HomeMy WebLinkAboutItem No. 05 - PowerPoint Presentation- Fee Study- May 6 2020Public Hearing to Consider
Adjustments to User Fees
May 6, 2020
City Manager’s Office
1
•The City’s Plan of Adjustment to exit bankruptcy
included a review of all areas of revenue enhancement,
including user fees, to ensure the City was recovering
its allowable costs
•The City began a review of User Fees in 2014 and
contracted with Revenue Cost Specialist (RCS) to
prepare of cost of services study
•The turnover in staffing throughout City departments in
the years following the BK caused the study to stall
Introduction & Background
2
•After a series of starts and stops, the City contracted with
RCS in December of 2019 to update the study.
•Staff throughout all departments and RCS have worked
together extensively since then to complete the study.
•This is the first comprehensive review of user fees since
2008 (building and safety) and 2009 (all other user fees)
•Staff estimates approval of recommendations will result in
approximately $967,400 in new revenue in FY 2020/21
Introduction & Background
3
User fees are:
•charges to customers receiving a specific
benefit (plan reviews, recreation classes)
versus services that are of broad benefit to the
entire community (police services); and
•the benefits/services provided to the payor are
not provided to those not charged
What is a User Fee?
4
With all types of user fees, revenues generated may not
exceed the estimated reasonable cost of providing the
service.
Included in cost estimates:
actual staff time (salary and benefits)
overhead (departmental and general city)
materials and supplies
What is a User Fee? (continued)
5
•Preparation of the study involved staff throughout all
City departments
•RCS was provided with data about staff time required
to perform tasks associated with services charged
user fees
•RCS prepared a cost allocation study and schedule of
the “fully burdened hourly rate” for all city positions
User Fee Review Process
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RCS evaluated service costs with two different methodologies:
•the individual unit level-time spent on a task by specific
employees, and
•the programmatic level, where total program costs are
compared to total program revenue
useful in areas with a myriad of fees based on a
number of schedules (Building & Safety)
User Fee Review Process (continued)
7
•In most cases, 100% cost recovery is recommended –
consistent with previous studies
•For some programs, 100% cost recovery is not feasible
considering a municipality’s specific situation:
demographics
public safety and voluntary compliance
market conditions
community priorities
User Fee Review Process (continued)
8
•RCS study estimated $1.3 million in potential revenue
•City staff has lowered revenue projections for most fees by
20% below RCS study for a total of $967,400 (not
including $40,000 for General Plan Maintenance Fee-
cannot be used for city operations)
Other Considerations
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Other Considerations
10
Factors considered when lowering revenue projections:
•current economic downturn-COVID 19 shutdown-
conservative approach is necessary
•fees will be effective in late July, only 11 months of
revenue
•some fees are dependent upon staffing levels
Revenues will be monitored closely and adjusted
upward or downward at mid-year or sooner
Other Considerations
11
There are some downward adjustment on some fees,
contributing factors:
time spent in other areas
changes in regulations/laws
changes in technology
changes in staffing levels
Projected Revenue by Department
12
Department
Estimated
Additional
Revenue
FY 2020-21
Library 500$
City Manager 6,000$
Finance 14,500$
City Attorney 16,800$
Parks & Recreation 23,600$
City Clerk 24,200$
Police 63,100$
Animal Control 80,000$
Public Works 355,100$
Community & Economic Development 383,600$
Total 967,400$
Estimated Additional Fee Revenue by Department
Items of Note:
13
Extensive detail is provided in the staff report and
attachments. Items with less than 100% cost recovery, or of
other special note, are outlined below:
Library – currently only 2.3% of Library operations are
funded with fees. 100% cost recovery not feasible.
•feedback from Library staff (board recently approved fees)
•balance between higher fees that will discourage use and
cost recovery
•benefit to community overall to have a library amenity
Items of Note:
14
Animal Control – currently only 12.5% of Animal Control
operations are funded with user fees. 100% cost recovery not
feasible.
Staff recommendation recommends increasing fees to achieve
15.6% recovery (an additional $80,000 in FY 2019/20)
Considerations in determining fees:
•encouraging compliance-general public safety benefit
•market considerations-adoption fees should be comparable
to surrounding areas to encourage adoption at city shelter
Items of Note:
15
Parks and Recreation – currently user fees cover
approximately 4% of the total Parks & Recreation budget.
•at program levels within Parks and Recreation cost recovery
rates range from 3.6% up to 30%
•similar to Library, 100% cost recovery would have made the
programs prohibitive to residents
•community benefit to park amenities and programs
•approach is to catch up with inflation rather than achieve
100% cost recovery.
Items of Note:
16
Police Department – police services in general are
considered a public benefit service
•where applicable, user fees are charges, for example “live
scan” processing requests
•a 20% overhead/administration fee is recommend to be
assessed to overtime charges to outside entities for police
services at special events
•the Police Department completed an in depth analysis of
costs incurred as well as overhead/administrative fees
charged by surrounding law enforcement agencies
Items of Note:
17
Alarm Permit Program
•RCS developed fee structure to obtain 100% recovery
•charging for 100% cost recovery would quadruple alarm
permit charges
•concern - if cost is too prohibitive participation and
compliance will go down
Staff reviewed fees of surrounding cities and recommended an
alternative fee structure
•lower permit fees than RCS recommendation, but gradually
increasing higher charges for multiple false alarms (see page
25 of Attachment 1 for detail)
Items of Note:
18
Community & Economic Development
Building & Safety Fees in part based on project valuation.
Because of this, cost recovery varies from year to year, but over
a multiyear view revenues are close to full recovery
City is currently using the IBC valuation table from 2008,
recommendation to update semi-annually
Fully burdened hourly rates have been updated
General Plan Maintenance Fee of 2% recommended
Items of Note:
19
Community & Economic Development (continued)
budgetary reductions in staffing have resulted in lower costs
should the City decide to enhance Building and Safety services,
the fee study should be updated to include these costs
input from the development community indicates an acceptance
of higher fees in return for quicker turn around time
Items of Note:
20
Public Works
Engineering and Cemetery user fees have lagged behind
increasing costs since the last fee study was completed 10 years
ago
Fees have been updated to reflect fully burdened hourly rates
and time associated with each service.
Next Steps
•Questions and Discussion
•Return to Council May 20th with resolutions
incorporating approved fees
User Fee Review-Conclusion
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