CC 2023-11-14 AG UF_PPUser Fee Study
City of Arroyo Grande
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What are User Fees
Provide private benefit with limited or 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.
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Why Update User Fees
Subsidies in services impact the General Fund
Private & specific benefit services are subsidized by unobligated funding sources
Reduces ability to fund general & community benefits
Decreased department funding typically results in understaffing and reduces service quality
Cost recovery knowledge and planning
Provides clarity of pressures on City resources
Enables City to strategize and set fees to benefit of the City and community
State requirements for reasonable cost-based fees
3
User Fee Objectives & Steps
Determine full cost of providing services or programs
Review fee schedules based on service delivery
Identify potential new fees (not currently collected)
Reduce or remove fees
Using fully-burdened rates, calculate full cost recovery
Update fees for services based on cost analysis
Incorporate or establish cost recovery goals
Subsidies allow access to services and facilitate compliance
Identify appropriate fee levels that:
Enhance reasonability and applicability
Maintain consistency with local policies and objectives
Maintain legal compliance with state law
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Scope of the Study
Review and calculate cost of providing services and related fees charged by the following departments and divisions:
Administrative Services
City Clerk / Legislative and Information Services
Engineering
Planning
Police
Building
Recreation Services
Public Works Services
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Data & City Staff Participation
Primary types of data used:
Expenditure data
Staffing structures
Central service/Indirect overhead
Productive/billable hours
Time estimates to complete tasks
City/Department input, feedback and policies
Staff support throughout process essential to ensure analysis fidelity
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Summary Steps of the Study
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Administrative Services
A mixture of business license fees, utility rated fees, penalties, and fines
For the two utility service fees, a time-based analysis using fully burdened hourly rates and reasonable time estimates for service were utilized
Suggested fee notes:
A new General Services fee be adopted to describe how the City would charge for a service that is either outside the scope of a listed fee, or for when there is not an already listed
Business License fees that include the State AB 1379 fee would be reduced since the State fee was reduced from $4 to $1
An increase to the New Utility Account Set up fee from $40 to $50
The remaining fees, penalties, and taxes would remain as currently set
8
City Clerk / Legislative and Information Services
Services include a few that used a time based cost analysis with others based on actual cost or set by the State
Analysis found:
Document Certification fee is currently being provided below full cost (no suggested fee change)
City Council Meeting DVD fee recommended to change from vendor cost to $5 in house
No other fee changes recommended
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Engineering
Map review, public improvement plan check, grading, drainage, erosion plan reviews, and inspection agreement fees are suggested to increase by 6.2%
Remaining fees utilized time based cost analysis
Suggested fee notes:
An increase to 39 fees
9 fees would remain as currently set
Average fee change would be an increase of 6%
10
Planning
Time based cost analysis
Analysis found that the current fees are funding the cost for most, but not all of the services
Suggested fee notes:
An increase to 46 fees
2 fees would decrease
7 new fees would be added
25 fees would remain as currently set
Average fee change would be an increase of 4%
11
Police
Time based cost analysis
Analysis found that fees are currently set below the full cost of providing service.
Suggested fee notes:
An increase to 41 fees
2 fees would decrease
29 fees would remain as currently set
Average change would be an increase of 16%
12
Building
Analysis of Building services relied primarily upon a program cost recovery analysis approach
Current cost recovery is around 77% and the intent of the suggested fee schedule is to achieve full cost recovery
Suggested fee notes:
An increase to 260 fees and the Building Permit fees
9 fees would remain as currently set
Average change in fees would be an increase of 29%
13
Recreation Services
Most fees are use of government property and should be set based on policy, usage, & market factors
Currently operating at around 42% cost recovery
A time and cost analysis was performed on some of the fees in the schedule that could have direct staff involvement identified to determine the direct cost for each
Suggested fee notes:
An increase to 44 fees
A decrease to 3 fees
4 new fees would be added
25 fees would remain as currently set
Average change in fees would be an increase of 11%
14
Public Works Services
Time based cost analysis
Analysis found that most fees are currently set below the full cost of providing service
Suggested fee notes:
An increase to 12 fees
1 new fee would be added
5 fees would decrease
6 fees would remain as currently set
Average fee change would be an increase of 13%
15
Policy Considerations
General standard: individuals or groups who receive private benefit from service should pay 100% of cost
In certain situations, subsidization is an effective public policy tool:
Encourage participation
Ensure compliance when cost is prohibitive to residents
Promote access to services
Recommend that City utilize inflation factor to annually adjust fees based on CPI, MOU, or another factor
Comprehensive analysis every 5 years
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Questions
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