User Fee Study
City of National City
Item 9.1
2 What are User Fees
▪ Fund services with private benefit and
limited or no community benefit
▪ State law requires that 1) individual use of
the service must be voluntary, and 2) fees
must reasonably relate to the services
provided
▪ Fee levels are determined through City
Council fee adoption
▪ Does not include development impact fees,
utility rates, taxes, etc.
3 Why Update User Fees
▪ Subsidies for individual services impact the General
Fund
o Private benefit-related services are subsidized by
the General Fund
o Reduces City’s ability to fund general services and
community benefits
▪ Decreased municipal funding can result in understaffing and reduced service quality
▪ Cost recovery awareness and planning
o Provides clarity on City resources
o Enables City to strategize and set fees to benefit the City and community
4 User Fee Objectives
▪ Determine full cost to provide services and programs
o Identify potential new fees
o Reduce or remove unused fees
o Calculate full cost recovery using fully-burdened hourly rates ▪ Update fees for services based on cost analysis
o Establish cost recovery goals
✓ Subsidies can increase access to services and facilitate compliance
o Identify appropriate fee levels
✓ Enhance reasonability and applicability
✓ Maintain consistency with local policies and objectives ✓ Maintain legal compliance with state law
5 Scope of the Study
▪ Review and calculate cost of providing services
and related fees charged by the following
departments and divisions:
o Building
o City Clerk
o Community Services
o Engineering/ Public
Works
o Fire
o Finance
o Neighborhood Services
o Planning
o Police
o Housing & Economic
Development
6 Data & City Staff Participation
▪ Primary types of data used:
o Expenditure data
o Staffing structures
o Central service/Indirect overhead (from Cost Allocation Plan) o Productive/billable hours
o Time estimates to complete tasks
o Department input, feedback and policies
▪ Staff support throughout process essential to ensure analysis fidelity
7 Summary Steps of the Study
Model
Development
Data
collection
Build fee
model
Overhead
and FBHR
Calculation
Cost Analysis
Staff
meetings
Update fee
schedules
Staffing and
time data
Full cost for
services
Set Cost
Recovery
Current cost
recovery
Target cost
recovery
Fee Study
Report
Create draft
report
Staff report
review
Finalize
report
Updated Fee
Adoption
Public
Hearing
8 Cost of Service Calculation
▪ Primary types of data used:
o Salary & Benefits
o Services and supply costs
o Indirect support costs
o Maintenance costs
▪ Hourly rates structured to account for direct work hours Salary &
Benefits
Productive
Hours
Salary &
Benefit
Rate
Direct and
Indirect
Overhead
Factors
Fully
Burdened
Hourly
Rate
9 Fee Cost Composition
▪ Fully Burdened Hourly Rates
predominately used to calculate
full cost for fees
▪ Important to keep in mind all
processes, personnel and
indirect support involved to
calculate full cost for services
Fee or
Service
Permit
Reviewer
Inspector
City
Engineer
City Clerk
Clerical Staff
Department
Director
10 Building
▪ Time-based cost analysis
▪ Suggested fee notes:
o An increase to 162 fees
o 7 fees would decrease
o 4 would remain as currently set
o Average change would be an increase of 27%
for existing fees
11 City Clerk
▪ Time based cost analysis
▪ Analysis found current fees are currently below
the full cost of providing services
▪ Suggested fee notes:
o An increase to 2 fees
o 5 new fee would be added
o 1 would remain as currently set
o Average change would be an increase of 104% to
existing fees
12 Community Services
▪ Most fees involve use of government property and should be set based on policy, usage and market factors
▪ It is generally accepted that Community Service programs provide a measure of public benefit to residents and the City as a whole.
Cities also strive to keep programs affordable for the community and competitive with surrounding jurisdictions. While some increased fees for services are proposed, most are recommended to remain unchanged.
▪ Suggested fee notes:
o An increase to 2 fees
o 66 fees would remain as currently set
o 1 new fee will be added
o Average change would be an increase of 1% for existing fees 13 Engineering & Public Works
▪ The Engineering and Public Works Department
is proposing an all-new fee structure based on
personnel cost to better reflect the wide variety
of services provided. Fees are tailored to
account for the specific staff time required for
each unique service request.
▪ Suggested fee notes:
o 20 new fee will be added
o 16 fees would remain as currently set
14 Fire
▪ Time based cost analysis
▪ Analysis found that current fees are below the full
cost of providing services
▪ Suggested fee notes:
o An increase to 46 fees
o 23 fees would decrease
o 13 fees would remain as currently set
o 25 new fees will be added
o Average change would be an increase of 14% for
existing fees
15 Finance
▪ Time-based cost analysis
▪ Analysis found that current fees are below
the full cost of providing services
▪ Suggested fee notes:
o An increase to 13 fees
o 19 fees would remain as currently set
o Average change would be an increase of 2%
for existing fees
16 Neighborhood Services
▪ Time-based cost analysis
▪ Analysis found current fees are underfunding
the cost of most of the services
▪ Suggested fee notes:
o An increase to 41 fees
o 14 fees would remain as currently set
o 8 new fees will be added
o Average change would be an increase of 50% for
existing fees
17 Planning
▪ Time-based cost analysis
▪ Analysis found that most current fees are below the
full cost of providing services
▪ Suggested fee notes:
o An increase to 33 fees
o 1 fee will decrease
o 5 fees would remain as currently set
o 1 new fee will be added
o Average change would be an increase of 42% for
existing fees
18 Police
▪ Time-based cost analysis
▪ Analysis found that most of the current fees
are underfunding the cost of services
▪ Suggested fee notes:
o An increase to 16 fees
o 7 fees would remain as currently set
o Average change would be an increase of 118%
for existing fees
19 Policy Considerations
▪ General standard: individuals or groups who receive
private benefit from service should pay 100% of cost
▪ In certain situations, subsidization is an effective
public policy tool:
oEncourage participation, and provide access to services oPromote compliance when cost is prohibitive to residents ▪ Recommend that City utilize inflation factor to
annually adjust fees based on CPI, CCI or other
factors
▪ Comprehensive analysis every 5 years
Questions
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21 Disclosure