Transcript Novato City Council Presentation

2010 User Fee Study
RESULTS ORIENTATION
Presentation to the Coronado City Council by:
Chad Wohlford, MPPA
WOHLFORD CONSULTING
June 15, 2010
PRESENTATION GOALS
Brief Project Orientation:
• Brief Methodology Overview
• Discuss Fee-Setting Issues
• Introduce and Explain the
Final Study Results
• Answer Questions
© Wohlford Consulting - 2010
1
PROJECT
REMINDERS
© Wohlford Consulting - 2010
2
USER FEE STUDY
Project Objectives


Establish Objective and Transparent Fee
Information
Understand the Full Cost of Services
(Direct and Indirect)






Develop Insight and a Rational Basis for
Setting Fees
Understand Subsidies and Revenue Impacts
Understand User Fees Principles and Context
Enhance Fairness and Equity
Ensure Compliance with State Law
Simplify Fee Schedules
© Wohlford Consulting - 2010
3
Project Study Areas
Determine the Full Cost of Services for:
•Community
Development:
• Police Services
• Administrative Fees
• Animal Control
• Building
• Planning
• Fire Services
•Engineering
• Private Projects
•Public Services
• Private Projects
• Inspections
• Lifeguard Services
• Ambulance / EMS
• Recreation Services
• Activities & Programs
© Wohlford Consulting - 2010
4
Project Study Exclusions
No Cost Analysis or Recommended Fees for :
• City Clerk / Admin.
Public Information
Requests
• Market-based Services
• Rentals
• Parking Permits,
Meters, Tickets
• Fines and Penalties
• Impact Fees
• Enterprise Funds
• Utilities
• Golf
Why Excluded?
• Not cost-based services
• Tax-based or revenue
goal-oriented
• Market-based
• State-limited or directed
• Other recent studies
• Not a user fee
• Lack of consistent time,
staff, or cost data
• Cost-effectiveness
© Wohlford Consulting - 2010
5
Project Focus
• A Study of the Cost of Services of
User Fee Activities at Current or
Expected Performance Levels
• Not a Management Analysis
•
•
•
•
•
Performance or Productivity
Efficiency or Effectiveness
Service Level or Quality
Staffing or Organizational Structure
Comparison of Operations or Services
© Wohlford Consulting - 2010
6
Cost-Based Methodology Overview
• Analysis was based upon the current City
organization and business practices
• Not Based on “Tax” Concepts
• Objective Unit Cost Analysis / Build-up
• Not Goal-Oriented or Based on Revenue Needs
• Calculation Factors:
•
•
•
•
Staff Time to Complete Activities and Services
Cost Recovery Rates of Individual Staff Positions
Rational Distribution of Overhead and Support
“Full Cost” Includes Direct and Indirect (OH) Costs
• Full Cost = Potential Fee (starting point)
© Wohlford Consulting - 2010
7
Simplified Conceptual Approach
Service ("Fee“)
/ Activity
Time to
Productive
Complete
X
Hourly
1 Activity
Rate
(hours)
=
Full Cost
or
Potential
Unit Fee
FEE #1:
X
Annual
Volume
of
Activity
=
Annual
Cost or
Potential
Revenue
10
Intake
0.5
$ 50
$ 25
10
$ 250
Plan Check
1.5
$ 100
$ 150
10
$ 1,500
Inspection
2
$ 100
$ 200
10
$ 2,000
0.5
$ 50
$ 25
10
$ 250
4.5 hrs.
$89 (avg.)
$ 400
10
$ 4,000
Other Cost
$ 100
10
$ 1,000
TOTAL COST
$ 500
10
$ 5,000
Current Fee
$ 300
10
$ 3,000
SUBSIDY
$200
10
$2,000
Filing
S&B Total:
© Wohlford Consulting - 2010
8
FEE SETTING
CONCEPTS
© Wohlford Consulting - 2010
9
User Fee Definition
User Fee:
A fee or rate charged to an
individual or group that receives a
private benefit
from services provided by the City.
Not a Tax:
• The service is usually a discretionary
activity requested by the fee payer.
• If a User Fee does not cover the City’s
cost for the service, taxes (General
Fund) pay for the remainder.
© Wohlford Consulting - 2010
10
Fee Setting (Pricing) Considerations
• Fairness and Equity
• Consistency with City Public Policy
•
•
•
•
•
Cost Recovery
Subsidization
Social Impacts / Affordability
Revenue Impacts
Activity Incentives / Disincentives
• Impact on Demand (elasticity)
• Legal Compliance
• Other Factors
• Comparable Fees
• Constituencies Affected
© Wohlford Consulting - 2010
11
Fees vs. Taxes
Source of Service Funding
Examples:
100%
Taxes
(GF)
(1) Building
Permits;
Some Rec.
Programs
Taxes
(GF)
Taxes
(GF)
User
Fees
User
Fees
(2) Youth
Programs
(3) Historic
Preservation
User
Fees
(4) Police Patrol
0%
100%
Private
Benefit
(1)
Some
Public
Benefit
(2)
Some
Private
Benefit
(3)
© Wohlford Consulting - 2010
100%
Public
Benefit
(4)
12
FINDINGS
and
RESULTS
© Wohlford Consulting - 2010
13
The Meaning of “Results”
• Study “Results” will show the FULL COST
of Services – Fee and Non-fee
• Results will not be the Fees: City Council
will set the Fees
• “Recommended” fees will come later
• Some Fee recommendations will likely not
be at 100% of Full Cost
• “Subsidy” is the gap between the Fee and
the Full Cost
• Subsidies are normally covered by
General Fund Revenues (i.e., taxes)
© Wohlford Consulting - 2010
14
“Full Cost” Includes:
$ Direct Salaries & Benefits
$ Services and Supplies
$ Supervision and Support
$ Capital, Growth, & Other Costs
$ Department Administration
$ Indirect Activities
$ Inter-Department Support
$ Citywide Administration (CAP)
© Wohlford Consulting - 2010
15
Sample UNIT COST Results – FIRE FEES
(How to Read the Results Worksheets)
Current
Fee /
Deposit
Full Cost
per Unit
Surplus /
(Subsidy)
per Unit
Commercial Sprinkler Insp.
$0
$ 572
( $ 572 )
0%
Annual Multifamily (R-1)
Occupancy Inspection
$0
$ 1,210
( $ 1,210 )
0%
Chemical Fire Extinguishing
System Inspection
$0
$ 652
( $ 652 )
0%
Junior Lifeguard Program
$ 400
$ 624
( $ 224 )
64 %
Surf Awareness Program
$ 120
$ 462
( $ 342 )
26 %
Ambulance: ALS – Non-Res.
$ 683
$ 931
( $ 248 )
73 %
Ambulance: BLS – Non-Res.
$ 572
$ 829
( $ 257 )
69 %
Fee Title
•
Full Cost
Recovery
Rate
Sample fees shown in order to demonstrate the results format
for all fee areas (as will be included in the consultant’s report)
© Wohlford Consulting - 2010
16
The Nature of Revenue Results
• Revenue and Unit Fee Comparison:
• Current Fee vs. Full Cost
• Former Structure (department fees) vs. New Structure (city fees)
• Revenue results provide a common basis for comparison,
not budget numbers
• Based on consistent assumptions and/or projections of
annual activity levels for each fee
• Revenue estimates in the study may not match budgeted
or actual revenues collected
• Actual future revenue levels will change:
•
•
•
•
Fee-setting by the City Council
Activity levels (market conditions)
Change in the “mix” of services and fees
Timing of the implementation of the fees and revenue collection
© Wohlford Consulting - 2010
17
General Findings
• All Departments have a significant overall current
fee subsidy
• Coronado currently does not charge some
common fees collected by other cities, such as:
•
•
•
•
Engineering Inspections
Stormwater Plan Check and Inspections
Fire Plan Check and Inspections
Admin costs for contractor-provided services
• Billable hours (one measure of productivity) are
consistent with other studies.
• Changes to the Building Fee approach (from
valuation to cost-based) will better align fees with
effort and protect against downturns.
© Wohlford Consulting - 2010
18
General Findings (continued)
• All Staff Hourly Rates are less than full cost –
averaging under 50% cost-recovery.
• Most of the current hourly rates are significantly
lower than those from other cities’ studies.
• Calculated hourly rates are within the reasonable
range of other studies.
• Some (few) fees have a surplus, but greater
numbers and volumes of subsidized fees result
in overall subsidies.
• 87% of current fees are subsidized
© Wohlford Consulting - 2010
19
CDD Planning Full Cost Results
FULL COST:
CURRENT
REVENUE:
Annual Cost of
Fee-Related
Services
Projected
@ Annual
Current Fees
$ 425,000
$ 56,000
CURRENT
SURPLUS /
(SUBSIDY):
COST
RECOVERY
RATE:
Annual
Difference
Current / Full
Cost
($ 369,000)
13%
• 100% of current fees under-recover full cost
• Staff rates are only 49% (avg.) of full cost
• Affects deposit-based fees (CEQA, EIR, Re-zone)
• Deposit-based fee revenues = deposit
• Cost of commonly free or subsidized services
included in results (Historic Preservation - $74K)
© Wohlford Consulting - 2010
20
CDD Building Full Cost Results
FULL COST:
CURRENT
REVENUE:
Annual Cost of
Fee-Related
Services
Projected
@ Annual
Current Fees
$ 828,000
$ 499,000
CURRENT
SURPLUS /
(SUBSIDY):
COST
RECOVERY
RATE:
Annual
Difference
Current / Full
Cost
($ 329,000)
60%
• Mix of current fees that over-recover (22%)
and those that under-recover (78%) full cost
• Volumes primarily in subsidized fees, so
overall impact is subsidy / potential revenue
• Staff rates are only 42% (avg.) of full cost
• Few Building fees are commonly subsidized
© Wohlford Consulting - 2010
21
Engineering Full Cost Results
FULL COST:
CURRENT
REVENUE:
Annual Cost of
Fee-Related
Services
Projected
@ Annual
Current Fees
$ 106,000
$ 17,000
CURRENT
SURPLUS /
(SUBSIDY):
COST
RECOVERY
RATE:
Annual
Difference
Current / Full
Cost
($ 89,000)
16%
• 100% of current fees under-recover full cost
• Staff rates are only 49% (avg.) of full cost
• Standard fee for improvements is currently
$46.50 for plan check and inspection
• New fees include Contract Administration on
“pass-through” costs
© Wohlford Consulting - 2010
22
Public Services Full Cost Results
FULL COST:
CURRENT
REVENUE:
Annual Cost of
Fee-Related
Services
Projected
@ Annual
Current Fees
$ 137,000
CURRENT
SURPLUS /
(SUBSIDY):
COST
RECOVERY
RATE:
Annual
Difference
Current / Full
Cost
$ 0 ($ 137,000)
0%
• No fees for any development-related or other
services = 0% Cost Recovery
• 51% of cost is related to Stormwater plan
check and inspection services
• Staff rates are only 49% (avg.) of full cost
© Wohlford Consulting - 2010
23
Police Full Cost Results
FULL COST:
CURRENT
REVENUE:
Annual Cost of
Fee-Related
Services
Projected
@ Annual
Current Fees
$ 477,000
$ 73,000
CURRENT
SURPLUS /
(SUBSIDY):
COST
RECOVERY
RATE:
Annual
Difference
Current / Full
Cost
($ 404,000)
15%
• 98% of Police fees under-recover full cost
• 78% of Animal Services fees under-recover
full cost
• Staff rates are only 40% (avg.) of full cost
© Wohlford Consulting - 2010
24
Fire Full Cost Results
FULL COST:
CURRENT
REVENUE:
Annual Cost of
Fee-Related
Services
Projected
@ Annual
Current Fees
$ 1,497,000
$ 636,000
CURRENT
SURPLUS /
(SUBSIDY):
COST
RECOVERY
RATE:
Annual
Difference
Current / Full
Cost
($ 861,000)
42%
• 100% of Fire, EMS, and Lifeguard current fees
under-recover full cost
• No fees for Fire plan check and inspection =
0% cost recovery
• EMS costs are 38% of the total cost and 88%
of current revenue
• Staff rates are only 44% (avg.) of full cost
© Wohlford Consulting - 2010
25
Recreation Full Cost Results
FULL COST:
CURRENT
REVENUE:
Annual Cost of
Fee-Related
Services
Projected
@ Annual
Current Fees
CURRENT
SURPLUS /
(SUBSIDY):
Annual Difference
$ 4,368,000 $ 1,294,000 ($ 3,074,000)
COST
RECOVERY
RATE:
Current / Full
Cost
30%
• Cost-Recovery analysis at the program level
• Current fee levels under-recover full cost in
all divisions and all except 2 program areas:
• Park and Beach Permits (119%)
• Fitness Center (101%)
• Cost Recovery rates range from 0% to 119%
© Wohlford Consulting - 2010
26
Citywide Annual Full Cost Results
SURPLUS /
(SUBSIDY)
(Current
Revenue – Full
Cost)
Department /
Division
FULL COST:
Annual Cost
of FeeRelated
Services
CDD Building
$ 828,000
$ 499,000
($ 329,000)
60%
CDD Planning
$ 425,000
$ 56,000
($ 369,000)
13%
Engineering
$ 106,000
$ 17,000
($ 89,000)
16%
Public Serv.
$ 137,000
$0
($ 137,000)
0%
Police
$ 477,000
$ 73,000
($ 404,000)
15%
Fire
$ 1,497,000
$ 636,000
($ 861,000)
42%
Recreation
$ 4,368,000
$ 1,294,000
($ 3,074,000)
30%
$ 7,838,000
$ 2,575,000
($ 5,263,000)
33%
TOTALS:
CURRENT
REVENUE:
Projected
(annual) @
Current Fees
CURRENT
COST
RECOVERY
RATE
(Current /
Full Cost)
© Wohlford Consulting - 2010
27
• Current overall annual subsidy of
$5,263,000
• Overall Cost Recovery Rate for Fee
Services Only is 33%
• 58% of the subsidy is in Recreation
CITYWIDE
RESULTS
SUMMARY
• Development-related departments
include $924,000 of the subsidy
• Excluding Recreation: Potential
revenue increase (to Full Cost) of
$2,189,000
• Without a fee increase or
reductions in operating costs,
common taxes (General Fund) or
other funds will continue to provide
subsidies to fee payers
© Wohlford Consulting - 2010
28
Next Steps
• City Staff will recommend general fee-setting and cost
recovery goals and solicit direction from the Council.
• City Staff will provide a comparison of other cities’ fees.
• City Staff will distribute Consultant's final report and
detailed lists of cost results and findings.
• City Staff will develop “Recommended” fees for the
Council’s consideration (based on Council goals).
• City Council will set the final fee levels and establish
the implementation date.
• Departments will update fee schedules and reprogram
electronic permit systems.
• New fees will go into effect on the designated date.
• Council may set an overall cost-recovery policy to
guide future staff action.
© Wohlford Consulting - 2010
29
QUESTIONS?
For further information, please contact:
Chad Wohlford, Project Manager
[email protected]
© Wohlford Consulting - 2010
30