Item Number: 1
City Council / Board of Directors
Public Hearing(s)
Meeting of: December 17, 2024
Submitted By:
Jenele Davidson, Deputy City Manager
Subject:
Update of the Master User Fee Schedule
Recommendation:
That the Honorable City Council and Victorville Water District Board of Directors:
(1) Open and conduct the Public Hearing;
(2) Close the Public Hearing; and
(3) Adopt Resolution Nos. 24-105 and VWD 24-010, amending the Master User Fee Schedule by adjusting certain user fees based on the percentage change in the Consumer Price Index, adding various new fees, and making other updates and conforming changes.
Fiscal Impact:
If approved, the updated Master User Fee Schedule will become effective on January 1, 2025. The revenue estimates for the impacted user fees will be evaluated during the midyear budget review process and adjusted as may be necessary.
Strategic Plan Goal:
Performing an annual review of the Master User Fee Schedule and applying an annual escalator where appropriate helps ensure the City/District is accomplishing Goal A:
Financial Sustainability from the current Strategic Plan. These incremental adjustments help the City/District in recouping costs associated with providing various services.
Background:
As part of a general cost recovery strategy, local governments have adopted user fees to fund services that provide limited or no direct benefit to the community as a whole. User fees recover costs associated with providing specific services which benefit the user, thereby reducing the use of General Fund monies for such purposes. Cost recovery objectives can be based on a variety of factors, including public versus private benefits provided by the service. If an activity has a public benefit, it might be more appropriately 3 8
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supported by the General Fund. Conversely, if an activity has mostly private benefits, it might be more appropriately supported by user fees. Activities that have a mix of public and private benefits might be supported by the combination of user fees and the General Fund. An example of this would be offering Victorville residents a lower fee for Recreation programs because these programs benefit members of our community.
In 2022, the City retained the services of NBS Government Finance Group (“NBS”) to conduct a comprehensive user fee study (“2022 Fee Study”) to understand and establish appropriate levels of cost recovery for City services. The City did so to ensure that the user fees do not exceed the costs of providing the service while also providing an opportunity for the City Council to re-align fee amounts with local cost recovery policies.
The quantitative methods used during the 2022 Study included a cost-of-service analysis and a cost recovery evaluation which: (1) provides a measurable analysis that compiles the full cost of providing governmental services and activities; and (2) compares the existing fee for each service or activity to the average total cost of the service quantified through the analysis.
On June 7, 2022, the City Council/District Board adopted Resolution Nos. 22-055 and VWD 22-008, which approved the 2022 Fee Study and the Master User Fee Schedule.
These resolutions also established an annual review process for user fees to ensure they keep pace with inflation, utilizing the July over July comparison of the Riverside-San Bernardino-Ontario, CA Consumer Price Index for All Urban Consumers (“CPI-U”) to determine the percentage by which the user fees could be adjusted each year. The intent was to consider adoption of revised fees annually each December, with an effective date of January 1st of each year for any adjusted fees approved. Such inflationary adjustments are discretionary and must be approved by the Council at a duly noticed public hearing.
On December 19, 2023, the City Council/District Board adopted Resolution Nos. 23-101 and VWD 23-016, amending the Master User Fee Schedule by adjusting certain user fees by the CPI-U for July 2023 over July 2022, which was 3.29%, and adding certain fees not previously included on the Master User Fee Schedule for Recreation and Library programming and operations. Those fees became effective on January 1, 2024.
On February 20, 2024, the City Council adopted Resolution No. 24-010 to approve a minor user fee study and adopt an amendment to the City’s Master User Fee Schedule to establish new business license fees applicable to sidewalk vendors and mobile vehicle vendors. Those fees became effective on April 4, 2024.
Discussion:
As part of the City’s effort to maintain financial sustainability and ensure cost recovery for services, when possible, an updated Master User Fee Schedule (Exhibit A of Attachments A and B) has been drafted for City Council’s/District Board’s consideration. Staff is proposing an annual escalator be applied to the applicable user fees currently in effect based on the July 2024 over July 2023 CPI-U percentage change, which is 2.70%. This CPI-U increase poses a minimal adjustment to user fees, resulting in a smaller impact to customers, in comparison to delaying rates adjustments which could result in a larger 3 8
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increase in the future. Exceptions to the CPI-U adjustment are fees that are percentage- based, market-based or otherwise governed or restricted by statute.
The Master User Fee Schedule has also been updated to include certain new user fees.
A cost-of-service analysis and a cost recovery evaluation has been conducted for all new fees added to the Master User Fee schedule (Exhibit B of Attachments A and B).
Most substantially, two user fee sections were added to the Master User Fee Schedule.
The first section includes new user fees for services that will be offered at the City’s Animal Care & Adoption Center. The second section that was added on the Master User Fee Schedule includes permitting fees for the Industrial Pretreatment Program. The fees for the Industrial Pretreatment Program were studied by NBS in 2018 with the intent to generate revenues required to recover costs in connection with issuing Wastewater Discharge Permits. Although these user fees were adopted in 2018 by Resolution No.
VWD 18-008, they are now being included as part of the overall Master User Fee Schedule document. These fees have not been escalated by CPI as they will be studied again in the near future.
The table below offers a breakdown of all other new fees or new fee subcategories that were added to the Master User Fee Schedule along with a brief explanation as to why the fee is being added:
Animal Services
Late License Renewal Added a flat rate penalty to encourage timely animal license renewals.
Potentially Dangerous or
Vicious Dog Administrative
Hearing
Added fee for cost recovery purposes as staff have
identified that administrative hearings demand
considerable time and attention to complete.
Building
•Electric Vehicle
Charging Station(s)
•Battery Storage Systems
(New Subcategory:
Stand Alone Systems)
•Retaining or Block Wall
(New Subcategory: Each
additional 5,000 s.f.)
Fees added to establish a rate for permit types that were previously not included in the Building Department fee
schedule.
Business License
Fingerprinting/Live Scan
Service
Fee added for the new Live Scan service offered by our
Business License division.
Sidewalk and Mobile
Vendors (New Subcategory:
Event Only License &
Renewal)
Fee added for new “Event Only” Business License
permits to be issued to vendors for City events or private events permitted with a TUP which do not fall under the other subcategories in the Sidewalk and Mobile Vendor
License fee.
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Code Compliance
Notice to Abate Added fee for cost recovery purposes as staff have identified that completing a Notice to Abate demands
considerable time and attention.
Community Services
•Special Event Permit
•Tournaments
•Vendor Spot at City
Event (10' x 10' booth)
•Victorville Sings
Auditions
Fees added to establish a rate for services or permits
that were previously not included in the Community
Services fee schedule.
•Replacement Library
Card
•Snack Bar Rental
Fees added to recover costs associated with staff time
and overhead costs.
Chair and Table Rentals Fee added to start offering residents a “premium” table and chair rental option for facility rentals.
Kiosk Credit Card
Processing Fee
Added fee for credit card processing fees on the recently installed print release kiosk at the library.
DVD Late Return Fine Added to encourage timely returns of DVD rentals.
Fire Prevention
Pre-Engineered Systems /
Equipment (New
Subcategory: Inspection,
Minor
Modifications/Repairs)
This fee was previously not included in the Fire
Prevention fee schedule and establishes a new lower
fee subcategory for inspections on minor modifications
or repairs.
Engineering
Geotechnical Report Added fee for consultant costs associated with required geotechnical reports.
Police Department
Administrative Penalties for
False or Nuisance Alarms
Added per VMC 3.50.040 to defray costs incurred in
providing emergency services in response to a false
alarm.
Public Works
Cost Recovery – Equipment Fee added for cost recovery purposes, establishing rates for equipment operation costs associated with
responding to road closures or similar events where
Public Works equipment is needed.
The Master User Fee Schedule document has also been updated to include two new exhibits. These exhibits, the Cal OES Rate Letter and the Caltrans Labor Surcharge and Equipment Rental Rate sheet, establish rates for specific user fees in the Fire and Public Works Departments. Although these rates were not calculated by the City or NBS, these rates were previously established by Cal OES & Caltrans respectively, providing the City with industry standard rates to charge for cost recovery. These fees will only be charged by the City for the specific user fees that reference these exhibits. 3 8
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A new hourly rate figure was also added to the bottom of each department’s schedule which will be used to calculate an appropriate fee for services performed by the City or District that are not listed in the Master User Fee Schedule. This rate figure was determined as part of the 2022 Fee Study by calculating the fully burdened hourly rate for staff using a blended/weighted average of costs associated with all positions within each department based on how resources are deployed. Like all other user fees, this rate figure has since been escalated yearly by the percentage change in CPI-U to account for increased costs. If the need arises, the fee for any service not listed will be calculated on a case-by-case basis, using this fully burdened hourly staff labor rate, multiplied by the amount of staff time required to perform the service. Since the 2022 Fee Study, new departments have been added to the Master User Fee Schedule including the Animal Shelter, Public Works (formally “Public Works – Parks”), Risk Management, and the Industrial Pretreatment Program. For those departments that were not included in the 2022 Fee Study, the hourly rate figure has been set to “actual cost” and will be calculated using the actual employee’s fully burdened hourly rate multiplied by the amount of staff time required to perform the service. While it is uncommon to have to utilize these hourly rates, including them provides a means to calculate cost recovery when appropriate.
Additionally, other changes have been incorporated into the Master User Fee Schedule to make corrections or clarifications to existing fees. Some examples of such changes include modifications to the user fee name, fee type, added footnotes, or ensuring that user fees are consistent across departments where appropriate.
Lastly, five fees have been eliminated from the Master User Fee Schedule. In the “Planning” section of the Master User Fee Schedule, the Interim User Permit and Minor Interim User Permit fees were removed as the Victorville Council Policy CP-11-05 on Interim Uses was rescinded with the adoption of Ordinance No. 2448. In the “Land Development and Engineering” section of the Master User Fee Schedule, the Standby Fee WID 1 & Standby Fee WID 2 fees were removed as these were not user fees. Finally, under the “Water - Customer Service” section, the “Other Fees and Service Charges” fee was eliminated as it was a duplicate fee, serving the same purpose as the fee for services not listed.
As the need for new User Fees arises, a cost-of-service analysis and a cost recovery evaluation will be conducted which may result in additional updates to the Master User Fee Schedule before the next annual review.
Staff finds that the proposed increases to the existing User Fees, as well as any newly established or added fees, do not exceed the reasonable costs of providing services and recommend moving forward with the adoption of Resolution Nos. 24-105 and VWD 24- 010.
Staff is available for any questions the Council/Board may have. 3 8
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Attachments: A. Resolution No. 24-105
B. Resolution No. VWD 24-010