User Fee Study
City of San Pablo
2 Purpose: Current Adopted Policy & Methodology
1. Current City Council Adopted Policy:
• Explore and Sustain New Revenue Enhancements to the City’sGeneral Fund (Policy No. #405); and
• Tier I Implementation: (Administrative – Related), Master Fee Schedule Update (with Cost Allocation Plan) (Policy No. #405.3) adopted in FY 2025-27 Council Priority Workplan, effective April 7, 2025; and
2. Last Amended User Fee Study and Methodology: Last amended and adopted in August 2020 (MGT Consulting Group); and
3. Current Use Fee Adopted Methodology: Increase fees annually based on CPI adjustment for future year adjustments for Building, Planning, and Public Works fees to be effective July 1 of each fiscal year (since July 1, 2021) via adopted Resolution No. #2021-055. 3 What are User Fees
• Provide private benefit with limited to no community benefit • State law requires that 1) individual use of the service must be voluntary, and 2) fees must reasonably relate to the services provided
• Fee levels & cost recovery determined through City Council fee adoption
• Does not include development impact fees, utility rates, taxes, etc.
4 Why Update User Fees
• Subsidies in services impact the General Fund
o Private & specific benefit services are subsidized by general fund o Reduces ability provide services such as public safety & community events/programs
• Decreased department funding can impact service quality/delivery • Cost recovery knowledge and planning
o Provides clarity of pressures on City resources
o Enables City to strategize and set fees to benefit of the City and community
o State requirements for reasonable cost-based fees
5 User Fee Objectives & Steps
• Determine full cost of providing services or programs o Review fee schedules based on service delivery
o Identify potential new fees (not currently collected) o Remove or restructure obsolete fees
o Using fully-burdened rates, calculate full cost recovery • Update fees for services based on cost analysis
o Incorporate or establish cost recovery goals
Subsidies allow access to services and can promote compliance o Identify appropriate fee levels that:
Promote local policies and objectives
Maintain legal compliance with state law
6 Scope of the Study
• Review and calculate cost of providing services and related fees charged by the following departments and divisions:
• General - Finance
• Police and Code Enforcement
• Public Works
• City Manager’sOffice
• Community Services
• Planning
• Building
• City Attorney
7 Data & City Staff Participation
• Primary types of data used:
o Expenditure data
o Staffing structures
o Central service/Indirect overhead
o Productive/billable hours
o Time estimates to complete tasks
o City/Department input, feedback and policies
• Staff support throughout process essential to ensure analysis fidelity 8 Summary Steps of the Study
Model
Development
Data
collection
Build fee
model
Overhead
and FBHR
Calculation
Cost Analysis
Staff
meetings
Update fee
schedules
Staffing and
time data
Full cost for
services
Set Cost
Recovery
Current cost
recovery
Target cost
recovery
Fee Study
Report
Create draft
report
Staff report
review
Finalize
report
Updated Fee
Adoption
Public
Hearing
9 Fee Structures
Flat Fees
• Reasonable time estimates for providing service
Actual Cost / Deposit Based Fees
• Services are billed using Fully Burdened Hourly Rates Fees determined by project size
• Programmic analysis determines the cost relationship between project size and cost of service
Recreation Activities / Programs / Rental / Use Fees
• Fees can be set based on policy, usage characteristics, comparison, and market based Fines / Penalties
• Not a cost-based fee, set to deter activity, without being overburdensome 10 Cost of Service Calculation
• Primary types of data used:
o Salary & Benefits
o Services and supply costs
o Indirect support costs
o System and maintenance costs
• Hourly rates structured to account for direct work hours Salary &
Benefits
Productive
Hours
Salary &
Benefit
Rate
Direct and
Indirect
Overhead
Fully
Burdened
Hourly
Rate
11 Fee Cost Composition Example
Fully Burdened Hourly
rates predominately used
to calculate full cost for
fees
Important to keep in mind
all processes, personnel,
cross department, and
indirect support involved
to calculate full cost for
services
Fee or
Service
Permit
Reviewer
Inspector
City
Engineer
City Clerk
Clerical Staff
Department
Director
12 General - Finance
•Analysis of services relied upon a time-based analysis •Current fee amounts are subsidizing services
•Suggested fee notes:
o An increase to 8 fees
o 6 fees would remain as currently set
o The average fee change would be an increase of 0.3%
13 Police and Code Enforcement
•Time based analysis for flat fees
•Current fee amounts are subsidizing services
•Suggested fee notes:
o An increase to 14 fees
o 3 fees would decrease
o 16 fees would remain as currently set
o The average fee change would be an increase of 7%
14 Public Works
•Time based analysis for flat fees
•Current fee amounts are subsidizing services
•Suggested fee notes:
o An increase to 13 fees
o 3 fees would decrease
o 39 new fees would be added
o 18 fees would remain as currently set
o The average fee change would be an increase of 2% for current fees 15 Community Services
• Facility rental fees are set based on policy considerations, usage factors, and market factors
• Department is currently at operating around 5% cost recovery • Suggested fee notes:
o An increase to 11 fees
o 1 new fee would be added for a Summer Camp Deposit
o 1 fee would decrease
o 310 fees would remain as currently set
o The average fee change would be an increase of 0.02%
16 Planning
• Time based analysis for flat fees
• Current fee amounts are not completely in line with cost of providing service
• Suggested fee notes:
o An increase to 24 fees
o 32 fees would decrease
o 1 new General Plan Update fee would be added
o 10 fees would remain as currently set
o The average fee change would be an increase of 2%
17 Building
• Time based analysis for new fees
• Overall program cost analysis found that the program is currently operating at 90% cost recovery
• Current fees are subsidizing services
• Staff is recommending private benefit service fees changed to obtain 100% cost recovery
• Projects over $1,000,000 to be based on valuation, rather than flat fee • Suggested fee notes:
o An Increase to 420 fees
o 150 fees would decrease
o 32 new fees would be added
o 16 fees would remain as currently set
o The suggested fee changes would result in an average increase of 10.7% 18 Policy Recommendations
• General standard: individuals or groups who receive private benefit from service should pay 100% of cost
• Suggested fee changes result in minor impact on fee users • In certain situations, subsidization is an effective public policy tool:
o Encourage participation
o Ensure compliance when cost is prohibitive to residents o Promote access to services
• Recommend that City utilize inflation factor to annually adjust fees based on BLS, CPI, MOU, or another factor
• Consistent best practice (current methodology of increasing fees annually based on BLS Employment Cost Index for future year adjustments for Building, Planning, and Public Works fees to be effective July 1 of each fiscal year, starting in July 2021, via adopted Resolution No. #2021- 055.
• Comprehensive fee study every 5 years
19 Policy Recommendations, cont.
PLANNING FEES:
• Housing Element action programs include reduction of fee for lot mergers (Program I-E). Proposed fee includes this reduction in line with estimated staff time (from $2,188 to $1,638).
• Proposed reduction in ADU/SB 9 planning fees is consistent with FY 2025-27 Council Priority Workplan Policy 301.4, with estimated staff time reduced from $1,275 to $766.
BUILDING FEES:
• Housing Element programs (I-F, I-J, 2-I) suggest reduced fees for affordable housing and “missing middle” housing. To be footnoted on future fee schedule • Research underway by staff but could involve a 10% or 15% reduction in building permit fees for new projects above 4 units with a minimum percent (e.g., 20%) of low- or moderate-income restricted units.
20 BFLSC Recommendation:
1. Receive Presentation; and
2. Proceed with a recommendation to the City Council to accept the Willdan Financial Services City’s Cost Analysis and Master Fee Schedule recommendations.
Questions