CITY COUNCIL STAFF REPORT
Meeting Date: June 17, 2024
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
SUBJECT: ADOPT RESOLUTION NO. ___-24 APPROVING THE CHANGES TO THE FISCAL YEAR 2024/2025 MASTER FEE SCHEDULE
SYNOPSIS
Staff is seeking City Council’s approval of proposed changes to the Fiscal Year 2024/2025 (FY 24/25) Master Fee Schedule (“MFS”), which would become effective September 1, 2024. The Proposed MFS was reviewed by the Budget Committee at its meeting of May 21, 2024, at which the Committee recommended Council’s adoption of the proposed MFS.
DISCUSSION
Background
A user fee, or service fee, is a payment made by an individual for a service that primarily benefits that individual. By law, user fees may not exceed the reasonable cost of the service for which they are collected. The intent of user fees is to cover 100 percent of the costs of providing the service.
Included in the costs of the service are three components:
• Direct Labor. Employee hours spent directly on the fee-related service. This rate includes the employee’s salary and benefits.
• Departmental Indirect Labor. Departmental employees not directly working on the feerelated service, but responsible for supervision and administrative activities. This cost layer includes administrative support staff and a portion of the department head’s time. • Central Overhead. This component includes costs for those departments that provide support to other City departments (e.g. City Attorney, City Manager, Finance and Human Resources).
The last comprehensive fee study was completed in June 2003, which analyzed if the City was receiving full cost recovery at that time. The City Council adopted Resolution No. 51-03 approving the FY 03/04 MFS, which updated fees for cost recovery and incorporated language to allow adjustment of certain fees annually based on the Consumer Price Index (“CPI-U”) for the San Francisco-Oakland-San Jose metropolitan area.
In 2023, the City Council approved an agreement with Willdan Financial Services (Willdan) to review the City’s user fees and update them based on best practices and full cost recovery.
Willdan worked with City departments and divisions to gather information and compiled their analysis and recommendations in the User Fee Study (see attached Willdan User Fee Study for the City of Pleasant Hill). On May 21, 2024, the Budget Committee reviewed the User Fee Study and recommended approval by the City Council. Tony Thrasher from Willdan will be available to present the recommendations to the City Council and answer any questions.
Analysis
The last comprehensive fee study was completed in June 2003 to analyze if the City of Pleasant Hill (City) was achieving full cost recovery for services provided to customers. In 2023, the City engaged Willdan to study the City’s business processes by department, develop a cost allocation model, and review the City’s user fees to determine the appropriate levels for achieving full cost recovery. For several of the fees, Willdan recommended increases to capture full cost recovery of the services provided by the City, based on current staff time and costs.
The proposed MFS update for FY 24/25 incorporates the suggested fees and changes developed by Willdan, which are identified in the User Fee Study, including:
• Continue Annual CPI Adjustment - A 2.4% increase in permissible fees, which represents the change (increase) in the San Francisco-Oakland-San Jose Consumer Price Index (CPI-U) as of March 1, 2024 over prior year for the same period. (For ease of administration, fees will be rounded to the nearest whole dollar whenever possible.). • Average Fee Change by Department/Division:
Building Increase to 10 fees; 5 new fees would be added; 25 fees would remain as currently set; and the average fee change would be an increase of 25% Code Enforcement An increase to 8 fees; 5 fees would remain as currently set; and the average fee change would be an increase of 55%
Engineering Increase to 31 fees; 8 fees would decrease; 12 fees would remain as currently set; and the average fee change would be an increase of 7% Police Increase based on 2.4% CPI
FISCAL IMPACT
The impact on General Fund revenue will depend on the fee-related activity. The proposed changes to the MFS are designed to capture cost recovery for providing services to customers.
Assuming similar levels of fee activity (used FY 2022/2023 as a baseline) and approval of all fees, the estimated increase is between $250,000 to $300,000.
PUBLIC CONTACT
Public contact was made through the posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Police Department, and at the Pleasant Hill Senior Center. The agenda and staff report are posted on the City’s web page. A notice (attached) was also published twice in the East Bay Times newspaper, on May 21, 2024, and May 28, 2024. In addition, notices were e-mailed to interested parties who had filed a written request with the City to be informed when the annual update of the MFS was to occur.
RECOMMENDED CITY COUNCIL ACTION
Adopt the resolution authorizing the changes to the Master Fee Schedule, as recommended by the Budget Committee.
ALTERNATIVES TO RECOMMENDED ACTION
Provide staff with directions regarding revisions to the Master Fee Schedule.
Prepared by: Erick Cheung, Finance Manager
Ross Yangwas, Accountant
Approved by: Ethan Bindernagel, City Manager
Attachments: Proposed Resolution
Exhibit 1 – Proposed Master Fee Schedule Effective September 1, 2024 Exhibit 1 - Proposed Master Fee Schedule Effective September 1, 2024 – Redline Version
Willdan User Fee Study for the City of Pleasant Hill
Notice of Public Hearing