Placentia Cit Council
AGENDA REPORT
TO: CITY COUNCIL
VIA: CITY ADMINISTRATOR
FROM: DIRECTOR OF FINANCE
DATE: APRIL 16, 2024
SUBJECT: ADOPTION OF PROPOSED OVERHEAD COST ALLOCATION STUDY AND
COMPREHENSIVE FEE AND RATE SCHEDULE
FISCAL
IMPACT: The proposed fee changes as of July 1, 2024, 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.
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April 16, 2024
City Council Agenda
April 16, 2024
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 the cost -of - living adjustments (COLA) granted to the City's bargaining groups since the last update to the City's fee schedule. As most fees are for services supported by City Staff and their time, this methodology more accurately reflects the City's cost to provide these services and ensures greater cost recovery.
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-2024-20, 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, 2024, for Fiscal Year 2024-25.
STRATEGIC PLAN STATEMENT
This item is consistent with the City Council approved 5 -Year Strategic Goal 1.3 to Update Fee Study/ Cost Allocation Review.
DISCUSSION:
The proposed adjustments to 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 bears 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 16, 2024
The Costs of Ser' ice
Central Services/Governmental
Administration/Management
Materials/Services/Supplies
Indirect Service Labor
Direct Service Labor
$ per Year,
per Hour,
and/or
per Unit of
Service
Fee -Based Cost Recover
100% = "Full Cost Recovery"
Cost Recovery Target by Service:
• Public/Private Benefit Policies
• Market Sensitivity
• Compliance
• Fiscal Constraints/Considerations
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 to review fees annually to account for inflationary factors, Staff is proposing an adjustment of all fees by the cost -of -living adjustments (COLA) granted to the City's bargaining groups since the last update to the City's fee schedule. As most fees are for services supported by city staff and their time, this methodology more accurately reflects the City's cost to provide these services and ensures greater cost recovery.
Staff from three bargaining groups, PCEA, POA and PFA, directly provide services reflected in the City's fee schedule. COLAs for FY2023/24 and FY2024/25 were provided to the three groups as follows:
Group FY 2023/24 COLA FY 2024/25 COLA
PCEA
POA
PFA 6% 4%
5% 5%
8% 6%
Fees were adjusted in April 2023 for FY 2023/24 by the CPI of 5.1%. To account for larger than CPI cost of living adjustments, Staff is recommending adjusting fees for FY 2024/25 by the respective COLAs, Tess last year's CPI increase as outlined below:
FY 2023/24
Group COLA
PCEA 5%
POA 8%
PFA 6%
FY 2024/25
COLA
5%
6%
4%
Compounded
COLA increase
lover 2 Yrs.
10.25%
14.48%
10.24%
CPI Included
in FY23/24
fees
5.1%
5.1%
5.1%
Difference
(Proposed Fee
Adjustment)
5.15%
9.38%
5.14%
City Council Agenda
April 16, 2024
Notable changes proposed to the fee schedule are outlined below.
Development Services
In FY2023/24, a Sidewalk Vendor Permit fee of $150 was added to the City's fee schedule. The City has subsequently approved a Sidewalk Vending ordinance (ORD NO. 0-2023-04) requiring all persons engaged in sidewalk vending to possess a sidewalk vending permit and comply with the regulations outlined in the ordinance including obtaining a business license.
Staff is proposing three separate fees for activities involving sidewalk vending including vending from mobile facilities (food trucks), sidewalk vending and sidewalk vending _< 25 square feet. Staff surveyed fees charged by surrounding communities and reviewed the amount of staff time spent on sidewalk vending regulation and is proposing the following annual fees:
• Food trucks- $225 plus $50 per employee
• Sidewalk vending- $250
• Sidewalk vending 5 25 sq. ft.- $100
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 and approved:
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Jennifer Lampman Damien-R-Arrula
Director of Finance City Administrator
Attachments:
1. Resolution R-2024-20 - Establishing and Adopting Certain Fees
2. Notice of Public Hearing, Adjustment of Various Fees
3. PowerPoint Presentation