Placentia Cit Council
AGENDA REPORT
TO: CITY COUNCIL
VIA: CITY ADMINISTRATOR
FROM: DIRECTOR OF FINANCE
DATE: APRIL 18, 2023
SUBJECT: PUBLIC HEARING: ADOPTION OF PROPOSED OVERHEAD COST
ALLOCATION STUDY AND COMPREHENSIVE FEE AND RATE SCHEDULE FISCAL
IMPACT: The proposed fee changes as of July 1, 2023, are intended to recover the cost of providing existing services associated with those fee -related regulatory functions and other programs.
SUMMARY:
The City of Placentia is responsible for providing a variety of services to its citizens. Services that support the general public, such as public safety services are supported by tax and other non -fee revenues, while services that are more elective in nature and have specific individual beneficiaries are typically supported by user fee charges. User fee -related services are provided by many City departments, but tend to be more heavily concentrated in Planning, Building, Engineering and Community Services divisions. By law, user fees must not exceed the cost of the service provided.
The City Council can choose to set fees that fully recover the cost of service or place said fees at lower levels that provide a level of subsidy, or alternatively, reduce costs by reducing the level of service provided.
Annually, the City reviews its fees and makes adjustments to ensure fees are consistent with industry best practices and city processes, account for inflation and may also add new fees resulting from new programs and/or changes in service delivery. This consistent review and adjustment of fees provides multiple benefits, including:
• Increasing the availability of General Fund revenues to be used for services and activities available to all residents and businesses, such as public safety services. • Keeping pace with general cost inflation.
• Avoiding fee spikes that are more likely to occur when municipalities leave fees unchanged for a multi-year period.
• Providing fee payers, City staff, and City policymakers with a pattern of consistency that provides information for forecasting and decision-making purposes. • Helping to meet fee -payer service level expectations by collecting fees to fund the existing level of services provided.
• Encouraging generational equity among fee payers by avoiding long-term stagnation of fees followed by significant fee increases.
2.b.
April 18, 2023
City Council Agenda
April 18, 2023
The last comprehensive fee update was completed in 2022 and prior to that completed in 2018, 2012 and 2007; Prior to 2007, the City's fee schedule had not been updated since 1990.
The City engaged Clear Source Financial Consulting to conduct a comprehensive fee study in 2022. Following their recommendation, Staff is proposing an adjustment of all fees by 5.1%, the CPI for All Urban Consumers (Los Angeles -Long Beach -Anaheim, CA) for February 2023.
RECOMMENDATION:
It is recommended that the City Council consider the following actions:
1. Open the Public Hearing to consider amending the Placentia Comprehensive Fee Schedule for certain fees, rates, and charges for various City user services; and
2. Receive the Staff report, consider all public testimony, and discuss the proposed fees; and
3. Close the public hearing; and
4. Adopt Resolution No. R-2023-23, a Resolution of the City Council of the City of Placentia, California, establishing and adopting certain City fees, rates, and charges for various City services with an effective date of July 1, 2023, for Fiscal Year 2023-24.
DISCUSSION:
The proposed fees are intended to comply with applicable federal, state, and local laws including providing confirmation that the proposed fees and charges are not a tax as defined in Article 13C of the California Constitution and that the proposed fees are no more than necessary to the cover the reasonable costs of the City's activities and services addressed in the fees. Additionally, the manner in which the costs are allocated to a payor bear a fair and reasonable relationship to the payor's burdens on, or benefits received from the activities and services provided by the City.
Nearly every service for which a fee is imposed can be illustrated as follows, contrasting the components of the full cost of service, which is the maximum fee amount justified, against the local agency's goals for cost recovery:
City Council Agenda
April 18, 2023
The Costs of Service Fee -Based Cost Recovery
Central Services/Governmental 100% = "Full Cost Recovery" Administration/Management
Materials/Services/Supplies
Indirect Service Labor
Direct Service Labor
$ per Year,
per Hour,
and/or
per Unit of
Service
Cost Recovery Target by Service:
• Public/Private Benefit Policies
• Market Sensitivity
• Compliance
• Fiscal Constraints/t-onsiderations
in the Organization
0% = Other Fund Subsidy
The City engaged Clear Source Financial Consulting to conduct a comprehensive fee study in 2022. Following their recommendation, Staff is proposing an adjustment of all fees by 5.1%, the CPI for All Urban Consumers (Los Angeles -Long Beach -Anaheim, CA) for February 2023.
Other changes proposed to the fee schedule are outlined below.
Fire Prevention Fees
The City initially established its fees for fire prevention services in partnership with our consultant, Dennis Grubb and Associates whom the City has contracted with for fire inspection and plan check services. Recently, the City hired its first Fire Marshall and after considerable review of the current fire fees, it was determined that there were several fees not included in the fee schedule such as operational permits by type of operation (places of assembly, exhibits and trade shows, hot work operations, waste handling, etc.), false alarm response and first responder fees. In addition, state mandated fees including inspections for various types of facilities were not included on the current fee schedule including, day -cares, jail/ lockups, schools, hotel/ motels and others.
The proposed changes will allow the City to recover a much higher percentage of its costs related to its fire prevention services.
Development Services
With the passage of AB1124 in 2021 which went into effect January 1, 2022, the State decreased the permit fees local building departments can charge for solar energy systems. For residential solar energy systems, local jurisdictions may not charge a fee of more than $450 plus $15 per kilowatt for each kilowatt above 15 -kilowatt hours. For commercial solar energy systems, jurisdictions have a cap of up to $1,000 for systems up to 50 kilowatts plus $7 per kilowatt between
City Council Agenda
April 18, 2023
51 kilowatts and 250 kilowatts, plus $5 per kilowatt for each kilowatt above 250 kilowatts. Changes are included in the proposed fee schedule to comply with this legislation.
In addition to the solar permit fee changes, Development Services is also proposing the addition of new fees including:
• Sidewalk Vendor Permit- The City currently does not have a permit process and/or associated fee for street vendors. Per state law, the City may not ban sidewalk vendors, but may require a permit and implement regulations pertaining to the location and operation of street vendors. A new permit fee is being proposed and an ordinance is currently being drafted to outline regulations on the operability of sidewalk vendors.
• Short -Term Rental Permit- The City currently charges a one-time permit fee for short-term rentals. To more accurately account for the city's ongoing costs with regulating short-term rentals, Staff is recommending an annual renewal process to align with industry practice and help ensure compliance by short-term rental operators.
Community Services
The Community Services department has identified a need within the community for summer day - camps for school -aged children. These camps would be full day and last five days per week, with participants registering on a per -week basis. Fees for the camps are included in the proposed fee schedule.
FISCAL IMPACT:
Additional revenues expected from the Proposed Master Fee Schedule are intended to offset the cost of providing existing services associated with those fee -related regulatory functions and other programs. Additional fee revenue is not intended to fund new services. Changes to fees are for cost recovery purposes only.
Prepared by: - -- Reviewed an• approv
Jen fifer Lampman
Damien R. Arrula
Director of Finance City Administrator
Attachments:
1. Resolution R-2023-23 - Establishing and Adopting Certain Fees
2. Notice of Public Hearing, Adjustment of Various Fees
3. PowerPoint Presentation