Loading...
HomeMy WebLinkAboutReso 2017-131RESOLUTION NO. 2017-131 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING CITY COUNCIL POLICY 159-03 (CITYWIDE COST RECOVERY POLICY) WHEREAS, it has been the general policy of the City of Chula Vista that the public at large should not subsidize services solely benefiting specific individuals or businesses through general tax revenues; and WHEREAS, City Council Policy No. 159-03 (Citywide Cost Recovery Policy), adopted by the Council via Resolution No. 2010-145, establishes target cost recovery levels for services/activities; and WHEREAS, the City Council desires to increase the target cost recovery levels for all Building and Planning Fees to full cost recovery, eliminating General fund subsidies for specific permits; and WHEREAS, the City Council further desires to increase the target cost recovery for Fire Department operational permits to full cost recovery, with the exception of Fire Company Inspection Program (FCIP) fees. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Chula Vista, that it does hereby amend City Council Policy No. 159-03 (Citywide Cost Recovery Policy) as set forth in Exhibit 1 to this Resolution, attached and incorporated by this reference. Presented by Kell . roughton, FASLA Director of Development Services Approved as to form by Gln R.C�ogins 1 Cj AAtt e \ Resolution No. 2017-131 Page No. 2 PASSED, APPROVED, and ADOPTED by the City Council of the City of Chula Vista, California, this 11th day of July 2017 by the following vote: AYES: Councilmembers: Diaz, McCann, Padilla, and Salas NAYS: Councilmembers: None ABSENT: Councilmembers: Aguilar M .I. WX • ir ATTEST: Kerry K.i elow, C, Acting City Clerk STATE OF CALIFORNIA COUNTY OF SAN DIEGO CITY OF C1 ULA VISTA I, Kerry K. Bigelow, Acting City Clerk of Chula Vista, California, do hereby certify that the foregoing Resolution No. 2017-131 was duly passed, approved, and adopted by the City Council at a regular meeting of the Chula Vista City Council held on the 11th day of July 2017. Executed this 11th day of July 2017. Kerry K.i elow, M C, Acting rty Clerk Resolution No. 2017-131 Nat- Nn ; COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: Citywide Cost Recovery Policy POLICY EFFECTIVE NUMBER DATE PAGE 159-03 06/08/2010 1 of 5 ADOPTED BY: Resolution No.: 2010-145 1.DATED: 06/08/2010 AMENDED BY: Resolution No. (date of resolution) BACKGROUND: As the City continues its efforts toward a sustainable budget that will withstand uncertain economic times in the long term, it is appropriate that cost recovery levels be established for services for which a fee is charged. The foundation of effective cost recovery is a well conceived, regularly reviewed _policy. Such a policy provides a guideline for setting fees given the full -cost of_each service, allowing optimum cost -recovery rates for certain services and alleviating unintended subsidization of these services from General Fund resources. A cost recovery policy provides guidelines for setting fees given the full cost of service. It does not bind policy makers to increasing or decreasing fees, but provides a rationale for doing so. The lower fees are set relative to full cost recovery, the more General Fund dollars are required to maintain the service. This additional support must then be weighed against the other ,needs for General Fund resources; including needs which may not have similar cost recovery options. While a primary mission of government is to satisfy community needs, many city services solely benefit specific individuals or businesses. It has been the general policy of the City Council that the public at large should not subsidize activities of such a private interest through general tax revenues. Therefore, the City has established user fees to best ensure that those who use a proprietary service pay for that service in proportion to the benefits received. With few exceptions, such as those services provided for low-income residents, fees have been set to enable the City to recover the full cost of providing those services. PURPOSE: The purpose of this Policy is to establish a citywide cost recovery policy, including: 1. Provisions for ongoing review; 2. Process for establishing cost recovery levels (including factors to be considered and general concepts); and 3. Target cost recovery levels for each program offered by the City. Resolution No. 2017-131 Page No. 4 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: Cit)-A,ide Cost Recovery Policy POLICY EFFECTIVE NUMBER DATE PAGE 159-03 06/08/2010 2 of 5 ADOPTED BY: Resolution No.: 2010-145 DATED: 06/08/2010 AMENDED BY: Resolution No. (date of resolution) POLICY: Provision for Ongoing Review Fees will -be periodically reviewed in order to keep pace with changes in the cost of living and methods or levels of service delivery. In -order to facilitate a fact -based approach to this review, a comprehensive analysis of the city's costs -and fees should be made at least every five years. In the interim, fees will be adjusted annually each October 1, by either: 1. Annual change in the City's operating budget; or 2. Annual change in the San Diego area's Consumer Price Index for all Urban Consumers All updates will be based upon the July to July change in the subject index for the prior year (or portion thereof in the instance of mid -year fee updates). Process for Establishing Cost Recovery Levels Factors to be Considered The following factors will be considered when setting cost recovery levels for user fees. 1. Community -wide versus special benefit The use of general purpose revenue is appropriate for community -wide services while user fees are appropriate for services that are of special benefit to easily identified individuals or groups. Full cost recovery is not always appropriate. 2. Service recipient versus service driver After considering community -wide versus special benefit for the service, the concept of service recipient versus service driver should also be considered. Particularly for services associated with regulated activities (development review, code enforcement), from which the community primarily benefits, cost recovery from the 'driver' of the need for the service (applicant, violator) is appropriate. 3. Consistency with City public policies and objectives City policies and Council goals focused on long term improvements to community quality of life may also impact desired fee levels as fees can be used to change community behaviors, Resolution No. 2017-131 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: Citywide Cost Recovery Policy POLICY EFFECTIVE NUTIM13ER DATE PAGE 159-03 06/08/2010 3 of 5 ADOPTED BY: Resolution No.: 2010-145 DATED: 06/08/2010 AMENDED BY: Resolution No. (date of resolution) promote certain activities, or provide funding for pursuit of specific community goals. For example, the City has historically subsidized building permits for photovoltaic systems in order to promote their use in the community. 4. Elasticity of demand Pricing_of services can significantly -impact demand. At full cost recovery; this has the specific advantage of ensuring that the City is providing services for which there is a genuine market, y and that it is not over -stimulated by artificially low prices. Conversely, high levels of cost recovery may negatively impact the delivery of services to lower income groups. This negative feature can work against public policy, especially if the services are specifically targeted to low income groups. 5. Feasibility of collection Although it may be determined that a high level of cost recovery may be appropriate for specific services, it may be impractical or too costly to establish a system to identify and charge the user. The method of assessing and collecting fees should be as simple as possible in order to reduce the administrative cost of collection. General Concepts 1. Revenues should not exceed the reasonable cost of providing the service. 2. Cost recovery goals should be based on the total cost of delivering the service, as calculated using the fully burdened hourly rates developed in the City's Cost Allocation Plan (CAP), including direct costs, departmental administration costs and organization wide supports costs such as accounting, personnel, informational technology, legal services, fleet maintenance and insurance. 3. The method of assessing and collecting fees should be as simple as possible in order to reduce the administrative cost of collection. 4. Rate structures should be sensitive to the 'market' for similar services as well as to smaller, infrequent users of the service. 5. A unified approach should be used in determining cost recovery levels for various programs based on the factors discussed above. Resolution No. 2017-131 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: Citywide Cost Recovery Policy POLICY EFFECTIVE NUMBER DATE PAGE 159-03 06/08/2010 4 of 5 ADOPTED BY: Resolution No.: 2010-145 DATED: 06/08/2010 AMENDED BY: Resolution No. (date of resolution) Determination of Cost Recovery Levels Level I: 0% - 30% Low cost recovery levels (0%-30%) are appropriate under the following circumstances: 1. There is no intended relationship between the amount paid and benefit received. Almost all `social service' programs fall into this category. 2. Collecting fees is not cost effective or will significantly impact the efficient delivery of the service. 3. There is no intent to limit the use (or entitlement to) the service. Again, most `social service' programs fit into this category as well as many public safety services. Historically, access to neighborhood and community parks would also fit into this category. 4. The service is non-recurring, generally delivered on a `peak -demand' basis, and is not readily available from a private sector source. Many public safety services also fall into this category. 5. Collecting fees would discourage compliance with regulatory requirements and adherence is primarily self -identified, and as such, failure to comply would not be readily detected by the City. Many small-scale licenses and permits fall into this category (hot water heaters, garage sale permits, etc.) 6. The public at large benefits even if they are not the direct users of the service. Level II: 30% - 70% Services with factors associated with both Level I and Level III cost recovery levels would be subsidized at a mid-level of cost recovery (30%-70%). See Level I and Level III sections of this Policy for a description of these factors. Level III: 70% - 100% Higher cost recovery levels (70%-100%) are appropriate under the following circumstances: 1. The service is similar to service provided through the private sector. 2. Other private or public sector alternatives could or do exist for the delivery of the service. 3. For equity or demand management purposes; it is intended that there be a direct relationship between the amount paid and the level and cost of the service received. 4. The use of the service is specifically discouraged. Police responses to disturbances or false alarms might fall into this category. 5. The service is regulatory in nature and voluntary compliance is not expected to be the primary method of detecting failure to meet regulatory requirements. Building permit; plan checks, and subdivision review fees for large projects would fall into this category. Resolution No. 2017-131 Page No_ 7 COUNCIL POLICY CITY OF CHULA VISTA SUBJECT: Citywide Cost Recovery Police POLICY EFFECTIVE NUMBER DATE PAGE 159-03 06/08/2010 5 of 5 ADOPTED BY: Resolution No.: 2010-145 DATED: 06/08/2010 AMENDED BY: Resolution No. (date of resolution) Tareet Cost Recovery Levels by Proaram SERVICE AREA / PROGRAM TARGET COST RECOVERY General Government Cit} Clerk Fees III (70%-100%) Information Technology Fees .:III_ (70%-100%) Finance Fees II (3)0%-70%) Special Events/Block Parties/Filming II (3)0%-70%) Public Safety Animal Control Fees I (0%- 30%) Police Department Fees III (70%-100%) Fire Department Fees; except subsidized permits l III (70%-100%) Fire Department Fees; subsidized permitsl II (3)0%-70%) Parking Fees II (30%-70%) Community Services Library Department Fees I (0%--)0%) Recreation Department Fees II (3)0%-70%) Development Services Building Fees III (70%-100%) Engineering Fees III (70%-100%) Planning Fees 111 (70%-100%) Sewer Fees Construction & Connection I11 (70%-100%) Sewer Service III (70%-100%) ' Subsidized Fire Department permits limited to Fire Company Inspection Program (FCIP).