TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Hillary Guirola-Leon , Finance Director
Mark Siegfried, Accounting Manager/Controller
DATE: May 14, 2025
SUBJECT: APPROVAL OF RESOLUTION R-25-13 UPDATING THE
SCHEDULE OF FEES FOR SERVICE BASED ON THE
UPDATED COMPREHENSIVE USER FEE STUDY AND COST
ALLOCATION PLAN
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Efficient, Responsive, and Effective City Services
Fiscally Responsible and Transparent City Government
BACKGROUND
Each year, the City Council approves a Master Fee Schedule as part of the annual budget process. Section 16 of the City’s Financial Policies related to Cost Recovery states that the City shall employ the principles and practices of cost recovery for services in a manner consistent with generally accepted cost of services and cost allocation best practices. User fees and charges are collected to recover some or all costs incurred by the City in providing a specific service from which one or more individuals obtain a benefit. It is a best practice for cities to perform a comprehensive fee study every 5 years and review user fee and charge schedules annually. The City conducted its last User Fee Study in 2020 with fees being effective September 1, 2021.
Periodic review of fees also encourages transparency in the process and shows the relationship between the fee and the cost of providing the service.
Gretchen Shepherd Romey, Mayor
Tony Chou, Vice Mayor
Hunter Chang, Council Member
John Chou, Council Member
Calvin Lo, Council Member
On November 13, 2024, Council awarded a professional services agreement to Revenue & Cost Specialists (RCS) to conduct the Cost Allocation Plan & Citywide User Fee Study. The action proposed as a part of this item is the adoption of the City Fee Schedule for various services and programs provided by the City, based on an updated Comprehensive User Fee Study and Cost Allocation Plan. The study results propose various changes, including increases to existing fees, elimination of fees, and new fees for services provided.
DISCUSSION
The purpose of the User Fee Study is to better align fees with the cost of providing a service.
RCS prepared the attached Fee Study Update, (Attachment 1) which provides the cost of fee-based services and makes cost recovery recommendations. The Executive Summary (page 3) of the Fee Study explains the methodology and provides explanations of the information contained within the report. RCS will present the Fee Study Report, provide an overview of the report methodology, and answer any questions from Council.
Determining the cost of service ensures that fees recover only the “costs reasonably borne” by the City in providing the service. A select number of fees are fees which are limited by State law and updated by the State. The remaining fees, which are not managed by the State, are adjusted to reflect the actual changes and costs to the City of providing those services. Based on the study, the list below provides a summary of the results:
• 10 new proposed fees
• 4 fees are proposed for reduction
• 8 fees are proposed for elimination
• Overall current cost recovery is 44.5%
• The City could realize approximately $182,600 in potential additional revenue if recommended fees are approved.
The Fee Study determines the “costs reasonably borne” of each service provided by the City for which it charges a fee. It is important to note that the full cost of providing a service may not necessarily become the City’s fee, but it serves as the basis as to the maximum amount that may be charged.
Types of Costs
The total cost of each service included is primarily based on the following types of costs:
• Salaries and Wages
• Employee Fringe Benefits
• Maintenance & Operation Costs
• General and Departmental Overhead Costs
• Full Cost Distribution
• General City Overhead
• Building Use Replacement
• Departmental Administration
• Fully Allocated Hourly Rates
• Outside Costs
• Calculation of Revenues
The Fee Study (Attachment 1) to the Staff Report provides additional detail regarding these types of costs and the allocation methodology. Appendix A (Pages 17-46) to the Fee Study Report indicates the current fee and the recommended fee based on the study analysis of full costs calculated.
Reasons for Cost Increases/ Decrease
The difference between the current fee and recommended fee can be attributed to several possible factors.
Below are a few examples:
• Previous fee levels may have been set at levels less than full cost recovery intentionally, based on policy decisions.
• Staffing levels and positions completing the service activity may differ from when the previous costs were calculated.
• Increases in Personnel and Services & Supplies costs, since the previous costs were calculated.
• Costs that this study has identified as part of the full costs of services may not have been calculated in the previous study.
• Changes in processes and procedures within a department, or the City as a whole.
• Substantial time may have passed since the fee was established and the previous fees have not been updated to consider inflationary factors • Some City services are being provided and do not have an associated fee for the service
Revenue enhancement is not the only goal of this study, and sometimes fullcost recovery is not desired or appropriate. The proper identification of additional services (new or existing services) and creation of a consistent and comprehensive fee schedule was the primary objective of this study. City staff, with RCS’ assistance, have reviewed the full costs and identified the recommended fee levels for consideration by the City Council.
Cost Allocation Plan
The Cost Allocation Plan provides details regarding overall costs for the various fees. Appendix B (pages 47- 363) in the Fee Study Report includes the Revenue and Cost Summary and Cost Detail worksheets. The Revenue and Cost Summary worksheets include a description of the service, the current fee structure, the current recovery rate, and the recommended recovery rate. The Cost Detail worksheets are the detailed costs involved with each service. This worksheet identifies the employees involved in providing the service, the time spent, and related costs.
Summary of Departmental Fee Changes
The Fee Study process provided each department with the opportunity to propose additional fees, elimination of fees, as well as to rename, reorganize, and clarify fees imposed. The fees described below reflect amendments based on the following departments:
Community Development (REF# S-001 to S-030A, S-032 to S-036, S-038- S054, S-056 to S-059, S-088, S-100 to S103, S-145-S147, S-150) The Community Development Department provides Plan Check and Building Permits fees for the City. The majority of the fees are proposed to recover 100% of the service costs except Appeal to the Planning Commission (S-047) set at 70% recovery and Copy of City Map (S-054) set at 30%.
The department is also proposing to add the following new fees:
• Planning Fence Permit
• Chicken Coop Review
• Certificate of Appropriateness- Director
• Certificate of Appropriate/Economic Hardship
• Mills Act Review
• SB9 Annual Inspection
• Multi-Family/Mixed Use Building Review
• Planning Commission Determination
• Density Bonus Review
The department is also proposing to remove the following fees:
• Building Relocation Review (S-038)
• Business License Change of Address (S-147)
Police (REF# S-069 to S-087 and S-089A, S-091 to S-099, and S-114) The Police Department is proposing to formalize the elimination the Police False Alarm Response (S-069) and Bicycle Registration fees (S-114). In 2017, the City Council agreed with the Police Department's recommendation to eliminate the Police False Alarm Response fees due to residential burglaries and that the fee would be viewed as an impediment to residents properly utilizing their alarms. The Bicycle Registration fees are being eliminated due the requirement of bicycle registration being eliminated by the State of California.
Fire (REF# S-104-S-113)
The Fire Department fees are being proposed at 100% recovery except for Emergency Medical Transport fees for Residents.
Recreation (REF# S-115 to S-127)
The Recreation Division cost analysis did not follow the typical unit-based approach used for the other fee areas. For most of this division’s programs, the underlying data for each activity for which a fee is charged was not available or varied widely, leaving the unit cost build-up approach impractical.
Instead, the cost analysis focused on the overall cost of each program area.
Appendix C (page 366) of the Fee Study provides the detail of Recreation services as well as its costs, revenues, and recovery.
Library (REF# S-128 to S-139)
The Library Division is considered to provide a service out of public funds for the benefit of the public at large and no increases are proposed. The majority of the revenues collected from the Library comes from Passport Application Processing and Passport Photograph Processing. The fees are proposed to remain unchanged as the passport application fee is set by the Federal government.
Parks & Public Works (REF# S-031, S-037, S-055, S-060, S-063 to S-068S143 to S-144A) The fees are proposed to recover 100% of the service costs. The department is proposing one new fee for Temporary Barricade Placement (S-144A).
The department is also proposing to remove the following fees:
• Utility Investigation Encroachment Permit (S-064A)
• Traffic Control Inspection fees (S-067)
• The Utility Investigation Encroachment Permit fee (S-064A) will be eliminated, since it is already included as part of the (S-064) fee. • The Traffic Control Inspection Fees (S-067) will also be eliminated since the fees are already part of the fees for Encroachment permits.
City Manager’s Office, City Clerk (REF# S-152 to S-160) The City Manager’s Office, which includes the City Clerk, is proposing to remove the Old Mill Photo Permit Fee (S-153), since the permit would be processed under general film and photo permits.
Finance (REF# S-148, S-149, S-161)
The Finance Department primarily provides support to other City departments and only has a limited amount of fees charged to the public to recover costs.
While many fees remain unchanged, the department is proposing 100% recovery for Credit Card Processing to recover payments made on credit cards.
The current credit card processing fee is 2.7% of the amount charged for online transactions and 0% for in-person transactions. Staff is recommending 100% cost recovery by changing the fee to 3% of the amount charged for online and in-person transactions. The City is budgeting $36,450 in credit charge merchant charges for FY 2025-26 and implementing a credit card processing fee will offset the merchant charges.
Master Fee Schedule Effective Date
The proposed Master Fee Schedule for the City Council’s adoption will become effective July 13, 2025 (60 days after the adoption of Resolution No. R-25-13) and will be included as part of the City’s budget to be adopted at the May 30, 2025 City Council meeting.
Staff reviewed the fee study with the City Council’s Finance Liaison, Vice Mayor Tony Chou. Questions were answered about the study, specific fees, and more.
FISCAL IMPACT & PROCUREMENT REVIEW
There is no fiscal impact to receive this report. The possible annual revenue is dependent on City Council’s direction and the amount of subsidy it wishes to provide. If Council was to adopt the Fee Study as stated in the report, the City could realize approximately $182,600 in additional new revenue. The fees would be effective July 13,2025 (60 days after adoption).
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends that City Council approve Resolution No. R-25-13 Updating the Schedule of Fees for Service with effective date of July 13, 2025, based on the results of the Fee Study Update for the City of San Marino May 2025.
If the City Council concurs with staff’s recommendation, an appropriate motion would be:
“I move to adopt Resolution No. R-25-13 Updating the Schedule of Fees For Service.”
ATTACHMENTS
1. Fee Study Update for the City of San Marino May 2025
2. Resolution No. R-25-13 Updating the Schedule of Fees For Service