REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Action on the Adoption of the Proposed FY 2025/26 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 to maintain the cost-recovery levels of the various fees 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. Pursuant to Government Code section 66018, notices for this public hearing have been published in the Santa Clara Weekly on April 9 and April 16, 2025. Staff has also notified all interested parties who have requested to be notified regarding proposed fee updates. This item and staff’s recommendations are intended to be considered upon completion of the public hearing. The public hearing provides all interested parties with an opportunity to comment or request clarification regarding any of the Fees.
The City’s Municipal Fee Schedule is reviewed annually by City staff as part of the normal course of operations. Periodically, a cost of service study is performed to identify the City’s full costs of providing fee-related services. Incremental updates typically occur in the years in between comprehensive studies.
The FY 2025/26 Fee Schedule update represents an interim year update with minor, incremental changes proposed that incorporate feedback received during the prior fee update and input from departments on fee changes needed to align with services.
The fee schedule was most recently comprehensively updated for FY 2024/25. The FY 2024/25 fee schedule update was influenced by a comprehensive cost of service study completed in calendar year 2023. Results of the next comprehensive study will be incorporated into the FY 2026/27 fee schedule.
DISCUSSION
The City’s Municipal 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
• 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
• Fire Fees, for services such as annual inspections and construction review to ensure compliance with the fire code
• Recreation Fees, for services such as program participation fees, and facility rental fees
• Administrative Fees, for services such as special requests for public records
The fee schedule also includes Load Development Fees under the Electric Utility section. These fees are recommended to be increased by the standard CPI adjustment of 3.5%. Staff will evaluate these fees through a separate study.
A summary of the changes proposed in the FY 2025/26 Municipal Fee Schedule is included in the table below.
For interim years, the majority of fees are generally proposed to increase by a cost-of-living adjustment, typically calculated as the most recent annual change in the regional consumer price index (CPI) or a change in the organization’s costs. Staff recommends applying the lower of these two factors, which is a 3.5% increase tied to the regional CPI. This minor recalibration of fees is simply intended to maintain cost recovery levels consistent with the fees previously adopted by the City Council. These types of adjustments are applied to 868 fees in the fee schedule.
In addition to the general inflationary changes proposed for fees, 26 fees have recommended adjustments to bring the fee closer to cost recovery, all within the Fire Department. The majority of these fees (24) are continuing a phase-in approach to achieve full cost recovery over the span of several years. This approach was approved by the City Council as part of the adoption of the FY 2022/23 Municipal Fee Schedule and FY 2025/26 represents the final year of the phase-in. The remaining two fees reflect higher costs in providing the service.
There are also four fees that are being restructured; of that, two restructured fees are in the Community Development Planning fee section to specify different fee amounts based on the type of project. The remaining two are in the Fire Department Construction Permits section, breaking out the type of Building Plan (Fire and CUPA).
There are 73 fees that are proposed to decrease, with the majority (40) being under the Engineering fee section. This decrease reflects the fees that are updated based on the Construction Cost Index (CCI), which decreased 0.3%. The Housing fee section also saw 12 fees decrease based on the Building Cost Index (BCI), which decreased 1.1%. Additionally, 12 Parkland In-Lieu Fees will be decreasing, based on the separate calculation done by the Parks and Recreation Department that reflects the annual land valuation study. There is a separate item the Parks and Recreation Department will be bringing forward during the April 29, 2025, City Council meeting to seek approval of a resolution establishing the average per-acre land values. The remaining nine fees proposed to decrease are spread out amongst the Community Development Building and Planning Divisions, Finance Department, Police Department and Water and Sewer Utilities Department.
The proposed fee schedule includes 16 new fees intended to recover the cost for services for which fees are not currently assessed. These include expedited plan review fees for Building and Fire Construction, a Housing multi-family late fee, fees to recoup costs charged to the Planning Division by a third-party vendor, and fees related to the short- term rental program and the transportation demand management program. Also proposed are fees related to fire construction permits, a library cleaning fee, and a fee to align with a new agreement with tow operators.
Also included is the proposed deletion of 57 fees. The majority (43 fees) reflect the Silicon Valley Animal Control Authority (SVACA) fees that are included in the fee schedule. Staff recommends deletion of all SVACA fees from the City’s fee schedule as the City does not calculate, charge, or collect these fees. The City website directs residents to the SVACA website, which provides an explanation of the fees charged for various services including adoptions and vaccinations. Seven fees proposed for elimination across the Planning Division, Fire Operational Permit section, Library Department and Cemetery are no longer applicable as those programs or services have ended or are no longer being offered. There are three fees in the Planning Division and two in the Cemetery section that are duplicative of other fees already existing in the fee schedule. The remaining two fees proposed to be deleted are under the Parks and Recreation Department, where the Department is recommended to consolidate the fees into existing fees.
The unchanged fees will continue to be charged at the rate set forth in the FY 24/25 Fee Schedule adopted under Resolution 24-9316.
The proposed new and deleted fees are detailed in the tables below:
In addition to the proposed fee adjustments, a recommendation is included to allow the consolidation of fire operational permit fees for facilities with multiple permits as allowed under the California Fire Code Section 105.1.3 [“When more than one Fire Department permit is required for the same location, the fire code official may consolidate the permits into a single permit at the time of issuance…”]. This applies to a limited number of facilities that require multiple permits, such as auto repair shops. The consolidation of fees ensures the total amount charged aligns with the actual time and resources required for permit processing and inspections.
Expedited review of plans from the Building Department and Fire Department is a newly offered service. The increased fee for the expedited service is attributable primarily to the overtime costs required in order to meet the shorter timeline (such costs are generally not incurred under the standard plan review timeframe).
Lastly, a separate City Council discussion and action is scheduled at the April 29, 2025 City Council meeting for Parks and Recreation sports field use fees. A recommendation is included in this report to align to any potential action that may result from that item.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) 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. The anticipated revenue impacts of the proposed changes have been factored into the development of the FY 2025/26 Proposed Operating Budget.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
PUBLIC CONTACT
On April 9, and April 16, 2025, notices of the public hearing were published in the Santa Clara Weekly in the manner set forth in Government Code Sections 6062a and 66018. Additionally, the City notified all interested parties that had requested to be notified regarding proposed fee updates. 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>.
RECOMMENDATION
Recommendation
1. Adopt a resolution for the “City of Santa Clara 2025/26 Municipal Fee Schedule” which (a) sets new fees, rates and charges (collectively “fees”); (b) amends existing fees; and (c) deletes certain fees; for various City departments effective on July 1, 2025, all in the form and at the rates presented and attached hereto, modified as necessary to accommodate Council action on field and turf use fees (April 29, 2025, agenda report 25-377).
2. Authorize the consolidation of fire operational permit fees for facilities with multiple operational permits as allowable under the California Fire Code 105.1.3.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. FY 2025/26 Proposed Municipal Fee Schedule
2. Resolution Adopting the FY 2025/26 Municipal Fee Schedule