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HomeMy WebLinkAboutCity Council Study Session - PowerPoint Presentation entitle -5c�,,,OP- 00 m - -- -- ----- - ------------ ------ ---------- - -- ------ Y -s4�0j. Cityof Huntington Beach Citywide User Fee and Rate study Presentation to City Council August 15, 2015 Presented ,by: Nicole Kissam, Director of Financial Consulting, NBs ©ahle Bulosan, Finance Manager—Accounting, City of Huntington Beach Nis helpMtg co munitl" i z Presentation Goals • Present key issues framing the user fee study • Discuss fee study principles and best practices ■ Present basic casting methodology and approach • Discuss a summary of findings ■ Discuss department recommendations r I Q & A I i NBS Citywide User Fee and Rate Study fund tomorrow 7L y }: User Fee Best Practices i ■ Governments conduct user fee studies to help recoup the cost of providing services i ■ Huntington Beach completed its last fee study in 2009 ■ The industry best practice for review of fees for service; — Comprehensive study every 3 to 5 years — Annual increase mechanism such as CPI or labor costs ■ In FY 2014/15, the City began the process of reviewing and updating the City's costs and fee data M,le C7*) N BS Citywide User Fee end Rate Study 3 help9ng tune eamarr - Scope of Services: User and Regulatory Fee study ■ Study the full cost of providing services for: community Development (Planning, Building and Code Enforcement) ` Public Works 1 Engineering Fire Police Community services ✓ Business Development j ✓ Library ✓ Finance, City clerk and other administrative functions ■ Use the resulting information to update the City's Fee Schedules ■ Not included in the study: Taxes, Fines, Development Impact Fees, Utility Rates, Parking, etc. C), N B S Citywide User Fee and Rate Stud 4 helplW cammunlrler Y hand tomorrow Key Components of a Fee Study k{ ■ Compliance with various State statutes and laws governing ° user fees ■ Defensible methodology for calculating fees for service ■ Analysis of current service and staffing levels • Identification of the cost of resources available to meet workload demands ■ Data available to validate a reasonable cost of providing services ■ Recommendations to Mayor and City Council regarding cost recovery policies, fee schedule updates, and implementation km�) N Bs- Citywide User Fee and Rate Study 5 Relping comet nftlee `7•' 7 nine tomorrow Ej 4 Citywide cost Allocation Plan • Cost Allocation Plans are required in order to obtain reimbursement for the City's costs of administering Federal and State grants ■ The Citywide cost Allocation Plan was completed in September 2015 ■ The Plan identifies the costs of administering and operating administrative functions in a governmental entity receiving grants ■ Rules for Cost Allocation Plans are contained in the Federal office of Management and Budget's A-87 cost Allocation Plan guidelines ■ A Cost Allocation Plan is designed to allocate costs fairly and equitably to service providing departments ■ Used as a basis to recover costs through charges to: Enterprise Funds (Water, Sewer, Refuse, and Hazmat Funds) Citywide User Fees '* NBS Citywide User Fee and Rate Study 6 fund tomorrow User Fee Study Guidance ■ Proposition 218 Section 6.2(b)2 ✓ "Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed" Must Pair Revenues to Costs What are the Costs? • CA Government Code §66014(a) r "Those fees may not exceed the estimated reasonable cost of providing the service for which the fee is charged" Focus on "Estimated Reasonable" • Proposition 20 Article XIIC§1 (e)(3) — Inspections and Regulatory Permits are exempt ...however are still limited to the local government's reasonable costs ✓ Article XI IC§ 1(e)(2), and 1(e)(4) — Parks and Recreation fees are either limited to reasonable costs, or exempt when for use of government property N B Citywide User Fee and date Study 7 � fialping ca,mmunl[faa fund lomorro I '. General User Fee Study Approach Establish fee list: current fees, additions, deletions, etc. ■ Gather input from staff at many levels in the organization regarding financial, service level and workload information 0 Analyze the total costs and revenues associated with services • Conduct research on comparable cities and their rates • Check results and validate data ■ Review and revise results at the Department and City Management levels ■ Present results to City Council for discussion and potential action N BS helping commuNSlea y Citywide user Fee and Rate Stud 8 Lund tomorrow ' CIA COST of SERVICE ANALYSIS �x4 Full Cost of Service Recoverable in Fees Estimated/ • i Hourly Rates forDepartment Known Time to Discrete Costs Provide of a r or Division Individual Services It providing Service Incurred r services Outcome Brow. - Fee Amount �ry (7) �y N B Citywide User Fee and Rate Stud 9 f' h®Iphzg oDmmunfflea ftmd tomorrow S:ti=V I COST VS. PRICE: Illustration of Cost Recovery in Fee-Setting Maximum Level of _- - - --- - --- - Targeted Cost fi Recovery (100%) Y Amount of Full Cost Subsidy from . f v, M Service ~ Other City 4 y Resources (l Current Level of Cost Recovery (°'o) Minimum Level of Targeted Cost Recovery (U%) 4Z) n' S Citywide User Fee and Rate Study 10 elping kind tomorrow COST RECOVERY POLICY DECISION MATRIX Fees should be assessed according to the individual or private benefit gained: GENEf SPECIFICAL i PRIVATE BENEFIT BENEFIT i fsUIL0— P MATS ` T POLIC IO14 0Q1�TY 5R1II N ZON1N�APPRQ1fA1� PARK MFAR ►UPPR �oN "ENG1NEER1N - - DEVE-L�+ ►IaMeNT REI VIEW 9.. I I I NBSCitywide User Fee and Rate Stud tY�n► Y fund tomorrow i Fee Study Recommendations and Highlights 4DNBS _ _ - 12 - r Summary Results for Fee Related Services — All Funds 3 Eligible Cost Estimated Annual Re cove ry f ro m Current Cost Recommended 1 • Regulatory ■ Recommended ■ Recovery .4 L• Division Revenue Fee Revenue Percentage� City Clerk $ 171,815 $ 199,845 86% $ 171,815 869/6 �f Finance $ 1,546,431 $ 4,250,447 36/ ° $ 1,948,785 46% Community Development $ 8,009,386 $ 8,198,133 98% $ 7,693,614 . 94% a Office of Business �y Development $ 52,775 $ 101,542 52% $ 96,655 95% o n — �a Public Works $ 1,777,735 $ 2,284,435 78/ $ 1,960,818 86/0 Police $ 798,393 $ 1,486,197 54% $ 931,998 63% Fire $ 1,591,640 $ 1,955,378 81% $ 1,714,119 88/ i Library $ 1811863 $ 216,074 84% $ 209,812 97% Community Services $ 4,330,681 $ 7,293,593 59% $ 4,396,829 60% Automation Fee $ 343,713 $ 572,856 60%° $ 429,642 75% is I S?�1 T� Citywide User Fee and Rate Study 13 helping communitles ' tuna tomorrow Summary Results of Recommendations T2 As l FeesNumber of Fees of r r i Fees • Charges & Charges No Change 350 40% u New 34 4% #' Deleted 6 1 % -increasing 336 _ 38% Decreasing 86 10% Structure Chan e 62 7% Total 874 100%, NBS Citywide User Fee and Rate Study 14 halpinp carnrraunl[iaa + fund tomo�w s Summary Results for Fee Related Services 'Al Establishing user fees at full cost recovery amount, the City would �Y= reduce the annual subsidy of these services by $7.8 million ■ At the recommended fee levels and with a phased-in approach, the City could generate the following additional General Fund Revenues: s — $109,000 in 2016 — $320,000 in 2017 — $533,000 in 2018 ■ The Fee Study analysis provides the information needed to re-align a fees based on the most recent information regarding City costs ■ The Fee Study also includes an analysis of the City's Technology Automation Fee which supports the maintenance of the enterprise land management system f r5 �(t JJ I N BS Citywide User 'Fee and Rate study 15 helping c©mmunleles fund tomorrow i f Summary of General Fund Fees F.K Ems_ Eligible , a Cost Estimated F Annual Recoveryfrorn Current Cost • y Recoverymmended Department/ Current Fee User/Regulatory Recommended Division ` Revenue Percentage City Clerk $ 171,815 $ 199,845 86% $ 171,815 86% ;k Finance $ 1,546,431 $ 4,250,447 36% $ 1,948,785 46% sr Community ft� � Development $ 8,009,386 $ 8,198,133 98% $ 7,693,614 94% Pudic Works $ 1,421,640 $ 1,789,714 79% $ 1,557,375 87% Police $ 798,393 $ 1,486,197 54% $ 931,998 63% Fire $ 1,405,760 $ 1,643,709 86% $ 1,402,450 85% Library $ 181,863 216,074 84% $ 209,812 97% Community Services $ 4,330,681 $ 7,293,593 59% $ 4,396,829 60% z; Automation Fee $ 343,713 $ 572,856 60/ $ 429,642 75% Totali ' . i . : General Fund ■ Full Cast Recovery — reduce subsidy by $7.4 Million ` ■ Recommended Fees -- reduce subsidy and increase revenue by $533,000 by 2018 N B h.aonaC.m-Wnito— Citywide User fee and Rate Study 16 fund tomorrow C, 4 s Community Development Fee Highlights � ,_3ryi t'Tit z Planning Fees to phase-in over 3 year period — Phase 1 in 2016 - 78% cast recovery Phase 2 in 201 - 88 /o cast recovery -- Phase 3 in 2018 - 97 I© cost recovery �k T Building Fees - 100 /a cost recovery in Year 1 `- code Enforcement - 1 Cog% cost recovery in Year 1 ■ General Plan Maintenance surcharge - 40°h cost F recovery in Year 1 Decreasing Fees - Planning/Building Plan Review and Building Inspection �j Increasing Fees — Landscape Plan check, Zoning s{ Permits, Electrical/Mechanical/Plumbing Permits 4-7) sir, i rk3 N BS Citywide User Fee and Rate Study 17 •,; helping p0--nMew (.'.y fund tomorrow k, F$ Finance Fee Highlights �a ■ Increasing Fees - Business License, Utility Billing Setup/Late, Collections Processing, Business Permits (Entertainment Permit, Massage certificate, etc.) - No change - credit card Processing, Parking Citation Processing ■ Full cost Recovery — reduce subsidy by $2.7 Million ■ Recommended Fees — reduce subsidy and increase ;f revenue $402,000 RN C) 'r g,e } N B Citywide User Fee and Rate Study 18 h a]p4ng cnmm.nftlom hind tomorrow y I: S �T M ■ t Public Works Fee Highlights Increasing Fees - Water Sill Tag, Development Related Deposits and Fees (parcel map check, final tract map, Fti?k T grading plan check and inspection) yz No Change - Wide/Overweight/Loading ht/Loadin permit fees are . g g g set by the State ft Decreasing Fees — National Pollutant Discharge Elimination System (NPDES) program fees :i Full Cost Recovery — reduce subsidy by $507,000 Recommended Fees — reduce subsidy and increase " revenue $183,000 .t �i k e 4 �, 1; N B Citywide laser Fee and Rate Study 19 helping gnrn muniHea 1 hirotl tomorrow i Police Fee Highlights ■ Increasing Fees — Alarm Permit, Vehicle Release, g Records Check ■ No Change — Jail Processing/Booking, Jail Fee (Pay to r" stay) ■ Full Cost Recovery — reduce subsidy by $6887000 ■ Recommended Fees — reduce subsidy and increase revenue $134,000 i kD rt I N Bs Citywide User Fee and Rate Study 20 1,01ping CGff'murtltl0i ` Turnd tomorrow ' s Fire Fee Highlights Majority of Fees are related to development and d inspection services — overall flat (plan review, fire prevention and oil well inspection, fire company business inspections) ■ Increasing Fees — Hazardous Materials Review and Inspection ■ No change Junior Lifeguard Program, Central Net Training Center Joint Power Authority, Emergency Medical Services (EMS) ■ EMS fees were excluded from the study and are primarily based on County's established fees • Full cost Recovery — reduce subsidy by $364,000 ■ Recommended Fees — reduce subsidy and increase revenue $122,000 a N BS Citywide User Fee and Rate Study 21 hBlping eO--unitWm ^� .,_ fund tomorrow Community Services Fee Highlights ■ Increasing Fees & Charges — Facility Rentals, Youth Sports & Swim Lessens, Specific Events, Various Recreational Program Registrations • No change — Adult Sports Programs, Tennis Y4 Program Charges are market sensitive; public has other choices to obtain similar services ■ Full Cost Recovery — reduce subsidy by $3 million ■ Recommended Fees — reduce subsidy and increase revenue $66,000 ZI=6 tip^ _w I j {a NBS Citywide User Fee and Rate Study 22 g "k fund tamo"ow f `8 Other Fee Highlights City Clerk — No change in subsidy and revenue � z= rhj Office of Business Development ` Affordable Housing Inspection (decreasing), Affordable Housing F Review (new), Rehab Loan (no change), Film Permits (increasing) NA O ■ Full Cost Recovery — reduce subsidy by $49,000 Recommended Fees — reduce subsidy and increase revenue ., Y ` $44,000 t,K4 Library r Increasing Fees - Theater/Room .Rentals, Technician Fee for Theater, Replacement Library Card ■ Full Cost Recovery — reduce subsidy by $34,000 Recommended Fees — reduce subsidy and increase revenue is $28,000 t J Citywide User Fee and Rate study 23 ?alpin0 cammunftles 'n. fund tomorrow _1 Technology Automation Fee Annualized Recommended Gurrantly Cost Category - ry75°In Recovery S0° ,Recovery f�{ Software Maintenance (annual cost) $ 195„837 $ 195,837 $ 146,877 $ 1 17,502 Staff Resources (annual cost) $ 162,018 $ 162,018 $ 121,514 $ 97,211 ELM Software and Implementation $ 215,001 $ 215,001 $ 161,251 $ 129,001 $ 572,856 $ 572,85fi $ 429,Total - - 642 $ 343,713 - Projected Revenue FY16/17 $ 8,641,621 $ 8,641„621 $ 8,641,621 Technology Fee 6.6%--T— 5.0% A-O% ELM Software and Implementation cast of $3.2 Million — g. Amortized over 15 years at $215,000 a year Full Cast Recovery -- reduce subsidy by $229,000 Recommended Fee — reduce subsidy and increase revenue $86,000 i= N BS Citywide User Fee and Rate Study 24 Helping CDrrlmunlllew fund ton - y° Summary of Non General Fund Fees Eligible Cost f f� lvrEstimated Annual Re cover .st Recommended Department Current Fee User Regulatory Recovery Recommended Cost Recovery RevenueDivision Revenue Fee k Office of Business ; { Development $ 52,775 $ 101,542 52% $ 96,655 95% Public Works $ 356,095 $ 494,721 72% $ 403,443 82% bJJ ``- Fire $ 185,880 $ 311,669 60/ $ 311,669 17 {b• Total 94 • • • • rr • 89 rr Non General Fund Full Cast Recovery — reduce subsidy by $313,000 Recommended Fee — reduce subsidy and increase revenue $217,000 !r€r€a f:f S " Citywide User Fee and Rate Study 25 � haiyatnp communtiaa fumd to mw,o. tc:tyi Summary of General FundCharges Estimated Annual Department/artment/ Current Charges Recommended Percentage t. Division Library Services $ 198,138 $ 227,859 $ 29,721 15% Community Services $ 251,400 $ 390,200 $ 138,800 55% Total 449,538 $ 618,059 Library and Community Services Charges not required to be �.F a .,s included in the fee study calculation — exempt by Proposition 26 E ` Recommended changes to charges are market driven 3r :F�1 �i{{ E BS helping cammunitlaa Citywide user Fee and Bate Study 26 ' . hind tomorrow L5 fu mo. Master Fee and Charges Summary Estimated Annual Current Recommended Recommended Fee /Charges Fee /Charges Recommended Percentage Department/ Division Revenue Revenue Increase Increase t�- h" i General Fund Fees & Charges Phase 1 - Dec 2Q16 18,659,220 18 936,371 277,151 1/ � Phase 2 - Oct 2017 18,659,220 19,147,971 488,751 3% Phase 3 - Oct 2018-- - 18,659,220 19,360,379 - -701,159 4% } i Non General Fund 5941750 811,767 217,017 36°% All Funds - Oct 2018 191253,970 20,172,146 918,176 5% Based on CPI: $1 gg Fee in 2009 $112 Fee Today Average Annual CPI Increase since 2009 is 1 .6% EEF:? K t°r��-: 'i N B S Citywide User Fee and Rate Study 27 hfrlping communitl®a - - fund tomarraw User Fee Study Recap ■ Financial Best Practices recommend review of Citywide user fees every 3 — 5 years An extensive and comprehensive review has been conducted of Citywide user fees ■ The recommended fee changes will better align the City fees with current costs based on FY 2014/15 data • The recommended fee changes will also help to reduce the existing $7.8 million subsidy • The Finance [department is working on a consolidated "Master Fee and Charges Schedule" to improve transparency and tracking of Citywide fees The new "Master Fee and Charges Schedule" will be proposed' to the City Council in September 2016 t N BS Ci ide User Fee and Rate Study 28 helpingunitkes J fund tomorrow S li a y Next Steps r ; te Item August 15, 2016 citywide User Fee Study - Study Session � Hearing August 25 2016 Public Hin Notice �#1 �y g September 1, 2016 Notice of Public Hearin � Y g to Interested F .:, Parties t September S, 2016 Public Hearing Notice ##2 yh September 9, 2016 Citywide User Fee Study Available to Public September 19, 2016 City Council Public Hearing for Adoption of Master Fee & charges Schedule December 1, 2016 Effective Date of Master Fee & Charges Schedule P• y. y 4 CM ) N B Citywide user Fee and Rate Study 29 tp.F helping communldeo T, h,,d tnmorrow �rFza � � � � . . . . . � ( , € � � E4 � � � ] � QUESTIONS ?, (\ \] � � I � %. � . \) �1 � kj ƒ7%) NBS Citywide User Fee and Rate Study __.cc___