Background
The City provides a variety of services that benefit specific customers, such as the issuance of business licenses, planning and building permits, and tree removal permits. In accordance with State law, the City is legally allowed to charge a fee to the used of a specific service to recover the cost of providing the service. The current user fee schedule for FY 24-25 is included as Attachment 3 for reference.
To help determine the cost of providing certain services, as well as to develop alternative and more equitable ways to finance some services, the City hired Revenue and Cost Specialists, LLC to complete a cost of services study in March 2023. The proposed Fiscal Year 2025-2026 fee schedule (“FY 25-26”) is based on this study and incorporates an inflationary adjustment of 2.4 percent to all existing fees.
Executive 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. The fees will become effective 60-days after adoption of the resolution, which is July 5, 2025. Since the prior fee schedules have been annually adjusted for inflation, overall the Proposed Fiscal Year 2025-2026 fees (Attachment 2) are consistent with the current fee schedule.
The proposed fees associated with the charges for services are intended to recover as close to 100% of the City’s cost of providing the service from the user, or beneficiary, of the service, without going over. However, Council may determine that certain services have a community-wide benefit and choose to reduce fees associated with certain services. The Council may also determine that a waiver be made available if there is an inability to pay. 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 nearly full cost recovery for services.
On April 1, 2025, the City Council received a presentation on the proposed Updated Fee Schedule for Fiscal Year 2025–26. In accordance with public noticing requirements, the proposed schedule was published online and noticed in the newspaper 10 days prior to the public hearing. A second notice was published two weeks ago in preparation for the Council’s final review and consideration of adoption of the Updated Fee Schedule.
The attached schedule includes one correction from the April 1st presentation, increasing the fee to match the invoice that the City pays for that service. There are some additional fees that should be included on the master fee schedule but the City is still in the process of completing studies thereon. Those fees will be brought back for approval separately. In addition, the City is researching the possibility of implementing a fee waiver where there is an inability to pay.
A new time study for all fees will be taking place in the next fiscal year.
Recommendation
Staff recommends that the City Council adopt Resolution 2025-041 (Attachment 1) adopting the Updated Fee Schedule for FY 25-26 included as Attachment 2. If adopted, the fee schedule will go into effect on July 4, 2025, 60 days after adoption.