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Home My WebLink AboutStudy Session - Fee Study PresentationCITY OF SEAL BEACH USER AND REGULATORY FEE UPDATE PUBLIC WORKS AND COMMUNITY DEVELOPMENT TERRY MADSEN | PRINCIPAL CONSULTANT tmadsen@clearsourcefinancial.com | 831.288.0608 www.clearsourcefinancial.com WHAT IS A FEE? An amount charged for a government activity performed at the request of, or specifically for, a particular individual, business, or group… as opposed to a service performed for the community as a whole Communities primarily use tax revenues to fund services that provide general (community-wide) benefit. Examples include, -Public safety -Public works -Parks maintenance Communities use fees and charges (direct recovery) to fund services that provide direct benefit. Examples include, -Plan Review -Permitting -Inspection 2CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH WHAT ARE EXAMPLES OF FEES? Building Fees, such as construction permit processing, plan check, and inspection Current Planning Fees, such as entitlement review and review for compliance with zoning code Engineering Fees, such as engineering, encroachment permitting, and excavation review and inspection fees This update DOES NOT examine taxes, assessments, utility rates, etc. 3CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH WHY DO CITIES CHARGE FEES AND PROACTIVELY MANAGE FEES? Optimize Revenues Available to Fund City Services: Ensure user and regulatory fees are set according to the costs of service, in compliance with statutory allowance and limits Enable more direct recovery of costs incurred to serve private interests/benefit or respond to individual actions Provide opportunity for relief to General Fund resources that are often viewed more critical to services of broader public benefit, subject to City Council policy direction Enable continuity of service level expectations by improving cost recovery levels 4CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH HOW ARE FEES ESTABLISHED AND MODIFIED? City Council has Authority to Directly Approve User and Regulatory Fees and Increases to Fees: Fees proposed are not taxes, as defined by Article 13C of the California State Constitution Fees are set in accordance with parameters set by Article 13C and by Section 66014 of the California Government Code: -Costs allocated to the payer should bear a fair or reasonable relationship to the payer's burdens on or benefits received from the governmental activity -Fees should not exceed the reasonable cost of providing the service for which the fee is charged 5CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH COST OF SERVICE METHODS DERIVING THE COST OF SERVICE 7CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH Apply fully burdened hourly labor rates to time required to perform Hourly Rate for Personnel Providing Services Time Required to Perform the Service Cost of Servicex= Fully Burdened Hourly Rates: Direct and indirect labor costs Services and supplies Agency overhead Estimated or Known Times for Providing Services Maximum Fee Amount 8CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH Full Cost of Service ($)Revenue from Current Fee ($) Maximum Level of Cost Recovery = 100% Minimum Level of Cost Recovery = 0% Current Level of Cost Recovery = X% City Subsidy EVALUATING COST RECOVERY Compare full cost of service to revenues available to fund activities Set policy for targeted recovery within the spectrum EXAMPLE OF USER FEE COST RECOVERY POLICY EXAMPLE RECOVERY CATEGORIES 10CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH COST RECOVERY THRESHOLD CHARACTERISTIC OF THE SERVICE / ACTION “NONE” No Recovery of the Costs of Service • Acute interest in protecting: - Public safety - Integrity of City infrastructure, assets, and operations - Vulnerable populations • Collection of fees is not feasible or cost-effective “LOW” Up to 50% of the Full Cost of Service • The broader public benefits greatly from the individual service provided • Larger fee amounts may discourage compliance with City requirements • Market sensitivities may negatively impact demand for services deemed important to the character of the community • City policy directs an influence on fee amounts for: - Concern for low-income participation - Concern for specific sectors, such as owner-occupied residences or small business - Priority for resident participation, versus non-resident EXAMPLE RECOVERY CATEGORIES 11CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH COST RECOVERY THRESHOLD CHARACTERISTIC OF THE SERVICE / ACTION “MODERATE” Greater than 50% of the Full Cost of Service • While the individual benefits greatly from service provided, public benefit or public interest in compliance/participation is present • Factors described in lower thresholds retain some influence • Though service benefits the individual to a high degree, fee levels should be sensitive to the encouragement of current City initiatives “FULL” 100% of the Full Cost of Service • Service benefits the individual to a great degree • Service is highly regulatory • Fee amounts do not materially impact compliance or demand • Fee amounts for comparable service are in line with other regional communities • The City discourages the activity “PENALTY” Greater than Full Cost • Must be a fine/penalty for non-compliance with City code FINDINGS AND IMPACTS OF POTENTIAL ACTION COST RECOVERY PERFORMANCE 13CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH $471K in new revenues are intended to offset the costs of existing services Annual Cost of Service Annual Fee Revenue General Fund Subsidy Overall Current Cost Recovery Annual Fee Revenue New Revenue to General Fund Targeted Cost Recovery Building $1,086,000 $812,000 $274,000 75% $1,055,000 $243,000 97% Current Planning $277,000 $52,000 $225,000 19% $197,000 $145,000 71% Engineering / PW $491,000 $187,000 $304,000 38% $250,000 $63,000 51% Technology Fee $45,000 $45,000 $0 100% $45,000 $0 100% General Plan Update Fee $205,000 $66,000 $139,000 32% $84,000 $18,000 41% Training Fee $5,000 $2,000 $3,000 40% $4,000 $2,000 80% Total $2,109,000 $1,164,000 $945,000 55% $1,635,000 $471,000 78% DIRECT FEE-RELATED SERVICES PREVAILING FEES PROPOSED FEES * Amounts shown are estimates. Actual amounts will vary based on applicant volume and project types. REGIONAL FEE COMPARISON 14CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH $75 $120 $124 $150 $162 $177 $464 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 SEAL BEACH - CURRENT NEWPORT BEACH REDONDO BEACH SEAL BEACH - PROPOSED ORANGE HUNTINGTON BEACH MANHATTAN BEACH Residential HVAC Change-Out Fee * Amounts shown include permit fee and permit issuance fee REGIONAL FEE COMPARISON 15CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH $49 $100 $126 $160 $162 $220 $315 $0 $50 $100 $150 $200 $250 $300 $350 SEAL BEACH - CURRENT REDONDO BEACH NEWPORT BEACH SEAL BEACH - PROPOSED ORANGE HUNTINGTON BEACH MANHATTAN BEACH Residential Service Panel Change-Out Fee * Amounts shown include permit fee and permit issuance fee REGIONAL FEE COMPARISON 16CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH $71 $71 $73 $96 $104 $116 $283 $0 $50 $100 $150 $200 $250 $300 REDONDO BEACH HUNTINGTON BEACH SEAL BEACH - CURRENT NEWPORT BEACH ORANGE SEAL BEACH - PROPOSED MANHATTAN BEACH Water Heater Change-Out Fee * Amounts shown include permit fee and permit issuance fee REGIONAL FEE COMPARISON 17CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH $0 $100 $336 $385 $391 $416 $485 $0 $100 $200 $300 $400 $500 $600 SEAL BEACH - CURRENT MANHATTAN BEACH REDONDO BEACH SEAL BEACH - PROPOSED ORANGE HUNTINGTON BEACH NEWPORT BEACH Residential Solar Install - Roof Less than 15kW * Amounts shown include permit fee and permit issuance fee REGIONAL FEE COMPARISON 18CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH $1,100 $1,148 $1,319 $1,491 $1,545 $1,693 $2,120 $0 $500 $1,000 $1,500 $2,000 $2,500 MANHATTAN BEACH HUNTINGTON BEACH SEAL BEACH - CURRENT ORANGE NEWPORT BEACH SEAL BEACH - PROPOSED REDONDO BEACH Building Permit Fee - $50,000 Project REGIONAL FEE COMPARISON 19CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH $180 $200 $274 $340 $369 $592 $618 $791 $816 $1,000 $1,193 $1,854 $1,994 $4,808 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 SEAL BEACH - CURRENT - MINOR REDONDO BEACH NEWPORT BEACH - SEASONAL SEAL BEACH - CURRENT - MAJOR ORANGE - RECURRING NEWPORT BEACH - LESS THAN 90 DAYS SEAL BEACH - PROPOSED - MINOR ORANGE - NON-RECURRING MANHATTAN BEACH - STANDARD REDONDO BEACH - WATERSPORT INSTRUCTION & RENTAL MANHATTAN BEACH - MAJOR SEAL BEACH - PROPOSED - MAJOR NEWPORT BEACH - MORE THAN 90 DAYS HUNTINGTON BEACH Temporary Use Permit REGIONAL FEE COMPARISON 20CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH $500 $500 $1,000 $1,236 $1,648 $1,715 $2,220 $2,472 $2,926 $3,296 $3,564 $4,039 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 MANHATTAN BEACH REDONDO BEACH - NON-MFR ORANGE - DEPOSIT SEAL BEACH - PROPOSED - NON-APPL. APPEAL TO DIR. SEAL BEACH - PROPOSED - APPLICANT APPEAL TO DIR. NEWPORT BEACH HUNTINGTON BEACH - APPEAL TO CC SFR APPLICANT SEAL BEACH - PROPOSED - NON-APPL. APPEAL TO PC OR CC HUNTINGTON BEACH - APPEAL TO PC SFR APPLICANT SEAL BEACH - PROPOSED - APPLICANT APPEAL TO PC OR CC HUNTINGTON BEACH - APPEAL TO CC OTHERS HUNTINGTON BEACH - APPEAL TO PC OTHERS Appeal OVERALL FINDING AND ACTION REQUESTED To ensure safe, orderly, and aesthetically pleasing development and construction within City limits, significant services are provided by City staff and contractors: •Intake and Initial Processing and Review •Initial Meetings •Project Correspondence •Multiple Rounds of Review •Report Preparation •Decision Making, Meeting Preparation •Permit Issuance •Field Inspections •Project Close-Out and Documentation Actions 21CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH OVERALL FINDING AND ACTION REQUESTED The City may enhance cost recovery for services of individual benefit or cause: Current fees and charges for service in certain service areas can be increased and/or restructured to statutory limits or less General Fund subsidy of individually-based service can be reduced 22CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH ACTION PLAN ACTION PLAN Consultant to Work With Staff to Make Final Refinements to Cost of Service Analysis Refinements Will Incorporate General Direction or Feedback Provided by City Council at Conclusion of this Presentation The City Council may direct changes to fees at the conclusion of a Public Hearing. Requested actions: Approve Changes to User and Regulatory Fee Schedule Authorize future inflationary adjustments with direction for periodic review 24CLEARSOURCE REPORT TO THE CITY OF SEAL BEACH DISCUSSION & QUESTIONS TERRY MADSEN | PRINCIPAL CONSULTANT tmadsen@clearsourcefinancial.com | 831.288.0608 www.clearsourcefinancial.com CITY OF SEAL BEACH USER AND REGULATORY FEE UPDATE