation Report

FISCAL IMPACT:

This review is completed quarterly and is funded via the annual $40,000 Internal Audit Program Management budget in FY2026-2027. This was funded as part of the General Fund budget.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” with the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COMMITTEE ACTION:

Motion to receive and file the quarterly Audit Findings Validation Report.

Approved by:

Colleen Rozillis, City Auditor
Joseph P. Lopez, City Manager
Attachments:

1. Audit Finding Validation Report 09-28-26

2. Audit Validation – Open Recommendations (Detail) – September 2026 #3..
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City of Modesto - Audit Recommendations Tracking Report 9/28/2026
Reports
Total Recommendations Open Recommendations
(Not Yet Completed by City)
Validated
Recommendations
(By Baker Tilly)
Reportable Recommendations
(Newly validated since last
summary)
Single Audit Report - 2017 (17-SAR ) 4 0 4 0
Single Audit Report - 2018 (18-SAR ) 3 0 3 0
Single Audit Report - 2019 (19-SAR ) 1 0 1 0
Single Audit Report - 2020 (20-SAR ) 1 0 1 0
Single Audit Report - 2021 (21-SAR ) 1 0 1 0
2018-2019 Stanislaus County Civil Grand Jury (18_19-SCCGJ ) 8 0 8 0 2022-2023 Stanislaus County Civil Grand Jury Final Report (22_23-SCCGJ ) 5 0 5 0 2021-2022 Stanislaus County Civil Grand Jury Final Report (21_22-SCCGJ ) 7 0 7 0 2024- FORESTRY AND SOLID WASTE EFFICIENCY STUDY UPDATE (24-FASWES ) 20 3 17 0 2024- PROCUREMENT PERFORMANCE AUDIT (24-PPA ) 11 1 10 0 2016- Solid Waste Efficiency Study (16-SWES ) 12 1 11 0 2016-WATER AND WASTEWATER EFFICIENCY STUDY UPDATE (16-WWE ) 14 1 13 0 2017- BILLING AND ACCOUNTS RECEIVABLE REVIEW (17-BAR ) 4 0 4 0 2017- FLEET SERVICES EFFICIENCY STUDY (17-FSE ) 27 1 26 0 2017- INTERNAL CONTROLS TESTING: PROCUREMENTCARDS (17-ICTPC ) 19 0 19 0 2017-INTERNAL CONTROLS TESTING: TRAVEL EXPENSES (17-ICTTE ) 17 0 17 0 2017- INTERNAL SERVICE FUND REVIEW (17-ISF ) 18 3 15 0
2018- Fleet Utilization Study (18-FUS ) 13 4 9 0
2018- PERMITTING EFFICIENCY STUDY (18-PES ) 10 0 10 0
2016 INTERNAL CONTROLS TESTING: CASH HANDLING (16-ICTCH ) 42 0 42 0 2025 Employment After Retirement Review (25-EARR ) 4 0 4 0 2025 Payroll Internal Controls Review (25 -PICR ) 5 0 5 0 2025 Water and Wastewater Utilities Fiscal Review (25-WWUFR ) 9 7 2 0 2025 Accounts Receivable Internal Controls Review (25-ARICR ) 7 0 7 0 2025 Capital Improvement Program Assessment (25-CIP ) 9 5 4 1 2025 Permitting Efficiency Study Update (25-PES2 ) 11 7 4 0 2026 Cashs Handling Internal Controls Review (26-CASH ) 3 0 3 2 2026 Homeless Performance Audit (26-HOME ) 9 9 0 0
2026 Parks, Recreation, and Neighborhoods Performance Audit (26-PRNPA ) 15 15 0 0 2026 Review of IT Policies and Procedures (26-ITPP ) 4 4 0 0 Total 313 61 252 3
Legend:

Total Recommendations = number of recommendations in the report Open Recommendations = number of recommendations not yet completed by City Validated Recommendations = number of recommendations validated by Baker Tilly as completed and adequately addresses the finding Reportable Recommendations = number of recommendations validated since last summary report for Audit Committee

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Reference ID
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Report
Report
Year Report Code Auditing Entity Finding Recommendation Baker Tilly Determination Notes 222C 2C 2025 25-CIP MA
The City's capital planning and project prioritization efforts are oftentimes conducted on a decentralized and somewhat subjective basis, which creates risks that capital project prioritization and funding are not transparent or consistently aligned with specific City priorities.

The City should consider reestablishing the CIP task force. The City has relaunched the CIP task force. They provided the list of staff who are active members of the task force and the discussion deck from a meeting held on August 10, 2026 233 2 2026 26-CASH BT
During our remote interviews with the Finance Department, we inquired about any concerns related to current practices surrounding asset safeguarding. Finance Department reported that the City’s Cashiering Division leaves checks unattended in a secured, badge-access area monitored by cameras. They also noted that change fund drawers remain unattended for approximately 30 minutes in an area not directly covered by camera surveillance, both at the end of the day before being taken to the vault and in the morning when drawers are
removed from the vault and placed out for staff to retrieve.

During our cash count, we inspected the location where these drawers are kept and confirmed that cash remains unsecured at the end of the day and in the morning, with no camera surveillance covering the specific area where the change fund drawers sit. Additionally, we observed that checks received at the customer service window were left on top of the desk instead of being placed in a locked drawer, and undeposited mailed checks were left on employees’ desks while staff were away for breaks or lunch.

Baker Tilly performed a walkthrough on July 29th, 2026 at the Cashiering Division and observed that checks are locked when staff step away from their workstations. We performed a walkthrough of change fund drawers are physically transported to the vault and that the transfer is now recorded in the "Opening/Closing Procedures" section of the checklist. Based on our walkthrough we believe that the City is now performing under the recommendation.
234 3 2026 26-CASH BT
Golf cart rental cash deposits are being stored in an unsecured, unlocked drawer, leaving the funds vulnerable to loss, theft, or misuse and failing to comply with required cash safeguarding practices established by the Government Finance Officers Association (GFOA) and the City’s internal Cash Handling Policy.

The City should store all cash in a locked, access-restricted drawer or safe in accordance with GFOA best practices and City policy. The City should also update procedures to prohibit unsecured storage and ensure staff consistently follow secure cash-handling practices.

Baker Tilly performed a walkthrough on July 29th, 2026 at Creekside Golf Course. We observed that the cash deposits for golf cart keys were not placed in a separate envelope that is stored in the locked cash register. Additionally, we observed that the Golf Course was utilizing the Cart Usage Agreement as a tracking tool to recognize if they had received the card deposit.

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Reference ID
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Report
Year Report Code Auditing Entity Finding Recommendation Department Assigned Expected Completion Date 37 6 2024 24-FASWES MA
The City’s Tree Ordinance can be strengthened in several areas. Update the Tree Ordinance based on International Society of Arborists (ISA) best practice guidance. PW QTR2 2027 38B 7B 2024 24-FASWES MA
Current staffing and equipment levels are not sufficient to address the City’s tree maintenance backlog and maintain a tree pruning cycle aligned with best practices.

Consider adding additional Forestry staff and equipment to reach a five- to six-year pruning cycle. PW QTR3 2026 42A 11A 2024 24-FASWES MA
Procurement delays are still impacting Forestry and Solid Waste’s ability to obtain necessary equipment, likely due to limited central procurement capacity and supply chain issues.

Work with Purchasing to establish service level standards and performance targets that will support efficient operations in Forestry and Solid Waste.

PW QTR3 2026
44 2 2024 24-PPA MA
Despite appropriate staffing when compared to peers, some Purchasing staff reported high workloads and limited capacity. This is likely due to unbalanced workloads across buyers, recent turnover, and process and system inefficiencies.

In addition to implementing other recommendations throughout this report related to turnover and process efficiency, perform a workload analysis to support balancing workloads appropriately across Purchasing buyers.

Finance QTR4 2026
55 6 2016 16-SWES MA The City’s Tree Ordinance can be strengthened in several areas. Update the Tree Ordinance based on ISA best practice guidance. PW QTR2 2027 66 5B 2016 16-WWE MA
The SCADA function is understaffed and disconnected from the Wastewater Division by reporting to the Information Technology (IT) Department.

Prioritize and address SCADA staffing and system needs. UTL QTR2 2027 95 17 2017 17-FSE MA
Vehicle and equipment project replacement cost calculations are missing important elements. Revise the fleet replacement cost methodology to include surplus values, annual inflation rates, auction fees, and make-ready costs.

PW QTR4 2026
143 2 2018 17-ISF MA
N/A Develop a plan to repay the existing deficit over 10 years. OPMB QTR3 2027 150 9 2025 17-ISF MA
N/A Continue to fund fleet maintenance utilizing actual costs. PW QTR4 2026 151 10 2026 17-ISF MA
N/A Revise fleet ISF replacement cost methodology to include surplus values, annual inflation rates, auction fees, and make-ready costs.

PW QTR4 2026
160 1 2018 18-FUS MA
N/A Update the utilization analysis six months after initial recommendations have been implemented to reestablish a baseline and complete a utilization analysis every two years thereafter.

PW QTR2 2027
162 3 2018 18-FUS MA
N/A Right-size the fleet based on results of the utilization analysis, which identified 45 units as potential candidates for reduction, reassignment, or pooling.

PW QTR2 2027
171 12 2018 18-FUS MA
N/A Expand the existing Wastewater Operations Pool at the Sutter Treatment Plant from 2 to 8 vehicles, using underutilized units from other Utility Divisions at the plant.

PW QTR1 2027
172 13 2018 18-FUS MA
N/A Revise the current vehicle take-home policy to add specific criteria relating to take-home and standby vehicle assignments. Review all vehicle take-home and current standby authorizations and justify approvals based on the new vehicle take-home policy.

PW QTR4 2026
209 1 2025 25-WWUFR MA
The Department lacks a systematic approach to tracking total anticipated project costs within its Capital Improvement Program (CIP), leading to large fluctuations in project costs and raising potential transparency and cash flow issues.

Clearly document total project anticipated costs, update totals as new projects are added, and evaluate project budget versus actuals to assess trends.

OPMB QTR4 2026
210A 2A 2025 25-WWUFR MA
The City lacks key maintenance data, an asset management system, and staff capacity to effectively address utility-related maintenance needs.

Collect and track maintenance data including installation dates, renewal periods, and estimated costs. UTL QTR1 2028 210B 2B 2025 25-WWUFR MA
The City lacks key maintenance data, an asset management system, and staff capacity to effectively address utility-related maintenance needs.

Utilize Lucity as an asset management system, or explore other systems to track asset management data more effectively and efficiently.

UTL QTR1 2028

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Year Report Code Auditing Entity Finding Recommendation Department Assigned Expected Completion Date 211A 3A 2025 25-WWUFR MA
The City's storm drain budget is projected to decline over the next five years, impacting the City's ability to maintain the program that helps prevent flooding and protects the City's water quality.

Evaluate reallocating storm drain fees, establishing development impact fees, and levying special taxes to fund the storm drain program more effectively over time.

UTL QTR4 2026
211B 3B 2025 25-WWUFR MA
The City's storm drain budget is projected to decline over the next five years, impacting the City's ability to maintain the program that helps prevent flooding and protects the City's water quality.

Consider reallocating street sweeping expenditures to be financed by a different fund than the storm drain fund.

UTL QTR1 2027
212 4 2025 25-WWUFR MA
Although water and wastewater rates have increased in recent years, the City has not adjusted related fees in over a decade, which may result in insufficient revenue to cover costs.

Evaluate water and wastewater fees to ensure costs are adequately covered. UTL QTR4 2026 213 5 2025 25-WWUFR MA
Despite grant opportunities, the Utilities Department lacks the capacity to pursue and manage grants effectively due to the absence of a dedicated grants management position.

Consider establishing a dedicated grants management position (potentially as a shared resource for City departments) to streamline the grant application process and reduce the workload on existing staff.

UTL QTR4 2026
222A 2A 2025 25-CIP MA
The City's capital planning and project prioritization efforts are oftentimes conducted on a decentralized and somewhat subjective basis, which creates risks that capital project prioritization and funding are not transparent or consistently aligned with specific City priorities.

The City should adopt prioritization criteria that appropriately weight critical maintenance needs and support clear communication.

OPMB QTR3 2026
223 3 2025 25-CIP MA
The City has some documented policies and procedures guiding capital planning and project management, but they are outdated and there are key gaps. This makes it difficult to ensure continuity of operations in an environment with personnel turnover.

The City should establish a comprehensive and up-to-date set of capital planning policies and procedures informed by best practices, including project management resources that provide standardized templates, checklists, and forms.

OPMB QTR1 2027
224A 4A 2025 25-CIP MA
The City's CIP processes lack modern technology solutions deliberately designed for capital projects and is largely decentralized between different systems and departments, which makes it difficult to track and report on project status on a standardized basis.

The City should establish a formalized project-tracking methodology. OPMB QTR2 2027 224B 4B 2025 25-CIP MA
The City's CIP processes lack modern technology solutions deliberately designed for capital projects and is largely decentralized between different systems and departments, which makes it difficult to track and report on project status on a standardized basis.

The City should develop regular reporting on key financial and project data to keep all stakeholders upto-date. OPMB TBD 226 6 2025 25-CIP MA
The CIP book aligns with a number of industry best practices, but there are opportunities to improve public transparency, process descriptions, and financial and project data.

The City should update the CIP book with best practice elemments, including expanding on the planning and prioritization process descriptions, adding more detail to financial and project data, and providing a holistic narrative about the City's capital activities.

OPMB QTR2 2027
227A 1A 2025 25-PES2 MA
Due to growth in permitting activities, workloads for staff involved in the permitting and building inspection processes have increased, although capacity to manage the workload is low, likely due to low staffing levels.

As resources allow, prioritize hiring for critical positions that will alleviate the most significant workload pressures, including Building Inspectors (particularly staff dedicated to code enforcement) and Development Services Technicians (in both Building and Planning).

CED QTR4 2027
227B 1B 2025 25-PES2 MA
Due to growth in permitting activities, workloads for staff involved in the permitting and building inspection processes have increased, although capacity to manage the workload is low, likely due to low staffing levels.

Review workloads throughout outside departments involved in the plan review process after implementing process improvements recommended in the Plan Review Timelines finding.

CED QTR1 2027
227C 1C 2025 25-PES2 MA
Due to growth in permitting activities, workloads for staff involved in the permitting and building inspection processes have increased, although capacity to manage the workload is low, likely due to low staffing levels.

Review workloads at the Reception Counter after implementing system upgrades recommended in the Automated Phone and Messaging Systems finding.

CED QTR1 2027
228 2 2025 25-PES2 MA
The City's current fee structure may not adequately cover the cost of all phases of development review and permitting activities, which could result in te subsidization of these activities.

The City should prioritize conducting a fee study and establish clear cost recovery goals for development and permitting activities.

CED QTR4 2028
229 3 2025 25-PES2 MA
The CED Department has established performance measures related to permitting activities, although these metrics are largely volume-based.

To enhance customer service delivery, the CED Department should develop additional performance measures related to customer experience and timeliness.

CED QTR1 2027

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Reference ID
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Report
Year Report Code Auditing Entity Finding Recommendation Department Assigned Expected Completion Date 230A 4A 2025 25-PES2 MA
Plan review timelines may be difficult for some departments to meet due to limited staff capacity, variation in project complexity, and a lack of consistent procedures across departments for timely review of plans.

To help manage the plan review timelines across departments and address the limited staff capacity, the City should consider implementing differentiated timelines based on project complexity and type.

CED QTR1 2027
232A 6A 2025 25-PES2 MA
Although eTRAKiT has significantly streamlined and modernized the permitting and plan review process, there are some challenges related to the system's governance and capabilities that are causing issues for staff. In addition, the lack of automated phone and messaging systems is impeding efficiency in some areas.

To improve the customer experience, limit staff confusion, and reduce plan review time, the CED Department should implement a nested question feature to guide applicants to the correct application forms for their project.

CED QTR3 2026
235A 1A 2026 26-HOME BT
Although the City has demonstrated leadership in pursuing funding opportunities and supporting nonprofit partners that deliver homelessness services, many community programs continue to operate near capacity and rely on uncertain funding sources. These conditions create challenges for long-term program sustainability and limit the system’s ability to consistently meet community needs.

The City should continue building on its existing efforts to strengthen long-term sustainability for homelessness programs by:

1. Formalizing and expanding support for nonprofit capacity development CED QTR4 2027
235B 1B 2026 26-HOME BT
Although the City has demonstrated leadership in pursuing funding opportunities and supporting nonprofit partners that deliver homelessness services, many community programs continue to operate near capacity and rely on uncertain funding sources. These conditions create challenges for long-term program sustainability and limit the system’s ability to consistently meet community needs.

The City should continue building on its existing efforts to strengthen long-term sustainability for homelessness programs by:

2. Developing and documenting a coordinated multi-year funding strategy CED QTR2 2027
235C 1C 2026 26-HOME BT
Although the City has demonstrated leadership in pursuing funding opportunities and supporting nonprofit partners that deliver homelessness services, many community programs continue to operate near capacity and rely on uncertain funding sources. These conditions create challenges for long-term program sustainability and limit the system’s ability to consistently meet community needs.

The City should continue building on its existing efforts to strengthen long-term sustainability for homelessness programs by:

3. Establishing or assessing flexible funding mechanisms to help stabilize services and leverage additional external funding
CED QTR2 2027
236A 2A 2026 26-HOME BT
Regional homelessness-related data is collected through multiple systems that are used by the City, community organizations, and other regional partners. However, differences in reporting requirements and limited integration across platforms make it difficult to develop a comprehensive view of systemwide outcomes and trends.

The City should continue building on its existing efforts to strengthen coordination across homelessnessrelated data systems by:

1. Establishing and documenting consistent data definitions and reporting expectations in coordination with regional partners
CED QTR2 2028
236B 2B 2026 26-HOME BT
Regional homelessness-related data is collected through multiple systems that are used by the City, community organizations, and other regional partners. However, differences in reporting requirements and limited integration across platforms make it difficult to develop a comprehensive view of systemwide outcomes and trends.

The City should continue building on its existing efforts to strengthen coordination across homelessnessrelated data systems by:

2. Developing and implementing a process to regularly compile and analyze key data elements across systems (e.g., HMIS, ESRI, Neighborly, and program dashboards) CED QTR2 2028
236C 2C 2026 26-HOME BT
Regional homelessness-related data is collected through multiple systems that are used by the City, community organizations, and other regional partners. However, differences in reporting requirements and limited integration across platforms make it difficult to develop a comprehensive view of systemwide outcomes and trends.

The City should continue building on its existing efforts to strengthen coordination across homelessnessrelated data systems by:

3. Aligning operational data systems with existing performance indicators to support consistent, systemwide reporting and analysis CED QTR2 2028
237A 3A 2026 26-HOME BT
The City has established a strong foundation for reporting and communicating information about homelessness initiatives through formal reports, dashboards, and community engagement.

Opportunities exist to improve clarity and consistency by consolidating information across programs and expanding the use of outcome-focused reporting.

The City should continue building on its existing reporting framework by:

1. Enhancing and maintaining a consolidated reporting format or dashboard that integrates key information across homelessness programs and data systems CED QTR1 2027
237B 3B 2026 26-HOME BT
The City has established a strong foundation for reporting and communicating information about homelessness initiatives through formal reports, dashboards, and community engagement.

Opportunities exist to improve clarity and consistency by consolidating information across programs and expanding the use of outcome-focused reporting.

The City should continue building on its existing reporting framework by:

2. Standardizing and documenting a core set of performance indicators to be used consistently across reports and dashboards
CED QTR4 2027
237C 3C 2026 26-HOME BT
The City has established a strong foundation for reporting and communicating information about homelessness initiatives through formal reports, dashboards, and community engagement.

Opportunities exist to improve clarity and consistency by consolidating information across programs and expanding the use of outcome-focused reporting.

The City should continue building on its existing reporting framework by:

3. Establishing and applying consistent reporting practices that include analysis and clear explanation of key trends, program outcomes, and how programs and investments contribute to community-level results
CED QTR1 2027
238 1 2026 26-PRNPA BT
Parks does not have clearly defined or consistently communicated roles, reporting relationships, and decision-making responsibilities, causing difficulty aligning staff responsibilities with current operational needs.

Parks should develop an internal roles and responsibilities framework that clarifies daily reporting lines, decision-making authority, communication expectations, and escalation points across managers, supervisors, crew leaders, and maintenance staff.

Parks TBD
239 2 2026 26-PRNPA BT
Current work scheduling and assignment practices limit operational flexibility and reduce the amount of time available for direct field maintenance and supervision. Frequent reprioritization, reactive work demands, and field time constraints contribute to inconsistent service delivery across parks.

Parks should develop a documented work scheduling and assignment model that allocates staff time based on park classifications and service levels, and that tracks available field time.

Parks TBD

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Year Report Code Auditing Entity Finding Recommendation Department Assigned Expected Completion Date 240 3 2026 26-PRNPA BT
Workforce capacity and seasonal staffing challenges may limit Parks’ ability to consistently meet maintenance and service demands.

Strengthen seasonal and part-time staffing strategies to improve recruitment, retention, workforce stability, and the Department’s ability to meet seasonal and ongoing service demands.

Parks TBD
241 4 2026 26-PRNPA BT Upcoming retirements and leadership transitions may create operational continuity and institutional knowledge risks for Parks.

Implement structured transition planning, cross-training, and knowledge sharing practices for critical positions and operational functions.

Parks TBD
242 5 2026 26-PRNPA BT
Parks has not established and implemented current maintenance standards and standard operating procedures to guide maintenance activities, service expectations, and prioritization decisions across the park system. As a result, maintenance activities are largely driven by staff experience and immediate operational demands rather than a consistent, documented framework.

Parks should develop, implement, and periodically update maintenance standards and SOPs that establish service expectations, maintenance priorities, and consistent maintenance practices across the park system.

Parks TBD
243 6 2026 26-PRNPA BT
The Department does not have a consistently used work management system to support maintenance operations. As a result, maintenance activities are tracked through a combination of systems, manual processes, and informal communication methods, limiting visibility into workload, work completion, and operational performance.

Optimize Lucity and related business processes to create a streamlined, user-friendly work management system that serves as the single source of record for maintenance activities, integrates public service requests, and provides reliable data for workload management, prioritization, and performance monitoring.

Parks TBD
244 7 2026 26-PRNPA BT
Parks does not have a comprehensive training and workforce development program to support consistent maintenance practices, cross-training, and operational continuity. As a result, the Department relies heavily on informal knowledge transfer and employee experience to develop staff and maintain specialized operational knowledge.

Parks should develop and implement a workforce training and development program that aligns employee training, certifications, cross-training, and knowledge transfer efforts with operational needs and future service demands.

Parks TBD
245A 8 2026 26-PRNPA BT
Reservation scheduling, operational coordination, and field service expectations may not always be fully aligned. Late reservation changes and communication gaps contribute to increased after-hours response, operational disruption, and inconsistent field preparation.

A. Establish clear reservation deadlines, communication procedures, and staff responsibilities so that field preparation needs are identified and communicated before maintenance crews leave for the day.

Parks TBD
245B 8 2026 26-PRNPA BT
Reservation scheduling, operational coordination, and field service expectations may not always be fully aligned. Late reservation changes and communication gaps contribute to increased after-hours response, operational disruption, and inconsistent field preparation.

B. Define what services are included with field and facility reservations and adopt a fee schedule that aligns service levels with the staff time and resources to support reservations.

Parks TBD
245C 8 2026 26-PRNPA BT
Reservation scheduling, operational coordination, and field service expectations may not always be fully aligned. Late reservation changes and communication gaps contribute to increased after-hours response, operational disruption, and inconsistent field preparation.

C. Evaluate opportunities to automate reservation-related tasks, such as field lighting and reservation notifications, to reduce after-hours staff response and improve coordination.

Parks TBD
246A 9 2026 26-PRNPA BT
Contract oversight responsibilities, communication processes, and performance expectations may not be consistently defined across contracted maintenance services. This can limit accountability, reduce operational coordination, and create uncertainty regarding contractor performance.

A. Assign clear contract ownership and oversight responsibilities for each contracted maintenance service to improve accountability, communication, and coordination.

Parks TBD
246B 9 2026 26-PRNPA BT
Contract oversight responsibilities, communication processes, and performance expectations may not be consistently defined across contracted maintenance services. This can limit accountability, reduce operational coordination, and create uncertainty regarding contractor performance.

B. Define measurable service expectations and implement a standardized process for inspecting, documenting, and addressing contractor performance issues.

Parks TBD
246C 9 2026 26-PRNPA BT
Contract oversight responsibilities, communication processes, and performance expectations may not be consistently defined across contracted maintenance services. This can limit accountability, reduce operational coordination, and create uncertainty regarding contractor performance.

C. Use contractor performance data and regular vendor reviews to guide contract management, future procurements, and continuous improvement.

Parks TBD
247 10 2026 26-PRNPA BT
The City’s updated special events permit process appears to have improved coordination and consistency compared to the prior approach. However, the process remains resource-intensive and may benefit from additional workflow automation, standardized timelines, and improved visibility across reviewing departments.

Parks should improve the special events permit process by standardizing Monday.com use, setting review timelines, automating reminders, and expanding visibility for events that affect City operations.

Parks TBD
248 11 2026 26-PRNPA BT
While the Department has developed a long-term fund development strategy, implementation of key initiatives appears limited.

City leadership should decide whether the 2023 Fund Development Plan remains a priority and, if so, dedicate the staff capacity, leadership attention, and implementation resources needed to carry it out.

Parks TBD
249 N/A 2026 26-ITPP BT
Based on our review of the User Management Policy, Change Control Policy, Computer System Use Policy, and the Disaster Recovery Plan, each of these has been updated to address the audit findings, with the exception of the finding regarding the RTO/RPO in the Disaster Recovery Plan. However, the RTO and RPO were documented in the new Disaster Recovery Policy that we reviewed in January 2026.

The City has established a foundational set of IT policies; however, opportunities exist to strengthen documentation, standardization, and alignment with current leading practices.

We recommend that the City align the new Disaster Recovery Policy to the established Business Continuity Plan (BCP) that was prepared by the IT team. The BCP has an emphasis on disaster recovery by providing an approach for responding to major disruptions that impact the City’s information systems, infrastructure, and technology-dependent operations. There are sections in the Disaster Recovery Policy, such as Section 5.4 (System Classification and Recovery Tiers) and Section 6.5 (Communication and Notification), that provide valuable information and should be aligned with the corresponding content in the BCP. This will help maintain the Disaster Recovery Policy as a high-level document, while the BCP contains detailed procedures for recovering systems.

IT
TBD

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Reference ID
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Year Report Code Auditing Entity Finding Recommendation Department Assigned Expected Completion Date 250 N/A 2026 26-ITPP BT
Based on our review of the User Management Policy, Change Control Policy, Computer System Use Policy, and the Disaster Recovery Plan, each of these has been updated to address the audit findings, with the exception of the finding regarding the RTO/RPO in the Disaster Recovery Plan. However, the RTO and RPO were documented in the new Disaster Recovery Policy that we reviewed in January 2026.

The City has established a foundational set of IT policies; however, opportunities exist to strengthen documentation, standardization, and alignment with current leading practices.

The Disaster Recovery Policy also mentions that it operates in conjunction with other policies and frameworks, such as the Cybersecurity Policy and the Incident Response Policy in Section 13.1. However, the City does not have these specific policies in place. As this is the initial draft of the policy, we recommend that the City conduct further reviews and align the Disaster Recovery Policy with the Business Continuity Plan (BCP) and other policies. IT
TBD
251 N/A 2026 26-ITPP BT
Based on our review of the User Management Policy, Change Control Policy, Computer System Use Policy, and the Disaster Recovery Plan, each of these has been updated to address the audit findings, with the exception of the finding regarding the RTO/RPO in the Disaster Recovery Plan. However, the RTO and RPO were documented in the new Disaster Recovery Policy that we reviewed in January 2026.

The City has established a foundational set of IT policies; however, opportunities exist to strengthen documentation, standardization, and alignment with current leading practices.

Based on reviews of the policies currently documented, we recommend that the City create an Incident Response Policy. Like the Disaster Recovery Policy, this policy should outline how the City detects, reports, and responds to cyberattacks, as well as how it determines when an incident needs to invoke recovery procedures documented in the Business Continuity Plan (BCP). Key components an Incident Response Policy should cover:
○ Definition of Incidents and Scope: A clear definition of what constitutes a cybersecurity incident (e.g., malware, ransomware, unauthorized access) and the scope of the policy. ○ Incident Response Team (IRT) Roles: Identification of key personnel, including an Incident Manager, technical leads, and liaisons for legal and communication. ○ Contact Information: Primary and secondary, out-of-band contact methods (e.g., mobile phones, personal email) for IRT members and external partners such as law enforcement, vendors, and cyber insurance.
○ Incident Reporting and Triage: Procedures for employees to report suspicious activity and a process for immediate triage.
○ Incident Response Phases (NIST-aligned):
− Preparation: Security hygiene, training, and tools.
− Detection and Analysis: Identifying threats.
− Containment, Eradication, and Recovery: Steps to isolate affected systems and restore operations. − Post-Incident Activity: A “lessons learned” review and documentation within two weeks of the event. ○ Communication Plan: Procedures for notifying regulatory bodies, citizens, and the media. ○ Documentation: An “Incident Handlers Journal” to document actions taken during an incident. ○ Testing and Maintenance: Mandates regular, scheduled testing (e.g., tabletop exercises) and review of the policy to ensure it remains current.

IT
TBD
252 N/A 2026 26-ITPP BT
Based on our review of the User Management Policy, Change Control Policy, Computer System Use Policy, and the Disaster Recovery Plan, each of these has been updated to address the audit findings, with the exception of the finding regarding the RTO/RPO in the Disaster Recovery Plan. However, the RTO and RPO were documented in the new Disaster Recovery Policy that we reviewed in January 2026.

The City has established a foundational set of IT policies; however, opportunities exist to strengthen documentation, standardization, and alignment with current leading practices.

We also recommend that the City develop a Third-Party/Vendor Management Policy that ensures thirdparty vendors (e.g., IT support, cloud providers) meet the municipality’s security requirements.

Currently, the City has an Information Technology Acquisition Policy. Following the acquisition of a cloud system or provider, ongoing management of that cloud system and provider should be established. The Third-Party/Vendor Management Policy would document the controls to cover the lifecycle of that product or service—from onboarding and security due diligence to ongoing monitoring, contract management, and offboarding—to ensure compliance and data protection. Key components of a thirdparty/vendor management policy include:
○ Vendor Risk Categorization and Assessment: Standardized procedures to evaluate vendor criticality (e.g., data sensitivity, operational impact) and security posture before onboarding. This would follow the procedures outlined in the IT Acquisition Policy and enhanced by ensuring ○ Due Diligence and Selection: Requirements for reviewing vendor security controls, such as SOC 2 reports, financial health, and compliance certifications (e.g., GDPR, HIPAA). This also would be part of the IT Acquisition Policy.
○ Contractual Requirements and SLAs: Defined liability for data breaches, Non-Disclosure Agreements (NDAs), and Service Level Agreements (SLAs) regarding performance. ○ Ongoing Monitoring: Continuous or periodic assessment of vendor security performance after onboarding to detect emerging threats. This would be an annual process for critical and high-risk vendors.
○ Termination and Offboarding: Procedures for secure data return or destruction upon contract termination.
○ Vendor Inventory: A maintained registry of all vendors, including their risk level, data access, and contact information.

IT
TBD

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CITY OF MODESTO

COMMITTEE AGENDA REPORT
DATE OF MEETING:

October 22, 2026
Date: October 1, 2026
TO: Audit Committee
Sue Zwahlen, Chair
Rosa Escutia-Braaton, Vice Chair
David Wright, Member
Camille Garcia, Public Member
Jovana Lloyd, Public Member
FROM: Colleen Rozillis, City Auditor
SUBJECT: Receipt of the Fee Benchmarking and Cost Recovery Audit Report CONTACT: Colleen Rozillis, City Auditor, [email protected] 206-302-6795 DESCRIPTION:

Consider the Fee Benchmarking and Cost Recovery Audit report dated October 1, 2026, and forwarding to Council for acceptance. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

The recommended action supports the City’s 2025-2026 Strategic Plan Goal J: Build a high-performance organization.

BACKGROUND:

City Council approved a Fee Benchmarking and Cost Recovery Audit as part of the Fiscal Year 2025-26 Internal Audit work plan.

DISCUSSION:

The Fee Benchmarking and Cost Recovery Review evaluated the City’s approach to establishing, reviewing, and updating fees, including cost recovery practices, peer benchmarking, fee policies and governance, and selected departmental and development-related fees. The report contains seven recommendations for improvement, including:
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Audit Committee, October 22, 2026
Receipt of the Fee Benchmarking and Cost Recovery Audit Report

• Fee Benchmarking: Incorporate periodic peer benchmarking to support datainformed fee adjustments and identify fees intentionally set below peer levels for policy purposes
• Cost Recovery: Establish a city-wide cost recovery framework with consistent methods for calculating costs, setting recovery targets, and documenting subsidies • Fee Policy and Governance: Adopt a city-wide fee policy that establishes consistent fee-setting methods, roles and responsibilities, review cycles, and approval processes
• Fee Escalators: Establish consistent guidance for applying fee escalators to keep fees aligned with changing service delivery costs
• Parks, Recreation & Neighborhoods Fees: Regularly review and update fees using standardized cost methods, document waivers and subsidies, and establish routine escalators
• Development Fees: Simplify and standardize development fees, automate fee assessment where possible, and develop a fee calculator to improve consistency and transparency
• Development Impact Fees: Conduct a comprehensive nexus study to update development impact fees based on current growth, infrastructure needs, and capital improvement plans
FISCAL IMPACT:

This review was budgeted for $40,000 and was delivered $10,000 over budget due to increased scope. Additional analysis was requested by the City and funded with cost savings from other Internal Audit projects. This audit amount was funded as part of the General Fund budget within the Office of the City Auditor.

CEQA/NEPA REQUIREMENTS:

This item does not constitute a “project” with the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.

RECOMMENDED COMMITTEE ACTION:

Staff Recommendations:

Motion to receive the Fee Benchmarking and Cost Recovery Audit Report dated October 1, 2026, and forwarding to Council for acceptance.

Approved by:

Colleen Rozillis, City Auditor
Joseph P. Lopez, City Manager
Attachments:
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Receipt of the Fee Benchmarking and Cost Recovery Audit Report

1. Fee Benchmarking and Cost Recovery Audit Report 10-01-2026 #4..
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Fee Benchmarking Review

CITY OF MODESTO
Proprietary & Confidential

FINAL REPORT
October 1, 2026
Baker Tilly Advisory Group
999 Third Avenue, Suite 2800
Seattle, WA 98104
(206) 302-6500
This report is intended for internal use by the City of Modesto, and may not be provided to, used, or relied upon by any third parties.
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Table of Contents
Executive Summary 4
Introduction 4
Summary of Observations and Recommendations 5
Introduction 8
Background 8
Scope and Objectives 8
Methodology 9
Commendations 11
Cost Recovery and Fee Framework Background 13
Cost Recovery Practices 13
Fee Frameworks 13
Current Approach to Fees and Cost Recovery 14
Observations and Recommendations 16
Peer Benchmarking Analysis 16
Cost Recovery Framework 19
Fee Policy and Governance 25
Fee Escalators 31
Parks, Recreation & Neighborhoods (PRN) Fees 34
Community and Economic Development Fees 39
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Development Impact Fees 43
Appendix A: Peer Cities Fee Benchmarking 47
Appendix B: Example Cost Recovery Models 51
Appendix C: Peer Benchmarking Survey Results 53
Appendix D: Impact Fee Benchmarking Data 61
Land Use: Single-Family Residential 62
Land Use: Multi-Family Residential 66
Land Use: General Office 69
Land Use: Industrial – Manufacturing 73
Land Use: Industrial – Warehousing 77
Land Use: Retail Less than 50,000 Square Feet 81
Land Use: Retail 50,000-100,000 square feet 85
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, operate under an alternative practice structure and are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. #4..
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EXECUTIVE SUMMARY

INTRODUCTION

BACKGROUND
The City of Modesto (the City, Modesto) engaged its internal auditor, Baker Tilly, to conduct a review of City fees to assess the following:
● The extent of cost recovery
● Competitiveness with local peers
● Codified fee recovery methods, to ensure that fees are appropriately reviewed and adjusted
While the original scope of this assessment included evaluating fee-level cost recovery across departments, the City does not consistently collect or maintain the detailed revenue, expenditure, workload, and service cost data. Therefore, Baker Tilly was not able to perform a comprehensive fee-by-fee cost recovery analysis. The resulting assessment focuses on fee benchmarking, policy and governance, cost recovery practices, and broader indicators of potential under- or over-recovery, rather than validating precise cost recovery levels for individual fees.

This document presents best practices for establishing a framework for City fees and cost recovery, as the City considers improvements to the existing process.

We want to highlight the hard work and continued efforts of Modesto staff in evaluating fee activities. Throughout our engagement with the City, staff have been responsive to our communications, forthcoming with information, and engaged in brainstorming ways to update City fees and improve related processes. These actions illustrate an important shared commitment to the continuous improvement of City performance. This organizational strength will be valuable in improving fee-related procedures across City departments.

SCOPE AND METHODOLOGY
The methodology followed four phases, which are described in the Introduction section of the report. This practice is designed to gather information about current operations, as documented, and compare them with best practices. We then evaluated how internal operations compare to industry trends and best practices. This approach ensures that recommendations are actionable.
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SUMMARY OF OBSERVATIONS AND RECOMMENDATIONS
The observations and recommendations in this assessment are opportunities for improvement that will help strengthen the City's efficiency and effectiveness. Our observations and recommendations are summarized in Table 1. Detailed observations and recommendations are included in the Observations and Recommendations section.

Table 1. Observations and Recommendations
Number Description
Observation 1 Benchmarking results indicate that many fees - particularly within Community and Economic Development, Fire, and
Parks, Recreation and Neighborhoods - are materially below comparable jurisdictions, potentially limiting cost recovery and contributing to inconsistent fee positioning across
departments.

Recommendation 1 Incorporate periodic peer benchmarking into the City’s fee review process to identify fees that may no longer align with comparable jurisdictions, support data-informed fee
adjustments, and document fees intentionally set below peer levels to achieve policy objectives, such as affordability, community access, or economic development
competitiveness.

Observation 2 The City lacks a consistent city-wide cost recovery framework to calculate full-service costs and document intended subsidy levels, resulting in inconsistent fee-setting practices and unclear, sometimes unintended, levels of cost recovery across departments.

Recommendation 2 Adopt a city-wide cost recovery framework that sets target recovery levels by service type and establishes a consistent documented process for calculating full costs, applies
beneficiary-based subsidy decisions, and identifies a
frequency for reviewing and updating fees across all
departments.

Observation 3 The City lacks a comprehensive city-wide fee policy, resulting in outdated fees, inconsistent fee-setting practices, unclear expectations, and limited coordination across departments. #4..
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Number Description
Recommendation 3 Adopt a formal city-wide fee policy and procedure that standardizes methods for fee calculations and documents the process for review and approval to ensure consistent,
transparent, and policy-aligned actions across all departments.

Observation 4 The City lacks consistent guidance on the use of fee escalators, resulting in irregular and inconsistent fee adjustments across departments.

Recommendation 4 The City should establish clear guidance for applying fee escalators, including defined indices and timelines for regular adjustments.

Observation 5 The Parks, Recreation & Neighborhoods department (PRN) has not consistently updated or applied a uniform cost-based approach to all fees, resulting in complex, outdated fee levels that may be below market rate and below the true cost of service.

Recommendation 5 Regularly review and update PRN fees using standardized cost methods, document waivers/subsidies, and establish routine escalators to ensure fees are current and aligned with Council goals related to community benefit and equity.

Observation 6 The Community and Economic Development (CED) fee schedule is complex and inconsistently administered across departments and systems, increasing staff workload and errors while reducing cost recovery alignment,
predictability, and transparency for applicants.

Recommendation 6 A. Modernize CED development fees by simplifying and standardizing the fee schedule, embedding and
automating fee assessment using eTRAKiT, and
publishing an updated schedule. B.

B. Develop a fee calculator to promote consistent fee
calculations by application type, support cost recovery objectives, and improve customer transparency.
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Number Description
Observation 7 Although the City has updated its development impact fees in recent years, it has not completed a nexus study since 2003.

While the City remains within the statutory timeframe for completing its next nexus study, the age of the existing study increases the risk that underlying assumptions regarding growth, infrastructure needs, capital costs, and land use no longer reflect current conditions.

Recommendation 7 Conduct a comprehensive nexus study to evaluate and update the City's development impact fees based on current growth projections, infrastructure needs, capital improvement plans, and the requirements of the Mitigation Fee Act.
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INTRODUCTION

BACKGROUND
The City of Modesto is a full-service municipality located in California’s Central Valley, serving a population of more than 200,000 residents across a diverse and growing community. The City provides a wide range of services through departments such as Police; Fire; Public Works; Utilities; Parks, Recreation & Neighborhoods (PRN); and Community and Economic Development (CED). Guided by its Strategic Plan, the City is focused on maintaining essential infrastructure, supporting economic development, and delivering reliable public services that meet community needs.

The City’s operating budget reflects a complex service delivery model supported by a mix of General Fund revenues, enterprise funds, and other restricted funding sources.

Core services such as public safety represent a significant share of expenditures, alongside ongoing investments in utilities, infrastructure maintenance, and community services. Like many California cities, Modesto continues to balance service demands with available revenues while addressing cost pressures related to staffing, operations, and long-term infrastructure needs.

In this context, fees and service charges are important revenue sources used to offset the costs of providing specific services. Periodic review of these fees helps ensure that the City is recovering an appropriate portion of service costs, maintaining alignment with peer agencies, and applying consistent methodologies for setting and updating fees.

SCOPE AND OBJECTIVES
The City engaged Baker Tilly to conduct a fee benchmarking review across each department that has City fees. The purpose of this review is to evaluate the extent to which current fees recover the cost of providing services, assess how the City’s fees compare to those of similar agencies, and review the methodologies used to establish and update fees. This assessment is intended to support the City in maintaining a consistent, transparent, equitable, and sustainable approach to fee-setting.

The primary objectives of this review were to:
● Identify the level of cost recovery achieved by current fees and highlight areas where fees may not align with the cost of service
● Compare the City’s fees to those of peer agencies to evaluate competitiveness and regional alignment
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● Assess the City’s codified fee-setting practices and processes to determine whether fees are reviewed and updated on a regular and consistent basis The original scope of this assessment included evaluating the extent of cost recovery achieved by City fees. However, the City does not consistently maintain the detailed fee-level revenue, expenditure, workload, and service cost data necessary to perform a comprehensive cost recovery analysis across all departments. As a result, the assessment focused primarily on evaluating fee structures, benchmarking selected fees against peer jurisdictions, reviewing fee governance and update practices, and identifying opportunities to strengthen Modesto’s overall fee and cost recovery framework. Additional data collection, standardization, and cost analysis would be needed to conduct a detailed, fee-by-fee cost recovery evaluation in the future.

METHODOLOGY
Our review methodology followed four phases, which are described in Table 2. This practice is designed to gather information about current operations, as documented, and compare it with best practices. We then evaluated how internal operations compare to industry trends and best practices. This approach ensures that recommendations are actionable.

Table 2. Project Phases
Phase Description
Startup and Project
Management
This phase included a kickoff meeting with City leadership to confirm expectations and discuss the overall project scope, logistics, deliverables, timing, and
progress-reporting requirements. Planning also served to clarify responsibilities between Baker Tilly and City staff, the timing of project activities, and the format of
deliverables. We conducted project management
throughout the engagement and ensured all deliverables
received a quality assurance review.

Fact-Finding and Data
Collection
Fact-finding and data collection consisted of activities designed to help Baker Tilly understand the City’s current state. These activities were designed to gather both
qualitative and quantitative information to form the
foundation for observations. For this engagement,
fieldwork activities included:
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Phase Description
• Interviews: We conducted 14 individual interviews and 11 focus groups with a total of 44 individuals who work closely or directly with processes related to City fees. • Document and Data Review: We gathered relevant
documentation for review, including fee schedules,
existing cost recovery practices, prior studies, relevant City resolutions, and other related information.
• Peer Fee Benchmarking: We conducted fee
benchmarking using a comparable peer group of
California cities approved by City leadership. Using this group, we collected and compared selected fees with
Modesto’s fees. Due to differences in fee structures,
methodologies, and publicly available information, the
benchmarking focused on fees with established
alignment in service type and fee purpose. Fourteen
cities were included in the benchmarking review:
o Bakersfield
o Fresno
o Glendale
o Manteca
o Merced
o Oxnard
o Redding
o Riverside
o Roseville
o Sacramento
o San Bernardino
o Santa Clarita
o Stockton
o Tracy
• Peer Surveys: We distributed a data collection survey to the 14 peers and conducted outreach to gather
additional information about fee update procedures
and practices, cost recovery approaches, governance
structures, and fee administration processes. Seven of
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Phase Description
the peer cities responded to the benchmarking survey,
and outreach requests for information during the
assessment, including:
o Bakersfield
o Glendale
o Manteca
o Merced
o Sacramento
o San Bernardino
o Santa Clarita
• Industry Best Practices: We conducted research on
industry best practices for fee frameworks, cost
recovery methodologies, subsidy models, fee update
cycles, escalation practices, and governance
processes.

Analysis Based on fact-finding and data collection, we evaluated the City's current conditions to identify opportunities for improving the effectiveness of the City’s fee-related
processes.

Reporting Based on our analysis, we prepared a draft report. This report was reviewed by City leadership and feedback was integrated into an updated report before finalization.

COMMENDATIONS
We would like to thank the City staff involved in this project for their willingness to assist us in this review process. These commendations, coupled with our observations and recommendations, provide an overview of areas of strength and opportunities for improvement that can help enhance operations at the City moving forward. #4..
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● Strong engagement and enthusiasm across departments: Across interviews, staff consistently expressed enthusiasm about the fee benchmarking effort and appreciation that the City is undertaking a comprehensive city-wide review. This level of engagement signals strong internal alignment, a desire for more structure, and strategic direction for fee-setting moving forward. ● Existence of a standardized template for fee inventorying: Although fee-setting and management are decentralized across departments, the City has an established template that departments use to inventory their fees. This underlying standardization provides a strong foundation for creating a more cohesive city-wide fee management approach and suggests that departments are already accustomed to working within a shared structure when guided by central coordination. #4..
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COST RECOVERY AND FEE FRAMEWORK

BACKGROUND

COST RECOVERY PRACTICES
Cost recovery analysis provides the City with a clearer understanding of the resources required to deliver services and the extent to which those costs are recovered through fees. By identifying direct and indirect cost drivers, service demand, and existing subsidy levels, cost recovery analysis supports informed decision-making on where operational efficiencies may exist, which services may warrant policy-based subsidies, and which fees may be appropriate candidates for adjustment. When used appropriately, this approach and the information it yields inform decisions about service delivery methods, opportunities for greater efficiency, and appropriate cost recovery targets.

Effective cost recovery practices ensure the City can sustainably deliver high-quality services, maintain transparency in fee-setting and updating processes, and align resource allocation with adopted policies and strategic priorities.

FEE FRAMEWORKS
A fee framework is used to guide the development of fees and sets parameters for ongoing evaluation and maintenance. A well-designed framework will provide Modesto City leaders and administrators with a structured, transparent, and defensible approach for establishing and updating user fees. The central purpose of a fee-setting framework is to ensure consistent development across departments and reflect the reasonable cost of providing services, per CA Constitution art XIII C § 1. #4..
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CURRENT APPROACH TO FEES AND COST

RECOVERY
The City of Modesto’s existing approach to setting and managing fees is largely decentralized. Among the individual City departments, a range of approaches is used to develop, implement, and monitor fees for programs and services. We found that the Finance and CED departments provide coordination and support to individual City departments, particularly for development-related fees. However, there is no single, standardized framework applied city-wide to ensure a consistent approach to setting and updating fees. As a result, a range of methodologies are being used across the nine departments, including cost-of-service estimates, peer benchmarking frequencies, data comprehensiveness, and statutory or code-based fees.

Table 3 shows the number of fees inventoried by department, the average fee value, and the average number of years since fees were last updated (if reported).

Table 3. Fee Inventory by Department
Department Name Count
Average Fee
Amount
Average Years
Since Last Update
CED 186 $1,896 3
City Clerk's Office 30 $10 23
Engineering 91 $331 3
Finance 95 $61 10
Fire 84 $207 3
Police Department 55 $120 Unknown
PRN 319 $50 1
Public Works 60 $20 2
Utilities 112 $390 3
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Current Data Limitations
Missing or incomplete data limits the ability to fully assess fee practices across all departments. In particular, the City does not consistently maintain fee-level revenue, expenditure, activity, and service cost data needed to evaluate cost recovery for individual fees or services. In many cases, financial information is tracked at broader departmental or program levels, rather than by individual fee type. Additionally, methods and procedures for tracking staff time, overhead, and service costs vary across departments. As a result, we supplemented available documentation with information gleaned from interviews and best-practice research, rather than a comprehensive feelevel analysis in all cases. Table 4 shows the limitations of the completeness of available fee data. Specifically, it reflects the amount of data that exists to verify the following:
● The percentage of fees, by department, with data pertaining to fee updates (typically indicated by the year a fee update occurred)
● Whether individual fees are subject to an auto-adjustment or an inflation factor ● Whether data exists regarding the source of authority for each fee.

Missing or incomplete data limits the City’s ability to fully assess the consistency, legal basis, and frequency of fee review across departments.

Table 4. Summary of Fees by Department
Department Name
Percent of Fees
Updated
Auto-Adjuster
Applied
Authority Source
Data
CED 100% 99.5% 100%
City Clerk's Office 93.3% 96.7% 100%
Engineering 94.5% 98.9% 99%
Finance 97.9% 43.2% 99%
Fire 36.9% 98.8% 37%
Police Department 0% 0% 98%
PRN 65.2% 1.3% 65%
Public Works 93.3% 98.3% 93%
Utilities 98.2% 95.5% 98%
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OBSERVATIONS AND RECOMMENDATIONS

PEER BENCHMARKING ANALYSIS
Observation 1 Benchmarking results indicate that many fees - particularly within Community and Economic Development, Fire, and
Parks, Recreation and Neighborhoods - are materially
below comparable jurisdictions, potentially limiting cost recovery and contributing to inconsistent fee positioning across departments.

Recommendation 1 Incorporate periodic peer benchmarking into the City’s fee review process to identify fees that may no longer align with comparable jurisdictions, support data-informed fee adjustments, and document fees intentionally set below
peer levels to achieve policy objectives such as
affordability, community access, or economic development competitiveness.

Municipal fee structures should be periodically benchmarked against comparable jurisdictions to assess competitiveness, support cost recovery objectives, and identify fees that may no longer align with current market conditions or service-delivery costs.

Benchmarking does not establish a “correct” fee level, as local policy priorities, subsidy decisions, service models, and fee methodologies vary across peer cities and departments. In addition, direct fee comparisons can be difficult, because jurisdictions frequently structure, bundle, calculate, and administer fees differently. As a result, benchmarking is most effective as a directional tool to identify trends, significant variances, and areas that may warrant further evaluation, rather than as a precise oneto-one comparison.

To account for differences in fee structures across jurisdictions, our analysis used a targeted sample of 56 comparable fees, where reasonable alignment in service type and fee purpose could be established. Although not all fees could be directly compared, the sampled results revealed consistent trends across several major service areas.

Table 5 contains a summary of the benchmarking results - the full list of benchmarked fees is available in Appendix A.
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Table 5. Sampled Fee Benchmarking Results
Fee Group
Number of
Fees
% Difference from Peer
Average
% of Sampled
Fees
Fees More than 10%
Below Peer Average 45 -45.5% 80%
Fees Within 10% of
Peer Average 7 2.4% 13%
Fees More than 10%
Above Peer Average 4 20.7% 7%
All Fees 56 -34.8% 100%
The benchmarking analysis found that 80% of the City’s fees are materially below peer averages, including fees for development-related services, fire prevention activities, and parks and recreation programs and services. On average, the sampled Modesto fees were 35% below comparable peer averages. The vast majority of the sampled fees (80%) were, on average, nearly 46% below the peer average. While some differences may reflect intentional policy decisions related to affordability or economic development, the magnitude and consistency of the variances suggest that most of the sampled fees have not kept pace with rising labor, material, and operating costs over time.

Table 6 summarizes the overall benchmarking trends identified across major service areas. While individual fee comparisons should be interpreted cautiously due to differences in local fee structures and methodologies, the benchmarking analysis identified consistent patterns in how Modesto’s fees compare to peer jurisdictions.

Table 6. Summary of Key Fee Benchmarking Trends by Department Department /
Service Area
General
Benchmark
Position Key Themes Identified
Potential
Implication
Community
Economic &
Development
Generally below
peers
Development review
and permit fees are
frequently below peer
averages.

Potential underrecovery of
developmentrelated service
costs
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Department /
Service Area
General
Benchmark
Position Key Themes Identified
Potential
Implication
Engineering
Services
Mixed, but often
below peers
Encroachment and map
review fees are
substantially below
peers; some plan
review fees are above
peers.

Inconsistent fee
methodologies and
update practices
Fire Prevention Generally below
peers
Inspection and permitrelated fees are
frequently below peers.

Potential underrecovery for
inspection and
compliance
activities
Parks, Recreation
& Neighborhoods
Generally below
peers
Community-use
ballfield, facility and
recreational fees are
often below peers.

Significant or
inconsistent
subsidy levels
Police Generally
aligned
Most fees are near peer
averages.

Fees generally
consistent with
comparable
agencies
Finance (Parking
Citations)
Generally
aligned/slightly
below
Citation fees are close
to peer averages.

Lower relative
concern
At the same time, Modesto fees are not consistently positioned below those of peers across all categories. Approximately 20% of sampled fees were aligned with (within 10% of peer average) or above peer averages, indicating that fee updates have occurred inconsistently by department or fee type rather than through a coordinated city-wide process. Interview feedback further supported this pattern, as department employees described varying methodologies, irregular update cycles, and challenges advancing fee increases due to resource constraints and sensitivity to customer impacts.

Taken together, the benchmarking results provide a reasonable basis for the City to reevaluate and potentially increase selected fees, particularly where fees are materially #4..
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below those in comparable jurisdictions, and where current fees do not support intended cost recovery goals. Peer benchmarking alone does not determine the appropriate fee amount; however, when combined with cost analysis and policy considerations, it provides objective support for evaluating whether existing fees remain appropriate and sustainable.

RECOMMENDATION
The City should use the results of this benchmarking analysis, together with updated cost recovery information and policy objectives (see Observations 2 and 3), to support phased fee adjustments in areas where fees are materially below peer averages and no longer reflect the cost of providing services. Priority consideration for fee adjustments should be given to development-related fees and services, fire prevention activities, and selected Parks, Recreation and Neighborhoods fees. Peer benchmarking comparisons and analysis revealed the largest and most consistent variances relative to comparable agencies for these key service categories.

As part of this effort, the City should clearly define and document the rationale and process for fee adjustments, including peer comparisons, changes in operating costs, service demand, and intended cost recovery levels. This information should be incorporated into staff reports and stakeholder communications to help explain the basis for proposed increases and demonstrate alignment with comparable jurisdictions and industry practices.

The City should also incorporate periodic peer benchmarking into its ongoing fee review process to help identify fees that may be falling behind market conditions. Using benchmarking as a recurring analytical tool will support more proactive and incremental fee updates, reduce the need for large one-time increases, and strengthen the City’s ability to justify fee adjustments in future budget and policy discussions.

COST RECOVERY FRAMEWORK
Observation 2 The City lacks a consistent city-wide cost recovery framework to calculate full-service costs and document
intended subsidy levels, resulting in inconsistent
fee-setting practices and unclear, sometimes unintended, levels of cost recovery across departments.
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Recommendation 2 Adopt a city-wide cost recovery framework that sets target recovery levels by service type and establishes a
consistent documented process for calculating full costs, applies beneficiary-based subsidy decisions, and identifies a frequency for reviewing and updating fees across all
departments.

The City does not consistently define, document, or apply the full elements of cost recovery when establishing and updating fees, resulting in incomplete and inconsistent fee calculations across departments. While some departments aim for full cost recovery and others operate with known subsidies, these approaches are not consistently documented or aligned across the organization. In practice, departments make decisions based on operational needs, historic practices, and/or stakeholder considerations, rather than following a unified framework.

Government Finance Officers Association (GFOA) best practices1 emphasize that subsidies should be intentional and aligned based on the extent to which a service provides a broad public benefit versus primarily benefiting individual users. A structured benefit-based framework, such as the cost recovery pyramid methodology (popularized by GreenPlay LLC and used by many jurisdictions), provides a practical way for decision-makers to classify services and establish cost recovery targets that reflect community priorities. Under this approach, programs and services with predominantly community-wide benefit typically recover little or no cost, while services with more individual/private benefit generally target higher levels to full cost recovery. Linking cost recovery expectations to service type and intended outcomes (see Figure A) can support more transparent policy discussions and ensure that fees and subsidies are applied consistently and defensibly.
1 Kavanagh, S. C. (2020). Financial Policies for Imposed Fees, Fines, and Asset Forfeitures: The Basis for Building Trust with the Public and Fair Treatment of All Citizens. Government Finance Officers Association.
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Figure A: Example Cost Recovery Model
©2001 GreenPlay, LLC
Although full cost recovery is a desirable long-term objective for many service areas, it is not always feasible or appropriate to achieve 100% recovery in a single adjustment cycle. Significant year-over-year fee increases may conflict with policy goals or place undue burden on residents and businesses. Also, many municipalities do not traditionally recover the full cost of programs and services due to affordability considerations, public benefit, equity objectives, or community development priorities.

Accordingly, fee analysis should support deliberate City decision-making about which services are appropriate for full cost recovery and which should be subsidized in line with City policies and strategic goals.

Because the City does not consistently calculate full cost recovery or document intended subsidy levels, it is often unclear whether under-recovery is an intentional policy choice or the result of outdated assumptions and inconsistent methods. Staff reported that fees may capture only a portion of the true cost of service, particularly where administrative overhead, indirect costs, shared services, and enforcementrelated activities are not consistently included. These considerations may impact the influence of equity considerations, affordability, and community benefit on fee decisions.

Tier 5: Mostly Individual
Benefit
Tier 4: Considerable Individual
Benefit
Tier 3: Balanced Community /
Individual
Tier 2: Considerable Community
Benefit
Tier 1: Mostly Community
Benefit
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Many peer cities surveyed reported a consistent approach to cost recovery supported by both (1) an organization-wide framework and (2) a common framework of methodological building blocks that are typically consistently applied. Even when policy choices differ, peers with more consistent cost recovery approaches generally have defined exceptions for factors such as community benefit, equity, or market sensitivity.

For example, Bakersfield and Sacramento generally aim for full cost recovery but acknowledge subsidized fees in certain circumstances (e.g., harder-to-serve areas or market sensitivity), Santa Clarita uses full recovery for development fees and partial recovery where services provide community benefit, and San Bernardino reports a consistent approach despite using partial recovery and subsidies in some areas. Table 7 summarizes the various approaches used by the responding peer cities for cost recovery and fee-setting. “Yes” indicates the city uses a consistent approach to cost recovery.

Table 7. Peer Cost Recovery Approach and Fee-Setting
Peer City
Uses Consistent
Approach to Cost
Recovery Approach to Fee-Setting
Bakersfield Yes
Most fees are set at full cost, but some are
subsidized, particularly those that affect citizens
in harder-to-serve areas of the community.

Glendale No A mix of partial cost recovery and subsidy-based fees.

Manteca No Fee-setting depends on the department and
whether the fee relates to Proposition 218**.

Merced No A mix of partial cost recovery and subsidy-based fees.

Sacramento Yes
Depends on the fee type. Generally, Sacramento
aims for full cost recovery while also accounting
for market sensitivity.

San Bernardino Yes Partial cost recovery and subsidy-based.

Santa Clarita Yes
Full cost recovery for development fees and
partial cost recovery for items that provide a
community benefit.
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restrictions on property-related fees.

Unlike many peer cities, Modesto has an inconsistent approach to cost recovery, including the use of different cost recovery inputs. Some departments incorporate direct cost components (e.g., labor, materials, and overhead) and others rely on partial estimates, historical assumptions, or informal approaches that have not been revisited in many years. In several cases, City staff track time and costs through systems such as Lucity or eTRAKiT; however, the data is not consistently or systematically used to validate unit costs or inform fee levels. Some staff reported the use of time-and-materials billing, and that time-tracking practices require substantial manual effort. Although some inspection activities are recorded in the permitting system (e.g., time logged in eTRAKiT), staff noted that key systems are not integrated (e.g., eTRAKiT does not seamlessly connect with the City’s ERP/timekeeping system). As a result, staff must enter, reconcile, or validate time and costs across multiple platforms (e.g., eTRAKiT, Oracle/timekeeping, and Excel). This increases administrative workload and creates the risk of errors, inconsistent application, delayed billing, and incomplete cost recovery.

Responding peer cities reported that a variety of cost inputs may be used, likely depending on the type of fee. Table 8 shows the various cost inputs used by peers. “Yes” indicates the city uses the cost input.

Table 8. Peer Fee Cost Inputs
Peer City
Time and
Materials
Loaded Labor
Rates
Overhead
Allocations
ConsultantDeveloped
Models
Bakersfield Yes Yes Yes No
Glendale Yes Yes Yes Yes
Manteca No No No Yes
Merced Yes Yes Yes Yes
Sacramento Yes Yes Yes Yes
San Bernardino Yes No Yes Yes
Santa Clarita Yes Yes Yes Yes
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At Modesto, this inconsistency in cost recovery approach is largely driven by the absence of a standardized, city-wide methodology and limited coordination across departments. Departments apply different interpretations of what “cost recovery” should include and how costs should be allocated, which contributes to variability in fee outcomes and reduces transparency and defensibility.

Collectively, these conditions increase the risk that the City is not fully recovering the costs of providing services and in some cases, is providing services below cost without a clear policy rationale. This can create unintended subsidies, reduce financial sustainability, contribute to inequitable outcomes or misaligned resource allocation, and make it difficult to clearly explain and defend fees to stakeholders.

RECOMMENDATION
The City should formalize a city-wide cost recovery framework that defines target recovery levels for different service categories and establishes a consistent process for evaluating and applying those targets.

Key elements of a Modesto cost recovery framework should include the following (also see Appendix B for example cost recovery models):
● Criteria and considerations for beneficiary subsidies: Community benefit fees typically are only used to cover direct project costs. Fees for programs/projects that are mostly or partially community-based should usually cover project personnel and other related development expenses. Fees for programs/projects that solely benefit individual users should normally be set to cover all costs, including direct and indirect expenses. These criteria should be determined based on city-wide strategic priorities. One way to distinguish between community and individual benefit is to use the framework in Table 9.

Table 9. Beneficiary Considerations: Community versus Individual Benefit
Community Benefit Individual Benefit
Any community resident/member may
attend
Attendance is restricted to a specific group
by request
The program/content/delivery
development is part of ongoing program
efforts and may be broadly applied and
utilized
Programs/services require customizing the
curriculum/product for a specific group
beyond what is typical for public
programming
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Community Benefit Individual Benefit
Materials developed are broadly
available and may be shared with others
Materials are available only to those within
a specific group
Time needed to develop the program is
reasonable and part of the overall plan
of work
Time needed to develop the program
exceeds what is reasonable and available
within the employee’s planned work
Time needed to deliver the program is
reasonable and within an employee's
work assignment
Time needed to deliver the program
exceeds what is reasonable and available
within an employee's work assignment
● Target cost recovery rates or levels for different types of fees (e.g., 100% cost recovery for fees related to individual benefits)
● Appropriate basis for cost recovery:
○ Direct and indirect cost analysis through time-and-effort studies ○ Historical trends
○ Benchmarking/market comparison
● Documentation of cost recovery determinations, calculations, data sources, and any assumptions used. This includes an evaluation of both direct costs (e.g., labor, materials, equipment) and indirect costs (e.g., administrative support, overhead, and shared services), using a consistent allocation methodology across departments. ● Responsibilities for maintaining and updating cost allocation models ● Review and approval procedures
While individual departments may apply different recovery levels based on service characteristics, the framework should ensure that all departments follow a consistent process for evaluating and documenting cost recovery decisions. Documenting these distinctions in policy will support consistent decision-making, improve transparency, and provide a clear basis for communicating subsidy decisions to residents and stakeholders.

FEE POLICY AND GOVERNANCE
Observation 3 The City lacks a comprehensive city-wide fee policy, resulting in outdated fees, inconsistent fee-setting
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practices, unclear expectations, and limited coordination across departments.

Recommendation 3 Adopt a formal city-wide fee policy and procedure that standardizes methods for fee calculations and documents the process for review and approval to ensure consistent, transparent, and policy-aligned actions across all
departments.

The City does not currently operate under a comprehensive city-wide fee policy that defines how fees should be established, evaluated, updated, and managed across departments. While individual departments have developed processes based on their specific service needs, these practices are not consistently applied or coordinated. As a result, key elements such as cost recovery objectives, update cycles, use of escalators, documentation standards, and approval processes vary across the organization.

It is best practice to have a fee policy to clarify information, roles and responsibilities, and to set fee review timelines. Unlike Modesto, many peers surveyed reported they conduct annual fee updates, while others reported regularly updating every few years.

Table 10 shows if peers have a formal fee policy, how often fees are reviewed/updated, and the date of the last update.

Table 10. Fee Policies and Governance for Peer Cities
Peer City
Documentation of
Formal Fee Policy
Frequency of Fee
Reviews/ Updates
Last Time City
Fees Were
Updated
Bakersfield Yes, but policy is not
updated Annually May 2025
Glendale No Annually June 2025
Manteca No 3-5 years Not reported
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Peer City
Documentation of
Formal Fee Policy
Frequency of Fee
Reviews/ Updates
Last Time City
Fees Were
Updated
Merced
No Inconsistent timeline
Recreation
Department: 2025
Development
Services: 2026
Fire Inspections:
2023
Sacramento Yes, updated and
comprehensive policy Annually May 2025
San
Bernardino
Yes, but policy is not
updated Inconsistent timeline July 2020
Santa
Clarita Yes, updated and
comprehensive policy
Other: Every fifth-year
full fee study; every
other year by CPI
June 2025
In interviews, departments noted uncertainty around expectations for updating fees, including when to initiate changes, the level of analysis required, and how to navigate the approval process. As a result, fee updates typically occur on an ad-hoc basis or are deferred until broader initiatives are undertaken, rather than following a defined and proactive process. Some departments incorporate periodic adjustments or participate in broader fee studies, while others have not updated fees in many years. While the majority of Modesto fees have been adjusted in the last five years, some have not been updated in decades despite significant cost increases. Table 11 shows the available date of update of City fees; while the majority were updated in the past four years, some were last updated in 1988.

Table 11. Modesto Fee Adjustments Over Time
Date Range
Number of Fees Adjusted by
Date Range
No Date Reported 237
1988-1999 17
2000-2015 55
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Date Range
Number of Fees Adjusted by
Date Range
2016-2020 59
2022-2026 667
Total Adjustments 1,035
For fees with available last-update data, Table 12 presents, by department, the average number of years since the last fee update, the number of fees with last-update information, the earliest year a fee was updated, and the most recent year a fee was updated. The data suggests that some City departments update fees regularly, while others may have gone for many years without review and updating—indicating inconsistent fee oversight and potential cost recovery gaps. Where fees have not been updated for many years, there is a strong possibility that the City is no longer recovering the actual cost of providing services.

Table 12. Modesto Fee Updates by Department
Department
Average
Years Since
Update
Number of
Fees2
Oldest Fee
Update
Most Recent
Fee Update
CED 3 186 2014 2025
City Clerk's Office 23 28 1988 2025
Engineering 3 86 2023 2023
Finance 10 93 1993 2025
Fire 3 31 2023 2023
Police Unknown N/A Unknown Unknown
PRN 1 208 1993 2025
Public Works 2 56 2017 2025
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Department
Average
Years Since
Update
Number of
Fees2
Oldest Fee
Update
Most Recent
Fee Update
Utilities 3 110 1995 2026
In addition, the absence of clearly defined roles and responsibilities has made it more difficult to coordinate fee updates across departments or advance recommendations efficiently. These challenges are compounded by capacity constraints and sensitivity to fee increases, which can further delay updates and contribute to a “set it and forget it” approach to fees for some City programs and services.

Without a formal policy and a dedicated framework to ensure that fees are aligned with direct and indirect costs, overhead, and updated subsidy adjustments, the City risks maintaining outdated or inconsistent fee structures. Over time, outdated and inconsistent fees will result in reduced cost recovery (see Cost Recovery Framework), increased reliance on subsidies, and the City’s inability to demonstrate that fees are reasonable, equitable, and compliant with applicable requirements.

RECOMMENDATION
The City should adopt a formal, city-wide fee policy and procedure that establishes a consistent framework for developing, updating, and managing fees across departments.

This policy should define roles and responsibilities, cost recovery objectives, fee update cycles (e.g., annual or every three years), use of escalators (see Fee Escalators), documentation standards, and approval processes, while allowing flexibility for department-specific considerations.

A fee policy and procedure should include the following components:
● Fee Framework: This framework should at minimum include the following:
○ Identify cost objectives for each service
○ Develop a consistent allocation strategy (see Cost Recovery Framework) ○ Document methods and practices for determining/allocating fees ○ Establish responsibility for maintaining and applying allocation models ● Roles and Responsibilities: Clearly designate departmental and city-wide responsibilities for maintaining fee schedules, conducting reviews, and ensuring consistency.
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● Fee Review Updates: Define how often fees must be reviewed and updated to ensure they remain aligned with current service delivery costs. A target timeframe for updating fees, such as every three years, should be specified. In addition, guidance in the form of steps/actions required to update fees, including methods, analytical requirements, and documentation standards, should be detailed in the policy.
● Fee Escalators: Define when and how fee escalators, such as Consumer Price Index (CPI) or Construction Cost Index (CCI) may be used to help fees keep pace with rising costs. This may include which types of escalators can be used, on what cadence (such as annually), which fees may use an escalator, and whether escalators require City Council (Council) approval or are applied at pre-set intervals.

It is also important to note that fee escalators should complement but not replace periodic comprehensive fee reviews.
● Cost Recovery: Clarify the City’s adopted approach to cost recovery (see Cost Recovery Framework for information on what should be included in cost recovery). ● Exemptions and Waivers: Define when exemptions, discounts, or waivers can or may be granted and the process for requesting and approving them. ● Documentation Requirements: Specify supporting materials needed to validate/support fee changes, such as third-party studies, cost analyses, and/or departmental justification.
● Enforcement: Identify how fees will be monitored and enforced to support compliance and ensure revenue integrity.
● Review and Approval Process: Outline required internal reviews, stakeholder input/coordination, and the formal approval path for fee recommendations (e.g., Fee Task Force, Department Directors, City Manager’s Office, and City Council).

As an example, the City of Sacramento has adopted a city-wide Fees and Charges Policy3 that aligns with these components and includes the following:
● Defines categories of fees (e.g., service, regulatory, rental, penalties) ● Establishes cost recovery goals
● Requires periodic updates to reflect changes in the cost of service ● Incorporates inflationary adjustments using a defined CPI index 3 City of Sacramento Fees and Charges Policy
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● Aligns all fee changes with Council policy direction and legal requirements Sacramento’s city-wide policy also requires that fees be reviewed annually to ensure they reflect current costs and service levels. The Sacramento model demonstrates how a formal policy can support internal consistency and financial sustainability.

By adopting a comparable policy, the City can move from a decentralized ad hoc approach to a structured and transparent system that supports consistent decision-making, improves coordination across departments, and ensures fees remain aligned with the full costs of programs and service delivery and the Council’s adopted policy objectives and priorities.

FEE ESCALATORS
Observation 4 The City lacks consistent policy guidance on the use of fee escalators, resulting in irregular and inconsistent fee adjustments across departments.

Recommendation 4 The City should establish clear guidance for applying fee escalators, including defined indices and timelines for regular adjustments.

The City lacks consistent policy guidance on when or how to apply inflationary adjustments, such as a CPI, CCI, or other escalators used to update/adjust fees. Fee escalators are intended to maintain alignment with underlying cost assumptions over time and are not intended to independently achieve full cost recovery. While some City departments incorporate periodic increases or reference external indices for fee adjustments, others rely on infrequent or ad hoc updates. In the absence of a consistent approach for determining and recommending fee adjustments, there is significant variation in how fees are maintained over time. Table 13 shows the number of fees for using an escalator and the type of escalator used as reported by City staff.

Table 13. Number of Modesto Fees with Escalator Applied Escalator Type
Number of Fees Reported with an
Escalator
Consumer Price Index 9
Construction Cost Index 379
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Escalator used, type not specified 18
Modesto Fees with an escalator
applied 406 (39% of Fees)
In practice, many fees have remained unchanged for multiple years, even as labor, materials, and service delivery costs increase. Leading practices support using defined escalation mechanisms and regular review cycles to ensure fees are adjusted and aligned to reflect the cost of providing services and avoid the need for large and/or infrequent adjustments.

The lack of consistently used escalators appears to be driven by the City’s decentralized approach to fee management and the absence of a city-wide policy establishing expectations for fee updates (see Fee Policy and Governance).

Departments independently determine whether and how to adjust fees, leading to inconsistent methodologies and timing across service areas. Capacity constraints are also a contributing factor, as staff noted that comprehensive fee reviews require significant time and coordination, making it difficult to prioritize regular updates. In addition, sensitivity to the impact of fee increases on residents, businesses, and development activity can create reluctance to advance adjustments even when cost increases are well understood.

Many peers use an annual escalator (either CPI or CCI) on some fees. Table 14 shows peer data on the use of escalators. The City of Bakersfield applies an annual CPI escalator on all fees while others, similar to Modesto, inconsistently use an escalator on some fees, depending on the type of fee.

Table 14. Peer Data on Fee Escalators
Peer City
Does city use
a fee
escalator(s)?
Is an
escalator
applied to all
fees?
Type of
escalator
used?
How often is
the escalator
applied?
Bakersfield Yes Yes CPI Annually
Glendale Yes No
(some fees) CPI Annually
Manteca Yes No
(some fees) CPI Depends on
the fee
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Peer City
Does city use
a fee
escalator(s)?
Is an
escalator
applied to all
fees?
Type of
escalator
used?
How often is
the escalator
applied?
Merced Yes No
(some fees) CPI and CCI Annually
Sacramento Yes No
(some fees) CPI and CCI
Depends; not
consistently
used each
year or applied
to each fee
San Bernardino No N/A N/A N/A
Santa Clarita Yes No
(some fees) CPI Annually
Without a consistent approach to applying escalators or regularly updating fees, the City risks maintaining fee levels that do not reflect current costs of materials, hourly wages, and other inputs. Delayed updates to fees may also lead to larger increases when changes are eventually implemented, making them more difficult for stakeholders to absorb and creating additional challenges in gaining approval.

RECOMMENDATION
The City should establish clear guidance on the use of fee escalators to support routine adjustments between comprehensive fee reviews. This guidance should define the following:
● Types of fees eligible for escalation: Fees that benefit most from consistent escalators include full cost recovery service fees or labor-intensive services. Fees with lower-cost recovery goals or intentional subsidies may be less appropriate for regular escalation and require additional policy considerations. ● Appropriate indices: The most common indices are CPI and CCI, though other relevant cost indices such as alignment with federal/state fees, producer price index, or fixed-percentage escalators that use a pre-set increase may also be appropriate depending on the cost drivers of the service.
● Frequency of use: Escalators should be applied at consistent intervals (e.g., time and frequency) based on the type of program or service, to promote transparency #4..
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and administrative efficiency. Annual escalators are commonly used though escalators may also be tied to periodic fee reviews and updates. ● Approval requirements: Escalator adjustments may not require the same approvals (such as Council approval) as other fee changes if they are applied in accordance with an established Council-adopted policy governing formula-based updates.

While fee escalators are intended to maintain alignment with rising costs, they should not replace periodic comprehensive fee studies. A structured approach to fee escalation will help ensure that fees remain current over time, reduce the need for one-time or phased adjustments, and improve predictability for both the City and its stakeholders.

PARKS, RECREATION & NEIGHBORHOODS (PRN) FEES
Observation 5 PRN has not consistently updated or applied a uniform cost-based approach to all fees, resulting in complex,
outdated fee levels that may be below market rate and
below the true cost of service.

Recommendation 5 Regularly review and update PRN fees using standardized cost methods, document waivers/subsidies, and establish routine escalators to ensure fees are current and aligned with Council goals related to community benefit and
equity.

Due to the volume and variety of PRN fees, we assessed these departmental fees specifically to identify areas for improvement. Many PRN fees have not been consistently reviewed or updated over the past five years. For 111 PRN fees, no dates were reported. PRN staff reported that some fees do not reflect current market rates or the City’s cost to provide programs and services for individuals, families, teams, and affinity groups. PRN has reportedly implemented targeted adjustments for certain facility-related fees, including Council-approved increases for some facilities; however, many other fees have remained unchanged for extended periods. Table 15 shows the date of PRN fee updates from 1993 to 2025.
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Table 15. Parks, Recreation & Neighborhoods Fees - Adjusted Over Time
Year
Number of Fees Adjusted
by Year
No Date Reported 111
1993 2
2025 206
Total Fees 319
Fees updated in 2025 apply to specific programs, including the Boy Scout Clubhouse, Maddux Youth Center, Senior Citizens Center, Mancini Bowl, Horseshoe Pits, McHenry Mansion, Group Picnic Rentals, Mary Grogan Soccer Complex, Sports Field Rental Fees, Field Services, and Miscellaneous Fees. Fees that have not been updated since 1993 pertain to the McHenry Museum. The remaining fees without a reported date include recreation and golf course fees. Although some fees have been updated, City staff reported that several fees for special event permits remain lower than those in peer cities.

PRN has made some efforts to update and create fee frameworks. For example, PRN completed a Fund Development Plan and Implementation Strategy assessment in 2023.

The Plan and Strategy established a benefit-based framework that categorizes recreation programs by public versus private benefit, and sets percentage-based cost recovery expectations by benefit tier (e.g., programs with higher community benefit are priced lower or offered at no cost, while programs classified as individual benefit, such as swim lessons, should recover the full program/service cost). PRN also uses internal budget worksheets (spreadsheets) to estimate program costs that incorporate staffing costs, an overhead rate, discretionary expenses, and consider donated goods or volunteer support, where applicable. However, this structured approach is not applied consistently across all PRN program and fee categories, resulting in uneven cost recovery outcomes, and limiting PRN’s ability to ensure that fees reflect current service costs and operational demand.

Fees for historic properties (e.g., the McHenry Mansion and the McHenry Museum Collection Services) represent a significant cost recovery gap, as noted by staff. PRN staff reported that fees for research and photo services at these locations were last evaluated in 1993 and remain at the same rates today. Additionally, certain new fees #4..
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that staff believe are warranted (e.g., a photography fee for photo sessions at highdemand historical sites and other City owned park locations) have not been implemented, due to resistance from some stakeholders, despite ongoing operational impacts on PRN hours. Staff also noted that rental fees for the McHenry Museum were excluded from the 2025 increases and adjustments. As a result, PRN indicated that some rental expenses may exceed the revenue generated because of staff and operating costs, raising concerns about financial sustainability and the appropriateness of continuing to offer certain rentals at current rates.

Although PRN fees are not consistently updated, our analysis indicates a continued increase in fee revenue. As shown in Table 16, fee revenue increased from approximately $3.1 million in FY23 to $4.3 million in FY25, while the percentage of General Fund expenses offset by fee revenue remained relatively consistent at approximately 22% to 26%.

Table 16. PRN General Fund Expenses and Fee Revenue
Metric FY23 FY24 FY25
PRN General Fund
Expenses
(thousands)
$14,268.3 $14,960.7 $17,478.7
PRN All Fee Revenue
(thousands) $3,127.5 $3,859.7 $4,253.7
Y-o-Y % Change 23% 10%
Fee Revenue as % of
General Fund Expenses 22% 26% 24%
PRN also uses a complex fee structure with multiple rate variables (e.g., different prices by day of the week, nonprofit rates, field fees by type (artificial versus natural turf), and additional rental-related fees for lighting and other amenities). While PRN’s registration/reservation system can apply rate rules (including resident/non-resident and nonprofit pricing), staff indicated that the fee structure can be difficult to explain to customers and to administer consistently. PRN also uses multiple systems for different functions (e.g., the Explore Recreation system for recreation-type fees, the Horse #4..
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Engine system for certain program registrations, and other systems for inventory management) and department leaders are considering new software to improve data quality and usability.

The complexity of PRN fees also limits Modesto’s ability to effectively evaluate cost recovery in sufficient detail for this high-demand city service. While PRN can track overall revenue for broader programs or facilities—such as total greens fees for Creekside Golf Course (revenue of approximately $1.2 million in FY25)—the City does not consistently track revenue and expenses at the individual fee or service level. As a result, PRN has limited visibility into whether the specific service/program fee categories, time slots, user groups, or service offerings are recovering costs, operating at a subsidy, or generating higher-than-expected revenue. The combination of numerous fee variations and multiple systems also makes it more difficult to conduct detailed financial analysis, assess pricing effectiveness, and make informed decisions about fee adjustments and subsidy levels.

In addition to outdated fees, PRN has identified new revenue opportunities that have not been implemented. Most notably, staff emphasized the absence of non-resident rates for facilities and rentals—an approach common in other jurisdictions, and a potential source of meaningful additional revenue. New PRN rates for potential customers from outside of the City will enhance special events (e.g., wedding rentals) and other demand-based revenues. Staff mentioned the need for clearer city-wide guidance on valuing and documenting the costs of in-kind City services (e.g., police staffing, volunteers, or other City support) for PRN events. Lacking guidance for valuing and documenting in-kind costs and certain overhead expenses affects PRN’s ability to consistently quantify the true cost of services, donated or contributed by other City departments, and communicate the value of these contributions.

Finally, PRN noted that fee waivers and use of facilities by city staff can create undocumented hidden subsidies and opportunity costs. For example, when City departments or outside groups use the McHenry Mansion or other PRN facilities at a discounted fee or no-charge, PRN still incurs staffing and setup costs and foregoes potential rental revenue. While staff indicated the facility and service waivers can be tracked through reservations, the fiscal impact and lost revenue are not consistently reported or tracked, limiting visibility into the true subsidy levels associated with PRN facility use.

Collectively, these conditions increase the likelihood that PRN is under-recovering costs across several service areas, due to a lack of a consistently documented policy #4..
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rationale and guidance. This reduces financial sustainability and limits PRN’s ability to align fees with both market demand and the City’s intended subsidy objectives.

RECOMMENDATION
PRN should undertake a comprehensive, structured fee review of all department fees using the process set in the recommended fee policy (see Fee Policy & Governance), clearly document waivers and subsidies, and establish routine escalators. The effort should prioritize high-risk and long-outdated fees (e.g., historical properties) and simplify the fee schedule to improve transparency for customers and ease of administration.

Considerations for the fee review include:
● Review the PRN department-wide fee schedule and standardize documentation:
○ Review the PRN fee schedule and complete a fee study to identify which fees should be updated, added, or removed. This review should include ways to simplify the schedule (e.g., consolidating day-of-week pricing where it does not materially affect demand or cost) and ensure that nonprofit, resident, nonresident, and other discounted rates are clearly defined, consistently verified, and easy to apply. Resident and non-resident fees may be best applied to programs and rentals that typically serve a higher rate of non-residents, so non-residents contribute to these services provided by the City.
○ Establish standard fee worksheets for each fee category (programs, facilities/rentals, permits, historical properties) documenting assumptions, unit costs, and the intended cost recovery/subsidy level. These worksheets should use standardized inputs (e.g., fully burdened labor rates, overhead allocations, materials, equipment, utilities, custodial/setup, and event-related support) to determine the full cost of service and appropriate fee level. ○ For McHenry Museum fees that have not been updated since 1993, the City may choose to differentiate between resident, non-resident, and nonprofit fees— similar to how the City of Santa Clarita allocates fees for a similar facility4. ● Formalize waiver, internal use, and subsidy tracking:
4 City of Santa Clarita Mitchell River House Rental Information #4..
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○ Establish criteria and approval authority for waivers/discounts and require documentation of the fiscal impact (e.g., revenue forgone and, where feasible, incremental costs incurred).
○ Track internal use of PRN facilities and report the associated opportunity cost and/or waived amount annually to improve visibility into subsidies. ● Establish a routine update cadence with annual escalators:
○ Continue CPI and CCI escalators where appropriate, and require comprehensive fee reviews on a set schedule (e.g., every two to three years) to reset fees based on updated cost and market conditions (see Cost Recovery Framework).

Implementing these steps will help PRN better align fees with current costs and demand, make subsidies transparent and intentional, reduce administrative complexity, and improve long-term financial sustainability.

COMMUNITY AND ECONOMIC DEVELOPMENT FEES
Observation 6 CED’s development fee schedule is complex and inconsistently administered across departments and
systems, increasing staff workload and errors while
reducing cost recovery alignment, predictability, and
transparency for applicants.

Recommendation 6 A. Modernize CED development fees by simplifying and standardizing the fee schedule, embedding and
automating fee assessment using eTRAKiT, and
publishing an updated schedule. B.

B. Develop a fee calculator to promote consistent fee
calculations by application type, support cost
recovery objectives, and improve customer
transparency.

Due to the variety and complexity of CED fees, we assessed these fees specifically to identify areas for improvement. CED administers a large and complex development fee schedule that spans multiple permit types and requires coordination across several departments. This department currently has 186 fees, which is approximately 18% of the City’s total fees.
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Because CED’s fee structure includes numerous conditional requirements and relies on a mix of system-automated and manual steps, this creates operational challenges for staff who have high workloads and can reduce predictability and transparency for applicants. These conditional requirements often require staff to apply judgment when determining applicability and calculating amounts, and this complexity is compounded by system limitations. For instance, not all planning fees are fully embedded in the eTRAKiT system. This means staff must calculate and enter certain fees manually. As a result, staff must determine these fees without the aid of forms for development fee inputs—increasing the risk of errors or rework and making it more difficult to apply fees consistently across project/permit types.

Fee structure complexity also affects how well fees align with workload and how they are perceived by customers. In some cases, fee structures do not scale with actual effort. For example, subdivision-related work may not be fully reflected because current fee tiers relate to the number of lots, but do not adequately take into account the amount of work needed based on the increase in lots per subdivision. This creates situations where staff effort is not matched by the corresponding fee paid by the applicant. Additionally, applicants may perceive fees as inconsistent or inequitable across project types. Staff noted that tiered or sliding-scale structures could better align charges with workload and development impacts.

While the City can track fee revenue and expenses at the broader departmental level for Planning, Building, and Engineering functions, it does not consistently track revenue and expenses at a sufficiently granular level to evaluate cost recovery by individual fee type or service. As shown in Table 17, fee revenue offsets a portion of overall General Fund expenses for these combined functions, ranging from approximately 41% to 58% over the review period. However, because revenue and expenditures are generally aggregated across divisions and service categories, the City may have limited visibility into which specific permits, reviews, inspections, or development-related activities are fully recovering costs versus those operating at a subsidy.

This limitation is compounded by the complexity of development-related fee structures, which include a mix of flat fees, deposit-based fees, time-and-materials charges, and fees shared across multiple departments. Although systems such as eTRAKiT provide improved time-tracking and permitting data, departments noted that the City does not consistently use this information to evaluate fee-level cost recovery or regularly reassess fee assumptions. As a result, the City may have difficulty identifying where fee #4..
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adjustments, process improvements, or policy decisions regarding subsidies are most needed.

Table 17. Planning, Building, and Engineering General Fund Expenses and Fee Revenue
Metric FY23 FY24 FY25
Planning + Building +
Engineering General Fund
Expenses (thousands)
$6,621.6 $5,962.9 $9,010.6
Planning + Building +
Engineering Revenue from Fees
(thousands)
$3,255.6 $3,478.6 $3,658.0
Y-o-Y % Change - 7% 5%
Fee Revenue as % of General
Fund Expenses 49% 58% 41%
In addition, complex fee triggers and multi-step reviews, inspections, and other requirements related to development permitting decisions can reduce transparency for applicants. Certain fees apply only under specific development conditions, require additional steps (such as CED-related charges limited to certain geographic areas), or are processed by different departments. Development review and inspection involve multiple departments (e.g., Planning, Building, Engineering, and Fire), each with distinct workflows. Differences between departmental processes can cause inefficiencies and require additional staff time to manage handoffs, resolve discrepancies, and respond to questions. These challenges are exacerbated by vacancies and turnover in key roles, which reduce the City’s capacity to maintain fee schedules, complete routine updates, and implement improvements, increasing operational risk and dependence on institutional knowledge. Even when requirements are publicly posted, applicants may not understand these complexities, which can lead to unanticipated costs, added follow-up with staff, and customer frustration.

The City established the Comprehensive Fee Task Force (CFTF) nearly 16 years ago to align development-related fee structures with the overall goals and policies of Modesto’s General Plan and Strategic Plan. The last review of development fees by the Task Force was in 2018-19 and a refresh by the Task Force is planned for this year (2026). #4..
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Fees subject to CFTF review are associated with the development process and include a fee range for land use, plan review, permitting and inspections, including:
● Building safety
● Fire prevention
● Land development
● Landscaping
● Planning (zoning and land use)
Community Facility District (CFD) fees are assessed for infrastructure financing needed for designated geographic areas within the City to support approved developments.

Many of the 18 CFD fees are set to adjust annually, up to a maximum of 4%. Capital Facilities Fees (CFF) are impact fees that support the development, expansion, or upgrading of Modesto public facilities that result from increased facility needs due to the construction of new buildings and non-residential additions. CFFs are updated every five years and were last updated in 2023. The 9.19% increase in 2023 was based on the CCI.

RECOMMENDATION
CED should modernize its development fee program by simplifying the fee schedule, standardizing cost recovery inputs and documentation across departments, and automating fee assessment and billing to reduce manual work and improve transparency for applicants. This effort should be implemented in coordination with Finance and partner departments (e.g., Engineering, Fire, and Public Works) and tied to the Fee Policy & Governance. Additionally, the City should task the CFTF with identifying an annual or biennial fee escalator to ensure staff and overhead costs associated with the review of land use and land development proposals are fully recovered.

CED should first review the full development fee schedule to identify conditional/duplicative fees, unclear triggers, and fees that require manual interpretation, then revise fee language to be objective and consistently applied. Fees that do not scale with workload (e.g., subdivision-related activity) should be redesigned to adopt tiered or sliding-scale structures based on measurable drivers (e.g., number of units/lots, valuation, square footage, or project type). Where feasible, high-volume repeatable services should be converted from time-and-materials to fixed or hybrid fees (fixed base + time-and-materials above a threshold) to reduce administrative effort while maintaining cost recovery.
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CED should also examine the eTRAKiT system to assess whether fully embedding planning fees and other routinely assessed fees is possible, in order to minimize manual entry, reduce staff dependency, and eliminate errors caused by the complexity of development fee inputs and calculations. Use of a public-facing fee calculator tool is a best practice and effective tool for the public and staff for identifying development fees based on various types of improvements and development scenarios. Once these updates are complete, CED should publish an updated schedule and permit fee calculator to the City’s website so customers can access them.

Implementing these actions will help reduce administrative burden, improve fee consistency and defensibility, increase predictability for applicants, and strengthen the City’s ability to recover the cost of development review services while making any subsidies transparent and policy-driven.

DEVELOPMENT IMPACT FEES
Observation 7 Although the City has updated its development impact fees in recent years, it has not completed a nexus study since 2003. While the City remains within the statutory timeframe for completing its next nexus study, the age of the existing study increases the risk that underlying
assumptions regarding growth, infrastructure needs,
capital costs, and land use no longer reflect current
conditions.

Recommendation 7 Conduct a comprehensive nexus study to evaluate and update the City's development impact fees based on
current growth projections, infrastructure needs, capital improvement plans, and the requirements of the Mitigation Fee Act.

Development impact fees are charges imposed on new developments to fund some or all of the costs needed to accommodate the infrastructure related to the development. In California, these fees are governed by the Mitigation Fee Act (Government Code §§ 66000-66025) enacted in 1981, which establishes specific legal requirements for how impact fees are calculated, adopted, and used. Because these fees are intended to mitigate the impacts of new development, it is important to periodically analyze these fees to ensure they continue to recover an appropriate share of growth-related #4..
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infrastructure costs, reflect current development patterns and construction costs, and remain legally defensible. Under the Mitigation Fee Act, fee revenues may only be used to mitigate impacts attributable to new development and cannot be used to correct existing infrastructure deficiencies. As a result, impact fee calculations require careful analysis of future development projections, infrastructure demand, levels of service, and planned capital improvements.

The City has a capital facilities fees policy and procedure that states that the City should conduct periodic studies to identify the facilities needed and their costs. However, the last study completed was in 2003, more than 20 years ago. According to the California Government Code §§ 66016.5 passed in 2022, nexus studies should be updated at least every eight years, from the period beginning January 1, 2022. Though the City is still compliant within this time frame, underlying assumptions from the nexus study may be outdated and no longer reflect current conditions.

When the City has a nexus study performed, it should consider how capital facilities fees may be restructured or updated. The City’s development impact fees include capital facilities fees with rates differentiated by land use and geographic area. Separate fee schedules are established for residential, commercial, institutional, and industrial development, with fees varying between the City limits, Sphere of Influence (SOI), and Downtown Economic Incentive Area (DEIA).

Our review found that peer cities use a variety of methodologies when establishing development impact fees ranging from a single consolidated development impact fee to numerous separate impact fees by infrastructure type. While all cities must satisfy the legal requirements of the Mitigation Fee Act, there is no single standardized fee structure or calculation methodology. Fee schedules vary based on local growth projections, capital improvement programs, adopted levels of service, land use assumptions, infrastructure priorities, and policy objectives.

Across the peer jurisdictions reviewed, the primary differences in development impact fee programs fall into three areas:

1. Fee categories. Most peer cities assess multiple infrastructure-specific impact fees rather than a single comprehensive fee. Common fee categories include:
• Transportation and traffic improvements
• Sewer and wastewater infrastructure
• Fire and public safety facilities
• Parks and recreation
• Water infrastructure
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Several jurisdictions also assess separate fees for storm drainage, law enforcement, libraries, technology, affordable housing, transit, public facilities, environmental mitigation, or other specialized infrastructure.

2. Development type differentiation. Most cities establish different fees based on land use, including residential, commercial, office, industrial, hotel, and institutional development. Residential fees are often further differentiated by housing type, dwelling size, or density to better reflect anticipated infrastructure demand.

3. Fee measurement methodology. Jurisdictions use a variety of units to calculate impact fees depending on the infrastructure being funded and the type of development. Common methodologies include fees assessed per dwelling unit, per square foot, per gross acre, per lot, per hotel room, per bed, or a combination of measurement units.

These differences demonstrate that development impact fees are community-specific and should reflect each jurisdiction's infrastructure needs and long-term growth strategy rather than neighboring cities' fee levels.

To help illustrate how the City could consider structuring its development impact fees as part of the nexus study, we developed several fee comparison scenarios based on the approaches observed among peer jurisdictions. These scenarios provide a framework for comparing potential fee structures and are intended to inform the City’s consideration of alternatives rather than prescribe a particular fee structure. See Appendix D: Impact Fee Benchmarking Data for the fee comparison scenarios.

RECOMMENDATION
The City should conduct a comprehensive update of its capital facilities fees through a nexus study and establish a regular process to review and update development impact fees. A nexus study provides the technical analysis needed to support these findings by documenting anticipated growth, identifying infrastructure improvements required to accommodate that growth, allocating costs between existing and future development, and calculating the proportionate share that may be recovered through development impact fees. The nexus study should evaluate current growth projections, planned capital improvements, infrastructure costs, levels of service, and land use assumptions to ensure that the City's capital facilities fees continue to comply with the requirements of California's Mitigation Fee Act and equitably allocate infrastructure costs attributable to new development.
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Regular nexus studies allow the City to update construction cost estimates, revise development and population forecasts, evaluate changes to the Capital Improvement Program, and confirm that fee revenues continue to be allocated appropriately among eligible projects. Establishing a regular schedule for comprehensive nexus study updates, supplemented by annual inflation adjustments where appropriate, helps maintain fee adequacy, improve transparency, support compliance with California law, and ensure that new development continues to pay its proportionate share of growthrelated infrastructure costs. #4..
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APPENDIX A: PEER CITIES FEE

BENCHMARKING
Table 18. Peer Fees Benchmarking Results
Benchmark Fee
Modesto
Fee Peer Avg. % Diff.

Peer
Count
CED - Building & Safety -
Miscellaneous - Demolition Permit $301 $350 -14.0% 8
CED - Building & Safety -
Miscellaneous - Electrical
Photovoltaic - Commercial
$1,098 $1,028 6.8% 10
CED - Building & Safety -
Miscellaneous - Electrical
Photovoltaic - Residential
$333 $386 -13.7% 11
CED - Building & Safety -
Miscellaneous - Signs (All Types) $321 $776 -58.6% 8
CED - Building & Safety -
Reinspection Fee $216 $170 27.1% 7
CED - Planning - Application for
Address Change $197 $305 -35.4% 3
CED - Planning - Application for
Building Plan Check $117 $188 -37.8% 2
CED - Planning - Application for
Development Plan Review $3,930 $6,938 -43.4% 2
CED - Planning - Application for
Development Plan Review (Least
Expensive)
$580 $5,311 -89.1% 13
CED - Planning - Application for
Development Plan Review (Most
Expensive)
$6,041 $11,272 -46.4% 8
CED - Planning - Application for
Rezone $4,323 $9,530 -54.6% 11
CED - Planning - Application for
Street/Alley Closure $7,495 $11,025 -32.0% 1
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Benchmark Fee
Modesto
Fee Peer Avg. % Diff.

Peer
Count
CED - Planning - Application for
Tentative Parcel Map $2,961 $5,523 -46.4% 8
CED - Planning - Application for
Tentative Subdivision Map $6,041 $12,306 -50.9% 3
CED - Planning - Conditional Use
Permit - Most expensive $6,041 $8,713 -30.7% 11
CED - Planning - Conditional Use
Permit - Single Family Dwelling $1,584 $3,478 -54.5% 4
Engineering - LDE - Encroachment
Permit - Application Pre-Inspection $120 $716 -83.2% 7
Engineering - LDE - Encroachment
Permit - Detour Traffic Control Plan
Review
$153 $547 -72.0% 1
Engineering - LDE - Encroachment
Permit - Street Lights $673 $547 23.0% 1
Engineering - LDE - Encroachment
Permit - Temporary Street/Right-ofWay Closures$370 $656 -43.6% 2 Engineering - LDE - Final Parcel Map
Check $2,060 $3,682 -44.1% 6
Engineering - LDE - Final Subdivision
Map Check $3,305 $4,427 -25.3% 3
Engineering - LDE - Lot Line
Adjustment $2,060 $2,457 -16.2% 11
Engineering - LDE - Outdoor Dining
Permits $200 $423 -52.7% 3
Engineering - PPD - Landscape Plan
Review - Initial Plan Check - Least
Expensive
$311 $661 -53.0% 5
Finance - Parking Citations -
Obstructing Fire Hydrant $80 $83 -3.6% 2
Finance - Parking Citations -
Obstructing Intersections and
Crosswalks
$55 $74 -25.7% 2
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Benchmark Fee
Modesto
Fee Peer Avg. % Diff.

Peer
Count
Finance - Parking Citations - Parked
in Bike Land $73 $100 -27.0% 1
Finance - Parking Citations - Parked
in Fire Lane $90 $84 7.1% 3
Finance - Parking Citations - Parked
on Sidewalk $63 $80 -21.3% 2
Finance - Parking Citations - Violation
of Disabled Parking Provisions $370 $362 2.2% 3
Fire Prevention - Fire Alarm System
Test and Inspection $186 $700 -73.4% 8
Fire Prevention - Fire Sprinkler
System Test and Inspection - New
Commercial
$523 $1,214 -56.9% 8
Fire Prevention - Inspection Activities
Hourly Rate $105 $210 -50.0% 4
Fire Prevention - Plan Check
Activities Hourly Rate $220 $211 4.3% 4
Fire Prevention - Site Plan Review $168 $204 -17.6% 1
Fire Prevention - Underground
Storage Tank - Installation $358 $1,274 -71.9% 7
Fire Prevention - Underground
Storage Tank - Removal $433 $853 -49.2% 7
Parks & Rec - Field Services -
Baseball Field Rental $30 $49 -38.8% 8
Parks & Rec - Field Services - Lights
for Ball Fields $30 $26 15.4% 8
Parks & Rec - Adult Softball League $550 $569 -3.3% 3
Parks & Rec - Alcohol Permit Fee -
Group $32 $63 -49.2% 3
Parks & Rec - Alcohol Permit Fee -
Individual $14 $120 -88.3% 4
Parks & Rec - Film Permit $84 $319 -73.7% 7
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Benchmark Fee
Modesto
Fee Peer Avg. % Diff.

Peer
Count
Parks & Rec - Filming Permit Time $168 $413 -59.3% 2
Parks & Rec - Golf Course -
Weekdays 18-holes $37 $47 -21.3% 2
Parks & Rec - Golf Course -
Weekends/Holidays, 18-holes $44 $61 -27.9% 2
Parks & Rec - Group Picnic Area
Rental $104 $185 -43.8% 7
Parks & Rec - Pool Entry Fee $2 $4 -50.0% 6
Parks & Rec - Special Event Permit
Application Fee $275 $406 -32.3% 11
Parks & Rec - Vending Permit $85 $149 -43.0% 7
Police - Carry Concealed Weapons
Permit - Initial New Application Fee $113 $109 3.7% 3
Police - Fingerprint Fee $10 $20 -50.0% 3
Police - Tow Release Fee $120 $206 -41.7% 3
Police - Tow Release Fee - Driver
Arrested for DUI $450 $384 17.2% 3
Public Works - Parking Rates - Hourly $1.25 $2 -37.5% 3 #4..
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APPENDIX B:

EXAMPLE COST RECOVERY MODELS
The City of Plano established the following cost recovery model5. It establishes a framework for recouping program and service costs through a tiered approach. Similar to the Cost Recovery Pyramid, shown below, this model has tiers that range from primarily community benefit (Tier 1) to primarily individual benefit (Tier 5). The model includes examples of services in each Tier, the associated level of cost recovery (i.e., tax-supported to fee-supported), and the basis of fees (i.e., best-practice, market-based, direct cost, and indirect cost), depending on the tier.

Figure 1: City of Plano Cost Recovery Model
5 City of Plano Financial Policies: Cost Recovery Policy #4..
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The City of Alexandria, Virginia’s Department of Recreation, Parks & Cultural Activities developed the following pyramid model to guide their cost recovery policy.6 Figure 2: City of Alexandria Cost Recovery Pyramid
6 City of Alexandria: Resource Allocation and Cost Recovery Policy #4..
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APPENDIX C: PEER BENCHMARKING SURVEY RESULTS
Table 19. Peer Benchmarking Survey Results
Survey Question Bakersfield Glendale Manteca Merced Sacramento San Bernardino Santa Clarita Who manages fees
at your city?
Finance Finance Each department Each
department
Each department Finance Administrative
Services
How often are fees
reviewed/updated?
Annually Annually 3-5 years Inconsistent
timeline
Annually Inconsistent timeline Other: Every 5th
year full fee
study; every other
year by CPI
When was the last
time your city's fees
were updated?
May 2025 June 2025 N/A Recreation
December
2025
Development
Services
March 2026
Fire
Inspections
2023
May 2025 July 2020 June 2025
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Survey Question Bakersfield Glendale Manteca Merced Sacramento San Bernardino Santa Clarita How would you
describe your city's
overall approach to
fee-setting?
Most Fees are set for
full recovery but
there are some that
are "subsidized".

Particularly those
that impact citizens in
the harder-to-serve
areas of the
community
Partial cost
recovery and
subsidy-based
Depends on the
department and if
the Prop 218 fee
Partial cost
recovery and
subsidy-based
It depends on the
fee type;
generally, we aim
for full cost
recovery, but we
also factor in
market sensitivity.

Partial cost recovery
and subsidy-based
Full cost recovery
for development
fees; partial cost
recovery for those
items that provide
a community
benefit
Does your city have
a formal policy on
fee-setting?
Yes, but is not
updated
No No No Yes, updated and
comprehensive
policy
Yes, but is not
updated
Yes, updated and
comprehensive
policy
Does your city have
a standing fee
committee or task
force for fee review?
No No No No No No No
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Survey Question Bakersfield Glendale Manteca Merced Sacramento San Bernardino Santa Clarita What methodology
do you use to
calculate cost
recovery?
Time and materials
Loaded labor rates
Overhead allocations
Loaded labor
rates
Overhead
allocations
Consultantdeveloped
models
Consultantdeveloped
models
Time and
materials
Loaded labor
rates
Overhead
allocations
Consultantdeveloped
models
Time and
materials
Loaded labor
rates
Overhead
allocations
Consultantdeveloped
models
Time and materials
Overhead allocations
Consultantdeveloped models
Time and
materials
Loaded labor
rates
Overhead
allocations
Consultantdeveloped
models
Does your city have
a consistent
approach to cost
recovery that is
used throughout the
city?
Yes No No No Yes Yes Yes
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Survey Question Bakersfield Glendale Manteca Merced Sacramento San Bernardino Santa Clarita How do you collect
and validate the
staff-time data used
to calculate cost
recovery?
A standardized
worksheet is
completed by
departments and
calculations are
reviewed by the
Finance department.

Gather data
from each
department.

N/A Department
tracks and
provides
We have been
working with a
consultant on the
time/cost studies.

The City hires a
consultant who
establishes a costing
model based on the
City's operations,
budget detail, and
intended uses. The
method for the model
uses time and annual
activity level data to
establish the cost of
providing services on
both a unit and
annual level. Once
the time spent for a
fee activity is
determined for each
individual or position,
the team uses its fee
and rate software to
apply applicable City
costs to the
calculation of the full
cost of providing
each service.

A third-party
consultant
performs a
comprehensive
update every 5
years. Fees are
generally updated
by CPI in all other
years (unless
market-driven or
specific reasons).

Reviewed by
departments,
Administrative
Services/Finance,
and the
Leadership
Team.
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Survey Question Bakersfield Glendale Manteca Merced Sacramento San Bernardino Santa Clarita Do you routinely
compare actual
costs to fee revenue
to evaluate underor over-recovery?
No, never Sometimes Yes, routinely Sometimes Sometimes Sometimes Yes, routinely #4..
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Table 20: Peer Benchmarking Survey Results (continued)
Approximately what percentage of City fees fully recover their costs? City Department Bakersfield Glendale Manteca Merced Sacramento San
Bernardino Santa Clarita
Administrative N/A 66 N/A N/A N/A N/A N/A
Community and
Economic
Development
N/A 63 N/A N/A N/A N/A N/A
Engineering N/A N/A N/A N/A N/A N/A
Finance N/A N/A N/A N/A N/A N/A
Fire N/A 100 N/A N/A N/A N/A N/A
Parks and
Recreation N/A 75 N/A N/A N/A N/A N/A
Police N/A 45 N/A N/A N/A N/A N/A
Public Works N/A 96 N/A N/A N/A N/A N/A
Utilities N/A 81 N/A N/A N/A N/A N/A
Library N/A 58 N/A N/A N/A N/A N/A
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Table 21: Peer Benchmarking Survey Results (continued)
City Department Bakersfield Glendale Manteca Merced Sacramento San Bernardino Santa Clarita Does your city use
an inflator such as
CPI to regularly
increase fees?
Yes, all fees have
an inflator
Yes, some fees
have an inflator
Yes, some fees
have an inflator
Yes, some fees
have an inflator
Yes, some fees
have an inflator
No, we don't use
an inflator
Yes, some fees
have an inflator
What type of inflator
does your city use?
Consumer Price
Index (CPI)
Consumer Price
Index (CPI)
Consumer Price
Index (CPI)
Consumer Price
Index (CPI)
Construction Cost
Index (CCI)
Consumer Price
Index (CPI)
Construction Cost
Index (CCI)
N/A Consumer Price
Index (CPI)
How often is this
inflator applied?
Annually Annually Depends on the
fee
Annually Depends on the
fee: It has been
inconsistent in the
past and not
every fee in the
past has allowed
for it.

N/A Annually
What best practices
have you
implemented that
improved your fee
processes?
N/A Complete Fee
Study and regular
review of fees by
departments
N/A N/A Having a policy
that has Council
buy in. Inflation/
incremental
annually
adjustments
versus major
increases after
N/A Good notes within
fee update
worksheets.

Thorough analysis
of fee changes.
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City Department Bakersfield Glendale Manteca Merced Sacramento San Bernardino Santa Clarita holding a fee flat
for many years
(and potentially
phasing in
increases when
there is a large
jump).

Communicating to
Council which
fees are not full
recovery and
being subsidized
by the General
Fund.
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APPENDIX D: IMPACT FEE BENCHMARKING DATA
This appendix presents a comparative benchmarking of Modesto’s development impact fees against selected California peer cities. Fees were normalized across varying land-use classifications, fee structures, and charging units where reasonably comparable to provide a consistent basis for comparison – these categories are shown in Table 22. The following sections present the functional components underlying each fee, illustrating how total development impact fees are allocated across fund categories. Because each jurisdiction’s fee program reflects its own nexus studies, infrastructure needs, geographic structure, and policy framework, these comparisons provide context and identify relative fee structures rather than directly comparable development costs in every circumstance. Peer Average and Median exclude the City of Modesto; zero-value components are excluded from these calculations as well.

Table 22. List of Normalized Land Use and Normalized Functional Groups Normalized Land Use Normalized Functional Groups
Single-Family Police
Multi-Family Fire
Senior Housing Parks / Recreation / Air Quality
Hotel/Motel General Government / Public Facilities
Retail <50,000 square feet Program Administration
Retail 50,000-100,000 square feet Streets / Transportation Retail 100,000-300,000 square feet Transit / Mobility
Retail >300,000 square feet Storm Drainage
Medical Office Water
General Office Wastewater/Sewer
Hospital Other
Daycare
Church
Nursing Home
Industrial (Manufacturing)
Industrial (Warehousing)
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LAND USE: SINGLE-FAMILY RESIDENTIAL
The Single-Family Residential category represents development consisting primarily of detached single-family dwelling units and is evaluated on a per-dwelling-unit basis. Because peer jurisdictions use different land-use definitions, fee structures, and charging units, we normalized categories when reasonably comparable.

Table 23 presents the total comparable impact fee for each jurisdiction and indicates how much of the jurisdiction’s published fee structure could be incorporated into the comparison. The “% of Fee Components Included” reflects the share of identified fee components that were comparable and included in the calculation; components using a different valuation metric or methodology were excluded from the comparable total. Figure 1 illustrates the total comparable impact fee across the jurisdictions and includes a reference line of the land-use peer average.

Table 23. Total Fees (All Funds) for Land Use Scenario by City City Rate per Unit
Number of Comparable Fee
Components
Number of Non-Comparable
Fee Components
% of Fee Components
Included
Modesto $18,146 3 –
Bakersfield $18,309 6 – 100%
Fresno $8,159 1 3 50%
Glendale $21,828 7 – 100%
Manteca $25,879 1 2 71%
Merced $13,574 4 – 100%
Oxnard $32,119 9 – 100%
San Bernardino $26,849 12 – 100%
Stockton $24,032 12 2 83%
Tracy $40,411 3 – 100%
Peer Average: $23,462 6 2 92%
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Figure 1. Total Comparable Impact Fees for Land Use Scenario by City

NON-COMPARABLE FEES FOR LAND USE SCENARIO
Non-comparable fees are presented separately where identified but excluded from the standardized comparison because differences in charging units/value structure prevented a reliable comparison.

Fresno
● Locally Significant Street Impact Fee: $8,787.37 per acre ● Major Street Charge: $27,503.69 per acre
● Locally Regionally Significant Street Charge: $8,787.37 per acre Manteca
● Fire Facilities Fee: $620 per 1,000 square feet
● Levee Impact Fee: $23,333 per acre
$18,146 $18,309
$8,159
$21,828
$25,879
$13,574
$32,119
$26,849
$24,032
$40,411
Peer Avg., $23,462
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
Modesto Bakersfield Fresno Glendale Manteca Merced Oxnard San Bernardino Stockton Tracy Total Comparable Impact Fees by City
Rate Peer Avg.
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Stockton
● Mossdale Tract Regional Flood Protection: $24,143 per acre ● Regional Transportation: $2.13 per square foot

PEER COMPARISON
Table 24 presents the underlying comparable fees by functional group or fund type, showing how each jurisdiction’s total fee is allocated among funding categories such as transportation, parks and recreation, public safety, and public facilities. Table 25 presents these fund category components as a percentage of each jurisdiction’s total comparable fee, while Figure 2 provides a visual comparison of Modesto’s functional allocation with the peer average for each fund category.

Table 24. Dollar Amount Fee Breakdown by City by Fund for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto $766 $477 $7,551 $631 $357 $8,244 $120 N/A N/A N/A N/A Bakersfield – – $3,278 – – $7,747 – – – $7,284 –
Fresno – $2,286 $5,111 – – $762 – – – – –
Glendale – – – $21,828 – – – – – – –
Manteca – – $9,246 $6,306 – $10,327 – – – – –
Merced – – – $13,574 – – – – – – –
Oxnard – – $8,230 $7,039 – $12,852 $3,997 – – – –
San Bernardino $639 – $17,888 $1,727 – $2,668 – $3,926 – – – Stockton $591 $781 $3,279 $5,143 – $13,336 – – – – $902 Tracy $340 $1,512 $8,242 $3,310 $1,923 $6,726 – $2,570 $6,886 $8,869 $33 Peer Average: $523 $1,526 $7,896 $8,418 $1,923 $7,774 $3,997 $3,248 $6,886 $8,077 $468 Table 25. Fund Type % Breakdown of Total Fee by City and Fund Type for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto 4.2% 2.6% 41.6% 3.5% 2.0% 45.4% 0.7% N/A N/A N/A N/A Bakersfield – – 17.9% – – 42.3% – – – 39.8% –
Fresno – 28.0% 62.6% – – 9.3% – – – – –
Glendale – – – 100.0% – – – – – – –
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Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Manteca – – 35.7% 24.4% – 39.9% – – – – –
Merced – – – 100.0% – – – – – – –
Oxnard – – 25.6% 21.9% – 40.0% 12.4% – – – –
San Bernardino 2.4% – 66.6% 6.4% – 9.9% – 14.6% – – –
Stockton 2.5% 3.2% 13.6% 21.4% – 55.5% – – – – 3.8%
Tracy 0.8% 3.7% 20.4% 8.2% 4.8% 16.6% – 6.4% 17.0% 21.9% 0.1% Peer Average: 1.9% 11.7% 34.7% 40.3% 4.8% 30.5% 12.4% 10.5% 17.0% 30.9% 1.9% Figure 2. Modesto’s Fund Type % Breakdown of Total Fee Compared to Peer Average for Land Use Scenario

3.8%

1.8%

42.4%

3.2%

1.6%

46.6%

0.7% 0.0% 0.0% 0.0% 0.0%

1.9%

11.7%

34.7%

40.3%

4.8%

30.5%

12.4%

10.5%

17.0%

30.9%

1.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%
Police Fire Parks / Recreation /
Air Quality
General
Government /
Public Facilities
Program
Administration
Streets /
Transportation
Transit / Mobility Storm Drainage Water Wastewater/Sewer Other Fee Breakdown by Fund Type
Modesto Peer Avg.
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LAND USE: MULTI-FAMILY RESIDENTIAL
The Multi-Family Residential land use category represents development consisting of multiple residential dwelling units within a common development, including apartments and similar attached or stacked housing, and is evaluated on a per-dwelling-unit basis.

Table 26 presents the total comparable impact fee for each jurisdiction and indicates how much of the jurisdiction’s published fee structure could be incorporated into the comparison. The % of Fee Components Included reflects the share of identified fee components that were comparable and included in the calculation; components using a different valuation metric or methodology were excluded from the comparable total. Figure 3 illustrates the total comparable impact fee across the jurisdictions and includes a reference line of the land-use peer average.

Table 26. Total Fees (All Funds) for Land Use Scenario by City City Rate per Dwelling Unit
Number of Comparable Fee
Components
Number of Non-Comparable
Fee Components
% of Fee Components
Included
Modesto $12,250 7 – –
Bakersfield $12,236 4 1 75%
Fresno $6,189 4 1 75%
Glendale $18,751 1 0 100%
Manteca $25,010 8 0 100%
Merced $9,908 1 0 100%
Oxnard $36,169 6 0 100%
San Bernardino $19,494 9 0 100%
Stockton $15,259 10 2 80%
Tracy $26,651 12 0 100%
Peer Average: $18,852 6 1 92%
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Figure 3. Total Comparable Impact Fees for Land Use Scenario by City

NON-COMPARABLE FEES FOR LAND USE SCENARIO
Non-comparable fees are presented separately where identified but excluded from the standardized comparison because differences in charging units/value structure prevented a reliable comparison.

Bakersfield
● $6.01 per square foot (School)
Fresno
● $17,062 per acre (Locally Regionally Significant Street Charge) Stockton
● $3.35 per square foot (Regional Transportation)
● $22,593 per acre (Mossdale Tract Regional Flood Protection) $12,250 $12,236
$6,189
$18,751
$25,010
$9,908
$36,169
$19,494
$15,259
$26,651
Peer Avg., $18,852
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
Modesto Bakersfield Fresno Glendale Manteca Merced Oxnard San Bernardino Stockton Tracy Total Comparable Impact Fees by City
Rate Peer Avg.
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PEER COMPARISON
Table 27 presents the underlying comparable fees by functional group or fund type, showing how each jurisdiction’s total fee is allocated among funding categories such as transportation, parks and recreation, public safety, and public facilities. Table 28 presents the fund category components as a percentage of each jurisdiction’s total comparable fee, while Figure 4 provides a visual comparison of Modesto’s fund allocation percentage against the peer average for each fund category.

Table 27. Dollar Amount Fee Breakdown by City by Fund for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto $462 $220 $5,195 $387 $194 $5,709 $83 N/A N/A N/A N/A Bakersfield – – $3,278 – – $3,740 – – – $5,218 –
Fresno – $1,744 $3,854 – – $591 – – – – –
Glendale – – – $18,751 – – – – – – –
Manteca – $1,050 $6,455 $9,787 – $7,217 – – – – $501
Merced – – – $9,908 – – – – – – –
Oxnard – – $5,442 $4,655 – $23,430 $2,642 – – – –
San Bernardino $566 – $14,158 $1,367 – $1,781 – $1,621 – – – Stockton $497 $658 $405 $3,188 – $9,750 – – – – $761
Tracy $3,624 $1,706 $5,495 $27 $1,156 – $3,651 $1,528 $3,501 $5,941 $22 Peer Average: $1,562 $1,289 $5,584 $6,812 $1,156 $7,752 $3,147 $1,574 $3,501 $5,580 $428 Table 28. Fund Type % Breakdown of Total Fee by City and Fund Type for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto 3.8% 1.8% 42.4% 3.2% 1.6% 46.6% 0.7% N/A N/A N/A N/A Bakersfield – – 26.8% – – 30.6% – – – 42.6% –
Fresno – 28.2% 62.3% – – 9.6% – – – – –
Glendale – – – 100.0% – – – – – – –
Manteca – 4.2% 25.8% 39.1% – 28.9% – – – – 2.0%
Merced – – – 100.0% – – – – – – –
Oxnard – – 15.0% 12.9% – 64.8% 7.3% – – – –
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Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
San Bernardino 2.9% – 72.6% 7.0% – 9.1% – 8.3% – – –
Stockton 3.3% 4.3% 2.7% 20.9% – 63.9% – – – – 5.0%
Tracy 13.6% 6.4% 20.6% 0.1% 4.3% – 13.7% 5.7% 13.1% 22.3% 0.1% Peer Average: 6.6% 10.8% 32.3% 40.0% 4.3% 34.5% 10.5% 7.0% 13.1% 32.5% 2.4% Figure 4. Modesto’s Fund Type % Breakdown of Total Fee Compared to Peer Average for Land Use Scenario LAND USE: GENERAL OFFICE
The General Office category represents non-residential office development primarily used for administrative, professional, business, or other general office activities, excluding medical offices, and is evaluated on a building-area basis per 1,000 square feet.

3.8%

1.8%

42.4%

3.2%

1.6%

46.6%

0.7%

6.6%

10.8%

32.3%

40.0%

4.3%

34.5%

10.5%

7.0%

13.1%

32.5%

2.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%
Police Fire Parks / Recreation /
Air Quality
General
Government /
Public Facilities
Program
Administration
Streets /
Transportation
Transit / Mobility Storm Drainage Water Wastewater/Sewer Other Fee Breakdown by Fund Type
Modesto Peer Avg.
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Table 29 presents the total comparable impact fee for each jurisdiction and indicates how much of the jurisdiction’s published fee structure could be incorporated into the comparison. The % of Fee Components Included reflects the share of identified fee components that were comparable and included in the calculation; components using a different valuation metric or methodology were excluded from the comparable total. Figure 5 illustrates the total comparable impact fee across the jurisdictions and includes a reference line of the land-use peer average.

Table 29. Total Fees (All Funds) for Land Use Scenario by City City Rate per 1,000 sq. ft.

Number of Comparable Fee
Components
Number of Non-Comparable
Fee Components
% of Fee Components
Included
Modesto $8,710 6 – –
Bakersfield – 2 2 0%
Fresno $1,854 3 0 100%
Glendale $11,920 2 0 100%
Manteca $7,172 5 0 100%
Merced $14,444 1 0 100%
Oxnard $17,704 3 0 100%
San Bernardino $4,547 4 0 100%
Stockton $5,853 9 0 100%
Tracy $4,719 7 0 100%
Peer Average: $8,527 4 2 100%
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Figure 5. Total Comparable Impact Fees for Land Use Scenario by City

NON-COMPARABLE FEES FOR LAND USE SCENARIO
Non-comparable fees are presented separately where identified but excluded from the standardized comparison because differences in charging units/value structure prevented a reliable comparison.

Bakersfield
● $278.00 per fixture unit (Sewer)
● Range of fee per average daily traffic rate (Transportation)

PEER COMPARISON
Table 30 presents the underlying comparable fees by functional group or fund type, showing how each jurisdiction’s total fee is allocated among funding categories such as transportation, parks and recreation, public safety, and public facilities. Table 31 presents the fund category components as a percentage of each jurisdiction’s total comparable fee, while Figure 6 provides a visual comparison of Modesto’s fund allocation percentage against the peer average for each fund category. $8,710
$1,854
$11,920
$7,172
$14,444
$17,704
$4,547
$5,853
$4,719
Peer Avg., $8,527
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
Modesto Bakersfield Fresno Glendale Manteca Merced Oxnard San Bernardino Stockton Tracy Total Comparable Impact Fees by City
Rate Peer Avg.
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Table 30. Dollar Amount Fee Breakdown by City by Fund for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto $347 $166 $0 $291 $196 $7,576 $134 N/A N/A N/A N/A Bakersfield – – – – – – – – – – –
Fresno – $688 – – – $1,166 – – – – –
Glendale – – – $7,920 – – – – – – $4,000
Manteca – $480 – $3,980 – $2,712 – – – – –
Merced – – – $14,444 – – – – – – –
Oxnard – – – $2,835 – $13,260 $1,609 – – – –
San Bernardino $780 – – – – $2,877 – – – $890 –
Stockton $106 $119 $40 $44 – $4,927 – – – – $619
Tracy – – – – $247 $2,015 – $914 $492 $1,035 $17
Peer Average: $443 $429 $40 $5,845 $247 $4,493 $1,609 $914 $492 $962 $1,545 Table 31. Fund Type % Breakdown of Total Fee by City and Fund Type for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto 4.0% 1.9% 0.0% 3.3% 2.3% 87.0% 1.5% N/A N/A N/A N/A Bakersfield – – – – – – – – – – –
Fresno – 37.1% – – – 62.9% – – – – –
Glendale – – – 66.4% – – – – – – 33.6%
Manteca – 6.7% – 55.5% – 37.8% – – – – –
Merced – – – 100.0% – – – – – – –
Oxnard – – – 16.0% – 74.9% 9.1% – – – –
San Bernardino 17.2% – – – – 63.3% – – – 19.6% –
Stockton 1.8% 2.0% 0.7% 0.7% – 84.2% – – – – 10.6%
Tracy – – – – 5.2% 42.7% – 19.4% 10.4% 21.9% 0.4%
Peer Average: 9.5% 15.3% 0.7% 47.7% 5.2% 61.0% 9.1% 19.4% 10.4% 20.7% 14.8% #4..
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Figure 6. Modesto’s Fund Type % Breakdown of Total Fee Compared to Peer Average for Land Use Scenario LAND USE: INDUSTRIAL – MANUFACTURING
The Industrial – Manufacturing category represents development primarily used for the production, assembly, processing, fabrication, or manufacturing of goods, and is evaluated on a building-area basis per 1,000 square feet.

Table 32 presents the total comparable impact fee for each jurisdiction and indicates how much of the jurisdiction’s published fee structure could be incorporated into the comparison. The % of Fee Components Included reflects the share of identified fee components that were comparable and included in the calculation; components using a different valuation metric or methodology were excluded from the comparable total. Figure 7 illustrates the total comparable impact fee across the jurisdictions and includes a reference line of the land-use peer average.

Table 32. Total Fees (All Funds) for Land Use Scenario by City City Rate per 1,000 sq. ft.

Number of Comparable Fee
Components
Number of Non-Comparable
Fee Components
% of Fee Components
Included

4.0% 1.9% 0.0%

3.3% 2.3%

87.0%

1.5%

9.5%

15.3%

0.7%

47.7%

5.2%

61.0%

9.1%

19.4%

10.4%

20.7%

14.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%
100.0%
Police Fire Parks / Recreation
/ Air Quality
General
Government /
Public Facilities
Program
Administration
Streets /
Transportation
Transit / Mobility Storm Drainage Water Wastewater/Sewer Other Fee Breakdown by Fund Type
Modesto Peer Avg.
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Modesto $3,408 6 – –
Bakersfield $840 1 0 100%
Fresno $1,059 5 0 100%
Glendale $7,240 2 0 100%
Manteca $4,017 6 0 100%
Merced $6,279 1 0 100%
Oxnard $8,445 3 0 100%
San Bernardino $2,875 4 0 100%
Stockton $3,160 8 0 100%
Tracy $4,176 7 0 100%
Peer Average: $4,232 4 0 100%
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Figure 7. Total Comparable Impact Fees for Land Use Scenario by City

NON-COMPARABLE FEES FOR LAND USE SCENARIO
Non-comparable fees are presented separately where identified but excluded from the standardized comparison because differences in charging units/value structure prevented a reliable comparison. ● None

PEER COMPARISON
Table 33 presents the underlying comparable fees by functional group or fund type, showing how each jurisdiction’s total fee is allocated among funding categories such as transportation, parks and recreation, public safety, and public facilities. Table 34 presents the fund components as a percentage of each jurisdiction’s total comparable fee, while Figure 8 provides a visual comparison of Modesto’s fund allocation percentage against the peer average for each fund category. $3,408
$840 $1,059
$7,240
$4,017
$6,279
$8,445
$2,875
$3,160
Peer Avg., $4,232 $4,176
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Modesto Bakersfield Fresno Glendale Manteca Merced Oxnard San Bernardino Stockton Tracy Total Comparable Impact Fees by City
Rate Peer Avg.
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Table 33. Dollar Amount Fee Breakdown by City by Fund for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto $149 $71 $0 $124 $76 $2,937 $51 N/A N/A N/A N/A Bakersfield – – – – – – – – – – $840
Fresno – $344 – – – $715 – – – – –
Glendale – – – $3,240 – – – – – – $4,000
Manteca – $170 – $1,590 – $1,860 – – – – $397
Merced – – – $6,279 – – – – – – –
Oxnard – – – $1,122 – $6,752 $571 – – – –
San Bernardino $5 – – – – $1,743 – $1,127 – – –
Stockton $62 $54 $23 $26 – $2,585 – – – – $411
Tracy – – – – $204 $1,604 – $914 $492 $959 $3
Peer Average: $34 $189 $23 $2,451 $204 $2,543 $571 $1,020 $492 $959 $1,130 Table 34. Fund Type % Breakdown of Total Fee by City and Fund Type for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto 4.4% 2.1% 0.0% 3.6% 2.2% 86.2% 1.5% N/A N/A N/A N/A Bakersfield – – – – – – – – – – 100.0%
Fresno – 32.5% – – – 67.5% – – – – –
Glendale – – – 44.8% – – – – – – 55.2%
Manteca – 4.2% – 39.6% – 46.3% – – – – 9.9%
Merced – – – 100.0% – – – – – – –
Oxnard – – – 13.3% – 80.0% 6.8% – – – –
San Bernardino 0.2% – – – – 60.6% – 39.2% – – –
Stockton 2.0% 1.7% 0.7% 0.8% – 81.8% – – – – 13.0%
Tracy – – – – 4.9% 38.4% – 21.9% 11.8% 23.0% 0.1%
Peer Average: 1.1% 12.8% 0.7% 39.7% 4.9% 62.4% 6.8% 30.5% 11.8% 23.0% 35.6% #4..
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Figure 8. Modesto’s Fund Type % Breakdown of Total Fee Compared to Peer Average for Land Use Scenario LAND USE: INDUSTRIAL – WAREHOUSING
The Industrial – Warehousing category represents development primarily used for storing, distributing, and handling goods, and is evaluated on a building-area basis per 1,000 square feet.

Table 35 presents the total comparable impact fee for each jurisdiction and indicates how much of the jurisdiction’s published fee structure could be incorporated into the comparison. The % of Fee Components Included reflects the share of identified fee components that were comparable and included in the calculation; components using a different valuation metric or methodology were excluded from the comparable total. Figure 9 illustrates the total comparable impact fee across the jurisdictions and includes a reference line of the land-use peer average.

Table 35. Total Fees (All Funds) for Land Use Scenario by City City Rate per 1,000 sq. ft.

Number of Comparable Fee
Components
Number of Non-Comparable
Fee Components
% of Fee Components
Included

4.4% 2.1% 0.0%

3.6% 2.2%

86.2%

1.1% 1.5%

12.8%

0.7%

39.7%

4.9%

62.4%

6.8%

30.5%

11.8%

23.0%

35.6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%
100.0%
Police Fire Parks / Recreation
/ Air Quality
General
Government /
Public Facilities
Program
Administration
Streets /
Transportation
Transit / Mobility Storm Drainage Water Wastewater/Sewer Other Fee Breakdown by Fund Type
Modesto Peer Avg.
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 78

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Modesto $2,496 6 – –
Bakersfield $840 1 0 100%
Fresno $484 2 0 100%
Glendale $7,240 2 0 100%
Manteca $990 1 0 100%
Merced $6,279 1 0 100%
Oxnard $2,368 1 0 100%
San Bernardino $1,748 3 0 100%
Stockton $2,426 9 0 100%
Tracy $4,176 7 0 100%
Peer Average: $2,950 3 0 100%
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 79

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Figure 9. Total Comparable Impact Fees for Land Use Scenario by City

NON-COMPARABLE FEES FOR LAND USE SCENARIO
Non-comparable fees are presented separately where identified but excluded from the standardized comparison because differences in charging units/value structure prevented a reliable comparison. ● None

PEER COMPARISON
Table 36 presents the underlying comparable fees by functional group or fund type, showing how each jurisdiction’s total fee is allocated among funding categories such as transportation, parks and recreation, public safety, and public facilities. Table 37 presents the fund components as a percentage of each jurisdiction’s total comparable fee, while Figure 10 provides a visual comparison of Modesto’s fund allocation percentage against the peer average for each fund category. $2,496
$840
$484
$7,240
$990
$6,279
$2,368
$1,748
$2,426
$4,176
Peer Avg., $2,950
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
Modesto Bakersfield Fresno Glendale Manteca Merced Oxnard San Bernardino Stockton Tracy Total Comparable Impact Fees by City
Rate Peer Avg.
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 80

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Table 36. Dollar Amount Fee Breakdown by City by Fund for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto $150 $71 $0 $125 $56 $2,058 $36 N/A N/A N/A N/A Bakersfield – – – – – – – – – – $840
Fresno – $344 – – – $140 – – – – –
Glendale – – – $3,240 – – – – – – $4,000
Manteca – – – – – $990 – – – – –
Merced – – – $6,279 – – – – – – –
Oxnard – – – – – $2,368 – – – – –
San Bernardino $5 – – – – $1,743 – – – – –
Stockton $62 $54 $23 $26 – $1,795 – – – – $467
Tracy – – – – $204 $1,604 – $914 $492 $959 $3
Peer Average: $34 $199 $23 $3,182 $204 $1,440 $0 $914 $492 $959 $1,328 Table 37. Fund Type % Breakdown of Total Fee by City and Fund Type for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto 6.0% 2.8% 0.0% 5.0% 2.2% 82.5% 1.4% N/A N/A N/A N/A Bakersfield – – – – – – – – – – 100.0%
Fresno – 71.1% – – – 28.9% – – – – –
Glendale – – – 44.8% – – – – – – 55.2%
Manteca – – – – – 100.0% – – – – –
Merced – – – 100.0% – – – – – – –
Oxnard – – – – – 100.0% – – – – –
San Bernardino 0.3% – – – – 99.7% – – – – –
Stockton 2.6% 2.2% 1.0% 1.1% – 74.0% – – – – 19.2%
Tracy – – – – 4.9% 38.4% – 21.9% 11.8% 23.0% 0.1%
Peer Average: 1.4% 36.6% 1.0% 48.6% 4.9% 73.5% 0.0% 21.9% 11.8% 23.0% 43.6% #4..
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Fee Benchmarking and Cost Recovery Review Report | Page 81

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Figure 10. Modesto’s Fund Type % Breakdown of Total Fee Compared to Peer Average for Land Use Scenario LAND USE: RETAIL LESS THAN 50,000 SQUARE FEET
The Retail – Less than 50,000 Square Feet category represents commercial development used primarily to sell goods or merchandise to consumers, with a gross building area of less than 50,000 square feet, and is evaluated on a building-area basis per 1,000 square feet.

Table 38 presents the total comparable impact fee for each jurisdiction and indicates how much of the jurisdiction’s published fee structure could be incorporated into the comparison. The % of Fee Components Included reflects the share of identified fee components that were comparable and included in the calculation; components using a different valuation metric or methodology were excluded from the comparable total. Figure 11 illustrates the total comparable impact fee across the jurisdictions and includes a reference line of the land-use peer average.

Table 38. Total Fees (All Funds) for Land Use Scenario by City

6.0%

2.8%

0.0%

5.0%

2.2%

82.5%

1.4% 1.4%

36.6%

1.0%

48.6%

4.9%

73.5%

0.0%

21.9%

11.8%

23.0%

43.6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%
Police Fire Parks / Recreation /
Air Quality
General
Government /
Public Facilities
Program
Administration
Streets /
Transportation
Transit / Mobility Storm Drainage Water Wastewater/Sewer Other Fee Breakdown by Fund Type
Modesto Peer Avg.
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 82

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
City Rate per 1,000 sq. ft.

Number of Comparable Fee
Components
Number of Non-Comparable
Fee Components
% of Fee Components
Included
Modesto $13,458 6 – –
Bakersfield – 2 2 0%
Fresno $602 1 0 100%
Glendale $10,500 2 0 100%
Manteca $10,846 5 0 100%
Merced $16,210 1 0 100%
Oxnard $12,354 3 0 100%
San Bernardino – 0 0 –
Stockton $7,019 9 0 100%
Tracy $5,807 7 0 100%
Peer Average: $9,048 4 2 100%
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 83

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Figure 11. Total Comparable Impact Fees for Land Use Scenario by City

NON-COMPARABLE FEES FOR LAND USE SCENARIO
Non-comparable fees are presented separately where identified but excluded from the standardized comparison because differences in charging units/value structure prevented a reliable comparison.

Bakersfield
● $278.00 per fixture unit (Sewer)
● Range of fee per average daily traffic rate (Transportation)

PEER COMPARISON
Table 39 presents the underlying comparable fees by functional group or fund type, showing how each jurisdiction’s total fee is allocated among funding categories such as transportation, parks and recreation, public safety, and public facilities. Table 40 presents the fund components as a percentage of each jurisdiction’s total comparable fee, while Figure 12 provides a visual comparison of Modesto’s fund allocation percentage against the peer average for each fund category. $13,458
$602
$10,500 $10,846
$16,210
$12,354
$7,019
$5,807
Peer Avg., $9,048
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Modesto Bakersfield Fresno Glendale Manteca Merced Oxnard San Bernardino Stockton Tracy Total Comparable Impact Fees by City
Rate Peer Avg.
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 84

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Table 39. Dollar Amount Fee Breakdown by City by Fund for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto $207 $101 $0 $175 $335 $12,394 $246 N/A N/A N/A N/A Bakersfield – – – – – – – – – – –
Fresno – $602 – – – – – – – – –
Glendale – – – $6,500 – – – – – – $4,000
Manteca – $390 – $1,800 – $8,149 – – – – $507
Merced – – – $16,210 – – – – – – –
Oxnard – – – $2,375 – $8,630 $1,349 – – – –
San Bernardino – – – – – – – – – – –
Stockton $54 $61 $20 $23 – $6,288 – – – – $573
Tracy – – – – $285 $2,908 – $914 $656 $1,035 $10
Peer Average: $54 $351 $20 $5,382 $285 $6,494 $1,349 $914 $656 $1,035 $1,272 Table 40. Fund Type % Breakdown of Total Fee by City and Fund Type for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto 1.5% 0.8% 0.0% 1.3% 2.5% 92.1% 1.8% N/A N/A N/A N/A Bakersfield – – – – – – – – – – –
Fresno – 100.0% – – – – – – – – –
Glendale – – – 61.9% – – – – – – 38.1%
Manteca – 3.6% – 16.6% – 75.1% – – – – 4.7%
Merced – – – 100.0% – – – – – – –
Oxnard – – – 19.2% – 69.9% 10.9% – – – –
San Bernardino – – – – – – – – – – –
Stockton 0.8% 0.9% 0.3% 0.3% – 89.6% – – – – 8.2%
Tracy – – – – 4.9% 50.1% – 15.7% 11.3% 17.8% 0.2%
Peer Average: 0.8% 34.8% 0.3% 39.6% 4.9% 71.2% 10.9% 15.7% 11.3% 17.8% 12.8% #4..
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Fee Benchmarking and Cost Recovery Review Report | Page 85

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Figure 12. Modesto’s Fund Type % Breakdown of Total Fee Compared to Peer Average for Land Use Scenario LAND USE: RETAIL 50,000-100,000 SQUARE FEET
The Retail – 50,000 to 100,000 Square Feet category represents retail commercial development with a gross building area between 50,000 and 100,000 square feet, and is evaluated on a building-area basis per 1,000 square feet.

Table 41 presents the total comparable impact fee for each jurisdiction and indicates how much of the jurisdiction’s published fee structure could be incorporated into the comparison. The % of Fee Components Included reflects the share of identified fee components that were comparable and included in the calculation; components using a different valuation metric or methodology were excluded from the comparable total. Figure 13 illustrates the total comparable impact fee across the jurisdictions and includes a reference line of the land-use peer average.

Table 41. Total Fees (All Funds) for Land Use Scenario by City

1.5% 0.8% 0.0% 1.3% 2.5%

92.1%

0.8% 1.8%

34.8%

0.3%

39.6%

4.9%

71.2%

10.9%

15.7%

11.3%

17.8%

12.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%
100.0%
Police Fire Parks / Recreation
/ Air Quality
General
Government /
Public Facilities
Program
Administration
Streets /
Transportation
Transit / Mobility Storm Drainage Water Wastewater/Sewer Other Fee Breakdown by Fund Type
Modesto Peer Avg.
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 86

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
City Rate per 1,000 Sq. Ft.

Number of Comparable Fee
Components
Number of Non-Comparable
Fee Components
% of Fee Components
Included
Modesto $11,252 6 – –
Bakersfield – 2 2 0%
Fresno $4,014 3 0 100%
Glendale $10,500 2 0 100%
Manteca $10,846 5 0 100%
Merced $16,210 1 0 100%
Oxnard $12,354 3 0 100%
San Bernardino – – – –
Stockton $6,614 9 0 100%
Tracy $5,807 7 0 100%
Peer Average: $9,478 4 2 100%
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 87

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Figure 13. Total Comparable Impact Fees for Land Use Scenario by City

NON-COMPARABLE FEES FOR LAND USE SCENARIO
Non-comparable fees are presented separately where identified but excluded from the standardized comparison because differences in charging units/value structure prevented a reliable comparison.

Bakersfield
● $278.00 per fixture unit (Sewer)
● Range of fee per average daily traffic rate (Transportation)

PEER COMPARISON
Table 42 presents the underlying comparable fees by functional group or fund type, showing how each jurisdiction’s total fee is allocated among funding categories such as transportation, parks and recreation, public safety, and public facilities. Table 43 presents the fund components as a percentage of each jurisdiction’s total comparable fee, while Figure 14 provides a visual comparison of Modesto’s fund allocation percentage against the peer average for each fund category. $11,252
$4,014
$10,500 $10,846
$16,210
$12,354
$6,614
$5,807
Peer Avg., $9,478
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Modesto Bakersfield Fresno Glendale Manteca Merced Oxnard San Bernardino Stockton Tracy Total Comparable Impact Fees by City
Rate Peer Avg.
#4..
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Fee Benchmarking and Cost Recovery Review Report | Page 88

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Table 42. Dollar Amount Fee Breakdown by City by Fund for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto $208 $99 $0 $174 $278 $10,290 $203 N/A N/A N/A N/A Bakersfield – – – – – – – – – – –
Fresno – $602 – – – $3,412 – – – – –
Glendale – – – $6,500 – – – – – – $4,000
Manteca – $390 – $1,800 – $8,149 – – – – $507
Merced – – – $16,210 – – – – – – –
Oxnard – – – $2,375 – $8,630 $1,349 – – – –
San Bernardino – – – – – – – – – – –
Stockton $54 $61 $20 $23 – $5,883 – – – – $573
Tracy – – – – $285 $2,908 – $914 $656 $1,035 $10
Peer Average: $54 $351 $20 $5,382 $285 $5,796 $1,349 $914 $656 $1,035 $1,272 Table 43. Fund Type % Breakdown of Total Fee by City and Fund Type for Land Use Scenario Police Fire
Parks / Recreation
/ Air Quality
Gen. Gov’t /
Public Facilities
Program
Administration
Streets /
Transportation
Transit /
Mobility
Storm
Drainage Water
Wastewater /
Sewer Other
Modesto 1.8% 0.9% 0.0% 1.5% 2.5% 91.5% 1.8% N/A N/A N/A N/A Bakersfield – – – – – – – – – – –
Fresno – 15.0% – – – 85.0% – – – – –
Glendale – – – 61.9% – – – – – – 38.1%
Manteca – 3.6% – 16.6% – 75.1% – – – – 4.7%
Merced – – – 100.0% – – – – – – –
Oxnard – – – 19.2% – 69.9% 10.9% – – – –
San Bernardino – – – – – – – – – – –
Stockton 0.8% 0.9% 0.3% 0.3% – 89.0% – – – – 8.7%
Tracy – – – – 4.9% 50.1% – 15.7% 11.3% 17.8% 0.2%
Peer Average: 0.8% 6.5% 0.3% 39.6% 4.9% 73.8% 10.9% 15.7% 11.3% 17.8% 12.9% #4..
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Fee Benchmarking and Cost Recovery Review Report | Page 89

FOR INTERNAL USE BY THE CITY OF MODESTO ONLY
Figure 14. Modesto’s Fund Type % Breakdown of Total Fee Compared to Peer Average for Land Use Scenario

1.8% 0.9% 0.0% 1.5% 2.5%

91.5%

0.8% 1.8%

6.5%

0.3%

39.6%

4.9%

73.8%

10.9%

15.7%

11.3%

17.8%

12.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%
100.0%
Police Fire Parks / Recreation
/ Air Quality
General
Government /
Public Facilities
Program
Administration
Streets /
Transportation
Transit / Mobility Storm Drainage Water Wastewater/Sewer Other Fee Breakdown by Fund Type
Modesto Peer Avg.
#4..
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