San Luis Obispo City Council
February 20, 2024

City of San Luis Obispo, California

Source: Results from DEISP Community Wide Vision English Survey 2023 compiled by the DEI Office.

Notes: Respondents were asked to describe their vision of the City for the future by selecting up to five choices from a predetermined list (provided response) or to write in their own custom response. Write-in responses that did not directly align with or answer the question were not included in the development of the above graphic.

City of San Luis Obispo, California

City of San Luis Obispo, California
PLAN NAME: 2023-2028 DEI Strategic Plan
CONTACT: Nestor Veloz-Passalacqua
Lead Organization
Supporting Partners
Timeline
Status ON TRACK

IN PROGRESS

INCOMPLETE
Key Accomplishments / Notes
Abbreviation
5CHC 5 Cities Homeless Coalition
AAPI AAPI SLO County
ASN Access Support Network
AIA American Institue of Architects local chapter
SLOBHD Behavioral Health Department
BBBS Big Brothers Big Sisters
N/A Building a Better SLO
Cal Poly Cal Poly San Luis Obispo OUDI
Cal Poly Cal Poly Black Academic Excellence Center
Cal Poly Cal Poly Black Student Union
Cal Poly Cal Poly Center for Innovation & Entrepreneurship Cal Poly Cal Poly Multicultural Center
CCCUSS Central Coast Coalition for Undocumented Student Success N/A Central Coast Follies
N/A Central Coast Youth Chorus
N/A City Farm SLO
CAPSLO Community Action Partnership of San Luis Obispo County, Inc (CAPSLO)

ABOUT THIS DOCUMENT

MATRIX COMPONENTS

ORGANIZATIONS OUTREACHED AND ENGAGED
Organization Name
This implementation matrix is designed to be a flexible, ever-evolving tool for tracking progress towards implementation of your strategic plan. In addition to identifying lead organizations and establishing priorities, it provides a graphic representation of when actions should realistically be implemented and suggests potential partners to help carry them out. The status column provides a visual indicator for monitoring where each strategy and action stands. Finally, space is provided for logging key milestones and accomplishments or capturing notes about barriers encountered.

Organization responsible for implementation of this task.

Stakeholder and partner organizations that will serve as collaborators or that can help move implementation forward.

A visual representation of the suggested timing of implementation This item has been accomplished or action is on track toward meeting or maintaining this task.

Action has been initiated, but is delayed or otherwise not fully on track. Requires removal of barriers or other actions to achieve implementation.

Action has not begun on this item or barriers may prevent implementation.

Brief description of relevant activities, major milestones, and/or accomplishments related to this task.

City of San Luis Obispo, California | 2024 DEI Strategic Plan Page 175 of 203 CCC Community Counseling Center (CCC) of San Luis Obispo N/A Conzona Women’s Ensemble
CASA Court Appointed Special Advocates of San Luis Obispo County, Inc Corazón Latino Corazón Latino
Cuesta Cuesta College
CCF Cuesta College Foundation
Cal Poly Disability Resource Center (Cal Poly)
Cuesta Disability Resource Center (Cuesta College)
N/A Dismantling Racism from the Inside Out/Bend the Arc Diversity Coalition Diversity Coalition of San Luis Obispo County N/A Downtown SLO
N/A Festival Mozaic
Food Bank Food Bank Coalition of San Luis Obispo County N/A Foundation for the Performing Arts Center
GALA GALA Pride and Diversity Center
N/A History Center of SLO County
Hospice Hospice of San Luis Obispo County
ILRC Independent Living Resource Center, INC
N/A Jack's Helping Hand, Inc
JCC Jewish Community Center Federation
LOC Latino Outreach Council
N/A Literacy for Life Organization
N/A Listos CA (Central Coast)
N/A Long Term Care Ombudsman Services of San Luis Obispo County City of San Luis Obispo, California | 2024 DEI Strategic Plan Page 176 of 203 ONGOING FY24-25 FY25-26 FY26-27 FY27-28

1.1.1.      Establish bimonthly collaborative and informative meetings with Cal Poly Office of University Diversity & Inclusion and Cuesta College Office of Student Equity & Special Programs to further explore partnerships around education and training. (include MCG #2.6.a) Admin-DEI Cal Poly & Cuesta College 

1.1.2.      Provide financial assistance to qualified families through City funded scholarships for youth related programs such as: before/after school childcare, spring break & summer camps, swim lessons, and after school sport programs. (MCG #2.8.d)
P&R Parks & Recreation 

1.1.3.      Explore and develop shared multicultural programming, activities, and events with Cal Poly, Cuesta College, and Non-profit partners through a pilot and/or pop-up multicultural center experience.. (include MCG #2.6.d)
Admin-DEI Cal Poly 

1.1.4.      Host City/Cal Poly quarterly roundtable (City & Cal Poly Leadership, DEI Employee Committee, HRC, Cal Poly students, DEI Leaders, Cuesta College, etc.) regarding community/student experience, relationship-building, and partnership programs. (MCG #2.6.c) Admin-DEI Cal Poly, Cuesta College,
Other Non-profits 

1.1.5.      Continue to work with community partners (Police Advisory Committee and Roundtable) to give the community a voice in policing and ensure that 21st Century Policing Recommendations are implemented where possible. (MCG #2.5.c)
Admin-DEI & PD PD 

1.1.6.      Annually report out on demographic data collected in NeoGov for City job applicants and Oracle for paid advisory body members and identify targeted strategies to address potential equity gaps. Admin-DEI Clerk's Office & HR Q4

1.1.7.      Design and implement programs aimed at removing barriers and increasing the representation of Black and Indigenous People of Color (BIPOC) and LGBTQIA2S+ communities in all City advisory bodies.

Including the process to track demographic data for City volunteers and unpaid advisory body members.

Admin-DEI & HR Human Resources Q2

1.1.8.      Research and explore ways to further integrate Tribal liaison functions in City programs and projects. Admin-DEI & P&R Administration Department Q2

1.1.9.      Research ways to allocate dedicated and ongoing funding capabilities to support equitable access to Parks & Recreation programs and services in the community. Admin-DEI Parks & Recreation Q1

1.1.10.      Monitor community demographic data to best inform target areas for more inclusive community engagement strategies as recommended by the Public Engagement and Noticing (PEN) Manual. Admin-DEI & P&R Administration Department Q3

1.1.11.      Develop a DEI cabinet of key community group leaders to serve as trusted sources between the community and the City’s DEI initiatives. Admin-DEI Administration Department Q1

1.1.12.      Develop or contract for interpretation services for critical and key events ensuring information, services, and outreach are presented in a culturally and linguistically appropriate manner for the key languages spoken in the City, including Spanish and ASL.

Admin-DEI Administration Department Q1

1.1.13.      Develop and release a “how to” guide in Spanish and other languages on how to participate in public meetings and share public comment. Admin-DEI Administration Department Q4

1.1.14.      Research and explore a parking validation program for in-person attendance at City Council meetings. Admin-DEI Public Works Q2

1.1.15.      Conduct community training and civic classes on how to be involved in City projects and programs in English and Spanish to ensure greater participation and representation. Admin-DEI Administration Department Q4

1.1.16.      Continue to provide Community Academy program in even numbered years including application outreach to underserved and underrepresented communities. (MCG #2.7.b) Admin-DEI & Public
Works Administration Department 

1.1.17.      Partner with veteran-based organizations to identify opportunities for learning for City departments and the public. Admin-DEI Administration Department Q1

1.1.18.      Support the implementation of the Sustainability & Natural Resources Office Major City Goal (MCG) climate justice initiatives impacting vulnerable populations. Admin-DEI Office of Sustainability & Natural Resources 

1.1.19.      Work with community organizations to provide additional resources and training to staff engaging with elderly populations to support inclusive engagement structures. Admin-DEI Administration Department 

1.2.1.      Utilize the Assistant VP for Strategic Planning and Network at Cal Poly OUDI to research best practices, grants for internships, programs, outreach, innovative practices, etc. (MCG #2.6.b) Admin-DEI Administration Department 

1.2 ENHANCE LOCAL NON-PROFIT AND BUSINESS ENVIRONMENTS TO ENCOURAGE PRACTICES THAT PROMOTE A STRONGER SENSE OF COMMUNITY AND BELONGING PILLAR 1: DIVERSE COMMUNITY ENGAGEMENT AND REPRESENTATION

1.1. STRENGTHEN PUBLIC INVOLVEMENT THROUGH INCLUSIVE COMMUNITY ENGAGEMENT AND EQUITABLE ACCESS TO INFORMATION, AND DECISION-MAKING OPPORTUNITIES

KEY ACCOMPLISHMENTS / NOTES
NOTE: All fiscal years are subject to evaluation, resource allocation, and funding during the Major City Goal and Budget process for the respective year.

LEAD

ORGANIZATION

SUPPORTING

PARTNERS

TIMELINE
STATUS
City of San Luis Obispo, California | 2024 DEI Strategic Plan Page 177 of 203 ONGOING FY24-25 FY25-26 FY26-27 FY27-28
PILLAR 1: DIVERSE COMMUNITY ENGAGEMENT AND REPRESENTATION

KEY ACCOMPLISHMENTS / NOTES
NOTE: All fiscal years are subject to evaluation, resource allocation, and funding during the Major City Goal and Budget process for the respective year.

LEAD

ORGANIZATION

SUPPORTING

PARTNERS

TIMELINE
STATUS

1.2.2.      Work with Cal Poly and Cuesta College to host interns. (MCG #2.1.b) Admin-DEI Administration Department 

1.2.3.      Research and explore a partnership with a qualified third party to develop and maintain a DEI competence certificate program for local businesses. Admin-DEI Office of Economic Development & Tourism Q4

1.2.4.     Support and partner with proven providers to implement a series of technical assistance events to educate and equip minority- and women-owned businesses (MWOBs) with the tools they need to be successful business owners in the community.

Admin-DEI Office of Economic
Development & Tourism Q3

1.2.5. Support the review of policies and practices to ensure compliance with current anti-discrimination, anti-harassment, and retaliation law, and further the City’s DEI values Admin-DEI Human Resources Q1

1.2.6.      Partner with non-profit organizations, such as the Chamber of Commerce and Diversity Coalition, to research the viability of developing a Leadership SLO module or program which encourages BIPOC and LGBTQ+ communities to develop leadership skills and encourage diverse groups to assume leadership roles on municipal boards, commissions, and the City Council.

Admin-DEI Businesses & Non-profits Q2

1.2.7.      Establish funding for all departments to add demographic questions to projects and programs in which such data will contribute to a better understanding of the participants’ makeup and needs to inform inclusive enhancements to future projects.

Admin-DEI Administration Department Q4

1.2.8.      Research opportunities to support ongoing funding for the DEI SLO Business Grant Program. Admin-DEI Office of Economic Development & Tourism Q1

1.2.9.     Support and sponsor job fairs to support businesses in engaging various communities that will foster more diverse and inclusive workforce development. Admin-DEI Human Resources Q3

1.2.10.      Support and embed an equity lens into the City financial planning and budget process. Admin-DEI Finance Department Q1 City of San Luis Obispo, California | 2024 DEI Strategic Plan Page 178 of 203 ONGOING FY24-25 FY25-26 FY26-27 FY27-28

2.1.1.      Support the development and implementation of the Broadband Strategic Plan to ensure access is equitable and pursue funding to fill gaps. (MCG #2.7.a) Admin-DEI Administration Department 

2.1.2.      Complete training for applicable staff on the City's updated Public Engagement & Noticing (PEN) to ensure diverse participation. (MCG #2.7.c) Admin-DEI Administration Department 

2.1.3.      Establish consistent and regular messaging, either visual, written, or oral, that validates and encourages the City’s commitment to DEI with the community and the City organization. Admin-DEI Administration Department Q1

2.1.4.      Partner with appropriate City departments to provide options for participation for all major public meetings when possible. Admin-DEI City Clerk's Office Q4

2.1.5.      Develop comprehensive DEI material in collaboration with Tourism Business Improvement District (TBID) & Promotional Coordinating Committee (PCC) for the SLO Visitor Center. Admin-DEI Office of Economic Development & Tourism Q2

2.1.6.      Partner with SLOPD to develop communication response plan for local, state, or national events impacting policing and DEI. Admin-DEI Police Department Q1

2.1.7.      Partner with SLOFD to enhance disaster preparedness outreach programs for those with disability, access, and functional needs, and lower-socio-economic community members who are disproportionately affected by natural disasters.

Admin-DEI Fire Department Q1

2.1.8.      Incorporate land acknowledgement into City Council meetings and advisory body meetings. Admin-DEI Administration Department Q1

2.1.9.      Provide City Council meeting information or other forms of communication in Spanish on the City’s website. Admin-DEI Administration Department Q1

2.1.10.      Develop diverse visual messaging to ensure individuals with limited literacy skills understand events, programs, or projects sponsored or led by the City. Admin-DEI Administration Department Q1

2.1.11.   Support City departments upon request in reviewing language, content, and images in all communication and marketing materials to ensure inclusion and accessibility. Admin-DEI All City Departments Q1

2.2.1.      Develop signage that articulates the City’s DEI values at City parks including Mission Plaza. Admin-DEI Administration Department Q3

2.2.2  Partner with the public art program to remove barriers and expand representation by diverse artists (BIPOC and LGBTQIA2S+) in the City. Admin-DEI Parks & Recreation Q1

2.2.3.      Explore the development, expansion, and funding opportunities for cultural activations, promotions, and celebrations in downtown, such as expansion of banner programs and store-front Admin-DEI Office of Economic Development & Tourism Q4

2.2.4. Explore and research the viability and implementation of all new City facilities to include gender inclusive restrooms Admin-DEI Community Development Q1

2.2.5.      Explore and research ways to incorporate bilingual information in City signage for key d ti ti
Admin-DEI Parks & Recreation Q3

2.2.6.      Research and explore the development of a community-led design process for creating a DEI icon to be included in City materials and shared with grant recipients, local businesses, and non-profit organizations.

Admin-DEI Administration Department Q2

2.2.7.      Contract to develop a feasibility study for a multicultural center. (MCG #2.6.e) Admin Office of Sustainability & Natural Resources 

KEY ACCOMPLISHMENTS / NOTES
PILLAR 2: EQUITABLE COMMUNICATION AND ACCESSIBILITY

2.1. DEVELOP AND IMPLEMENT INCLUSIVE AND ACCESSIBLE COMMUNICATION STRATEGIES THAT REFLECT THE CITY'S DEI INITIATIVES

2.2 IMPROVE LOCAL DOWNTOWN AND OVERALL CITY ENVIRONMENTS BY CREATING OPPORTUNITIES TO CELEBRATE DIVERSITY AND FACILITATE INCLUSION NOTE: ALL FISCAL YEARS are subject to evaluation, resource allocation, and funding during the Major City Goal and Budget process for the respective year. LEAD ORGANIZATION SUPPORTING

PARTNERS

TIMELINE
STATUS
City of San Luis Obispo, California | 2024 DEI Strategic Plan Page 179 of 203 ONGOING FY24-25 FY25-26 FY26-27 FY27-28

3.1.1.      Further develop purpose, role, activities and enhance impact of DEI Employee Committee, including equal standing and priority to tasks and responsibilities assigned to the members (e.g. Employee Resource Groups (ERGs), newsletters, cultural celebrations, trainings, internal communication, public web pages, etc.). (MCG #2.1.c)
Admin-DEI Administration Department 

3.1.2.      Continue to provide grant support to the HRC for DEI High Impact Grants and Human Services Grants and complete necessary follow up to ensure required reporting by grant recipients. (MCG #2.1.e) Admin-DEI Administration Department 

3.1.3.      Edit existing and create new policies and procedures that reflect a DEI lens for internal processes to ensure all City Departments support the DEI Major City Goal. (MCG #2.8.c) Admin-DEI All City Departments 

3.1.4.      Evaluate resources needed to implement the DEISP across City departments and make funding recommendations as needed. Admin-DEI Administration Department 

3.1.5.      Based on the completion of the DEI Strategic Plan, determine the ongoing support structure needed in the Office of DEI to optimally deliver organizational and community programs and services. (MCG #2 1 )
Admin-DEI Administration Department 

3.1.6.      Review and embed DEI language into existing policies and procedures, codes of conduct within facilities, parks, programs, events, and rentals for services provided to the community. (MCG #2.8.a) Admin-DEI All City Departments 

3.1.7.      Include the DEI Manager in Financial Planning Steering Committee meetings. (MCG #2.8.b) Admin-DEI Administration Department 

3.1.8.      Continue to support and act as the staff liaison to the Human Relations Commission. (MCG#2 1 d)
Admin-DEI Administration Department 

3.1.9.      Annually revise and enhance DEI section in the City’s Legislative Platform. Admin-DEI Administration Department 

3.1.10.      Develop and implement a DEI language toolkit for City staff that includes guidelines to address inequities while also building better practices. Admin-DEI Administration Department Q1

3.1.11 Include DEI parameters in the review and selection process of all available City grant funding opportunities in compliance with Proposition 209 Admin-DEI Administration Department Q2

3.1.12.      Develop and distribute to the community and partners a brief annual report from the Office of DEI highlighting outcomes and results of DEI work. Admin-DEI Administration Department Q4

3.1.13.      Explore, research, and implement the development of a Racial Equity Statement and a Gender Equity Statement to support the Community Development Department in their collaborative housing and homelessness funding opportunities.

Admin-DEI Community Development Q4

3.1.14 Embed and operationalize the City's equity consideration, as presented in the Climate Adaptation & Safety Element (CASE) report, into project and program desing, development, and implementation via project plans.

Admin-DEI Administration Department Q4

3.1.15.      Provide support to the Community Development Department and other departments in reviewing public engagement practices, policies, plans, and proposed ordinances to ensure inclusive and equitable outcomes.

Admin-DEI Administration Department Q4

3.2.1.      Promote DEI best practices in Police Department (PD) recruiting and hiring efforts. (MCG #2.5.a) Admin-DEI Police Department 

3.2.2.      Work in partnership with Public Works and the Police Department to ensure new public safety building design is equitable and inclusive for the community and all department employees. (MCG #2.5.c) Admin-DEI PD & Public Works 

3.2.3.      Complete a planning study for gender inclusive restroom and sleeping facilities for Fire Stations 3 & 4. Process with design work pending results of study. (MCG #2.4.d) Admin-DEI Fire Department Q1

3.2.4.      Develop a Bias and Hate Incident Reporting process in collaboration with the Police Department and work with the Human Relations Commission (HRC) to review citywide hate crime and incident data on a quarterly basis and identify appropriate supportive action(s) through the Office of DEI.

Admin-DEI Administration Department Q2

3.2.5.      Develop outreach, recruitment, and retention, and advancement programs to remove barriers to access for diverse communities in Fire, Police, Utilities, and the Public Works departments. Admin-DEI FD, PD, Utilities, and Public Works Q1

3.2.6.      Embed DEI guidelines into the capital improvement project review committee processes. Admin-DEI Public Works Q2 PILLAR 3: EMBEDDED ACCOUNTABILITY AND SUSTAINABLE CHANGE

3.1. PRIORITIZE TRANSFORMATIONAL GOVERNANCE WHERE DEI IS EMBEDDED IN BUDGETING, PLANNING, PROGRAMMING, AND POLICY-MAKING

3.2 PARTNER WITH KEY PUBLIC FACING CITY DEPARTMENTS IN PURSUING STRATEGIES AIMED AT CREATING DIVERSITY, ADDRESSING INEQUITIES, AND FOSTERING SYSTEMIC CHANGE

KEY ACCOMPLISHMENTS / NOTES
NOTE: ALL FISCAL YEARS are subject to evaluation, resource allocation, and funding during the Major City Goal and Budget process for the respective year. LEAD

ORGANIZATION

SUPPORTING

PARTNERS

TIMELINE
STATUS
City of San Luis Obispo, California | 2024 DEI Strategic Plan Page 180 of 203 ONGOING FY24-25 FY25-26 FY26-27 FY27-28

4.1.1.      Provide DEI-related training for all staff of all levels (Council, Commissions, Advisory Boards, Directors, Managers, Staff, etc.) (MCG #2.4.c) Admin-DEI Administration Department 

4.1.2.      Update and provide resources using the internal DEI website to engage staff in knowledge-acquisition and skill-retention opportunities. Admin-DEI Administration Department Q1

4.1.3.      Collaborate with Human Resources to develop mandatory specialized DEI training matrix across all positions within the organization that identifies required and preferred DEI training objectives. Admin-DEI Human Resources Q2

4.1.4.      Incentivize and recognize participation in inclusive leadership training modules for all Department Heads and managers within the organization. Admin-DEI Administration Department Q2

4.1.5.      Promote professional development opportunities outside the organization for staff to enhance their DEI competencies. Admin-DEI Administration Department Q3

4.2.1.      Continue to enhance job descriptions and recruiting materials such as material in Spanish or in different formats to create easy access. (MCG #2.3.a) Admin-DEI Human Resources 

4.2.2.      Assess and develop enhancements processes such as implementing DEI focused screening and interviewing trainings to personnel and interview panels. (MCG #2.3.b) Admin-DEI Human Resources 

4.2.3.      Create and rollout DEI-focused trainings for employees. (MCG #2.3.c) Admin-DEI Human Resources 

4.2.4.      Examine policies and programs to support primary caretakers. (MCG #2.3.d) Admin-DEI Human Resources 

4.2.5.      Collaborate with Human Resources to formalize a bilingual program for City employees including supplemental staff. Admin-DEI Human Resources

4.2.6.      Continue communicating childcare options and resources for City employees; additional to First 5 findings.

Explore flex schedules, job share, remote options, etc. (MCG #2.3.e) Admin-DEI Human Resources 

4.2.7.      Implement an annual Quarterly Management Meeting to be focused on DEI in collaboration with the Office of DEI. Admin-DEI Human Resources Q2

4.2.8.      Conduct job qualification study to identify comparable/transferable qualifications or skill sets between education and years of experience. Admin-DEI Human Resources Q3

4.2.9.      Research and explore employment pipeline programs to remove barriers for diverse individuals including but not limited to Black, Indigenous, people of color, people within the LGBTQIA2S+ community, and those who have diverse neuro and physical abilities.

Admin-DEI Human Resources Q1

4.2.10.      Partner with Human Resources and City Attorney’s Office to research a process for employees to report bias incidents that occur in the workplace. Admin-DEI Human Resources & Attorney's Office Q1

4.2.11 Collaborate with established Employee Resourve Groups (ERGs) such as PACE and SLOHAS to embed DEI into ongoing staff development and engagement opportunities. Admin-DEI Administration Department Q2

4.2.12.      Develop hiring toolkit for hiring panels that focuses on addressing bias in the workplace. Admin-DEI Administration Department Q1

4.2.13.      Integrate DEI requirements into performance evaluations for management level positions which can include, but is not limited to training, team development, and project implementation. Admin-DEI Human Resources Q3

4.2.14.      Develop and implement a DEI module in new hire onboarding process. (MCG #2.4.b) Admin-DEI Human Resources 

4.2.15.      Work with the Employee Recognition Committee to establish an Inclusive Excellence Staff Award. Admin-DEI Administration Department Q2

4.2.16.      Collaborate with the Fire Department and other interested departments to expand their internship and mentorship program to remove barriers and increase diverse recruitment practices and employment retention. Admin-DEI Fire Department Q1

4.2.17.      Require departments, with the support of the Office of DEI, to complete a DEI “SWOT” analysis for internal strength, weaknesses, opportunities, and threats every other year in alignment with the City financial planning processes.

Admin-DEI All City Departments Q4
PILLAR 4: INCLUSIVE ORAGNIZATIONAL CULTUREA AND STRUCTURE

4.1. EMPOWER CITY LEADERSHIP AND CITY STAFF TO BUILD UPON THEIR DEI COMPETENCIES AND ENGAGE IN EXPANDED EDUCATIONAL OFFERINGS

4.2 FOSTER AN INCLUSIVE WORKPLACE CULTURE THAT PROMOTES EQUITABLE HIRING, RETENTION, AND PROMOTION PRACTICES NOTE: ALL FISCAL YEARS are subject to evaluation, resource allocation, and funding during the Major City Goal and Budget process for the respective year.

LEAD

ORGANIZATION

SUPPORTING

PARTNERS

TIMELINE

STATUS KEY ACCOMPLISHMENTS / NOTES
City of San Luis Obispo, California | 2024 DEI Strategic Plan Page 181 of 203

City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: February 16, 2024
TO: Mayor and Council
FROM: Whitney McDonald, Assistant City Manager
Prepared By: Rebecca Bernstorff, Business Manager – Community Service Group VIA: Derek Johnson, City Manager
SUBJECT: ITEM 8a – STUDY SESSION TO RECEIVE AN UPDATE AND PROVIDE

DIRECTION REGARDING THE CITYWIDE USER AND REGULATORY

FEE STUDY
As staff have been preparing for the Fee Study Session, they have been concurrently working on finalizing the results of the final User Fee Study Report with an outside fee expert. In order to ensure accuracy, efficiency and ample time for review and public outreach before implementation of an updated fee schedule, staff are recommending deferring the March 19 Public Hearing recommendation that is currently in the Council Agenda Report.

Due to project manager staffing changes, and resources dedicated to the Parking Rate Study scheduled this Spring 2024, delaying the Fee Study will provide additional time for staff to review report results and share them with the community before returning to Council for any recommended actions.

As such, a change to the Recommendation section of the Council Agenda Report, is noted below in blue:

RECOMMENDATION

1. Hold a study session and receive a presentation on the City’s user and regulatory fees; and

2. Receive public input and provide guidance to staff regarding recommended fee-related structural changes and any adjustments to current policies or practices; and

3. Direct staff to defer the Public Hearing to be in alignment with the timing of the Impact Fee Study, which is anticipated to be completed by January 2025, perform outreach to interested parties consistent with the Public Engagement and Noticing Manual ahead of the public hearing scheduled for March 19, 2024, to consider approving new user and regulatory fees consistent with the completed fee study.

Item 8a. Comprehensive Fee Study Overview Study Session Page 2 The Public Engagement section of the Council Agenda Report states:

Public Engagement
Staff began public engagement to inform stakeholders and the public regarding the fee study and update process in the beginning of February and are currently on the agendas for the February 15 Developer’s Roundtable meeting, and the March 6, 2024 Parks and Recreation Commission meeting which may include recreational community user group representatives associated with sport field and facility rentals (e.g. roller hockey rink, swim center, and golf course).

While staff did present an overview of the user and regulatory fee study and the information included in this agenda item at the Developer’s Roundtable on February 15, 2024, and received preliminary feedback from the group at that time, it is recommended that the Parks and Recreation Commission presentation be delayed until late 2024 or early 2025 when the final draft fee study is completed. However, staff will provide a brief status update to the Parks and Recreation Commission consistent with this recommended change in timing at the March 6, 2024 meeting.

Additionally, to align with the new recommendation, staff recommends changes to the Alternatives section of the Council Agenda report, as noted below in blue:

ALTERNATIVES
The Council could direct staff to not continue the finalization of the fee study and delay completion of the fee study until a later date. This action is not recommended in order to be in alignment with the Fee Cost Recovery Goals within the City’s Fiscal Policies, including that fees are reviewed and updated on an ongoing basis (every five years and in the interim annually by CPI) to ensure that they keep pace with changes in the cost-of-living as well as changes in methods or levels of service delivery. It is important to complete a comprehensive fee study to be in alignment with our policies. Delaying consideration of the final draft user and regulatory fee study to coincide with the impact fee study in early 2025 would still be in alignment with ensuring cost recovery.

Schedule the hearing on March 19, 2024, this is not recommended as Staff’s assessment is that more time is needed, and that organizational capacity needs to focus on delivering a thorough and comprehensive Parking Fee analysis coupled with alternatives and recommendations.

Item 8a
Department: Administration
Cost Center: 1009
For Agenda of: 2/20/2024
Placement: Study Session
Estimated Time: 90 minutes
FROM: Derek Johnson, City Manager
Prepared By: Whitney McDonald, Assistant City Manager
Timmi Tway, Community Development Director
Emily Jackson, Finance Director
Rebecca Bernstorff, Business Services and Administrative Manager SUBJECT: STUDY SESSION TO RECEIVE AN UPDATE AND PROVIDE DIRECTION

REGARDING THE CITYWIDE USER AND REGULATORY FEE STUDY

RECOMMENDATION

1. Hold a study session and receive a presentation on the City’s user and regulatory fees; and

2. Receive public input and provide guidance to staff regarding recommended feerelated structural changes and any adjustments to current policies or practices; and

3. Direct staff to perform outreach to interested parties consistent with the Public Engagement and Noticing Manual ahead of the public hearing scheduled for March 19, 2024, to consider approving new user and regulatory fees consistent with the completed fee study.

POLICY CONTEXT
As a part of Section 2 – User Fee Cost Recovery Goals – within the City's Fiscal Policies:

Fees are reviewed and updated on an ongoing basis to ensure that they keep pace with changes in the cost-of-living as well as changes in methods or levels of service delivery.

In implementing this goal, a comprehensive analysis of City costs and fees should be made at least every five years. In the interim, fees are adjusted by annual changes in the Consumer Price Index. Fees may be adjusted during this interim period based on supplemental analysis whenever there have been significant changes in the method, level or cost of service delivery.

Additionally, as a part of Strategic Approach 1.5.c within the Economic Resiliency, Cultural Vitality and Fiscal Sustainability Major City Goal, implementing a City fee program update was identified as a work effort within the 2023-25 Financial Plan.

Item 8a

REPORT-IN-BRIEF
The City of San Luis Obispo’s last fee study was conducted in 2017 by NBS Government Finance Group. The City’s adopted Fiscal Policies include User Fee Cost Recovery Goals that call for the City to review and update user fees approximately every five years to adjust to changes in the cost-of-living and changes in methods/levels of service delivery (Attachment A, Fiscal Policies, Section 2, Cost Recovery Goals). As such, the City contracted with MGT Consulting of America, LLC (MGT) in 2023 to review and update the City’s user and regulatory fees (commonly known as cost-of-service fees), which include development review and inspection, as well as fees charged for recreational classes, sport programs, and public safety services, among others. While the original scope for the study did include review of development impact fees (AB 1600 Fees), these fees are currently under review in a separate effort that will be presented to the City Council in early 2025.

The City's fiscal policy related to User Fee Cost Recovery Goals was most recently reaffirmed by the Council with adoption of the 2023-25 Financial Plan and identifies cost recovery amounts dependent upon types of projects/programs. Based on the current policy, Development Review related programs (including service/permit fees in planning, building and safety, engineering, and the fire department) should generally have highcost recovery (100% in most instances) and programs in Parks and Recreation are divided into tiers (low, mid, high) dependent on the activities and users (see discussion in "cost recovery goals" below). The current fee schedule is provided in Attachment B.

The intent of this study session is to ensure that the City Council and community share an understanding of City fees and how fee studies are conducted, prior to future discussions on the specifics of the recommended fee changes. The report begins by differentiating between taxes and fees, and within fees, regulatory and user fees; cost recovery policy levels from the 2023-25 Financial Plan, the purpose of the current Fee Study and what it includes; the methodology in how the fees were calculated; and concludes with the City’s current cost recovery level and key proposed structural changes and recommendations. This report also includes questions to facilitate City Council discussion and direction regarding the recommended changes to current policies and practices, which will inform the current fee study. The intent is to enable Council to approve new fees that can be implemented for FY 2024-25.

DISCUSSION
Background
Where City Revenue Comes From
The City’s financial structure is separated into governmental and business activities, which are reported and administered through five major funds. Business activities (Water, Sewer, Parking, and Transit; also known as “enterprises”) are distinguished from general governmental funds by their similarity to private sector enterprises and are funded primarily through user charges.

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Taxes. The City’s General Fund is the primary operating fund for general government operations and is largely funded through various tax revenues. Two main sources of the City’s revenue are sales tax and property taxes; these specific taxes are levied on the sale of goods and real property within the city and contribute to the City’s General Fund, which can be allocated by the Council for any governmental purpose. As a part of the FY 2023-24 adopted budget, tax and franchise revenue make up 87% of anticipated revenue within the General Fund.

Fees. Fees are charged directly to customers using a particular City service in order to cover the City’s costs of providing the service and the level of fees is limited to the amount required to cover City costs. For example, fees are charged to cover the cost of reviewing plans, permitting, and inspecting a new building. Additionally, California Proposition 26 was approved by California voters in November 2010 and clarified which charges are considered user fees and which are considered taxes. The significance of this distinction is that user fees may be raised by resolution of the City Council up to the limit of actual costs of providing service (as determined by a fee study), whereas the amount of taxes is limited by the amount approved by voters and may only be imposed or increased by a majority vote of city voters.

It is important to note that as part of a general cost recovery strategy, local governments adopt user fees to fund programs and services that provide limited or no direct benefit to the community as a whole. As cities struggle to maintain levels of service and variability of demand, they have become increasingly aware of subsidies provided by the General Fund and have implemented cost-recovery targets. To the extent that governments use general tax monies to provide individuals with private benefits, and not require them to pay the full cost of the service (and, therefore, receive a subsidy), the government is limiting funds that may be available to provide other community-wide benefits. In effect, the government is using community funds to pay for private benefit. Unlike most revenue sources, cities have more control over the level of user fees they charge to recover costs, or the subsidies they can institute. As such, if the City chooses not to increase fees as recommended by the fee study, the general taxpayer is covering the cost of services they may not be using. Budgetarily, this results in less revenue and that tax revenues don't grow but must cover more costs. This means that the City ultimately does not have enough fiscal capacity to deliver core services, which places our ability to meet some of our mandates at risk.

Below is an infographic that demonstrates the key differences between taxes and fees and how each one benefits the community.

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Figure 1 - Tax v. Fee Benefits
User and Regulatory Fees Overview
A City Fee Study is a review of fees for services rendered. Typically excluded from fee studies are rate-based fees for enterprise services like water, sewer, transit, and parking.

These fees are generally undertaken with specific studies related to the enterprise or business services. As a part of the FY 2023-24 adopted budget, user fees for services makes up 13% of anticipated revenue. As a large part of what goes into providing services to the community is the labor behind the service, it is important to note that staffing makes up 72% of the City’s General Fund expenditures, as services to the community are delivered by staff.

The focus of the study that is currently in process is on fees charged for service (user and regulatory fees) and does not include review of development impact fees (AB 1600 Fees), as these fees are used to address the impact of new development on general public services, certain public facilities, transportation, etc. The City’s development impact fees consist of Transportation, Parks Impact, Water and Sewer, Police and Fire Impact Fees.

User fees are charges collected for a service provided or required due to the request or voluntary action of an individual/entity. Regulatory fees are imposed to recover costs associated with a local government agency's authority or obligation to govern certain activities. Examples of common types of regulatory fees charged include planning, engineering, fire, stormwater, and building permit review fees.

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User fees include recreational classes and community sports programs and public safety services, such as fingerprinting or a California Fire Code or hazardous materials permit.

Per Government Code section 66014(a), user and regulatory fees may not exceed the City’s reasonable costs to provide the service for which the fee is charged.

Below is an infographic that that demonstrates the key differences between regulatory fees and user/voluntary fees.

Figure 2 - Regulatory v. User Fees
Cost Recovery Policy
As stated above, the City's user and regulatory fee recovery policy (Attachment A) identifies cost recovery amounts dependent upon types of services/programs for which the fee is being charged. The City Council has determined that certain fees should be established at rates that fully cover the cost of providing a particular service. A cost recovery goal of 100% means that the full cost of providing the service is passed on to users of the service and recovered through the fee. A cost recovery of 30% means that only 30% of the cost to provide the service is passed on to the users of the service and recovered from the fee.

The following infographic outlines adopted cost recovery policy to be considered in setting user fees and cost recovery levels.

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Figure 3 - Cost Recovery Policy Factors
The City’s Policy also outlines circumstances favoring high-cost recovery and low-cost recovery levels and indicate the importance of considering the fees charged by other agencies to aid in assessing the reasonableness of fees.

Low-cost recovery levels are appropriate under the following circumstances:

1. There is no intended relationship between the amount paid and the benefit received. Almost all "social service" programs fall into this category as it is expected that general funds will subsidize services that are necessary to certain groups in need of services that may exceed the group’s relative ability to pay.

2. Collecting fees is not cost-effective or will significantly impact the efficient delivery of the service.

3. There is no intent to limit the use of (or entitlement to) the service. Again, most "social service" programs fit into this category, as well as many public safety (police and fire) emergency response services. Historically, ongoing maintenance costs to ensure access to neighborhood and community parks would also fit into this category.

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4. The service is non-recurring, generally delivered on a "peak demand" or emergency basis, cannot reasonably be planned for on an individual basis, and is not readily available from a private sector source, either at all or at the level of need in a community. Many public safety services also fall into this category.

5. Collecting fees would discourage compliance with regulatory requirements and adherence is primarily self-identified, and as such, failure to comply would not be readily detected by the City. Many small-scale licenses and permits might fall into this category.

High cost recovery levels are followed under the following circumstances:

1. The service is similar to services provided through the private sector.

2. Other private or public sector alternatives could or do exist for the delivery of the service.

3. For equity or demand management purposes, it is intended that there be a direct relationship between the amount paid and the level and cost of the service received.

4. The use of the service is specifically discouraged. Multiple Police responses to nuisance disturbances or false security alarms might fall into this category.

5. The service is regulatory in nature, driven by voluntary property development choices, and non-compliance with regulatory requirements could adversely affect those impacted by the individual property owner’s development choices. Building permit, plan checks, and subdivision review fees for large projects would fall into this category.

The City's user fee cost recovery goals provide cost recovery levels for Parks & Recreation Activities as well as Development Review Programs. Development Review Programs include:

1. Planning (planned development permits, tentative tract and parcel maps, rezonings, general plan amendments, variances, use permits).

2. Building and safety (building permits, structural plan checks, inspections).

3. Engineering (public improvement plan checks, inspections, subdivision requirements, encroachments).

4. Fire plan check.

The policy indicates cost recovery for Development Review Programs “should generally be very high” and that “in most instances, the City’s cost recovery goal should be 100%.”.

Adopted Council cost recovery goals for recreation activities indicate that cost recovery for activities directed to adults should be relatively high, and those directed to youth/seniors should be relatively low (except that cost recovery should be higher where services are similar to those provided in the private sector). Cost recovery goals for Parks & Recreation activities are provided below.

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Current User and Regulatory Fee Study Purpose
The City's User Fee Cost Recovery policy calls for the City to review and update service charges on an ongoing basis to ensure that they keep pace with changes in the cost-ofliving and changes in methods or levels of service delivery. State law generally provides that fees for services cannot exceed the reasonable actual costs for providing services.

In implementing this provision, the City has adopted the goal of comprehensively analyzing service costs at least every five years, with interim adjustments annually based on changes in the Consumer Price Index (CPI). The last comprehensive fee study was implemented in 2017.

In San Luis Obispo, past fee studies involved multiple Departments and identified the cost of providing services and comparing the result to the current fee amount to determine whether it is recovering the full cost of the service provided. Determination of the full cost of service focuses on labor and uses expenditure and organizational information with time-tracking data, time estimates, and workload information. A fee study also provides an opportunity to add new fees, remove outdated fees, or simplify fee structures. Like all jurisdictions, the City is impacted by cost increases and inflationary pressures on labor, materials and supplies, and needs to ensure that service fees are aligned with the cost of service and provide an opportunity for the City Council to re-align fee amounts with the adopted cost recovery policies.

The City completed an extensive Request for Proposal (RFP) process from February – April 2023. In May 2023, the City contracted with MGT and initiated the process to review and update the City's user and regulatory fees (Building, Development Review Engineering, Fire, General Government (administrative services like business license processing), Parks and Recreation, Planning/Cannabis, Police, Public Works, and Utilities. The infographic below depicts the purpose and process of the comprehensive fee study.

Low-Range
0-30%
• Aquatics
• Community gardens
• Junior Ranger camp
• Minor commercial film
permit applications
• Skate park
• Parks and Recreation
sponsored events
• Youth sports
• Teen services
• Senior services
Mid-Range
30-60%
• Triathlon
• Golf
• Summer and Spring
Break Camps
• Classes
• Major commercial film
permit applications
High-Range
60-100%
• Adult athletics
• Banner permit
applications
• Child care services
• Facility rentals (indoor
and outdoor)

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Figure 4 - Comprehensive Fee Study Process
The following is a summarized list of fees for each City department or program studied by MGT in the current User and Regulatory Fee Study, which can also be found in greater detail in the FY 2023-24 current fee schedule (Attachment B):

1. General administrative services, including:
a. Business License processing and renewal
b. Returned check processing
c. Appeals to Advisory Bodies following administrative (non-planning) decisions

2. Community Development services, including:
a. Planning and Zoning - entitlement and permit review and processing b. Building permit review, processing, and approvals
c. Engineering plan review and encroachment permit processing d. Cannabis applications and licensing

3. Public Works Department services, including:
a. Construction field inspection for public improvements constructed by private development

4. Utilities services, including:
a. Meter installation and removal
b. Account set-up and disconnect
c. Water and sewer lateral installation and abandonment d. Wastewater Industrial Users

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5. Fire Prevention services, including:
a. Hazardous occupancy permits
b. Non-mandated and required fire inspections
c. Certified Unified Participating Agency fees (CUPA)
d. Multi-dwelling fire and life safety inspections
e. Fire sprinkler and suppression system review and inspections

6. Police services, including:
a. Various administrative processing fees such as vehicle impound and release, alarm permits, taxi permits, etc.

7. Recreational facilities, services, classes, programs and permits, including:
a. Youth Services
b. Aquatics
c. Recreational sports
d. Instructional classes
e. Special events
f. Indoor and outdoor facilities
g. Ranger Service
h. Golf Course

8. Information Technology (IT) Surcharge
a. A 3.05% IT Surcharge is included in fees associated with the overhead related to the Energov permitting system.

Below is an infographic summarizing at a high level what is included in the fee study and what is not included in the fee study.

Figure 5 - Summary of What's Included and Not Included in the Fee Study Scope

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User and Regulatory Fee Study Methodology
To determine the estimated/reasonable cost eligible for recovery as a user/regulatory fee, the study identifies the full cost of service eligible for recovery and those costs are translated into a fee structure for various programs and services. Determination of the full cost of service uses expenditure and organizational information with time-tracking data, time estimates, and workload information. The full cost of service is derived for each service or activity, and includes labor, services or supplies, and various types of operational overhead costs.

Thus, the user fee study is comprised of two basic elements:

1. Hourly rates of staff providing the service.

2. Time spent to provide the service.

The product of the hourly rate calculation multiplied by the time spent to provide a service yields the total cost of the service. For example, if the hourly rate of staff reviewing a permit is $100 dollars an hour, and it takes staff four (4) hours to review a certain type of permit, then the total cost to provide the service of reviewing the permit is $400.

Hourly Rates. The hourly rate methodology used in this study builds indirect costs into hourly salary and benefit rates to arrive at fully burdened hourly rates. The fully burdened hourly rates calculated by MGT are a mechanism used to calculate the total cost of providing services. Total cost is generally recognized as the sum of the direct cost together with a proportionate share of allowable indirect costs. The proper identification of all costs (including labor, operating expense, department administration, and citywide support) as “direct” or “indirect” is crucial to the determination of the total cost of providing services.

Direct costs are typically defined as those that are specifically tied to a particular function or activity, including the labor of persons working directly on the specific service for which the fee is charged, and possibly materials or supplies for people to work on the service.

Indirect costs are those that support more than one program area and are not easily identifiable to specific activities. Examples of indirect costs are: 1) departmental administrative and support staff, 2) training and education time, 3) public counter and telephone time, 4) some service and supply costs, and 5) citywide overhead costs from outside of the department as identified in the City’s cost allocation plan.

MGT’s hourly rate calculation methodology includes the following:

1. Personnel Services Analysis – each staff classification within the department or division is analyzed in the study. The first burden factor is comprised of compensated absences such as vacation/holidays/sick leave days taken in a year’s time. Staff classifications are then categorized as either direct (operational) or indirect (administrative or supervisory) labor. In some cases, a classification will have both direct and indirect duties. The total indirect portion of staff cost is incorporated into hourly overhead rates.

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2. Indirect Cost Rate – a ratio of indirect cost to direct labor (salaries plus benefits) is established. There are three elements of indirect cost incorporated, including:
a. Indirect Labor – includes total compensation, administrative and supervisory staff costs.
b. Other Operating Expenses – most services and supplies are included as a second layer of indirect cost and are prorated across all fees and services.

There are some service and supply expenses classified as “allowable direct.

Some examples of these are professional services expenses, or sports supplies. These allowable direct expenses would be directly associated with specific fees or programs, as opposed to being allocated across all activities through the indirect overhead.
c. External Indirect Allocations – this represents the prorated portion of citywide overhead (from the City’s cost allocation plan) which is attributable to the service for which the fee is charged.

3. Fully Burdened Hourly Rates – incorporates all the elements that comprise the hourly rates used in this cost analysis.
a. Each direct or operational staff classification is listed, together with the average annual salary and benefits.
b. The hourly salary and benefit rate is calculated by taking the annual salary and benefits of an employee and dividing by 2,0801 available productive hours in a year.
c. The overhead rate is derived by multiplying the internal and external indirect cost rates against the salary and benefit rate.

The total combines the salary, benefits, and overhead rates. This is the fully burdened rate for each staff classification. MGT prepared indirect overhead rates and corresponding hourly rate calculations using FY 2023-24 budgeted expenditures. In the case of Building, one hourly rate was developed using the total salary and benefits and total indirect expenditures and dividing those costs by the number of direct hours available for staff.

Time Spent. Once fully burdened hourly rates were developed for City staff, staff and the consultant worked to identify the time spent directly on each of the user fee activities.

Each staff person involved in the user fee services identified time spent to complete each task associated with all user fee services. To inform this analysis, staff and the consultant based this exercise on time spent on delivering various services in FY 2022-23 (the most recently completed fiscal year).

Fee Calculations and Revenue Projections. MGT calculated the cost of providing each service, both on a per‐unit and total annual basis (per‐unit cost multiplied by annual volume equals total annual cost). Costs were calculated by multiplying per‐unit time estimates by the hourly labor rates; additional operating expenses directly associated with certain services were also added in.

1 2,080 hours is the total hours in a work year at 52 x 40hrs/week.

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Finally, if other departments or divisions provided support into certain user fee activities, this time was accounted for and added into the analysis as a crossover support activity.

For example, planning and engineering teams often provide cross support to review building permits, so the time of planning and engineering staff was accounted for in the total cost of providing the service of reviewing a building permit. Full costs were then compared to current fees/revenues collected, and subsidies (or over‐recoveries) were identified. It’s also important to note that MGT included comparisons to other jurisdictions as a part of their analysis which will be included in the final report.

Summary of Preliminary Cost of Service Findings
The following table illustrates the full cost to conduct services in each department/division in FY 2022-2023 as well as the actual revenue realized in that same fiscal year and the percentage of actual costs that were recovered. This is important background information that provides the City with valuable insight into the current cost recovery levels and will help inform necessary changes in fees to better align future fees with cost recovery policy goals as staff continue to review the final report from MGT.

Department / Division Full Cost to Conduct
Services2
Current Revenue &
Cost Recovery Level
1 Building and Safety (CDD) $4,097,808 $3,952,334 96%
2 Engineering (CDD) $2,114,280 $1,372,852 65%
3 Planning / Cannabis (CDD) $2,301,514 $1,211,812 53%
4 Fire $1,301,320 $962,996 74%
5 Police $250,213 $356,254 142%
6 General Government
(Administration/Finance)
$388,259 $533,154 137%
7 Parks and Recreation $9,840,424 $1,906,407 19%
8 Public Works $67,138 $64,954 97%
9 Utilities $2,029,620 $1,071,626 53%
As shown, the City’s current recovery amount varies significantly depending on the department/division and also varies within each department/division. As discussed above, the City’s cost recovery policy guides decisions about the ultimate fee amounts adopted. Under the current policy, all fees will be recommended to recover near 100% of identified costs, with the exception of Parks and Recreation, fees established by statute or applicable administrative code, and some of the Planning fees as discussed in the next section. Recovery at greater than 100% indicates that a change has occurred since the fees were last studied in 2017 such that less time is now required for the service (less time spent on a given task reduces the cost of providing that service). This may occur for several reasons, such as process improvements or computer system enhancements that make certain tasks faster. Any services identified as recovering greater than 100% will be reduced to comply with user and regulatory fee requirements.

2 Annual cost does include all cross-support costs from other departments.

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Highlights and Key Changes per Department/Division
In addition to recommending changes to fee amounts based on current recovery levels and analysis of staff cost and time spent on activities, staff and the consultant are developing other recommended changes to the fees. These other changes include significant changes to the structure of some fees, addition of new fees, removal of fees that are no longer needed, and renaming and consolidation of fees. Because these are highlights and key changes, some of the fee changes were not included as a part of the below summary as they were routine updates. Some of the key changes that staff will present to the Council with the draft report at a future meeting include:

Building and Safety
 Currently, Building and Safety fees include flat fees as well as fees that are charged on a base + increment schedule as reflected on 30 separate matrixes.

The flat fees are generally assessed for activities that require the same amount of review regardless of the project (for example, review required for a permit and inspection of the installation of a new water heater is the same regardless of the address or size of home). The base + increment fees are generally used for applications/projects that can vary greatly in the amount of effort needed to review an application. For example, the time and effort required to review permits for a new building will vary greatly if the building is a 400 square foot ADU or a 140,000 square foot commercial building.
 After reviewing the current fee schedule, and in consultation with the Consultant, the Building and Safety Division will be proposing an overhaul of the building permit fee structure in order to simplify the fees and make them easier for staff and applicants to understand.
o As described above, the current building construction permit fee schedule is complex. The new proposed structure will reduce the number of fee categories from 15 to 11. The fees categories are being simplified so that no project falls under multiple categories.
o Currently, the fee structure is represented as 30 separate matrices. 15 are for plan check services, and 15 are for building inspection services. Each matrix represents a building use, and calculates fees based on square footage and type of construction.
 Construction permits will be simplified into 11 categories with a price per square foot for plan review and for inspections; the categories are aligned with the types of permits that are issued. These new categories will replace the 30 matrices that consists of hundreds of different options.
 The individual fee categories are currently range in recovering between 75-100% of the costs.

Engineering
 Engineering fees are assessed as either a percentage of estimated construction costs, a fixed fee or base + increment, depending on the type of permit/application being reviewed.
o The fee structure for Improvement Plan Check and Construction Inspection are proposed to be simplified from a tiered scale to a percentage basis. Both

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methods calculate fees based on the estimated construction cost, however the percentage basis is easier to understand and calculate.  The individual fee categories are currently range in recovering between 20-100% of the costs.

Planning and Cannabis
 The Planning Division assesses fees for a wide variety of activities related to the use of private property such as entitlement permits for new multifamily and commercial projects, conditional use permits for certain uses, and general plan amendments.
 Current Planning fees include fixed fees as well as deposit fees. o Fixed fees are used for planning applications/actions that generally require the same amount of work regardless of the location/type of project (for example, all Conditional Use Permit requests cost the same amount). o Deposit based fees are used for planning applications that have a wide range of work depending on the complexity of the project, such as a Planned Development, Rezoning or Environmental Impact Report.  Currently, as outlined in the existing fee schedule, some planning fees are collected in two phases. A portion of the fee, the “application fee” is collected upon application submittal, and remainder, the “completion fee” is invoiced when action is taken on the application. A hold is then placed on the property so when a subsequent permit is submitted in association with the property, the fee is collected. This payment system was established in 2017 and provides flexibility for applicants who wish to pay their planning application fees in two installments.

However, this process impacts Community Development’s ability to realize full cost recovery for services due to the fact that some planning applications that are completed and invoiced are never paid by the applicant, do not materialize into projects for a variety of reasons, or do not require a subsequent permit to implement the project. When this occurs, the City is limited in its ability to collect the second installment of the planning fee that was assessed, even though the planning application was fully processed, and services rendered. The reason that this approach was established, which originated during the “Great Recession,” was to distribute the entitlement cost burden to both the beginning and the end of the project’s lifespan. This practice was carefully crafted in partnership with various trade and business organizations and was continued as part of the 2017 fee update. Staff are seeking direction from Council on whether to continue this practice of splitting the collection of planning fees, as described in question #1 in the table below.
 The individual fee categories are currently range in recovering between 4-100% of the costs.

Fire
 The current fire construction permit fee schedule operates on a base + increment structure, which currently has a total of 128 fees. For efficiency, a recommendation is being made to adopt the same methodology/construction categories as Building and Safety.

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 The individual fee categories are currently range in recovering between 40-100% of the costs.

Police
 Some alterations to alarm permit and false alarm response fees will be recommended that will result in lower fees in light of changes to operations (i.e. the use of a third party to administer alarm permits) and recommendations about escalating false alarm response fees.
 The individual fee categories are currently range in recovering between 30-145% of the costs.

Parks and Recreation
 The costs of services were evaluated consistent with the methodology outlined above, which integrates the support costs from other departments, such as Public Works for programs that utilize City parks and facilities, along with Fire and Police for special event applications.
 Consistent with the adopted cost recovery policy, Parks and Recreation fees will be evaluated for elasticity of demand of the individual programs within each of the categories to determine where (if any) fee increases could be made without jeopardizing loss of participants. The fee structure for Parks and Recreation services were sensitive to the "market" for similar services as well as to smaller, infrequent users of the services. This was incorporated into the analysis by the consultant and staff when reviewing each fee. The fees are divided into divisional groups: Youth Services- academic year and camps, Youth Sports, Aquatics, Recreational Adult Sports, Instructional Classes, Special Events (Fee & Non-Fee), Indoor Facilities, Outdoor Facilities, Jr. Ranger Camp, Golf Course and Special Events.
 MGT identified the current cost recovery for before and after school childcare, as well as camps, at 49%. The current cost recovery policy identifies childcare to fall within the 60-100% cost recovery standard and camps to fall within the 30-60% cost recovery standard. In developing its analysis, MGT has incorporated a more comprehensive assessment of program overhead resources (including, for instance, facility and utility costs, as well as supplies, staffing, marketing, registration, etc.) in the total costs of the City’s childcare services resulting in MGT identifying a lower cost recovery percentage (49%), whereas the previous fee study only incorporated the direct Parks and Recreation Department costs which resulted in an identified higher cost recovery.
 MGT identified the current cost recovery for golf operations at 21%. The City’s cost recovery policy identifies golf services to fall within the 30-60% cost recovery standard. Fee recommendations for golf course services will take into account local market comparisons to comparable sized courses, planned programming that provides equitable access for the community, and supports the 30-60% cost recovery policy.

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 The department is recommending implementing a non-resident fee for key programs and facility rentals such as camps (spring break, summer, and Jr.

Ranger), impacted classes, and facility rentals (Jack House Garden, Swim Center). The incorporation of resident and non-resident fee classifications is a common practice by municipal recreational agencies. Camps and swim lessons tend to have waitlists and are impacted by the number of non-resident enrollments.

The non-resident surcharge is expected to have the added benefit of more resident enrollments, and also help programs meet cost recovery targets without significant increases to residents.

Previous Council or Advisory Body Action
The previous fee study review Study Session was conducted on February 21, 2017, and the subsequent Public Hearing was held on April 18, 2017. CPI adjustments have been made annually through Fiscal Year 23-24.

Public Engagement
Staff began public engagement to inform stakeholders and the public regarding the fee study and update process in the beginning of February and are currently on the agendas for the February 15 Developer’s Roundtable meeting, and the March 6, 2024 Parks and Recreation Commission meeting which may include recreational community user group representatives associated with sport field and facility rentals (roller hockey rink, swim center, golf course).

As indicated in Next Steps below, staff will perform additional outreach until the planned March 19, 2024 City Council Public Hearing in order to review and discuss the proposed fee changes and answer questions from interested parties including but not limited to residents, Chamber of Commerce, Downtown SLO, Student Community Liaison Committee (SCLC), Neighborhood Groups, and other interested public parties, including public utilities. Outreach will be in the form of in-person meetings and an Open City Hall page on the City’s website. Additional informational outreach will be conducted after adoption of any new rates to ensure that the public and impacted groups are aware of the changes both before and when they are implemented.

CONCURRENCE
All appropriate City departments have been extensively involved in providing information including budget information, staffing information, and time estimates to the consultant.

All requisite departments have also performed extensive review of draft fee models provided by the consultant and are all currently finalizing and comments and review on the final report.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.

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FISCAL IMPACT
Budgeted: N/A Budget Year: 2024-25
Funding Identified: N/A
Fiscal Analysis:

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $0 $0 $0 $0
State
Federal
Fees
Other:

Total $0 $0 $0 $0
There are no direct fiscal impacts associated with this study session; aside from the consultant costs to conduct the study that were budgeted as a part of Fiscal Year 2023-

24. As discussed in the summary section above, the City is currently recovering between 43-157% of costs associated with providing user and regulatory services, depending on the service. At the planned March 19, 2024 City Council meeting, Council will have the opportunity to adopt initial recommended fee amounts by staff or to direct further revisions to the proposed fees and return at a later date for adoption.

NEXT STEPS
Staff will continue work to finalize the draft fee study based on the feedback received at this study session. In addition, staff will perform additional outreach to interested parties to review, discuss, and inform the community of the proposed fee changes consistent with the Public Engagement and Noticing (PEN) Manual. Outreach will include in-person meetings as well an Open City Hall page including a narrated PowerPoint presentation and opportunity for written feedback.

On March 19, 2024, staff will return to the City Council in response to direction provided on February 20, 2024, with recommendations and a resolution to consider for adoption an updated fee schedule. Pursuant to applicable laws, several categories of fees cannot become effective until 60 days after adoption. If adopted prior to May 1, 2024, the comprehensive fee schedule will become effective on July 1, 2024.

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FOCUS QUESTIONS FOR CITY COUNCIL DIRECTION
Staff has provided the following focused questions to facilitate City Council discussion and direction to staff:

Questions for City Council Direction
Yes No
1 Is the Council supportive of Planning fees being collected infull at the time of planning application submittal or should the practice continue to collect fees at the beginning and end of a project?
2 Should any significant increases in fees be phased in over multiple years? For example, if a fee increases more than 25% should the fee increase by 12.5% in year one and another

12.5% in year two or for a longer period3?

ALTERNATIVES
The Council could direct staff to not continue the finalization of the fee study and delay completion of the fee study until a later date. This action is not recommended in order to be in alignment with the Fee Cost Recovery Goals within the City’s Fiscal Policies, including that fees are reviewed and updated on an ongoing basis (every five years and in the interim annually by CPI) to ensure that they keep pace with changes in the cost-of-living as well as changes in methods or levels of service delivery.

RESOURCES
City Cost Recovery Goals (Financial Plan 23-25, Fiscal Policies, Section 2) City Current FY 23-24 Comprehensive Fee Schedule

3 The basis for this option would be to smooth out the inflationary impacts of fees as a result of sustained and seemingly transitory high levels of inflation.