REPORT TO COUNCIL
SUBJECT
Title
Study Session on the Proposed Fiscal Year 2026/27 Municipal Fee Schedule
Report
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 ensure 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 for the Fees proposed for FY 2026/27 is scheduled for April 21, 2026. Pursuant to Government Code section 66018, the first notice for this public hearing was published in the Santa Clara Weekly on April 1, 2026, and the second notice will be published on April 8, 2026. 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 vast majority of fees presented in the Proposed FY 2026/27 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. The proposed fee ranges for Stadium Event parking at certain City facilities also include a market rate component.
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 facility rental and parking.
• 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, 63% of the proposed Fee changes reflect cost of service increases of 10% or less, with 1% of fees reflecting cost of service increases above 10%. An additional 1% of the fees incorporate increases above 15% to account for the planned phase-in of increases to reach cost recovery. Fees that are adjusted based on various price indices make up 9% of the changes and 17% of the Fees are unchanged. There are a limited number of fees that are decreased, restructured, new or deleted.
Proposed FY 2026/27 Municipal Fee Schedule
Summary of Fee Changes
Please note the Fee Schedule includes proposed updates to the Park In-Lieu fees. However, the in-lieu fees are based on the land appraisal that will be brought forward separately for City Council consideration and adoption. Additionally, the Fee Schedule only reflects CPI adjustments to certain Electric Utility fees (e.g., overhead and underground line fees and load development fees). These fees will be reviewed and updated via a separate study.
Following is an overview of the Fee Schedule:
Fees to Remain Unchanged
• Seventeen percent (17%) of Fees will remain unchanged
Fees Proposed to Decrease or Be Restructured
• Seven percent (7%) of Fees are proposed to 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 10% or Less
• Sixty-three percent (63%) of Fees are proposed to increase 10% or less
• Fee changes of less than 10% are the result of:
o A recalibration in the cost of service
Fees with Cost of Service Increases Greater than 10%
• One percent (1%) 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 Proposed Phase-In Increases Greater than 15%
• Eight Fees in the Fee Schedule are proposed to be phased-in over several year to achieve cost recovery. These fees represent one percent (1%) of the proposed changes.
Fees Proposed to be Eliminated
• 14 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 other existing fees. These changes include:
New Fees Proposed
• 12 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:
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 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 2026/27 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 2026/27 Proposed Municipal Fee Schedule