City Council Agenda Report
TO: Mayor Clauzel and Members of the City Council
FROM: Fernando Ulloa, Interim City Manager
BY: Jennifer Riedeman, Finance Director
MEETING DATE: December 17, 2024
ITEM NO: 7.1
SUBJECT: Approve Resolution No. 2024-73 Adopting updated User Fees and Authorize the new User Fees and also increases to previously approved User Fees based on CPI as set forth in the Comprehensive User Fee Study dated September 2019.
RECOMMENDATION
Motion to Approve Resolution No. 2024-73 Adopting updated User Fees and Authorize the new User Fees and also increases to previously approved User Fees based on CPI as set forth in the Comprehensive User Fee Study dated September 2019.
BACKGROUND
In 2018/19 the City hired Willdan Financial Services to complete an updated analysis of all city user fees. The user fee study is now complete and due to the complexity of fees, a variety of fee methodologies were evaluated. A final report that provides the details of this study is attached for reference. The report identifies 100% full cost recovery for city services and the recommended level of recovery as determined through discussions with city staff.
The fees adopted included Building, Engineering, Finance, Fire, Recreation & Community Services, Administration, Planning, Police, and Public Works. Recreation & Community Services sets their fees based on industry standards, rather than cost recovery.
ANALYSIS
Staff recommends City Council approve the updated User Fees in order to recover current costs to provide the related the services.
The CPI increases to the previously approved fees is based on the June row in the table below (6.8%, 2.9%, and 3.2%:
Based on State Law, fees cannot take effect until 60 days after adoption of a Resolution. Upon City Council approval, the fees will go into effect on February 15, 2025.
These fees will remain at the current fee levels listed until Council takes further action. The Analysis included evaluation of staff involved, time estimates, development of fully burdened hourly rates, citywide overhead, and the calculation of a full cost recovery fee. This level of detail provides the basis for the following:
1. Reasonable cost of providing services
2. Defensible methodology
3. Compliant fees-for-service
4. Cost Recovery
The city can legally set fees at a level to recover the full cost of providing these services. The City benefits by realigning its user fees by 1) reducing general fund subsidy, 2) better supporting the departments’ funding, and 3) setting realistic expectation for cost recovery.
In addition to the CPI increases, all departments provided feedback and made updates to the User Fees and a separate list is attached. Additional changes may be forthcoming as departments review their activities and revenue recovery options. There were no changes to the Parking Fees as they are based on the California Vehicle Code.
The city will advertise the fees and public hearing as required by law.
FISCAL IMPACT
This action will authorize an increase of existing User Fees with an annual CPI (Consumer Price Index) increase applied starting January 18, 2025 as stated in the resolution, and also approve the listed new and deleted User Fees.
Staff will seek an updated User Fee Study in FY 2025/26, as it was required to be completed every five years in the resolution adopting the 2019 User Fee Study in FY 2020/21.