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HomeMy WebLinkAbout04 - Fee Schedule AdjustmentsMeeting Date: July 23, 2002 Agenda Item No. 4 CITY OF NEWPORT BEACH ADMINISTRATIVE SERVICES DEPARTMENT Resource Management • Fiscal Services • M.I.S. • Revenue • Accounting July 23, 2002 TO: MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Glen Everroad, Revenue Manager SUBJECT: Fee Schedule Adjustments RECOMMENDED ACTION: Adopt Resolution 2002- establishing the City's 2002 Fee Schedule. In 1996, the City of Newport Beach retained KPMG Peat Marwick LLP (KPMG) to conduct a cost of services study for City services requested and initiated by residents, businesses and others who most benefit from the City services. The KPMG study determined the actual cost of providing each of those services including direct labor costs, administration or "overhead" costs and the cost of materials and supplies based on actual 1994 -1995 costs. At the City Council meeting of February 10, 1997 the Council adopted Ordinance 97 -8 establishing Chapter 3.36 (COST RECOVERY FOR USER SERVICES) of the Municipal Code. The Ordinance codified the Council's decisions at that time regarding the percentage of cost to be recovered from direct user fees for the services studied. The remaining cost of those services is subsidized by tax revenues derived from the general population. At the same meeting the Council adopted Resolution 97 -15 establishing a Fee Schedule for City services. The fees in the Fee Schedule were based on the 1996 study and Chapter 3.36 of the Municipal Code. The intent was to update the Fee Schedule regularly by resolution to reflect changes in costs, and revise Chapter 3.36 of the Municipal Code whenever the City Council wished to change the percentage of cost recovery. Additionally, the Fee Schedule was intended to be a centralized location for the myriad of fees previously located in individual ordinances, resolutions and council policies. 1 During the three -year period following the 1994 -95 base year used in the cost of service study, costs changed sufficiently to warrant an adjustment to service fees. In order to keep the cost of recovery consistent with Chapter 3.36 of the Municipal Code, the City retained KPMG in March 1998 to conduct a follow up study and calculate an adjustment to service fees. KPMG only calculated an adjustment to the fees in the Fee Schedule at that time. No adjustment was made to any underlying cost allocation. The fee adjustment in 1998 (Resolution 98 -45) increased the labor portion of the cost for each service by the three -year net salary and benefit increase (6.5 %) and increased the non- labor cost of each service by the local area CPI change (4.27 %). Because costs did not change significantly during 1999, it was not until June of 2000 that staff used the KPMG fee adjustment methodology to calculate that adjustment. The fee adjustment approved by the City Council's adoption of Resolution 2000 -60 increased the labor portion of the cost for each service by the two -year net salary and benefit increase (2.53 %) and increased the non -labor cost of each service by the local area CPI change (5.10 %). The 2001 Fee Schedule (Resolution 2001 -46) increased the labor portion by 4% and the non -labor portion of fees by 3.6 %. DISCUSSION Since the 2001 fee adjustment, the City has experienced a net 5.46% increase in salaries and benefits through fiscal year 2002 -03 and a 2.68% CPI change through March 2002. Using the methodology developed by KPMG to apply these amounts to the labor and non -labor portions of City costs, staff prepared the attached proposed fee adjustment. This adjustment will bring fees in compliance with cost recovery standards established by Chapter 3.36. The Fee Schedule was distributed to City departments for review. Staff was asked to identify existing fees not previously represented in the Fee Schedule, any changes in service processes for existing fees, any new services for which fees should be established, and any fees that should be dropped from the Schedule. In addition to these changes, several departments reported anticipated changes including a review of all Planning Department fees, the addition of NPDES related fees for Building, revisions to Special Event fees by Community Services and the Utilities Department's ongoing study of water and sewer related fees. The recent increases to the City's property liability insurance premiums have also given rise to a review of related fees for possible increase in the near future. As in the 2001 adjustment, department staff also provided recommendations on rounding of some of the calculated fees in the interest of simplicity. Council Resolutions adopting fees previously found outside the Fee Schedule that have been added to the Schedule are either repealed or amended by each Council action adopting the resolution establishing the Fee Schedule. 2 At some point in the near future the City should do a detailed examination of fees. For several reasons, staff believes it would be appropriate to undertake that effort. Even though it is a somewhat costly and time - consuming endeavor the resulting revenue can recover the cost. Further, staffs growing familiarity with fees and the understanding of their importance could permit a large portion of the study to be done in- house. This would leave the City with a methodology for future evaluation of service costs. The study would also enhance staffs understanding of the cost of providing service. • By the time the study is undertaken the base year information will be over 8 years old and there have been several organizational changes in City operations since that base year. • The original study included only about half the number of fees now contained in the Fee Schedule. • It would be prudent to determine what effect the annexation of Newport Coast has had on the costs of services before the City begins to absorb too much of that potential new cost. • Regulations and court cases defining the City's ability to access revenue sources are increasing the City's focus on fees to pay for the services being provided. • Cost recovery is reduced each year on those fees for service not subjected to the cost of living adjustments since the 1996 cost of services study. RECOMMENDATION Consistent with the cost recovery standards contained in Chapter 3.36 of the Municipal Code, staff recommends another interim fee adjustment this year. Attached to the Resolution as EXHIBIT "A" is the recommended Fee Schedule. Glen Everroad Revenue Manager Attachments: Resolution EXHIBIT "A" RESOLUTION NO. 2002 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH UPDATING THE MASTER SCHEDULE OF FEES TO BE CHARGED FOR USER SERVICES WHEREAS, in 1996 the City of Newport Beach retained KPMG Peat Marwick LLP (KPMG) to conduct a cost of services study for City services requested and initiated by residents, businesses and others who are most benefited by the service; and WHEREAS, the KPMG study determined the actual cost of providing the services including direct labor costs, administration or "overhead" costs and the cost of materials and supplies based on 1994 -1995 actual costs; and WHEREAS, on February 10, 1997 the City Council of the City of Newport Beach adopted Ordinance 97 -8 establishing Chapter 3.36 (COST RECOVERY FOR USER SERVICES) of the Municipal Code; and WHEREAS, Chapter 3.36 of the Municipal Code contains cost recovery percentages for specific services contained in the 1996 study, and WHEREAS, the City Council of the City of Newport Beach adopted Resolution 2001 -46 on June 26, 2001 establishing a Fee Schedule for municipal services based on the 1996 study and Chapter 3.36 of the Municipal Code; and WHEREAS, it is the desire of the City Council to maintain the City's Fee Schedule in order that it accurately reflect the current services provided by departments and the fees established for user services should reflect the approximate costs of providing the services. NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The schedule of fees for service attached to this Resolution as EXHIBIT "A" is hereby established. Section 2: Resolutions number 2001 -46 and 2001 -23 are hereby rescinded. Section 3: This Resolution shall take effect July 24, 2002. '. -I Passed and adopted by the City Council of the City of Newport Beach at the regular meeting held on the 23rd day of July, 2002. Mayor ATTEST: CITY CLERK a 8 0 k m 9 e d a � m Z d W �s N V G N N � s��ssssss = - - OR ♦ 4 ♦ L� N L y ti O O o 'o_ nxi rL rL a a a a a z z o o 0 0 3 .3 t4 U U $ a a i L1 l! a ° Ll L) U p p jU F 3 � @ `° y q F V V u� E fL O go All in sza, c u ii � m e r�nxs< E a N O N O Ste! 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