TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: JUNE 25, 2024
Reviewed by:
City Manager: AP
SUBJECT:
Title
USER FEE RATE INCREASE OF 3.90 PERCENT BASED UPON THE CONSUMER PRICE INDEX (CPI) FROM APRIL 2023 TO APRIL 2024 TO THE CITYWIDE USER FEE SCHEDULE, EFFECTIVE JULY 1, 2024 (FUNDING SOURCE: VARIOUS FUNDS)
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SUMMARY
The City of Claremont charges fees for a large variety of services provided by all operating departments. These fees range from permit review fees charged by the Community Development Department and facility rental fees charged by the Recreation and Human Services Department to fingerprinting fees charged by the Police Department.
State law requires that fees charged by local governments for the services they provide cannot recover more than the total cost of rendering those services. As a result, periodic user fee studies are required. In 2023, the City contracted with Willdan Financial Services (Willdan) to prepare a Cost Allocation Plan and a Citywide User Fee Study. The purpose of the study was to develop an updated fee schedule to reduce the General Fund subsidy of fees and verify that the City is not charging more than the actual cost of providing services.
In June 2023, the City Council adopted a Comprehensive User Fee Schedule that allows for automatic annual cost of living increases. Resoution 2023-44 provides a mechanism to increase rates annually based upon the Consumer Price Index (CPI) for the Los Angeles-Long Beach-Anaheim region for April to April Consumer Price Index (CPI).
RECOMMENDATION
Recommended Action
Staff recommends the City Council receive and file the 2024 Citywide User Fee Schedule, effective July 1, 2024.
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ALTERNATIVES TO RECOMMENDATION
In addition to the recommendation, there are the following alternatives:
A. Request additional information from staff.
B. Reject the proposed fee changes.
C. Request changes to the proposed fee schedule.
FINANCIAL REVIEW
The proposed increases in user fees are projected to recover the updated cost of providing City services. Additional revenues that may result from the increase in user fees are difficult to predict since the demand for City services is variable.
The staff cost related to this project is estimated at $2,860, which is included in the operating budgets of each City department.
ANALYSIS
The City of Claremont charges fees for a large variety of services provided by all of the City’s operating departments. The appropriateness of these fees with regard to cost recovery needs to be reviewed periodically. City staff undertakes a new Cost Allocation Plan and Citywide User Fee Study every five years. The latest study conducted in 2023 ensures that fees charged by the City are appropriate in terms of cost recovery and with respect to any new regulations or requirements since the last fee study. While the goal of adjusting fees is 100 percent cost recovery, some fees are being recommended at less than 100 percent due to the desire to make the services more accessible to the community, and to avoid substantial increases in the costs of those services.
Staff believes that it is important to adjust fees on a regular basis to keep pace with inflation, and to avoid a situation where fees remain unchanged for several years, with large, growing General Fund subsidies for services provided. As such, on June 27, 2023 the City Council adopted a Comprehensive User Fee Schedule and allowed for automatic annual cost of living increases. Resolution 2023-44 provided a mechanism to increase rates annually based upon the Los Angeles-Long Beach-Anaheim region for April to April Consumer Price Index (CPI). Using the April CPI figure will allow staff the necessary time to implement fee adjustments effective July 1st of each year.
The 3.90 percent rate increase was applied to the majority of the departmental fees with the exceptions noted below. However, certain fees were rounded down in order to streamline the dollar amounts.
Notable exceptions by department are as follows:
Community Development
Many of the services performed by the Planning Division are charged at the actual cost, with project applicants providing a deposit against which the actual costs are charged. The costs charged against these deposits include staff time, at the fully burdened hourly rates included in Attachment B, as well as consultant time charged at actual cost. The deposits for these services remained the same in the Citywide User Fee Schedule in Attachment A, however the fully burdened hourly rates were increased by the 3.90 percent CPI rate in Attachment B.
Community Services
Sanitation and Sewer Fees reflected in the Citywide User Fee Schedule were taken separately to the City Council. The 2024 Sanitation and Sewer Fee Summary that will go into effect on July 1, 2024 was received and filed by the City Council on May 14, 2024. These fees reflect the percentage increase in the CPI from March 2023 to March 2024 of 3.0 percent.
The Proposed Citywide User Fee Schedule, incorporating the CPI increase effective July 1, 2024, is included as Attachment A to this report. Further, the Fully Burdened Hourly Rates for staff who provide services that are charged on an hourly basis are included as Attachment B.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, General Plan, and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
This item has been noticed in accordance with all applicable State and local laws, including but not limited to Government Code Sections 6062a, 66016, 66017, and 66018. The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director
Attachments:
A - Proposed Citywide User Fee Schedule
B - Fully Burdened Hourly Rates