Receive the Fiscal Year 2025-2026 Fee Schedule for Administrative Services, Community Planning and Building, Public Safety, Public Works, Community Activities and Library services.

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 user of a specific service to recover the cost of providing the service. 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 is based on this study, reflects previous direction from Council regarding subsidies of certain services like tree permits, and incorporates an inflationary adjustment of 2.4 percent to all existing fees, with the exception of fees set by the State or courts and parking violations.

For Community Activities, this fee schedule also represents a catch-up of past CPI adjustments, as the fee schedule for Community Activities has not been adjusted for a number years.  Previous adjustments have not been seen as material but the cumulative impact of increasing costs makes review and potential revision of these fees important.

Summary

The purpose of this agenda item is to provide an update regarding fees and for Council to receive and make recommendations to the proposed master fee schedule for the upcoming fiscal year. If Council approves, the fees will become effective on July 4, 2025.  A summary matrix of the current and proposed fees is included as reference Attachment 1.

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.

Consistent with financial policy C94-01, the proposed fee schedule includes an annual adjustment based upon the San Francisco-Oakland Consumer Price Index (CPI), which was calculated by the Bureau of Labor and Statistics at 2.4 percent for the year ending December 2024. The Fiscal Year 2025-2026 Proposed Budget includes a 2.4 percent increase on the revenues known as “charges for services”.

The revenue from fees allows the City to recover its costs for providing a service from the direct recipient, or user, like property, sales and use and transient occupancy taxes, are needed to help offset the cost of services. This means that the overall General Fund revenues are not subsidizing user fees, then more of the General Fund is available to fund community-wide activities that have a public benefit, like libraries, public safety, and public works.

Council adopted the Fiscal Year 2024-2025 Fee Schedule on June 4, 2024.