REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Gilbert Garcia, Chief Financial Officer
Subject:
title
Adopted Resolution No. 2018-29, a Resolution of the City Council of the City of Huntington Beach Amending Resolution No. 2016-59, Establishing the Consolidated Comprehensive Citywide Master Fee and Charge Schedule (Supplemental Fee Resolution No. 5) - Continued from May 21, 2018 with Public Hearing Open
body
Statement of Issue:
A best practice in government finance is for cities to update their user fees and charges on a regular basis. The last comprehensive User Fee Study was completed by the City in 2016. Adjustments to the Citywide Master Fee and Charges Schedule are recommended for approval based on a review performed by City Staff and the Finance Commission.
Financial Impact:
Citywide user fees and charges currently generate approximately $19.5 million in annual All Funds revenue with $18.3 million in the General Fund. In the Adopted General Fund Budget of $224 million for FY 2017/18, this represents approximately eight percent of total General Fund revenue. The monies generated by City-wide user fees and charges are used to support many of the services funded through the budget, including public safety which represents 55 cents of every dollar spent in the General Fund. If adopted as proposed, the updated Schedule may generate up to $88,000 in additional revenue in the Fourth of July Fund (Fund 204) in the next fiscal year to help ensure a balanced budget for the event. The FY 2018/19 Proposed Budget includes the anticipated revenues in the Fourth of July Fund. There are no anticipated changes to General Fund revenues.
Recommended Action:
recommendation
A) Conduct a public hearing regarding the Master Fee and Charges Schedule Adjustments; and,
B) Adopt Resolution No. 2018-29, “A Resolution of the City Council of the City of Huntington Beach Amending Resolution No. 2016-59, Establishing the Consolidated Comprehensive Citywide Master Fee and Charges Schedule (Supplemental Fee Resolution No. 5)”
end
Alternative Action(s):
Amend the Master Fee and Charges Schedule and adopt as revised, within legal constraints.
Analysis:
Local government operations are primarily funded from taxes, users fees and charges, fines, and grants. The City of Huntington Beach charges fees for providing various services and programs to residents, businesses operating in the City, and visitors. These fees include providing cultural and recreational activities, issuing building permits, activating residential water and sewer accounts, conducting inspections of commercial buildings to ensure fire safety and compliance with local and State building codes and regulations, and many other services. In some cases, fees are charged at full-cost recovery for providing services. In other cases, fee recovery is less than 100 percent, which can be due either to market conditions, government mandated caps or the recognized benefit of subsidizing certain programs to the community.
As a general rule, the City may not recover from service users more than the cost incurred to provide the service pursuant to State law. Revenue received from fees is deposited into the applicable funds including: the General Fund, Water Fund, CUPA, and other Funds of the City.
In order to establish fees on the basis of full-cost recovery, it is necessary to first determine the cost of services. To ensure appropriate fee amounts are being assessed, the City employed the assistance of a professional fee study and cost allocation plan consultant, NBS. Based on the results of that study, the City Council reviewed and approved adjustments to multiple fees and created a Consolidated Master Fee and Charges Schedule on November 7, 2016.
Finance Commission
As part of the City Council approval of the Citywide Master Fee and Charges Schedule, the Finance Commission was asked to review the proposed changes to coincide with the annual budget development process. At the regularly scheduled meeting of the Finance Commission held on April 25, 2018, proposed adjustments to the Master Fee and Charges Schedule were reviewed and discussed. The Finance Commission recommends approving Resolution No. 2018-29, a Resolution of the City Council of the City of Huntington Beach Amending Resolution No. 2016-59, Establishing the Consolidated Comprehensive Citywide Master Fee and Charge Schedule (Supplemental Fee Resolution No. 5) excluding the language “and, to add a new fee for California Fire Code (CFC) Maintenance Testing and Inspection Electronic Report submittal.” Finance Commission recommends approving all adjustments and footnotes on Exhibit A except for the addition of the California Fire Code (CFC) maintenance Testing and Inspection Electronic Report submittal fee (F-261).
Community Services Department Fourth of July Changes
The recommended rates referenced in Exhibit A are administrative in nature and as such do not represent increased rates, but rather institutionalize the rates that were previously adopted by the City Council in 2016 and 2017 through Council Resolutions 2016-31 and 2017-28.
The rates were implemented in order to temporarily raise parking rates on the two days before the Fourth of July Holiday itself (July 2nd and July 3rd) in the attended south beach lots and at the Main Promenade Parking Structure.
Staff is now recommending that previously adopted rates become a permanent part of the Master Fee and Charges Schedule. Since the Fourth of July falls on a different day of the week each year, the recommendation provides for increased rates on the Fourth of July itself, as well as for each of two additional days immediately preceding and/or following the Fourth of July as selected by the Director of Community Services. The updated schedule is anticipated to generate amounts similar to prior years, approximately $88,000 over a three-day period.
Fire Department False Alarm/Non-Emergency Calls Billing and Electronic Inspection Report Fee
Fire Department false alarm billing rates will not change. The recommended change to the fee schedule includes expanding the false alarms to include non-emergency service calls, and adding a footnote to explain the circumstances under which billing will occur.
The Department is also recommending to add a new fee for a vendor service that proactively manages submissions of third party testing results for sprinkler, fire alarm, restaurant hood and other protection systems in a cloud-based environment.
Current Fire Department staffing and data systems are challenged to keep up with the large number of systems and reports, which are generally mailed or faxed. The inefficiencies in the current process appear to cause a portion of building owners to wait to receive violations before maintaining their systems. A key fire prevention goal is to reduce risk and promote compliance in an efficient and cost-effective manner. The current system does not adequately accomplish that goal. Fire department follow-up on inspection, testing, and maintenance (ITM) reports is difficult given current resources. The solution is to either (1) utilize outside contractors that perform the service; or (2) invest in in-house staffing. Staff recommends to utilize vendors, such as Compliance Engine, to provide both risk reduction and maximum efficiency for a small fee of $12.
The fee will be paid by the business requiring inspection directly to the vendor. The vendor will maintain the inspection and test result documentation and play an active role in obtaining missing or late reports. This arrangement is common with other municipal agencies, such as the cities of Anaheim, Long Beach, Pasadena, and Beverly Hills. These updates to the Fire Department fees will not generate any additional revenues to the City.
Library Department Charges
Charges for the rental of the Theater and meeting room spaces at the Central Library are not limited to the cost of service, but rather are set at the discretion of the City. The Central Library was expanded in 1994, to provide an additional venue for cultural and educational programming in the community. The practice of supporting cultural and educational programs allows for the continued provision of affordable cultural services to the residents of Huntington Beach, while maintaining consistency with current market rates for similar services in neighboring cities. Charges for all the meeting rooms and Theater are being rounded up or down, to make costs more consistent with other services, and to enhance customer service with more predictable costs for events and activities. The Theater rates are seeing a slight increase, due to rounding up the rates, while reducing the number of different rates overall. The larger meeting spaces, like the C/D Rooms are seeing a slight increase due to popularity and rounding of the dollar amounts for simplification. The increases are minimal and should have limited impact on potential clients. The City does not anticipate any net changes to revenues due to these updates to library charges.
Conclusion
The fee study conducted in 2016 allows the City to capture and calculate cost information needed to adjust fees and to determine the full cost of providing certain services. Overall, the recommended changes on Exhibit A are anticipated to increase revenues by $88,000 in the Fourth of July Fund this next fiscal year should the recommended fees and charges be adopted by the City Council. There are no anticipated changes to General Fund revenues.
With implementation of the annual review of the Citywide Master Fee and Charges Schedule during the annual budget making process, all fees at less than 100 percent cost recovery can be revised to generate additional revenue if needed, and charges can be evaluated to ensure alignment with market conditions. A Master Schedule also helps to promote the annual review process due to the simplicity of the format and the ease of reviewing one Master Schedule and one Resolution (versus numerous schedules and resolutions) further promoting best practices and providing the public greater transparency into the fee setting process.
If approved by the City Council, adjustments to the Citywide Master Fee and Charges Schedule will become effective after City Council adoption, or July 1, 2018.
Environmental Status:
Not applicable
Strategic Plan Goal:
Improve quality of life
Enhance and Maintain Infrastructure
Strengthen Economic and Financial Sustainability
Enhance and Maintain Public Safety
Enhance and Maintain City Services Delivery
Attachment(s):
1. Resolution No. 2018-29, a Resolution of the City Council of the City of Huntington Beach Amending Resolution No. 2016-59, Establishing the Consolidated Comprehensive Citywide Master Fee and Charges Schedule (Supplemental Fee Resolution No. 5).
2. Public Hearing Notice.
3. Master Fee and Charge Schedule Adjustments Presentation