COUNCIL AGENDA REPORT
TO: Mayor and City Council
FROM: Rebecca Campbell, Director of Finance
DATE: July 7, 2026
SUBJECT: Adoption of a Resolution Approving an Updated 2026 User Fee Schedule
Description:
The City Council will hold a public hearing and consider adopting a Resolution approving the addition and update of the Citywide User Fees identified in the Annual User Fee Update and 2026 User Fee Schedule.
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
RECOMMENDATION:
Adopt a Resolution approving the update of Citywide User Fees identified in the Annual User Fee Update and 2026 User Fee Schedule.
BACKGROUND:
"User fee" activities are defined as services the City provides to individuals who receive some material benefit from these services. The user fee philosophy holds that the cost of providing these services should be borne by the group receiving the benefit, not the community as a whole. User fee services are differentiated from general public benefit services, such as police and fire, which are largely tax-supported. For the most part, City fees should be set at full cost recovery to avoid subsidizing the activities of specific groups/individuals. However, to promote activities and actions, fees may be set at les s than full cost recovery. An example of subsidizing a service to benefit the community is the establishment of swimming fees at less than full cost recovery to promote exercise and good health.
During the FY 2026-28 Full-Cycle Budget Update process, the City’s consultant Revenue Cost Specialists (RCS) met with City staff to discuss the addition, removal, and/or adjustment of user fees. This round of recommended fee updates by RCS built on the prior year’s analysis and further addresses specific fee adjustment requests from Citywide departments. All fees were adjusted with an effective date of August 1, 2026 through adoption of Resolution No. 2026 -82 with the exception of the following as the Utilities Department discovered that some requested changes were not incorporated into the final fee schedule published for that public hearing:
2 S-191 – Solid Waste Extra Haul
S-192 – Overloaded Solid Waste Container
S-198 – Private Fire Protection Connection
S-222A – Liquid Waste Disposal
On June 2 nd, the City Council also adopted Resolution No. 2026 -80 establishing rental fees for the Japanese Community Center effective July 1, 2026.
DISCUSSION:
Exhibit A to Attachment A now incorporates the adjustments to the fees deferred from the June 2nd public hearing as well as the rental fees for the Japanese Community Center.
The fees deferred from the June 2 nd public hearing are proposed to become effective August 1, 2026. The rental fees for the Japanese Community Center are already effective as of July 1, 2026.
Subsequent to the actions taken on June 2, 2026, staff in the Finance and Recreation & Parks Department discussed the calculation of the new fees reflected in Appendix E:
Recreation & Parks Facility Rental Fees. The calculation should have rounded the fees down to the nearest whole dollar, as they have historically been, to reduce the administrative burden of transacting with coins at the Recreation & Parks Department’s counters. Staff recommends the adoption of the user fees, to be effective as noted above, based on the Full Cost Recovery Fee as shown in the Fee Study Update report previously presented to the City Council on June 2, 2026, and with the proposed revision to Appendix E: Recreation & Parks Facility Rental Fees.
Staff in the F inance and Police Departments met to discuss the billing rates for special event police services. When a position is assigned to staff an event during an employee’s regular schedule, the City would typically charge the Outside Billing Rate, which seeks reimbursement for the fully loaded cost of a position’s salary and benefits as well as overhead. The Santa Maria Police Department (SMPD) believes it can provide a better service to non-profit and for-profit organizations holding special events than if they w ere to contract with an outside police agency or security company. Since these events are provided within the City limits the SMPD would be responsible for handling any major incident or crime that occurs during one of these events as well as any subsequen t investigation. By contracting with the SMPD, the SMPD will be able to control and maintain a higher level of service for these events. The 2026 User Fee Schedule for the Police Department (Exhibit A) notes that the per hour fee for Police Officer, Police Corporal and Police Sergeant will be charged at the fully allocated rate. SMPD staff would be assigned to these events on an overtime basis outside of their regular schedule. The use of the aforementioned Outside Billing Rate would be inappropriate since there would be a nominal cost of benefits and overhead incurred. Therefore, Finance staff recommended to SMPD a methodology to calculate a fee for policing services provided to non-profit and for -profit organizations holding special events based on the ove rtime rate for the positions assigned plus cost recovery of operating expenses. This methodology would exclude cost recovery of benefits and overhead that would otherwise be recovered from the Outside Billing Rate. Utilizing this methodology, the per overt ime 3 hour fee for a Police Officer for FY 2026 -27 would be $109.56. The fee for other SMPD positions, such as Sergeants and Lieutenants, will be calculated utilizing this methodology. Staff implemented this new billing rate along with the other billing rates that support the 2026 User Fee Schedule effective July 1, 2026.
Alternative(s)
The City Council can choose not to adjust the following fees:
S-191 – Solid Waste Extra Haul
S-192 – Overloaded Solid Waste Container
S-198 – Private Fire Protection Connection
S-222A – Liquid Waste Disposal
Round down fees in Appendix E: Recreation & Parks Facility Rental Fees to the nearest whole dollar
The City Council could also choose to provide guidance on the proposed methodology for calculating a fee for policing services provided to non-profit and for-profit organizations holding special events.
Fiscal Considerations
The City set fees to full cost recovery starting in 2024, the proposed fees help the City maintain full cost recovery.
The proposal to round down fees in Appendix E: Recreation & Parks Facility Rental Fees to the nearest whole dollar will avoid an administrative burden of transacting with coins at the Recreation & Parks Department’s counters that will outweigh the lost rev enue from the previous proposed fees.
The proposed methodology for calculating a fee for policing services provided to non - profit and for-profit organizations holding special events allows the City to recover its costs of providing such services without overcharging for services that would either discourage contracting with the City or potential cancellation of events, neither would be a desired outcome.
Impact on the Community
Adjusting the fee schedule using the “full business costing” concept ensures there is equity between taxpayers and fee -payers, as well as fairness between property -related and non -property-related services, thereby assisting in the City’s continued financial sustainability into the future. Charging appropriate fees lessens subsidies and increases overall resources to provide general services to the public.
ATTACHMENT(S)
A. Resolution – User Fee Update 2026
Exhibit A – User Fee Schedule 2026
B. RCS – Santa Maria Fee Study Update Report