TITLE
Recommendation to receive supporting documentation into the record, conclude the 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 Third Quarter of Fiscal Year 2012 (FY 12), which describes the proposed changes to the City's Master Fee and Charges Schedule. On April 17, 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, were 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 Third Quarter of Fiscal Year 2012.
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 five 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 July 3, 2012 and Budget and Performance Management Bureau Manager Dennis Strachota on June 27, 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 August 7, 2012 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 12 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 $199,383; the total revenue for all funds is $219,383.
Fire
Ambulance Transport and Mileage Rates
Ambulance transport and mileage rates for Advanced Life Support (ALS) and Basic Life Support (BLS) are being increased to match those of Los Angeles County. For numerous years, the City has matched the County's rates. Los Angeles County increased their rates effective July 1, 2012. The annual increase in General Fund revenue from these fee changes is estimated to be $199,383.
It is important to note, however, that ambulance transport services do not historically collect 100 percent of fees resulting in significant write-offs. The write-off is 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. For purposes of this report, the uncollectible amount is not reflected as a subsidy since Medicare and Medical rates would still cap reimbursement to the City even if rates were increased.
Parks, Recreation and Marine
Late Fees
As a result of the recent City Auditor's audit report, staff recommends approval of fee changes for the following late fees: Adult Sports Leagues, Athletic Facilities-Permits and Reservations, and Facility Rentals-Permits and Reservations. These late fees are assessed after 30 days to outstanding balances to pay for the costs associated with the administration of the collections process. Collections activities include phone, email, print, mailing, and other communications between the user and the Contracts, Sports Office, and Accounting divisions. Also, the late fees cover staff time and management review, technology, and working with the City Attorney's Office and/or the Department of Financial Management's Collections Division, if necessary. Staff recommends adding 10 percent of the total fees owed/month of non-payment up to a maximum of one hundred percent (100%) of the amount payable on the due date as a late fee.
Concession Sales
After reviewing the fee established for Concession Sales in the youth league programs, staff recommends removing "youth" from the term "youth concession sales" in order to charge this fee to both adult and youth sports leagues for concession sales, as needed. Fees for these services are established to offset administrative expenses, staffing, utilities and facility maintenance. Staff recommends revising the Concession Sales Fee to 5 percent of gross receipts.
Advance Advertisements
After reviewing the fees established for advertising in Parks, Recreation and Marine publications, staff recommends providing a "multiple insertion" discount for advertisements placed in advance. This discount will offset staff time for all the tasks to seek advertising, process accounts, prepare design and placement, and collect fees. Staff recommends adding two fees as follows:
· Adding the Multiple Insertion Discount Fee - 10 percent for two insertions paid in advance
· Adding the Multiple Insertion Discount Fee - 20 percent for three or more insertions paid in advance
The Parks, Recreation and Marine Department believes that these costs will achieve cost recovery necessary to sustain and grow these services over time.
Public Works
Parking Citation Processing Fee
The Towing & Lien Sales Division currently redirects the public to pay their outstanding parking citations at Long Beach City Hall prior to retrieving their towed vehicles. Some vehicle owners have expressed an interest in paying their unpaid parking citations directly to Towing & Lien Sales in order to expedite the return of their vehicles. The cost for this additional service has been calculated to be $10.00 and includes the staff time to process the outstanding parking citations and to offset the cost to connect Towing & Lien Sales to the various secured computer systems that are necessary to access the unpaid citation amounts and to credit the payments to the owner's account. A customer can avoid this additional fee by paying directly at City Hall. It is estimated that 2,000 customers will choose this alternative, which will result in $20,000 in additional annual revenue to the Towing Fund.
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 -- THIRD QUARTER FY12 ADJUSTMENTS
Respectfully Submitted,
JOHN GROSS
DIRECTOR OF FINANCIAL MANAGEMENT
APPROVED:
PATRICK H. WEST
CITY MANAGER