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FINANCIAL CONSULTING
City Council Meeting 1 April 5, 2022
Public Hearing
2 MEETING AGENDA
Background
✓ Fundamentals
O Study Findings and Recommendations
• Conduct Public Hearing
CLEARSOU RCE PRESE NTATION TO THE CITY OF PLACENTIA
ATTACHMENT 4
Background
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ATrAcHMENT 4
4 BACKGROUND
• The City maintains a Master Fee Schedule identifying
applicable fees for various City services
• Cities collect fees and charges for government
services performed at the request of, or specifically
for, a particular individual, business, or group... as
opposed to services performed for the community as
a whole
CLEARSOURCE PRESENTATION TO THE CITY OF PLACENTIA
ATTACHMENT 4
BACKGROUND
• This item is limited to review of fees for Building,
Current Planning, Engineering, and Non -Development
Related Fees
This item DOES NOT examine:
Taxes
Assessments
Utility Rates
Development Impact Fees
CLEARSOURCE PRESENTATION TO THE CITY OF PLACENTIA
INANCIAL CONSULTN
MUNICIPAL EES IN CALIFORNIA
The California State
Constitution, amended by "
successive ballot measures,
establishes requirements for
governmental
service fees
Common practices among
California cities provides
widely accepted
standards for meeting
Constitutional obligations
User fees must be linked to and not exceed
the estimated reasonable cost of service
The full cost of service sets the maximum
limit of a cost -based fee
Direct program costs for labor, services, and supplies
Facilities overhead
Departmental administration
Citywide administration and central support services
Generally, fees from users of one program
may not be used to pay for costs incurred to
serve discounted users or users of a different
program
7 CLEARSOURCE PRESENTATION TO THE CITY OF PLACENTIA
S
MUNICIPAL FEES IN CALIFORNIA
Why do Cities
Review Fees and
Charge Fees for
Services?
• Ensure user and regulatory fees are set
according to the costs of service
Enable more direct recovery of costs
incurred to serve private interests/benefit or
respond to individual actions
Provide opportunity for relief to General
Fund resources that are often viewed more
critical to services of broader public benefit,
subject to City Council policy direction
c Enable continuity of service levels by
improving cost recovery levels
GI.EAR$OURCE PRESE.N'IAT'ION TO THE cIT'v' OF PLAF:ENIIA ATTACHMENT 4
FEES ARE APPROVED BY THE CITY COUNCIL
The City Council has
authority to Directly
Approve User and
Regulatory Fees and
Increases to Fees
9 Fees proposed are not taxes, as defined by
Article 13C of the California State Constitution
Fees are set in accordance with parameters set
by Article 13C and by Section 66014 of the
California Government Code:
Costs allocated to the payer should bear a fair or
reasonable relationship to the payer's burdens on or
benefits received from the governmental activity
Fees should not exceed the reasonable cost of
providing the service for which the fee is charged
CLEARSOURCE PRESEN'TATrON .i0 THE ( Tv' OF PLACENTIA
ATTACHMENT 4
TERMINOLOGY
These terms of art
have specific meaning
across California
municipalities and
within the City
10 "Full Cost of Service"
The estimated total cost of a program,
inclusive of direct labor, services, and supplies
expenses, and associated overhead expenses
"Cost Recovery"
The amount of a program's full cost of service
that is supported by the program's own fee
revenues
"Subsidy"
The amount of a program's full cost of service
that is supported by other City revenue
sources
CI.EARSOURCE PRESS NT4TION TO THE CITY OF PI4CENTIA
ATTACHMENT 4
11 COST OF SERVICE
The cost of service sets the
maximum limit of a cost -based
fee. It includes:
Direct program costs for
labor, services, and supplies
Departmental administration
Citywide administration and
central support services
Hourly
Rate for
Personnel
Providing
Services
Fully Burdened
Hourly Rates:
Direct and indirect
labor costs
Services and supplies
Agency overhead
'me
Required
to
Perform
the
4 Estimated or
Known Times for Amount
Providing Services
Cost of
Service
Maximum Fee
CLEARSOURCE PRESENTATION TO THE CITY OF PLACENTIA
ATTACHMENT 4
Cost recovery
policy reflects
local values
regarding the
presumed
beneficiaries for
each program
area, ranging from
community
benefit to
individual
benefit
Exclusively individual benefit
Considerable individual
benefit
Balanced individual and
community benefit
Considerable community
benefit
Mostly community benefit
12 CEEARSOURCE PRESENTLTION TO THE CITY OE PTACENTIA
SUBSIDY
The amount of a
program's full cost of
service that is
supported by other
City revenue sources
Full Cost
of Service
($)
Maximum Level of
Cost Recovery =
100%
City Subsidy
Current Level of
Cost Recovery =
Revenue
from
Current
Fee ($)
Minimum Level of
Cost Recovery =
0%
13 CLEARSOURCE PRESENTATION TO THE CITY OF PLACENTIA
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FINDINGS AND RECOMMENDATIONS
Modify fee schedule to reflect transition to in-house
Fire Department services
e° Building Fees are Proposed to Remain Unchanged
a Enhance cost recovery for Planning fees
Restructure some Engineering fees to encourage
recovery of in-house and contract service costs
Recommend on-going annual adjustment for fees to
reflect inflationary changes — with periodic full cost of service studies
CLEARSOURCE PRESENTATION TO THE CITY OF PLACENTIA
AT s"' 1
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FINANCIAL CONSULTING
PUBLIC HEARING
17 Fee Changes Should Be Considered at The Conclusion
of a Public Hearing
• If Adopted, Fee Changes Are Proposed to Be Effective
July 1, 2022
CLEARSOURCE PRESENTATION TO THE CITY OF PLACENTIA
ATTACHMENT 4
D N I 1 1 fl S N O J 1 V I D N V N l J
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