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Recommendation to receive supporting documentation into the record, conclude the hearing, and adopt resolution amending the Master Fee and Charges Schedule for specified City services for the City Clerk, City Prosecutor, Community Development, Development Services, Library Services, Parks, Recreation and Marine, Police, and Public Works Departments. (Citywide)
DISCUSSION
On January 22, 2008, as part of the quarterly fee adjustment process for Fiscal Year 08 (FY 08), the City Council approved an updated Master Fee and Charges Schedule for specified City services. The basis for this schedule of fees and charges is the Fee Study, which was originally recommended by the Budget Oversight Committee and commissioned by the City Council on June 3, 2004, to complete a cost accounting of the most significant City services and their related user fees. Actual costs are updated annually to ensure full cost recovery for the City's services.
One of the findings of the Fee Study was that the City's process to offset its costs to provide fee-based services did not provide for an inflationary adjustment or other cost growth factors.
Thus, some fees remained unchanged for decades resulting in a significant unintended subsidy, which was only addressed when a fee came back before the City Council. To provide a methodology to keep pace with current costs, a mechanism to allow changes to the City's fee structure became necessary. City staff will continue to bring proposed fee adjustments on an ongoing basis to keep fees up to date. Attached are requested changes to the Master Fee and Charges Schedule for the Second Quarter of FY 08. Please see Attachment A for a List of Proposed Fee Adjustments.
Proposed changes in the Master Fee and Charges Schedule involve several factors as follows:
FY 08 Adopted Budget Implementation: On September 11, 2007, the City Council adopted the FY 08 budget including the Financial Policy on User Fees and Charges, which reads:
"The City of Long Beach is empowered to recapture, through fees, up to the full cost of providing specific services. Regular and consistent review of all fees is necessary to ensure that the costs associated with delivery of individual services have been appropriately identified, and that the City is fully recovering those costs. It is the City's policy to set user fees at full cost recovery levels, except where a greater public benefit is demonstrated to the satisfaction of the City Council, or when it is not cost effective to do so."
The FY 08 Adopted Budget continued the effort to implement the City Council policy of full cost recovery of user fee services through a gradual increase in user fee rates. This proposal for the Second Quarter of FY 08 is consistent with that effort. Fifty-five of the fee adjustments recommended are in response to this fiscal strategy.
Language Changes: One of the results of regularly scheduled opportunities for change to the master fee and charges schedules is greater attention to how the information is presented to the public. During their reviews, departments clarify wording or recategorize fees to better inform the public of the nature of their fees. Two changes in language are included in this resolution.
Service Demands: Certain new fees are being introduced to address the increased demand for City services. Charging a fee allows residents to enjoy the benefits of a service that may otherwise not be possible without sufficient revenue to offset the cost of providing the service. Changes in demand or impact may result in new fees being developing. Some services in low demand are not initially assigned a fee because of the cost of development of a billing process. As demand increases, the impact on the organization increases resulting in an improved cost/benefit ratio. In addition, services sometimes grow from a minimal impact to a larger impact resulting in the requirement to assign a cost to the service being provided. Of the fee adjustments being recommended, four are in response to increased service demands or to assist in cost recovery efforts.
Fee Deletions: Some fees have been recommended for deletion from the Master Fee and Charges Schedule. The specific reasons are addressed in Attachment A, which includes a listing of proposed fee deletions.
This letter was reviewed by Assistant City Attorney Michael J. Mais on March 25, 2008 and Budget Management Officer Victoria Bell on March 17, 2008.
TIMING CONSIDERATIONS
In order for the fee adjustments to be implemented and new revenue to be generated, the attached resolution must be adopted. Therefore, City Council action is requested on April 22, 2008 to allow for increased cost recovery at the earliest possible time.
FISCAL IMPACT
General Fund revenue changes described in Attachment A have already been accounted for in the Fiscal Year 08 budget, or are required to maintain a balanced budget for the fiscal year. The City's FY 08 General Fund revenue estimates assume natural growth of fee and charges revenues, as well as a certain level of improved cost recovery occurring annually as departments strive to meet the City Council policy for full cost recovery. The total value of the annual revenue changes included in Attachment A is approximately $904,270.
Community Development - Code Enforcement
The Code Enforcement Bureau is requesting changes to the Master Fee and Charges Schedule to better align its fees with the City Council's cost recovery directives. The fee increases are in alignment with the User Fee Study done in 2004 to recover 100 percent of full cost. Cost recovery alignment includes fees related to Contract Preparation, Incidental Enforcement Costs, Notice of Lien, Performance Inspection, and Preparation of Contract.
Based on estimated annual volume, the projected revenue increase is $3,570, which recovers the full cost.
The Inspection Warrant is a new fee based on approximately four hours of an inspector's time related to a warrant. Warrants are required for Code Enforcement abatement proceedings on private property. These hours include field inspections, affidavits, appointments with a judge, postings on property, and other administrative related work. A minimal number of warrants have been issued and are expected to increase due to the turn of the housing industry and resultant vacant buildings. It is estimated that adopting a $370 fee for warrants will result in annual revenue of $3,700.
Financial Management
The Financial Management Department is requesting changes to the Master Fee and Charges Schedule pertaining to parking citations to be more in line with the cost of providing parking control services, as well as with neighboring jurisdictions. Based on estimated annual citations, the projected revenue increase is $455,000 for the General Fund.
Fire Department
The Fire Department is requesting additions to the Master Fee and Charges Schedule pertaining to late payment penalties to be consistent with existing practice. The NonPayment of Fire Permit Fee is requested to be deleted and replaced by either Late Payment Penalty or CUPA: Late Payment Penalty. The late payment penalty fees will be a percentage of the original fee rather than a fixed amount. The fiscal impact of these fee changes is expected to be minimal, but adjusting the basis of the fee will ensure greater equity in the application of the penalty.
Department of Health and Human Services
The Tobacco Retail Permit of $442, as approved by City Council on February 19, 2008, applies to all businesses in the City selling tobacco products, with the goal of preventing illegal sales to underage youth.
The Program is an educational and enforcement program that will realize full cost recovery.
The Program provides for reports to the City Council on the reduction of illegal sales to minors. The permit fee is not a fine; however penalties will apply for noncompliance. The Program will be administered by the Environmental Health Bureau of the Department of Health and Human Services. The revenue from this program is expected to be $442,000, which will be used to fully offset the cost to operate the program.
SUGGESTED ACTION
Approve recommendation.
BODY
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LONG BEACH AMENDING THE MASTER FEE AND CHARGES SCHEDULE FOR SPECIFIED CITY SERVICES FOR THE DEPARTMENTS OF CITY CLERK, CITY PROSECUTOR, COMMUNITY DEVELOPMENT, FINANCIAL MANAGEMENT, FIRE, GAS AND OIL, HEALTH AND HUMAN SERVICES, LIBRARY SERVICES, PARKS, RECREATION AND MARINE, PLANNING AND BUILDING, POLICE, AND PUBLIC WORKS
Respectfully Submitted,
LORI ANN FARRELL
DIRECTOR OF FINANCIAL MANAGEMENT/CFO
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PATRICK H. WEST |
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CITY MANAGER |