Adopt Resolution 2020-030 adopting a schedule of fees for Fiscal Year 2020-2021 for Administrative Services, Community Activities, Community Planning and Building, Public Safety and Public Works Services and provide direction to staff.

In August 2015, the City hired Revenue and Cost Specialists, LLC (“RCS”) to prepare a cost of services study (“Study”).  The study calculated the City’s cost of providing certain types of services to specific customers, or users, of the services.  For these services, the user is charged a fee for the service, such as the issuance of a permit or license, which benefits the user. The service may be withheld if payment is not received and thus these services may be considered as “personal choice services.”  As the service has an identifiable user and that user receives a benefit from receiving the service, the City is legally allowed to recover its cost of providing the service from the user through a fee or charge for service. Cost recovery for services allows for a more equitable financing of these services as the specific user pays for the service rather than the cost of the services being funded, or subsidized, by other general purpose revenues. 

The study proposed a recommended fee for various services based upon full cost recovery.  Staff incorporated recommendations provided by Council into the proposed fee schedule first adopted in September 2016 and have adjusted the fees annually for inflation in accordance with City policy.  In 2019, the City retained RCS to prepare an update to the original study in order to examine the relationship between the current fees being charged and the cost of providing the service, again, in accordance with City policy that stipulates fees should be reviewed at least every three years.  The update commenced in the autumn of 2019 and involved the consultant revising the City’s costs of providing services based upon staff salaries and benefits and other allowable overhead expenses and interviewing City staff regarding the processes involved in completing various activities.  The final report was completed in early March 2020 in order to align the fee schedule with the budget development process, which primarily occurs from February to June.

Summary

The purpose of this agenda item is to provide an update regarding fees and for Council to adopt the proposed master fee schedule for the upcoming fiscal year.  Upon adoption of the resolution, the fees will become effective on July 1, 2020.  Since the prior fee schedules have been adjusted annually for inflation, overall the Proposed Fiscal Year 2020-2021 (“FY 20-21”) fees are fairly consistent with the current fee schedule, with a few exceptions as summarized in more detail by the functional area below.  

The staff report references the name of a particular service and a corresponding number (S-XXX).  Detailed information regarding the fee is available within Attachment #1, City of Carmel-by-the-Sea Fee Study Update Report, by using the reference number.  The Study includes a description of the service, the staff position(s) involved in performing the service, the average processing time, cost of the service and the current and proposed fees.  A summary matrix of the current and proposed fees is also included as reference as Attachment #2.

The proposed fees associated with the charges for services are intended to recover 100% of the City’s cost of providing the service from the user, or beneficiary, of the service. However, Council may determine that certain services have a community-wide benefit and choose to reduce fees associated with certain services.  If fees are reduced to less than 100% of cost recovery, then the difference between the cost of the service and the fee charged to the user needs to be made up, or subsidized, by other General Fund revenues. This in turn means that there would be less General Fund revenue available for other community-wide services. Staff recommends that Council strive to achieve full cost recovery for all services.  

Functional Area- Community Planning and Building      

The majority of the City’s charges for services pertain to services provided by the Community Planning and Building Department. These services include such activities as design review, use permits, historical evaluations, and building plan review and inspections.  For FY 20-21, the majority of planning-related fees are proposed to decrease as the cost of providing the service is less than prior years due to changes in staffing and other organizational efforts to promote efficiencies.  The proposed fee schedule does not include any subsidy for planning services, including the processing of appeals and Mills Act contracts, which have been subsidized in the past based upon prior Council direction.  For FY 20-21, the Department is proposing a new fee for a traffic control plan review/inspection (S-070A).  In general, the FY 20-21 proposed building-related fees are consistent with the current fee schedule.    

The City of Monterey currently provides fire prevention and inspection services as part of the fire services agreement between Carmel and Monterey.  Staff recommends that the City of Carmel charge the same fees as the City of Monterey for various fire plan reviews and inspection services.  Aligning Carmel’s fees with the City of Monterey will allow for full cost recovery of these services and offset the cost of the fire service agreement.

Carmel’s costs for planning and building services are based upon the cost of City staff and other allowable expenses as well as the processes involved in completing activities, such as design review.  Attachment #3 provides a comparison of development fees for the City and neighboring jurisdictions pertaining to four scenarios.  The comparison is based upon assumptions as to which applications would be required in other agencies as the nomenclature for planning services varies among jurisdictions and do not always match. In addition, the processes undertaken by agencies may also be quite different.  With these caveats, the comparison table does provide an illustration of Carmel’s current and proposed fees in relation to the range of fees charged by other jurisdictions. 

Functional Area- Public Works

The FY 19-20 proposed fees for tree removal (S-072), tree pruning (S-072A) and tree appeals (S-072C and S-072D) are significantly greater than the current fees charged, with increases ranging from $365 to $940.  

One reason for the increased cost is that it takes more staff time to process these activities as it did in the past when the original tree evaluations were completed at no charge to the public. This may be the result of different staff performing the work and/or due to the change in processes.  For example, if in the past, an evaluation of a tree was performed by staff without charge and prior to a permit being obtained, then the amount of time needed for the review may have been reduced as the field work associated with a tree permit was already performed prior to the permit.  In addition, there is now a different configuration of staff involved in the various processes due to changes in the organization of the Department and to promote enhanced coordination between forestry and public works functions. 

A comparison of charges for tree activities by neighboring cities is included as a reference in Table 1: Tree Pruning and Removal Fees Comparison, below. However, the actual process undertaken for reviewing a tree permit may be substantially different in jurisdictions, which would contribute to the amount of the fee.

Table 1: Tree Pruning and Removal Fees Comparison

Functional Area- Public Safety

Most of the services provided by the Police Department have a community-wide benefit and are paid for by General Fund revenues such as property, hotel and sales taxes.  However, there are some services that have specific users and are provided by charging a fee. Examples of these services include animal transport, residential parking permits and vehicle verification.  

The proposed fees for the Police Department are, in general, consistent with the current fee schedule.  However, charges for a response to a false alarm are recommended to increase by $40 for the first activation.  Responding to a false alarm is a typical fee charged by local governments, and, as shown below in Table 2: Police False Alarm Fee Comparison, other Monterey Peninsula cities also charge for this service. The intent of this fee is to: (1) recover the cost of response; (2) deter repeat incidences and (3) minimize the administrative expense of tracking multiple violations.

Table 2: Police False Alarm Fee Comparison

In addition to the Police Department responding to false alarms, many cities also charge when the Fire Department responds to false alarms.  As explained earlier within the staff report, Fire services are provided through a contract with the City of Monterey. Monterey does not charge for the first false alarm, but does charge tiered amounts for each subsequent false alarm ($20, $30, $60, $100 and $500 respectively).  Currently Carmel currently does not charge for this service, and should the fee be imposed, it will require administrative coordination between the two cities for invoicing and fee collection.

Public safety includes police, fire and ambulance services.  Currently in accordance with Council direction established in 2010, any individual that receives ambulance services and lives within the zip code 93921 is billed a residential rate. Services provided outside of this zip code are billed at a non-residential rate.  For comparison, basic life support services (BLSE1) are billed at $1,246.88 for residents and $2,265.54 for non-residents while advanced life support services (ALSE1) are $1,362.52 for residents and $2,265.54 for non-residents.  In FY 18-19, there were nearly 800 ambulance runs. Of these runs, 93% were paid by Medicare, workers compensation, MediCal and insurance, which assumes that these entities were billed the residential rate if they were covering the costs of services for individuals living within the 93921 zip code.

In order to achieve greater cost recovery for calls within the City and to promote consistency in the fees charged for the same services, staff recommends that Council: (1) charge the same fees for services regardless of residency and (2) adopt the Monterey County Ambulance Rates as specified within Exhibit C to Resolution 2020-031.  Should Council support this rate adjustment, staff will coordinate with the City’s billing provider to update the ambulance billing schedule for the upcoming fiscal year.

Functional Area- Community Activities

Community Activities includes special event fees, Vista Lobos rental and the fees associated with vendors participating in the Homecrafters Fair. The Department is proposing a new fee of $740 for the upcoming fiscal year for an appeal of staff decision to the Community Activities Commission (S-097), as this is the only department with either a board or commission that does not currently have an appeal fee in place.  

The FY 20-21 proposed fee for processing a special event permit is decreasing by $115 to $620.  The current fee of $430 for a film permit is proposed to be separated into two different fees for either a still photo ($280) or a motion picture ($590) to reflect the complexity of staff time involved in these different types of filming permits.  While the proposed fees are intended to recover the City’s cost of providing the service, which is based upon the City’s staffing and other allowable overhead costs and its special event permitting processes, a comparison of other special event fees charged by neighboring Peninsula cities is included in Table 3: Special Event Fee Comparison, below for reference.

Table 3: Special Event Fees Comparison

In addition to special events that are held at the beach, in parks, or in the right-of-way, there is also a charge for parking stalls, which includes the cost of issuing a special event permit as well as a rental fee for the exclusive use of the stall as that parking space is no longer available for public use. The rental fee of $100 per day per stall is increased to $200 during peak demand associated with specific special events (Car Week and PGA Tour) and the time of year (last two weeks in December). Currently, this fee is waived for shuttle services that are provided for specific events based upon prior Council direction.  While the proposed FY 20-21 fee schedule reflects the decreased cost of the permit, it does assume that the two rental fees are still in place and continues the subsidy for shuttle services.  The FY 20-21 proposed fee schedule also includes the continuation of a 75% subsidy for non-profit organizations and schools consistent with previous Council direction.  Council has the option to either increase or decrease the current subsidy as well as make any changes to parking stall fees.

While the fee schedule is intended to recover the cost of the City providing certain services, like issuing a special event permit, there are other services the City offers, namely rental of City facilities, where the City may charge more than its costs and may assess a fee based on demand and market conditions.   In particular, the fee schedule includes the current rental cost for Vista Lobos of $25 an hour and the costs to a vendor to participate in the Homecrafters’ Fair ($25 jury fee and $205 booth rental fee).  Council has the option to adjust these rental fees based upon market conditions.

Functional Area- Administrative Services

Administrative Services includes such services as business license registration and renewal, construction parking permits and document reproduction and other services provided by the City Clerk whose fees are largely stipulated by the State.  The FY 20-21 proposed fee for processing a new fixed business license, which requires a review by the Community Planning and Building Department to ensure the business activity is consistent with zoning requirements, is proposed to decrease by $80 to $310.  The fee for an “In and About” license and a business license renewal are proposed to remain the same at $15 each.  A comparison of the business license administrative fees charged by Peninsula jurisdictions is included below for reference in Table 4: Business License Administrative Fee Comparison.  

Table 4: Business License Administrative Fee Comparison

Although the updated study did not review this fee, based upon recent Council direction, the proposed fee schedule includes a charge of $45 for home mail delivery services, which includes City administration for processing requests and invoicing ($4) and the direct cost of the courier service ($41).  The proposed fee is waived for residents that meet eligibility criteria. The fee schedule also includes the rental of a parking space at the Norton Garage and Council may increase the rental cost based upon demand and market conditions.

The FY 19-20 Adopted Budget assumed $2.5 million in revenue for charges for services.  It is anticipated that this revenue will fall short of its budget target by $500,000.  In FY 20-21, the  majority of fees charged for service are proposed to decrease as the cost of providing these services is less than in prior years due to departmental efficiencies.  However, staff is expecting that the demand for planning and building services will remain strong and that staff will be able to resume providing these services utilizing social distancing protocols.  These charges will offset other anticipated decreased demand for services in other areas such as business license administration, community activities and public safety due to the economic impacts associated with COVID 19.  At this time, staff assumes that charges for services will generate approximately $2 million in revenue in FY 20-21, although it is possible that this revenue will be significantly less depending on the magnitude of the ongoing economic impacts of COVID 19.