TO:Andrew P. Powers, City Manager
FROM:Jaime Boscarino, Finance Director
DATE:March 25, 2025
SUBJECT: 2025 Draft Citywide User Fees, Fines, Penalties, Rates, and Assessments (User Fees), and Development Impact Fees
RECOMMENDATION:
1. Receive information on Draft User Fees and Development Impact Fees as presented at the Public Study Session and provide direction to staff.
2. Schedule a Public Hearing for April 29, 2025, to establish User Fees and Development Impact Fees to be effective July 1, 2025.
3. Find that this action is not a project as defined under the California Environmental Quality Act.
LEVINE ACT ITEM: No
FINANCIAL IMPACT:
Financial Impact to Be Determined. The current financial impact of the adjustments of the Draft User Fees and Development Impact Fees as outlined in the 2025 Proposed User Fee Schedule is to be determined and will be finalized for the Public Hearing. Financial impact based on future adopted User Fees and Development Impact Fees will be included in the Proposed FY 2025-26 and FY 2026-27 Operating Budget.
BACKGROUND:
Taxes vs. Fees
Local governments charge fees to recover the costs of providing specific governmental services. These fees are different than taxes. On November 2, 2010, California voters approved Proposition 26, a constitutional amendment that clarified what qualifies as a local tax. Proposition 26 broadened the definition of a local tax to mean any “levy, charge, or exaction of any kind” imposed by a local 2025 Draft User Fees and Development Impact Fees
March 25, 2025
government and paid by taxpayers. Under this definition, if a local government collects revenue through these types of charges, voter approval is required – either a majority vote for general governmental purposes or a two-thirds vote if the revenues are designated for a specific purpose. In contrast, a fee that directly offsets the cost of providing a specific service may be adopted by a majority vote of City Council. While Proposition 26 broadens the definition of a local tax, it also established seven exceptions:
1) Special Benefit or Privilege Exception
Fees charged for a specific benefit or privilege provided to a payer that is not available to the general public.
2) Government Service or Product Exception
Fees covering the reasonable costs of a government service or product provided directly to a payer.
3) True Regulatory Charges (Licenses and Permits) Exception Fees for licenses, permits, or other regulatory activities necessary to cover enforcement and compliance costs.
4) User Charges (Local Government Property) Exception
Fees for the use of local government property, such as facility rentals. 5) Fines and Penalties Exception
Charges imposed as penalties for legal violations, such as code enforcement penalties.
6) Developer Charges (Property Development) Exception
Fees related to property development, including impact fees and development review costs.
7) Benefit Assessments and Property-Related Charges (Proposition 218) Exception
Fees assessed specifically for property-related services, as governed by Proposition 218.
The fundamental difference between fees and taxes lies in their purpose and structure. Fees are charged to a specific payer in exchange for a direct service or benefit, while taxes generate revenue for general government services benefiting the entire community. Under a user fee structure, a government can only recover the actual costs of providing the service. Fees cannot be used to generate surplus revenue, nor should they be unintentionally subsidized by other revenue sources. 2025 Draft User Fees and Development Impact Fees
March 25, 2025
Staff has reviewed all fees proposed in the User Fee Schedule to ensure compliance with Proposition 26 and its exceptions.
Consultant Services
The City performed a competitive Request for Proposal (RFP) process for Cost Allocation Plan and User Fee Study Consulting Services in Summer 2024. On September 24, 2024, City Council approved an agreement with Matrix Consulting Group (Matrix) to provide Cost Allocation Plan and User Fee Study Consulting Services.
Comprehensive Cost Studies
To ensure that user fees are reasonable and not arbitrary, the City periodically conducts comprehensive cost-of-service studies. These studies account for changes in laws, operating costs, staffing levels, technology, processes and service demand, ensuring that fees accurately reflect the cost of providing services.
The City has undertaken several comprehensive cost-of-service studies over the years with the most recent as follows:
•2013: Comprehensive review and full cost-of-service study for Building & Safety, Planning, Code Compliance, and Engineering user fees. •2021: Comprehensive review and full cost-of-service study for Planning, Code Compliance, and Engineering user fees.
A full cost-of-service study for Building and Safety fees was last conducted in 2013.
An updated study was originally planned for 2021 but was postponed to allow for the implementation of the City’s new permitting and planning software system. This delay ensured that the study would more accurately reflect staff time and effort under the updated and streamlined processes.
As part of this 2025 User Fee study, the City has now completed the updated analysis, incorporating the impacts of the new system to ensure fees align with the cost of providing Building and Safety services.
In addition, a comprehensive review and full cost of services study was completed for all User Fees citywide. The comprehensive study was required since operating costs, staffing levels, and activity had substantially changed over previous years.
The review and update began in November 2024 in close coordination with all departments. The proposed User Fee Schedule is included as Attachment #1, which will be provided in the supplemental packet. Matrix final report will be included in the Public Hearing staff report (tentatively scheduled for April 29, 2025). 2025 Draft User Fees and Development Impact Fees
March 25, 2025
Budget Process
As part of the biennial budget process, City staff reviews and updates User Fees as needed to reflect the calculated cost of providing services. This ensures that fees remain aligned with service delivery costs and helps guide the development of revenue projections for the budget. The last update was conducted during the FYs 2023-2025 budget process and adopted by City Council on April 25, 2023, and set User Fees for July 1, 2023 – June 30, 2025.
City Council Finance/Audit Committee
The City Council Finance/Audit Committee (Committee) was established in 2008 to comply with Statement on Auditing Standards (SAS) 114 and to enhance financial transparency. The Committee serves as a forum for open communication between the City’s external auditors and City Council, ensuring oversight of the City’s financial matters. Staff meets periodically with the Committee to provide budget and financial updates and to seek input on financial strategies. As part of this oversight, staff will have presented the proposed User Fees and Development Impact Fees to the Committee (meeting on March 24, 2025).
DISCUSSION/ANALYSIS:
City Council Policy and State Law
The City has a long-standing commitment to fiscal sustainability, which includes ensuring that fee revenue covers the cost of providing City services to private individuals, businesses, or groups. The User Fee Schedule includes a wide range of fees for services from Building Permits to Special Use Permits. City Council’s policy is to adjust fees biennially with the goal of achieving “Full-Cost Recovery.” The cost of providing these services includes personnel, materials, and overhead.
When a fee does not fully cover the cost of providing the service, it is subsidized by tax revenues, reducing the revenue available for other City services such as public safety and street maintenance. In such cases, general taxpayers bear the cost of a service that provides a direct private benefit to an individual, business, or group.
The City also ensures compliance with State Law and the State Constitution for establishing and adjusting fees. By law, the amount charged for a user fee cannot exceed the City’s cost of providing the corresponding service. As part of the comprehensive review, the cost of providing each service was calculated by determining which staff provide the service, how long it takes for the service to be completed, the cost of staff time, and the workload levels. Staff then compared these calculations to the current fee amounts and evaluated appropriate adjustments. In some cases, the proposed fees are lower than those calculated in the prior study due to operational efficiencies, new technologies, streamlined processes, and reimagined service delivery methods. Conversely, proposed fee 2025 Draft User Fees and Development Impact Fees
March 25, 2025
increases are recommended where necessary to bring the City closer to full-cost recovery and ensure that the fees accurately reflect the true cost of the services provided.
City Council Exceptions (Exceptions to Full-Cost Recovery) In previous reviews of the City's User Fees, City Council elected to intentionally set certain fees below “Full-Cost Recovery.” These exceptions primarily apply to fees paid by existing homeowners, where charging the full cost would impose a large financial burden on the homeowner. The list of City Council Exceptions is included as Attachment #2. The following fees are recommended to be added to the exemption list moving forward:
•PW-19-01 Backflow Inspection and Testing (no fee if business submits annual backflow report on time)
•PW-45-04 Water Conservation Requirements Hardship, Unique Circumstances, or Disability Waiver (no fee for residential water customers with disabilities preventing them from hand watering)
•PW-63A Stormwater Inspection Fee (no fee if facility passes all requirements on initial inspection)
•PW-63B-01 Stormwater Quality Permanent Best Management Practices (BMP) Annual Inspection (no fee if BMP owner provides annual maintenance reports)
Non-Compliance Fees
Non-Compliance fees are charged when an applicant engages in work without obtaining required City permits or approvals. These fees were first discussed during the 2013 User Fee Study Session, where the City Council directed staff to incorporate them into the User Fee Schedule. Non-compliance Fees serve as a penalty and are calculated by doubling the proposed fee.
Proposed User Fees Schedule
The proposed User Fees for FYs 2025-2027 are currently comprised of approximately 679 fee items.
A summary of the proposed User Fees are as follows:
2025 Draft User Fees and Development Impact Fees
March 25, 2025
Department Proposed
Fees*
No
Change Increase Decrease
City Clerk 17 7 4 1
Community Development
Building 119 13 35 53
Planning 112 41 57 12
Cultural and Community Services
Theatres/Community Services 166 123 30 8
Library Services 39 22 17 0
Finance 70 39 18 4
Police 20 8 0 12
Public Works 136 60 49 20
TOTALS 679 313 210 110
*Changes will not tie to proposed fees because fees were added and deleted.
Current fees proposed are summarized by Department below:
1. City Clerk
The majority of City Clerk fees are currently proposed to remain the same.
Four fees are proposed to be increased, and one fee is proposed to be decreased based on the results of the fee study. Fees are minimal in nature or based on time and materials. Five new fees are proposed to be added (shown as “new” on the proposed User Fees Schedule):
•Initiatives and Measures
•Administrative Fee
•Document Retrieval
•Witness Fee - Public Safety Officers
•Witness Fee - All Others
2. Community Development
Building
Thirteen fees are currently proposed to remain the same because they are charged based on time and materials, deposit, or are one of the fees on the City Council Exceptions list. Thirty-five fees are proposed to be increased, and 53 are proposed to be decreased based on the results of the fee study.
Seventeen new fees are proposed to be added (shown as “new” on the proposed User Fee Schedule):
•Permit Application (New Construction/Tenant Improvements and (New/Remodels/Additions) (2)
•Building Permit Fee (New Construction/Tenant Improvement 2025 Draft User Fees and Development Impact Fees
March 25, 2025
$5,000,001 and above) (1)
•Expanded Solar related fees (11)
•Electrical Permit Fees (Standalone electrical fixtures) (2) •Alternate Means and Methods Review (hourly rates) (1)
Planning & Code Compliance
Forty-one fees are currently proposed to remain the same because they are charged based on time and materials, deposit, or are one of the fees on the City Council Exceptions list. Fifty-seven fees are proposed to be increased, and 12 proposed to be decreased based on the results of the fee study.
Two new fees are proposed to be added (shown as “new” on the proposed User Fee Schedule):
•Voluntary Lot Merger
•Research Fee
3. Cultural and Community Services
Theatres/Community Services
Currently, 123 Theatre fees are proposed to remain the same in order to remain competitive with other facilities. In addition, 30 fees are proposed to be increased, and eight are proposed to be decreased based on the results of the fee study.
Five new fees are proposed to be added (shown as “new” on the proposed User Fee Schedule), which are all related to security and security guard services for the theaters.
Library Services
Twenty-two Library fees are proposed to remain the same. In addition, 17 fees are proposed to be increased, and there are no proposed decreases based on the results of the fee study. No new fees are proposed.
4. Finance
Thirty-nine Finance fees are proposed to remain the same. Eighteen fees are proposed to be increased, and four are proposed to be decreased based on the results of the fee study. Four new fees are proposed to be added (shown as new on the proposed User Fee Schedule) relating to the Civic Arts Plaza room rentals, including: Clean Up, Failure to Vacate, Refreshments, and rental of the Acorn Room.
2025 Draft User Fees and Development Impact Fees
March 25, 2025
5. Police
All Police fees were not included in the cost of services study performed by Matrix as most of the fees are developed by the County of Ventura. One fee is proposed to be revised (LE-02 False Alarm, which affects multiple fee lines).
6. Public Works
Sixty Public Work’s fees are currently proposed to remain the same because they are charged based on time and material, deposit based, or there was no change in service levels. In addition, 49 fees are proposed to be increased, and 20 proposed to be decreased based on the results of the fee study.
Six new fees were added (shown as “new” on the proposed User Fee Schedule):
•Construction & Demolition Permit (SFR & Tis under 50,000 SF) •Construction & Demolition Permit (comm, MFR, Tis over 50k SF) •FEMA Flood Plain Permit sub fee
•Sustainability Review Fee (Trash Enc., Organics, EV Chargers, Water Conservation) - Comm, MF under 50,000 SF
•Sustainability Review Fee (Trash Enc., Organics, EV Chargers, Water Conservation) - Comm, MF over 50,000 SF
•Water Hydraulic Model Analysis
Development Impact Fees
Development Impact Fees are charged to new developments to support public capital improvements and are subject to the Mitigation Fee Act. These fees ensure that new developments contribute their fair share toward the City’s infrastructure, based on the impact the development places on public facilities and services.
Development Impact fees include Traffic Impact Fees, Road Payback Fees, Police Facilities Fee, and Water and Wastewater Plant Improvement and Connection Fees.
1. Traffic Impact and Road Payback Fees. The City’s Traffic Mitigation and Impact Fee Study was last approved on April 23, 2019. A new study is scheduled to be completed during FY 2025-26 and brought before City Council for review and approval. Additionally, six road payback fees, previously established and amended by various City Council resolutions, 2025 Draft User Fees and Development Impact Fees
March 25, 2025
will continue to be imposed on land development projects to ensure they contribute their fair share toward previously constructed road improvements.
Per Resolution No. 2023-015, Traffic Impact and Road Payback Fees are subject to a biennial adjustment based on increasing construction costs, as measured by the Consumer Confidence Index (CCI) for Los Angeles from December 2022 to December 2024. Staff recommends an 11.93 percent increase in accordance with the CCI adjustment (Attachment #3).
2. Police Facilities Fee
The Police Facilities Fee reimburses the City for funds advanced toward the construction of the East Valley Law Enforcement Facility. Per Resolution No. 2023-016, this fee is adjusted based on the City’s average investment returns over the past five years. Staff recommends a 1.58 percent increase to align with this methodology.
3. Water and Wastewater Plant Improvement and Connection Fees These fees are adopted by City Council resolution and support water and wastewater infrastructure improvements and connections. The most recent fee update was approved by City Council in November 2023 and will be included in the Adopted User Fee Schedule for reference.
Schedule for Adoption
At the conclusion of the User Fee Study Session, staff recommends City Council provide direction on the proposed fee adjustments as well as schedule a Public Hearing for Tuesday, April 29, 2025.
During the Public Hearing, a resolution will be presented to City Council to adopt the User Fees as contained in the 2025 User Fee Schedule, as well as resolutions for the adjustment of the Traffic Impact and Road Payback Fees and Police Facilities Fees.
COUNCIL GOAL COMPLIANCE:
Meets City Council Goal B:
B. Operate City government in a fiscally and managerially responsible and prudent manner to ensure that the City of Thousand Oaks remains one of California’s most desirable places to live, work, visit, recreate, and raise a family.
2025 Draft User Fees and Development Impact Fees
March 25, 2025
PREPARED BY:Ryan Roman, Budget Officer
Miguel Chavez, Sr. Financial Analyst
Attachments:
Attachment #1 – Draft 2025 User Fee Schedule (FYs 2025-26 & 2026-27) Attachment #2 – City Council “Full Cost” Exceptions
Attachment #3 – Traffic Mitigation Impact Fees
FIN:390-10\mc\H:\COMMON\Council\2025\Administration\03252025 User Fee Report Study Session.docx