TITLE
Recommendation to receive supporting documentation into the record, conclude the public hearing, and adopt resolution amending the Master Fee and Charges Schedule. (Citywide)
DISCUSSION
City Council approval is requested for the List of Proposed Fee Adjustments for the First Quarter of Fiscal Year 2013 (FY 13), which describes the proposed changes to the City's Master Fee and Charges Schedule. On September 4, 2012, the City Council approved an amended 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. The fees developed under this schedule are updated annually to encourage 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. To provide for a more effective cost recovery, per the City Council's Financial Policy on User Fees and Charges, a mechanism to allow broad-based changes to the City's fees became necessary. Hence, the Master Fee and Charges Schedule, along with quarterly fee updates, as initiated. City staff will continue to bring proposed fee adjustments on an ongoing basis to keep fees up to date. Please see Attachment A for a List of Proposed Fee Adjustments for the First Quarter of FY 13.
Proposed changes to the Master Fee and Charges Schedule involve several factors as follows:
City Council Financial Policy on User Fees and Charges - The Financial Policy states that departments are expected to recover 100 percent of their actual costs for user fees and charges unless the City Council approves a subsidy. Departments have proposed 79 changes related to keeping cost recovery efforts in line with actual costs.
Increased 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. Some services in low demand are not initially assigned a fee because of the cost of developing 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 need to assign a cost to the service being provided. Changes in the regulatory environment may also result in new fees being developed. Of the fee adjustments being recommended, 9 are in response to increased service demands or to assist in cost recovery efforts.
This matter was reviewed by Assistant City Attorney Michael J. Mais on December 21, 2012 and Budget and Performance Management Bureau Manager Dennis Strachota on December 17, 2012.
TIMING CONSIDERATIONS
In order for the fee adjustments to be implemented and new revenue to be generated, the attached Resolution must be adopted by the City Council. Therefore, City Council action is requested on February 5, 2013 to allow for increased cost recovery at the earliest possible time.
FISCAL IMPACT
Any General Fund revenue changes described in Attachment A are only estimates based on anticipated service usage. The City's FY 13 adopted General Fund revenue estimates assumed natural growth of fees and charges; therefore, the requested fee increases are required to meet current revenue commitments in the respective departments and will support each department's General Fund operations during the fiscal year. The annual General Fund revenue changes included in Attachment A are $634,709; the total revenue for all funds is $639,899. A substantial portion of the General Fund increases ($319,000) are the result of the Parks and Recreation Commission fee increases requested by the City Council in the FY 13 budget deliberations.
Development Services
Senate Bill 1222 (SB 1222), approved by the Governor on September 12, 2012, set a statewide standard for fees charged for permits to install rooftop solar energy systems. The new bill establishes a limit of $500 for residential rooftop systems up to 15 kilowatts (kW), plus $15 per kW for each kW exceeding 15 kW. The maximum fees for commercial rooftop systems are limited to $1,000 for systems up to 50 kW, with a $7 increment for each kW between 51 and 250 kW and a $5 increment for each kW over 250.
Currently, the City does not charge fees specific to rooftop solar energy systems. To comply with this new state requirement, the Development Services Department requests the approval of a series of new electrical permit fees. These fees have been set so that when combined with existing plan check and surcharge fees, the total charges will align with the caps set by SB 1222.
Financial Management
Employee W2
The increase is to recover the administrative costs associated with issuing a copy of a W2 for the current year or prior years for both current and former employees. After a review of the cost analysis of this process, it has been determined all costs are not being recovered. Effective January 2013, current employees will have the ability to print the more recent W2s via the LifeView online system at no cost; therefore, this fee is only required if an employee requests a hard copy of the original W2.
Business Licenses and Permits
Senate Bill 1186 (SB 1186) became effective on January 1, 2013, and will expire on December 31, 2018. The law mandates that any applicant or a renewal for a local business license or permit, shall pay an additional fee of one dollar ($1), which shall be collected by the city or county that issued the license or permit. The law authorizes the City to retain seventy percent (70%), and the remaining thirty percent (30%) to be remitted to the State on a quarterly basis. The goal of SB 1186 is to increase disability access, reduce compliance cost to businesses, and increase education of the Americans with Disabilities Act (ADA).
Fire
The Advanced Life Support (ALS) and Basic Life Support (BLS) Ambulance Transport rates are being increased to match those of Los Angeles County. For numerous years, the City has matched the County's rates. The annual increase in General Fund revenue from these fee changes is estimated to be $315,000.
It is important to note, however, that ambulance transport services do not historically collect 100 percent of fees due to the difference between the billed amount and capped Medicare and Medical reimbursement rates, as well as other patient factors outside the City's control, such as indigence, inability to pay, bankruptcy, death, etc.
Health & Human Services
Vehicles: Mobile Food Preparation
The Health and Human Services Department is performing fewer inspections on these vehicles. Decreasing the frequency of inspection on Mobile Food Preparation Vehicles provides a cost savings for both the department and the permit holders, while still maintaining a frequency sufficient to protect public health. The reduced inspection frequency is also consistent with our surrounding jurisdictions (Los Angeles and Orange Counties). Reduced number of inspections has resulted in a reduction of the existing fee from $975 to $650 per year.
Cottage Food Operation
Class A: This new fee is to defray clerical and Health Inspector labor to track, review, and process relevant information, and to investigate complaints. A "Cottage Food" operation is a home-based business that produces food for human consumption. This classification denotes: 1) sales directly from producer to consumer; 2) registration with the Health Department; and, 3) no inspection required.
Class B: This new fee is to defray clerical and Health Inspector labor to track, review, and process relevant information, and to investigate complaints. This classification denotes: 1) direct and indirect sales from producer to consumer; 2) registration with the Health Department; and, 3) inspection is required.
Long Beach Airport
Airline Fees
Each year, the Airport engages in a process with the airlines to develop the rates and fees charged for their landings, gate use, common use, apron parking, and terminal space rental. One of the key drivers of rates and fees is minimum revenue established by the bond covenants, which call for a minimum revenue to debt service coverage ratio of 1.5. An FY 13 mid-year adjustment is necessary due to JetBlue's under-utilization of assigned flights resulting in a decline in direct and indirect revenue. A 20 percent rate increase is proposed effective March 1, 2013, based on revised passenger enplanement projections to ensure the Airport realizes its budgeted net revenue for the remaining seven months of FY 13.
Security Access Control Media
In an effort to reduce the frequency of unaccounted for security access control media, such as identification badges, gate cards, and access keys, and the resultant costs of re-issuing identification media airport-wide, the Airport Department is increasing its various media replacement fees and adding a fee for unreturned media.
Second-floor Terminal Rent
A second floor office space fee is added to formalize its rental rate equal to that of the first floor ticket counter space.
Parks, Recreation, & Marine
Department fees established by the Parks and Recreation Commission (Commission) are intended to recover the costs associated with providing the service to individuals and organizations for activities that are consistent with the Department mission and vision. The attached list includes 42 fee adjustments proposed for FY 13, resulting in an estimated net revenue increase of approximately $319,000 to provide cost recovery for user fees consistent with Commission policy. As requested by the City Council, there are no new fees included in this request, only increases to existing fees. Staff recommends adjustments to the Youth League Participation and Light Usage fees be effective May 1, 2013 due to the registration period for youth leagues.
Public Works
Environmental Services
The adjustments in Public Works under Environmental Services fees reflect a CPI change based on the Solid Waste Collection Resolution. The cost for the Refuse Transportation Permit Fee was not part of the CPI rate increase.
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 CITY OF LONG BEACH - FIRST QUARTER FY13 ADJUSTMENTS
Respectfully Submitted,
JOHN GROSS
Director of Financial Management
APPROVED:
PATRICK H. WEST
CITY MANAGER