In March 2023, the City hired Revenue and Cost Specialists, LLC (“RCS”) to prepare a cost of services study (“Study”). The study calculated the cost to the City associated with providing certain types of services to specific customers, or users, of the services. Examples of charges for services include design plan review and tree removal permits. These services have an identifiable user that receives a direct benefit from the service, and thus, the City may legally recover its cost of providing the service from the user through a fee or charge for service.
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 May 2020 and have adjusted the fees annually for inflation in accordance with City policy. In March 2023, 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 occurred in April 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 for the Community Planning and Building and Public Works Departments. Public Safety, Administration and Community Activities FY 2023-2024 fees are adjusted +4.9% in line with the City’s fiscal policy C94-01 and based upon the San Francisco-Oakland-Hayward area Consumer Price Index (CPI) for the time period from December 2021 to December 2022.
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 September 9, 2023. Since the prior fee schedules have been adjusted annually for inflation, overall the Proposed Fiscal Year 2023-2024 (“FY 23-24”) fees are fairly consistent with the current fee schedule, with a few exceptions as summarized in more detail by the functional area, below.
Detailed information regarding the fees are available within the City of Carmel-by-the-Sea Fee Study Update Report (Attachment 3). 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 for comparison.
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 23-24, there is a mix of proposed increases and decreases to planning-related fees. For FY 23-24, the Department is also proposing a new fee for Reasonable Accommodation-Staff, Mills Act Maintenance Plan Review, Mills Act 5-Year Inspection, and Mills Act 10-Year Maintenance Plan Review. The Department is also proposing removal of the temporary sign permit fee (S-048).
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. The Neighboring Jurisdictions Comparatives Table 1: Planning Fees Comparison (Attachment 4), provides a snapshot of development fees for the City and neighboring jurisdictions pertaining to our more common permits. 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 23-24 proposed fees for Tree Removal, Tree Pruning and Tree Appeals are significantly greater than the current fees charged. For FY 23-24, the Department is also proposing a new fee for Tree Evaluations.
Historically, Council has subsidized tree permitting within the City and prior proposed tree permitting fees have not been approved with the adopted Fee Schedule. The Neighboring Jurisdictions Comparatives Table 2: Tree Pruning and Removal Fees Comparison (Attachment 4) details the comparison of charges for tree activities by neighboring cities. Please note the actual process undertaken for reviewing a tree permit may be substantially different in other jurisdictions, which would contribute to the amount of the fee.