REPORT TO COUNCIL
SUBJECT
Title
Study Session on the Fiscal Year 2024/25 Municipal Fee Schedule
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
Many of the City of Santa Clara’s fees, rates, and charges (“Fees”) are contained in a municipal fee schedule, which is adopted by the City Council by resolution. Generally, the fee schedule is updated annually which helps ensures that the Fees comply with applicable law, including the California Constitution as well as provide transparency in the fee structure for the City’s development-related and other municipal fees.
California Constitution Article XIIIC and other applicable laws enable local agencies to set fees without voter approval; provided, among other things, the fees do not exceed the reasonable cost of service. To the extent that a fee has been set based upon a presumption of 100% cost recovery, the City cannot generally waive the fee unless it covers the cost of such waiver out of another permissible funding source such as the General Fund or as otherwise allowed under state law.
California Government Code Section 66016(a) and 66018 states that prior to imposing a new fee or increasing an existing one, a local agency shall hold at least one open and public meeting at which oral or written presentations can be made as part of a regularly scheduled meeting and notice of such hearing must be published. The public hearing is scheduled for April 23, 2024. Pursuant to Government Code section 66018, the first notice for this public hearing was published in the Santa Clara Weekly on April 3, 2024 and the second notice will be published on April 10, 2024. Staff has also notified all interested parties that have requested to be notified regarding proposed fee updates. The purpose of this study session is to inform the Council and the public regarding the proposed Fee changes, obtain input regarding the Fees, and provide all interested parties with an opportunity to request clarification or comment on any of the Fees prior to the public hearing.
The FY 2024/25 Proposed Municipal Fee Schedule (“Fee Schedule”)are based on the results of a recently completed comprehensive study of the current costs of providing fee-related services prepared by ClearSource Financial Consulting that is included as Attachment 1 to this Report to Council.
DISCUSSION
The Fee Schedule generally contains Fees for City services which include, but are not limited to:
• Planning Fees, for services such as entitlement review and review for compliance with the zoning code
• Building Fees, for services such as permitting of new construction or modifications to existing structures
• Engineering Fees, for services such as map review, encroachment permitting, and public improvement review
• Fire Fees, for services such as annual inspections and construction review to ensure compliance with the fire code
• Utility Fees, for services such as requests for sewer lateral inspections, and restoration of discontinued service
• Police Fees, for services such as vehicle impound and false alarm response
• Recreation Fees, for services such as program participation, and facility rentals
• Administrative Fees, for services such as requests for public records
The Fee Schedule includes over 1,000 individual Fees, in part, because there are numerous Fee categories to account for the varied service needs of the community. This is common among similar California municipalities.
The Fee Schedule outlines the proposed Fees by department and is included as Attachment 2. As shown in the table below, 73% of the Fees are unchanged or reflect cost of service increases of less than 10%. An additional 11% of the fee adjustments reflect the planned phase-in of increases to reach cost recovery. There are limited fees that are increased above 10%, decreased, restructured, new or deleted.
Summary of Fee Changes
Please note the Fee Schedule does not update the Park In-Lieu fees. The in-lieu fees are based on the land appraisal and will be brought forward separately for City Council consideration and adoption.
Following is an overview of the Fee Schedule:
Fees Proposed to Remain Unchanged, Decrease, or Be Restructured
• Forty-seven percent (47%) of Fees are proposed to either remain unchanged, decrease, or are being restructured (e.g., fees are being broken out for clarity/more specific purposes).
• Decreased Fees reflect adjustments to the time and/or staffing necessary to complete the work associated with the fee.
Fees with Cost of Service Increases Less than 10%
• Thirty-four percent (34%) of Fees are proposed to increase less than 10%
• Fee changes less than a 10% are the result of:
o A recalibration in the cost of service
Fees with Cost of Service Increases Greater than 10%
• Four percent (4%) of fees are proposed to increase more than 10%
• Fee changes greater than 10% are the result of:
o A recalibration in the cost of service
o Recent increases in the costs of labor and/or materials and supplies included in service Fees (e.g., increase in the cost of utility meters).
Fees with Final Phase-In Increases Less than 15%
• Effective FY 2022/23, a number of Fees in the Fee Schedule were approved to be phased-in over three fiscal years. Nine percent (9%) of Fees are proposed to increase less than 15% to reach full cost-recovery in FY 2024/25.
Fees with Final Phase-In Increases Greater than 15%
• Effective FY 2022/23, a number of Fees in the Fee Schedule were approved to be phased-in over three fiscal years. Two percent (2%) of Fees are proposed to increase greater than 15% to reach full cost-recovery in FY 2024/25.
Fees Proposed to be Eliminated
• 22 Fees are proposed to be eliminated from the Fee Schedule
• The majority of these Fees are either no longer applicable or are now being captured through existing fees. These changes include:
New Fees Proposed
• 22 new Fees are proposed
• The Fees will allow the City to recover the costs of services or materials that are being requested of staff and for which corresponding fees or rates are not contained or adequately addressed in previous fee schedules. These changes include:
City Council Referral Regarding the Impact of Cost Recovery Policy on Youth Sports Programs
As part of the adoption of the FY 2022/23 Municipal Fee Schedule, the City Council adopted a cost recovery policy for parks and recreation user fees. In doing so, the intent was to create a common understanding of how policy decisions related to community benefit tiers drive decisions related to how the City establishes user fees. (See Attachment 3 - Parks and Recreation Cost Recovery Policy, pg. 3).
The policy was a result of a comprehensive public outreach process that included:
1. A cost of service analysis
2. Presentations to three City Commissions: Parks and Recreation, Senior Advisory and Youth Commission
3. A community survey with 234 respondents
During the public comment portion of the Council discussion, representatives of local sports groups expressed concerns about the proposed fees for sports leagues. As a result, a referral was made to have staff to meet with the sports groups to further discuss the cost recovery policy and fee schedule.
On March 14, 2024, City staff met with the sports groups at a community meeting held at the Reed and Grants Sports Park. The purpose of the meeting was to provide an opportunity for the City’s consultant to review the adopted cost recovery policy, to discuss the Municipal Fee Schedule, and to provide a forum to share lessons learned since the adoption of the policy. It is important to note that the proposed FY 2024/25 budget will not include an increase in sport field user fees and this was made clear to the user groups at the beginning of the meeting.
In all, over 30 individuals participated in the meeting which was conducted in a hybrid fashion. The following is a summary of the groups who participated with the number of attendees from each group noted in parentheses:
t p the number of representatives noted eses:
1. Current Parks and Recreation Commission Member (1)
2. Former Parks and Recreation Commission Member (1)
3. Lions (3)
4. PAL (3)
5. SC Pony Baseball (1)
6. SC Residents (5)
7. SC Swim Club (2)
8. SC Youth Soccer League (7)
9. SC Unified School District (3)
10. Westside Little League (3)
11. No affiliation noted (1)
The meeting lasted approximately two hours.
While the original intent of the meeting was to discuss user fees, the meeting pivoted to a more robust discussion around processes related to field use and the need for better communication, coordination, and partnership. The meeting ended with a commitment to hold another meeting to continue the discussion around field use. Staff also made a commitment to conduct future meetings with user groups in the first quarter of the calendar year to discuss whether increases would be proposed the following fiscal year. This would start in January 2025 given that no change was being proposed for FY 2024/25. Such a forum would afford staff the opportunity to share proposed increases and provide the user groups sufficient notice to plan for future increases in the following fiscal year. It should be noted that no request was received from the groups to amend the current fee schedule.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(4) of Title 14 of the California Code of Regulations in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
It is important to note that while adjusting fees and billing rates will provide a fiscal impact in the form of additional revenue, the revenue is intended to be used to offset the costs of providing existing services that are recoverable from fees. Consequently, while fees may rise annually, typically labor costs (the primary driver of fee-related costs) also rise annually. Recalibration of these fees simply provides an offset of existing expenditures/needs rather than a source of funding for expanded service levels.
COORDINATION
This report has been coordinated with the City Attorney’s Office and the City departments with fees included in the Municipal Fee Schedule.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Review and Provide Input on the Proposed Fiscal Year 2024/25 Municipal Fee Schedule.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. User and Regulatory Fee Study
2. FY 2024/25 Proposed Municipal Fee Schedule
3. Parks and Recreation Cost Recovery Policy