PISMO BEACH CITY COUNCIL STAFF REPORT
Agenda Item #11.A
Meeting Date: May 6, 2025
TITLE:
New Conditional Use Permit Fee for Massage Establishments Effective July 5, 2025 RECOMMENDATION:
1. Conduct a Public Hearing to receive input from the public on the proposed user fee;
2. Adopt a Resolution adding a new Conditional Use Permit for Massage Establishment Fee to the fee schedule adopted by Resolution R-2025-013, effective July 5, 2025.
DISCUSSION:
The purpose of this public hearing is to review the proposed Conditional Use Permit for Massage Establishment fee, which has been updated based on Council direction provided at the April 1, 2025 City Council meeting; open the public hearing for public comment; and review, modify, and approve the resolution (Attachment 1) adding a new Conditional Use Permit for Massage Establishment fee.
The City charges user fees to individuals or groups for the use of City facilities, resources, or services. As part of the City’s cost recovery strategy, user fees help fund programs and services that provide a private benefit rather than a direct, citywide benefit. Without appropriate cost recovery, general tax revenues would subsidize private benefits, limiting funds available for essential community-wide services such as public safety and community programs.
The general standard is that individuals or groups who receive a private benefit from a service should pay 100% of cost. However, the City may choose to subsidize certain fees for policy reasons, such as encouraging participation in public programs, ensuring compliance when cost is prohibitive, and promoting access to essential services.
City Council Direction
On April 1, 2025, the City Council gave direction to reduce the Conditional Use Permit (CUP) fee for just Massage Establishments from $4,974 to $500. Because the existing Conditional Use Permit fee does not distinguish between types of uses, a new fee must be added to the schedule in order separately lower the CUP fee for Massage Establishments.
The proposed reduction in the CUP fee for Massage Establishments reflects a policy choice to reduce barriers for Massage Establishments entering the city of Pismo Beach.
California Government Code Section 66000 et seq. requires that these types of fees shall be effective no sooner than 60 days following the final action on the adoption of the fee.
As such, this proposed fee, if approved by Council resolution, would be effective July 5, 2025.
11.A-1Council Agenda 5-6-2025
Conclusion and Recommendation
Staff recommends that the Council:
Conduct a Public Hearing to receive input from the public on the proposed user fees; and
Adopt a Resolution adding a new Conditional Use Permit Fee for Massage Establishments to the fee schedule adopted by Resolution No. R-2025-013, effective July 5, 2025.
FISCAL IMPACT:
The fiscal impact of adopting the attached resolution creating a new CUP for Massage Establishment Fee is a reduction of $4,474 per applicant compared to paying the current CUP fee, resulting in reduced General Fund fee revenues. While the City’s cost to process each CUP for Massage Establishments remains unchanged, approximately 90% of that cost would be absorbed by the General Fund. This action shifts a portion of the cost from individual applicants to the broader tax base, effectively providing a targeted subsidy to support Massage Establishments.
Each year starting with July 1, 2026, the CUP for Massage Establishment fee is proposed to be increased by the amount of annual increase in the Consumer Price Index—U (Los Angeles Long Beach-Anaheim, CA All Urban Consumers) as reported for the twelve months from February of the previous year to February of the current year.
ATTACHMENTS:
1. Resolution
Prepared by:
Nadia Feeser, Administrative Services Director
Scot Graham, Community Development Director
Submitted by:
Nadia Feeser, Administrative Services Director
City Manager Approval:
11.A-2Council Agenda 5-6-2025
RESOLUTION NO. R-2025-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH,
CALIFORNIA ADDING A NEW CONDITIONAL USE PERMIT FOR MASSAGE
ESTABLISHMENT FEE TO THE FEE SCHEDULE ADOPTED BY RESOLUTION R-2025-013, EFFECTIVE JULY 5, 2025
WHEREAS, the City of Pismo Beach has conducted an extensive and exhaustive analysis of its services, the costs reasonably borne of providing those services, the beneficiaries of those services, and the revenues produced by those paying fees and charges for special services; and
WHEREAS, the City wishes to comply with both the letter and the spirit of Article XIIIB of the California Constitution and limit the growth of taxes; and WHEREAS, the City desires to establish a policy of recovering the full costs reasonably borne of providing special services of a voluntary and limited nature, such that general taxes are not diverted from general services of a broad nature and thereby utilized to subsidize unfairly and inequitably such special services; and WHEREAS, notice of public hearing has been provided per California Government Code Section 6062a, oral and written presentations made and received, and the required public hearing held; and
WHEREAS, the City may choose to subsidize certain fees for policy reasons, such as encouraging participation in public programs, ensuring compliance when cost is prohibitive, promoting access to essential services, and reducing barriers to small businesses; and
WHEREAS, a schedule of fees and charges to be paid by those requesting such special services need be adopted so that the City might carry into effect its policies; and WHEREAS, it is the intention of the City Council to add a new Conditional Use Permit for Massage Establishments at $500 per permit to the fee schedule adopted by Resolution R-2015-013.
NOW THEREFORE, the City Council of the City of Pismo Beach hereby resolves as follows:
1. Fee Schedule Adoption. The City Council approves a Conditional Use Permit for Massage Establishment fee, effective July 5, 2025, in the amount of $500 per application. The City Council specifically finds that the fees adopted are reasonable and do not exceed the cost of providing the services.
11.A-3Council Agenda 5-6-2025
Attachment 1
2. Collection and Listing of Fees. The Conditional Use Permit for Massage Establishment fee is hereby directed to be computed by and applied by the various City departments, and to be collected by the City Administrative Services Department for the herein listed special services when provided by the City or its designated contractors. The Conditional Use Permit for Massage Establishment fee shall be charged and collected for the enumerated services.
3. Separate Fee for Each Process. The fee set forth by this resolution is for each identified process; additional fees shall be required for each additional process or service that is requested or required. Where fees are indicated on a per-unit of measurement basis the fee is for each identified unit or portion thereof within the indicated ranges of such units.
A. Added Fees and Refunds. Where additional fees need to be charged and collected for completed staff work, or where a refund of excess deposited monies is due, and where such charge or refund is ten dollars ($10.00) or less, a charge or refund need not be made.
5. Interpretations. This resolution may be interpreted by the several City department heads in consultation with the City Manager and, should there be a conflict between two fees then the lower in dollar amount of the two shall be applied.
A. It is the intention of the City Council to review the fees and charges as determined and set out herein based on the City’s next Annual Budget and all the City’s costs reasonably borne as established at that time and, as and if warranted, to revise such fees and charges based thereon.
6. Constitutionality. If any portion of this resolution is declared invalid or unconstitutional then it is the intention of the City Council to have passed the entire resolution and all its component parts, and all other sections of this resolution shall remain in full force and effect.
7. Listing of Fees. A copy of the User Fee Schedule that includes the Conditional Use Permit for Massage Establishment fee shall be maintained in the Administrative Services Department Office and in the City Clerk’s files for review by the public during business hours.
8. Effective Date. This resolution shall go into effect immediately, and the fee adopted hereby shall go into full force and effect on July 5, 2025.
BE IT FURTHER RESOLVED that the Conditional Use Permit for Massage Establishment fee shall be increased by the amount of annual increase in the Consumer Price Index—U (Los Angeles-Riverside-Orange County, CA All Urban Consumers) as reported for February of each year, effective July 1, 2026, and each year thereafter on July 1st.
11.A-4Council Agenda 5-6-2025
Attachment 1
UPON MOTION OF Council Member , seconded by Council Member , the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 6th day of May 2025, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
IN WITNESS WHEREOF, I have hereunto set my hand on _______________________. ________________________
Erica Inderlied, City Clerk
11.A-5Council Agenda 5-6-2025
Attachment 1