DATE: APRIL 26, 2022
DEPARTMENT: FINANCE
FROM: MARK ROBERTS, Director of FINANCE
TITLE: Fiscal Year 2023 city-wide Schedule of fees and Service charges RECOMMENDATION:
Staff recommends City Council approve a resolution authorizing the City-wide Schedule of Fees and Service Charges effective July 1, 2022.
EXECUTIVE SUMMARY:
Each year, the City’s fee schedule is reviewed and adjusted by each department, as applicable, to ensure fees and charges keep pace with inflation, and to work toward full recovery of City service costs. The updated Schedule of Fees and Charges will be effective 60 days after City Council adoption and will begin Monday, July 1, 2022.
BACKGROUND:
Pursuant to Article XIII B of the California Constitution and Chapter 11B of the Salinas Municipal Code, fees for governmental services may be charged to recover all costs reasonably borne in providing all regulation, products, or services. Costs reasonably borne are defined in City Code Section 11B-3 as a) all applicable direct costs; b) all applicable indirect costs; c) fixed assets recovery expenses (depreciation); d) general overhead; e) departmental overhead; f) debt service costs; and g) costs for necessary public services.
City Code Section 11B - Fee and Service Charge Revenue
Chapter 11B of the Salinas Municipal Code provides for adjustments to existing City fee/service charge revenue based upon increases provided in the Consumers Price Index (CPI) – All Urban Consumers for the San Francisco, Oakland, and San Jose areas. Such adjustments are presented to City Council for adoption by resolution.
Study by Willdan Financial Services
In October 2015, City Council adopted an updated Fee Schedule based on a Comprehensive Fee Study prepared by Willdan Financial Services. Willdan analyzed a variety of factors, ultimately quantifying the full cost incurred by the City in providing the respective services. The recommended fee amount was then established to achieve as close to full cost recovery as possible. A number of factors prevented full cost recovery from being attained for certain fees, including mandated fee amounts, industry averages, and full cost recovery amounts that were either exceedingly high and/or varied greatly from the prior established fee. The resulting adopted fee schedule, effective January 1, 2016, is the basis for which the current CPI increase was calculated.
Consumer Price Index
The Consumers Price Index (CPI) – All Urban Consumers for the San Francisco, Oakland, and San Jose areas increased 3.2% in calendar year 2021. Staff, therefore, recommends City fees and service charges be increased 3.2% effective July 1, 2022.
While staff recommends most City fees be increased by 3.2%, some exceptions exist. Specifically, forty-six fees are mandated by various regulations, cannot increase, and are identified in the “Notes” column of the attachment. As a result of a joint operations agreement, sixty-eight Animal Shelter fees were adjusted to align with Monterey County. Department discretion was considered on a case-by-case basis, resulting in twenty-three fees’ either remaining unchanged or decreasing and are identified in the “Notes” and “Recommended” columns of the attachment. Lastly, six new fees are being proposed and are identified in the narrative below and on the attachment.
Finance Committee Recommendations
At its April 5, 2022 meeting, the Finance Committee recommended a 2.5% increase rather than the 3.2% corresponding to increase in the CPI. Staff will ultimately adjust the fee schedule at the rate determined by City Council.
The Finance Committee also requested City staff seek feedback from the Salinas Valley Chamber of Commerce, Salinas United Business Association (SUBA), and various youth sports groups. The outreach was conducted as requested with Salinas Valley Chamber of Commerce, who recommended that the proposed 8.0% Engineering News-Record Construction Cost Index increase should be only 4%. Additionally, City staff will be meeting with SUBA after the date of submittal of this report but prior to the Council meeting. Staff will update the result of SUBA input at the Council meeting. The Library and Community Services department confirmed that youth sports groups are not subject to these fees, and as such, those groups were not contacted.
Attachment – FY 22-23 City-Wide Schedule of Fees and Service Charges Finance & Administration
Recommendation includes a 3.2% CPI increase.
Cannabis
Recommendation includes a 3.2% CPI increase.
Planning
Recommendation includes a 3.2% CPI increase.
Maintenance
Recommendation includes a 3.2% CPI increase.
Public Works
Recommendation includes a 3.2% CPI increase.
Four new fees are being proposed, are identified throughout the Public Works section of the attachment and are consistent with hourly staff rate. Six fees did not increase as the department determined the existing amount was sufficient for full cost recovery.
Fire
Recommendation includes a 3.2% CPI increase.
Police
Recommendation includes a 3.2% CPI increase.
Two new fees are being proposed and are identified in the Police section of the attachment. Both pertain the massage parlors.
Animal Shelter
Fees were adjusted to align with Monterey County per joint operations agreement.
Library
Recommendation includes a 3.2% CPI increase.
Three fees were decreased to an amount sufficient for full cost recovery as determined by the department.
Recreation
Recommendation includes a 3.2% CPI increase.
Building-Permit Center
Recommendation includes a 3.2% CPI increase.
Fourteen fees did not increase as the department determined the existing amount was sufficient for full cost recovery.
Code Enforcement
Recommendation includes a 3.2% CPI increase.
Housing
Recommendation includes an 8.0% Engineering News-Record Construction Cost Index increase as stipulated in the Inclusionary Housing Ordinance.
FISCAL AND SUSTAINABILITY IMPACT:
New and increased fees and service charges are an integral part of the City Council’s budget-balancing solutions, as these revenues recover the cost of the services being provided to those provided the services. Increased annual revenue associated with the recommended fees and service charge adjustments based on the CPI (3.2%) is estimated to be approximately $100,000. These fee increases will be included in fiscal year 2023 estimated revenue projections.
ATTACHMENTS:
Resolution
FY 23 City-Wide Schedule of Fees and Service Charges
Fee Schedule Presentation – City Council 4-26-22
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