REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Action on the Adoption of the FY 2024/25 Proposed 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 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. Pursuant to Government Code section 66018, notices for this public hearing were published in the Santa Clara Weekly on April 3 and April 10, 2024. Staff has also notified all interested parties that 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 FY 2024/25 Proposed Municipal Fee Schedule (“Fee Schedule”) is based on the results of a recently completed comprehensive study of the current costs of providing fee-related services prepared by ClearSource Financial Consulting. The User and Regulatory Fees Study is included as Attachment 1 to this report and Fee Schedule is included as Attachment 2.
A Study Session on the FY 2024/25 Proposed Fee Schedule was held on April 9, 2024. Responses to the City Council and public questions and feedback are provided in Attachment 3.
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
• 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
Over 1,000 individual fees were reviewed as part of the comprehensive fee study done in preparation of the FY 2024/25 Proposed Fee Schedule. As shown in the table below, the majority of the fees are unchanged or reflect cost of service increases of less than 10%. There are limited fees that are increased above 10%, decreased, restructured, new or deleted.
There are 190 fees that are recommended to increase above 10%. Of that amount, 142 are Fire Department fees that are in the final year of a phase-in approach to achieve full cost recovery, while another 25 are continuing to be phased in. This approach was approved by the City Council as part of the adoption of the FY 2022/23 Municipal Fee Schedule. The remaining 23 Fees are spread out amongst the Planning Division, Electric Utility, Finance, Public Works, and Water and Sewer Utilities Departments.
The proposed Fee Schedule also recommends the restructuring of 26 existing fees. The restructured fees reflect existing fees that have been broken out for clarity or for more specific purposes or where the calculation methodology has been changed. The majority (12) of the restructured fees are in the Parks and Recreation Department, while the remaining can be found under the Housing and Community Services Division, Planning Division, Electric Utility, Fire, Police and Public Works Departments.
There are 80 Fees that are proposed to decrease, with the majority (61) being in the Building Division, while the remaining are spread out amongst the Planning Division, Fire, Parks and Recreation, and Public Works Departments. The decreases in these fees reflect updated costs for providing services.
The proposed Fee Schedule includes 22 new fees intended to recover the cost for services for which fees are not currently assessed. Also included is the proposed deletion of 21 Fees. The majority of these fees are either no longer applicable or are now being captured through existing fees. The proposed new and deleted Fees are detailed in the tables below:
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 4 - 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 hearing on the Proposed FY 2023/24 Municipal Fee Schedule, the City Council expressed concerns about the proposed fees for sports leagues. As a result, a referral was made to have staff 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 Fee Schedule does 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.
Feedback from the April 9, 2024 Study Session
During the Study Session, the City Council and the public had questions and comments regarding the Proposed Fee Schedule, primarily focused on the Parks and Recreation Cost Recovery Policy, the youth sports fields rental fees, and senior center room and equipment rental fees. There were also questions on various topics such as the use of volunteers to offset costs, the availability of racquet court reservation information, the upfront charge for the Mills Act fee; and the funds raised by the fees.
Responses to these questions are included in Attachment 3.
Changes to the FY 2024/25 Proposed Fee Schedule from Study Session
Since the April 9, 2024 Study Session, the following changes have been incorporated into the FY 2024/25 Proposed Municipal Fee Schedule:
Community Development Department - Housing and Community Services Division
• Addition of “Per Square Foot” language to clarify Development Impact Fees units
• Addition of “Per Unit” language for new Below Market Purchase fees
Community Development Department - Planning Division
• Adding back the Development Area Plan Related to PD-MC Rezoning Fee, originally proposed to be deleted. This fee is an application fee that includes the review of submitted architectural design and site layouts to implement phases of development in properties zoned PD-MC. The current fee is $38,350 and no change to the fee amount is being recommended.
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. The anticipated revenue impacts of the proposed changes have been factored into the development of the FY 2024/25 Proposed Budget.
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
On April 3 and April 10, 2024, 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> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Approve Resolution Adopting the “City of Santa Clara 2024/25 Municipal Fee Schedule” with an effective date of July 1, 2024, which (1) sets new Fees; (2) amends existing Fees; (3) retains unchanged Fees for various City departments; and (4) deletes certain fees.
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. Responses to Questions from the April 9, 2024 Study Session
4. Parks and Recreation Cost Recovery Policy
5. Resolution Adopting the FY 2024/25 Municipal Fee Schedule