TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DENNIS McLEAN, DIRECTOR OF FINANCE AND INFORMATION TECHNOLOGY

DATE: FEBRUARY 21, 2006

SUBJECT: MASTER SCHEDULE OF FEES AND CHARGES FOR CITY SERVICES

Staff Coordinator: Gary Gyves, Senior Administrative Analyst

Attachment

RECOMMENDATION:

ADOPT RESOLUTION NO. 2006-__ ADOPTING A MASTER SCHEDULE OF FEES AND CHARGES FOR CITY SERVICES.

BACKGROUND AND DISCUSSION:

On February 15, 2005, the City Council adopted Resolution 2005-16 establishing a cost allocation plan, approving a cost of services analysis, and adopting a master schedule of fees and charges for City services. The City retained an independent consultant, MAXIMUS Inc., to complete the cost allocation plan and cost of services analysis (the “Fee Study”) dated November 17, 2004. The Fee Study’s conclusion, which was taken directly from the MAXIMUS Study, is detailed below:

MAXIMUS identified an overall current subsidy provided by the City of Rancho Palos Verdes (City) to "fee-payers" as a whole, whereby the City was charging less than the full actual cost of providing the services. Although subsidies are common in local government, it is MAXIMUS’ opinion that the City is currently subsidizing, in most fee paying categories, beyond what would be considered "equitable" to the general population of the City. This opinion is based on the assumption that the costs of services benefiting individuals, and not society as a whole, should be borne by the individual receiving the benefit.

The Fee Study set forth a mechanism for ensuring that fees adopted by the City for services rendered do not exceed the reasonable estimated cost of providing the services. The February 15, 2005 Cost-Based Fee Study Staff Report, which details the Cost Study’s conclusions, goals, and methodology, is attached as Exhibit 2. The attached Staff Report also details the bases under which Staff made its fee recommendations, which primarily include the current subsidy provided to fee payers and the fact that most City fees had not been increased since 1992. In most cases, Staff recommended instituting fee increases over a two-year period. Therefore, Staff is returning to the City Council to request the second year increases, which are detailed below:

Planning - Staff is recommending a 15% increase in Planning Fees. On February 15, 2005, the City Council adopted the first 15% of Staff’s recommended 30% increase in Planning Fees. Additionally, Staff would like to add the following four fees to the City’s Master Schedule of Fees. These fees were previously adopted by City Council Resolution 2002-04, but were inadvertently left out of the Master Fee Schedule adopted by the City Council on February 15, 2005:

> Penalty fees: Section 17.86.080 of the Municipal Code establishes penalty fees, which have been set at double the application fee, when work requiring a permit has been started or carried on prior to obtaining a permit. Penalty fees are not cost-based fees and do not have to be based on the costs to provide the service.

> Revision and Amendment fees: These are typically charged for major revisions to permits or approvals that have already been issued, and are equal to one-half the original application fee or a trust deposit for those applications which required, or would have required a trust deposit.

> Geologic Investigation Permit trust deposit: The purpose of this deposit, which is required by the Development Code, was to ensure that trenches, borings, etc. are properly backfilled and the site restored to its previous condition. All excess funds remaining in the trust deposit after work has been completed is returned to the applicant.

> Encroachment Permit trust deposit: City Council Policy No. 31 requires a separate category of encroachment permits for tract entry observation booths (i.e., guard shacks), which require a minimum $1,000 trust deposit. All excess funds remaining in the trust deposit after work has been completed is returned to the applicant.

Building & Safety - Staff is recommending a 10% increase in Building, Electrical, Plumbing and Mechanical Permit Fees (“Building & Safety Fees”). On February 15, 2005, the City Council adopted the first 10% of Staff’s recommended 20% increase in Building & Safety Fees.

View Restoration - On February 15, 2005, the City Council adopted a $172 non-compliance penalty fee. Reference to this fee appears in the current View Restoration Guidelines. Staff is proposing that the non-compliance penalty fee be increased to $300. Staff feels that the current fee of $172 is insufficient. Penalty fees are not cost-based fees and do not have to be based on the costs to provide the service.

City Manager - Film Permits - Staff is recommending that film permit application fees be increased to 50% of the full cost to provide this service. The film permit application fee was a new fee adopted at 20% of full cost by the City Council on February 15, 2005.

Public Works - Staff is recommending a 15% increase in Encroachment Permits. On February 15, 2005, the City Council adopted the first 15% of Staff’s recommended 30% increase in Encroachment Permits.

Recreation and Parks - Staff is recommending a 15% increase for field rental rates and facility rentals at Hesse Park, Ladera Linda and Ryan Park, as well as parking rates at Abalone Cove (“Recreation Fees”). On February 15, 2005, the City Council adopted the first 15% of Staff’s recommended 30% increase in Recreation Fees. Please note that sports field rental rates are not being increased for youth organizations (e.g. AYSO, little league and girls softball).

The Master Fee Schedule and resolution are attached as Exhibit 1.

Future Analysis Of Fees And Costs:

Staff also recommends that the City perform a periodic thorough analysis of fees and charges in the future, either internally or through a third party. Based on the results of the review, the City Council could revise such fees and charges. Staff is also recommending that the City Council make a determination annually, after conducting a duly noticed public hearing, whether or not to increase fees. Such interim fee increase, if any, could be based upon the average percentage increase in City salaries and benefits during the two most recent fiscal years. However, Staff believes the consumer price index could also be used.

Procedural Requirements:

According to Government Code Section 66016 and 66018, prior to levying a new fee or service charge, or prior to approving an increase in an existing fee or service charge, a local agency shall:

1. Hold at least one open and public meeting, at which oral or written presentations can be made, as part of a regularly scheduled meeting.
2. Notice of the time and place of the public meeting, including a general explanation of the matter to be considered, shall be published at least ten days before the public meeting.
3. Send a notice of the public meeting at least 14 days prior to the meeting to any interested party who files a written request with the local agency for mailed notice of the meeting on new or increased fees or service charges.
4. At least 10 days prior to the meeting, the local agency shall make available to the public data indicating the amount of cost, or estimated cost, required to provide the service for which the fee or service charge is levied and the revenue sources anticipated to provide the service, including General Fund revenues

FISCAL IMPACT:

On February 15, 2005, Staff recommended instituting fee increases over a two-year period. If the City Council approves Staff’s recommendations for second year fee increases, Staff is estimating that fee revenue could increase by as much as $86,000 annually. Please note that demand for City services could potentially impact revenue estimates. If approved by the City Council, Staff will incorporate the estimated fee increases into the 2006 Five-Year Financial Model.

Respectfully submitted,

Dennis McLean
Director of Finance and Information Technology

Reviewed,

Les Evans
City Manager