2010 user fee study results orientation 2010 user fee study results orientation presentation to the...

2010 User Fee StudyRESULTS ORIENTATION

2010 User Fee StudyRESULTS ORIENTATION

Presentation to the Coronado City Council by:

Chad Wohlford, MPPA

June 15, 2010

WOHLFORD CONSULTING

© Wohlford Consulting - 2010 2

PRESENTATION GOALSPRESENTATION GOALS

Brief Project Orientation:• Brief Methodology Overview• Discuss Fee-Setting Issues• Introduce and Explain the

Final Study Results• Answer Questions


PROJECTREMINDERS

PROJECTREMINDERS


USER FEE STUDY Project ObjectivesUSER 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


Project Study AreasDetermine the Full Cost of Services

for:

Project Study AreasDetermine the Full Cost of Services

for:•Community Development:

• Building• Planning

•Engineering• Private Projects

•Public Services• Private Projects

• Police Services• Administrative Fees• Animal Control

• Fire Services• Inspections• Lifeguard Services• Ambulance / EMS

• Recreation Services• Activities & Programs


Project Study ExclusionsNo Cost Analysis or Recommended

Fees for :

Project Study ExclusionsNo 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


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


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)


Simplified Conceptual ApproachSimplified Conceptual Approach

Service ("Fee“) / Activity

Time to Complete 1 Activity (hours)

XProductive

Hourly Rate

=

Full Cost or

Potential Unit Fee

X

Annual Volume

of Activity

=

Annual Cost or

Potential Revenue

FEE #1: 10

Intake 0.5 $ 50 $ 25 10 $ 250

Plan Check 1.5 $ 100 $ 150 10 $ 1,500

Inspection 2 $ 100 $ 200 10 $ 2,000

Filing 0.5 $ 50 $ 25 10 $ 250

S&B Total: 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


FEE SETTINGCONCEPTS

FEE SETTINGCONCEPTS


User Fee DefinitionUser 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.


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


Fees vs. TaxesFees vs. Taxes

Source of Service Funding

User Fees

User Fees

User Fees

Taxes (GF)

Taxes (GF)

Taxes (GF)

0%

100%

100%PrivateBenefit

(1)

SomePublicBenefit

(2)

SomePrivateBenefit

(3)

100%PublicBenefit

(4)

(1) Building Permits; Some Rec. Programs

(2) Youth Programs

(3) Historic Preservation

(4) Police Patrol

Examples:


FINDINGSand

RESULTS

FINDINGSand

RESULTS


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)


$ Supervision and Support

$ Capital, Growth, & Other Costs

“Full Cost” Includes:

$ Direct Salaries & Benefits

$ Services and Supplies

$ Department Administration

$ Indirect Activities

$ Inter-Department Support

$ Citywide Administration (CAP)


Sample UNIT COST Results – FIRE FEES(How to Read the Results Worksheets)

Sample UNIT COST Results – FIRE FEES(How to Read the Results Worksheets)

• Sample fees shown in order to demonstrate the results format for all fee areas (as will be included in the consultant’s report)

Fee Title

Current Fee /

DepositFull Cost per Unit

Surplus / (Subsidy) per Unit

Full Cost Recovery

Rate

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 %


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


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.


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


CDD Planning Full Cost ResultsCDD Planning Full Cost Results

• 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)

FULL COST:Annual Cost of

Fee-Related Services

CURRENT REVENUE:

Projected @ Annual

Current Fees

CURRENT SURPLUS / (SUBSIDY):

Annual Difference

COST RECOVERY

RATE: Current / Full

Cost

$ 425,000 $ 56,000 ($ 369,000) 13%


CDD Building Full Cost ResultsCDD Building Full Cost Results

• 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



CURRENT REVENUE:

Projected @ Annual

Current Fees


Annual Difference

COST RECOVERY


Cost

$ 828,000 $ 499,000 ($ 329,000) 60%


Engineering Full Cost ResultsEngineering Full Cost Results

• 100% of current fees under-recover full cost


• Standard fee for improvements is currently $46.50 for plan check and inspection

• New fees include Contract Administration on “pass-through” costs



CURRENT REVENUE:

Projected @ Annual

Current Fees


Annual Difference

COST RECOVERY


Cost

$ 106,000 $ 17,000 ($ 89,000) 16%


Public Services Full Cost ResultsPublic Services Full Cost Results

• No fees for any development-related or other services = 0% Cost Recovery

• 51% of cost is related to Stormwater plan check and inspection services




CURRENT REVENUE:

Projected @ Annual

Current Fees


Annual Difference

COST RECOVERY


Cost

$ 137,000 $ 0 ($ 137,000) 0%


Police Full Cost ResultsPolice Full Cost Results

• 98% of Police fees under-recover full cost

• 78% of Animal Services fees under-recover full cost




CURRENT REVENUE:

Projected @ Annual

Current Fees


Annual Difference

COST RECOVERY


Cost

$ 477,000 $ 73,000 ($ 404,000) 15%


Fire Full Cost ResultsFire Full Cost Results

• 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




CURRENT REVENUE:

Projected @ Annual

Current Fees


Annual Difference

COST RECOVERY


Cost

$ 1,497,000 $ 636,000 ($ 861,000) 42%


Recreation Full Cost ResultsRecreation Full Cost Results

• 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%



CURRENT REVENUE:

Projected @ Annual

Current Fees


Annual Difference

COST RECOVERY


Cost

$ 4,368,000 $ 1,294,000 ($ 3,074,000) 30%


Citywide Annual Full Cost ResultsCitywide Annual Full Cost Results

Department / Division

FULL COST:Annual Cost

of Fee-Related

Services

CURRENT REVENUE:Projected

(annual) @ Current Fees

SURPLUS / (SUBSIDY)

(Current Revenue – Full

Cost)

CURRENT COST

RECOVERY RATE

(Current / Full Cost)

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%

TOTALS: $ 7,838,000 $ 2,575,000($

5,263,000) 33%


CITYWIDERESULTS SUMMARY

• 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

• 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


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.


QUESTIONS?

Chad Wohlford, Project Manager

[email protected]

For further information, please contact:

2010 user fee study results orientation 2010 user fee study results orientation presentation to the...

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