HomeMy WebLinkAbout2A - PresentationUser Fee Study
City of Palm Springs
April 2025
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What are User Fees
▪Provide private benefit with limited or no community benefit
▪State law requires that 1) individual use of the service must
be voluntary, and 2) fees must reasonably relate to the
services provided
▪Actual fee levels & cost recovery determined through City
Council fee adoption
▪Does not include development impact fees, utility rates,
taxes, etc.
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Why Update User Fees
▪Subsidies to services with private benefit impact the General
Fund
o Private & specific benefit services are subsidized by unobligated
funding sources
o Reduces ability to fund general & community benefits
▪Decreased department funding typically results in understaffing
and reduces service quality
▪Cost recovery knowledge and planning
o Provides clarity for allocation of resources
o Enables City to maximize community benefit
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User Fee Objectives & Steps
▪Determine full cost of providing services or programs
o Review fee schedules based on cost components of service
o Identify potential new fees (not currently collected)
o Reduce or remove fees
o Using fully-burdened rates, calculate full cost recovery
▪Update fees for services based on cost analysis
o Incorporate or establish cost recovery goals
✓Subsidies can allow increased access to services and facilitate
compliance
o Identify appropriate fee levels that
✓Enhance reasonability and applicability
✓Maintain consistency with local policies and objectives
✓Maintain legal compliance with state law
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Scope of the Study
▪Review and calculate cost of providing services and related
fees charged by the following departments and divisions:
o Aviation
o Building
o City Clerk
o Community TV/ IT
o Engineering
o Finance
o Fire
o Parks & Recreation
o Library
o Special Programs/
Compliance
o Planning
o Police
o Housing
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Data & City Staff Participation
▪Primary types of data used:
o Expenditure data
o Staffing structures
o Central service/Indirect overhead
o Productive/billable hours
o Time estimates to complete tasks
o City/Department input, feedback and policies
▪Staff support throughout process essential to ensure analysis
fidelity
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Cost Allocation Plan (CAP)
▪A Cost Allocation Plan ensures costs associated with Central Service
Departments are appropriately allocated to Operating Departments,
divisions and/or funds.
Central Service
Departments
City Manager
City Clerk
Finance
Fire
Police
Development
Services
Central Service departments
provide support to
operating departments
Operating Departments
provide services
directly to the public
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Cost Allocation Plan (CAP)
▪Tool that determines a fair & equitable methodology
to identify and allocate central or indirect costs to
direct cost programs.
▪Allocations reasonably represent how direct cost
programs use and benefit from indirect cost
programs.
▪Used in the formation of personnel rates, budgeting
and cost reimbursement.
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Cost Allocation Plan (CAP)
▪Indirect Cost Functions Allocated
▪City Attorney
▪City Clerk
▪City Council
▪City Manager/ Admin
▪Finance
▪Human Resources
▪IT
▪Procurement
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Summary of
Cost
Allocation
Plan (CAP)-
Full Plan
Allocated Cost Summary Fiscal Year 2024-2025
Direct Cost Base
Operating Department / Division / Fund Total Allocation
Modified Total Direct
Cost
Indirect Cost
Rate
$24,080,218 $271,641,404 9%
100: Code Compliance $145,090 $2,430,736 6%
100: Community Development $884,634 $21,793,405 4%
100: Cultural Arts $326,003 $8,482,714 4%
100: Development Services $2,878,704 $12,528,768 23%
100: Facilities Maintenance $638,450 $12,447,469 5%
100: Fire $2,913,502 $27,476,658 11%
100: Library $763,451 $3,468,129 22%
100: Office of Special Programs $701,301 $4,042,156 17%
100: Parks & Recreation $1,613,608 $9,102,791 18%
100: Police $6,592,935 $44,116,383 15%
100: Public Affairs $59,613 $1,138,796 5%
119: Small Hotel TBID Fund $18,753 $769,046 2%
120: Forfeited Assets $6,603 $169,046 4%
121: Safety Augmentation $52,794 $1,172,914 5%
124: Street Cleaning $12,693 $311,182 4%
125: Recycling $22,958 $399,587 6%
136: Emergency Response Fund $24,868 $1,022,618 2%
137: Community Develop Block Grant $19,803 $528,460 4%
138: Sustainability Fund $82,173 $661,007 12%
140: CFD Public Safety #1 Fund $29,990 $879,959 3%
149: Air Quality Management Fund $2,093 $61,929 3%
150: Public Arts Fund $57,621 $1,416,146 4%
151: Library Endowment Fund $10,353 $196,666 5%
160: Special Projects $18,874 $685,000 3%
260: Measure J Capital Projects $77,925 $750,000 10%
261: Capital Projects Fund $749,111 $30,234,860 2%
301: Debt Service Fund $4,179 $18,500 23%
328: A.D. 2015-1 $3,971 $31,388 13%
410: Airport Passenger Charges $5,188 $64,977 8%
415: Airport Fund $4,177,898 $40,083,651 10%
416: Airport Capital Projects Fund $804,522 $31,935,840 3%
420: Wastewater Treatment Plant $235,712 $7,141,597 3%
430: Golf Course Fund $118,605 $5,328,160 2%
870: Merged #1 Cap Successor $10,405 $354,445 3%
874: Housing Successor $12,351 $386,919 3%
879: Successor Agency Debt Service $3,485 $9,500 37%
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Summary Steps of the Study
Model
Development
Data
collection
Build fee
model
Overhead
and FBHR
Calculation
Cost Analysis
Staff
meetings
Update fee
schedules
Staffing and
time data
Full cost for
services
Set Cost
Recovery
Current cost
recovery
Target cost
recovery
Fee Study
Report
Create draft
report
Staff report
review
Finalize
report
Updated Fee
Adoption
Public
Hearing
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Aviation
▪Fees related to Airport Parking
▪Used a market-based approach to determine the cost of
each parking option
▪Suggested fee notes:
o An increase to 2 fees
o 0 fees would decrease
o 4 fees would remain as currently set
o 0 new fees would be added
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Building
▪Time based cost analysis
▪Full Fee Schedule restructure and simplification
▪Analysis found that some current fees are not in line with the
updated cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 13 fees
o 7 fees would decrease
o 167 fees would be removed or replaced
o 18 new fees would be added
o 2 fees would remain as currently set
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City Clerk
▪Time based cost analysis
▪Analysis found that some current fees are not in line with the
updated cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 2 fees
o 1 fee would decrease
o 1 new fee would be added
o 3 fees would remain as currently set
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Community TV/IT
▪Time based cost analysis
▪Analysis found that some current fees are not in line with the
updated cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 5 fees
o 1 fee would decrease
o 1 new fee would be added
o 18 fees would be removed
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Engineering
▪Time based cost analysis
▪Analysis found that some fees are currently not in line with
the updated full cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 22 fees
o 21 fees would decrease
o 47 fees would remain as currently set
o 5 new fees would be added
o Average change would be an increase of 4% for current fees
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Finance
▪Time based cost analysis
▪Analysis found that some fees are currently not in line
with the updated full cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 8 fees
o 2 fees would decrease
o 10 fees would remain as currently set
o 0 new fees would be added
o Average change would be an increase of 9% for current fees
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Fire
▪Time based cost analysis
▪Analysis found that many fees are currently not in line
with the updated full cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 151 fees
o 34 fees would decrease
o 5 fees would remain as currently set
o 13 new fees would be added
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Parks & Recreation
▪Cost Recovery and dynamic pricing were used to update the fees and structure, with a focus on
improving cost recovery while recognizing the public benefit of recreation programs and the
importance of keeping them affordable and competitive for bot residents and non-residents.
▪Considered Prop 26, which allows discretionary fees for government-owned facilities to reduce
costs to the public.
▪Analysis found that many fees are currently not in line with the updated full cost of providing
services
o Dynamic pricing and increased cost recovery for services and facilities recommended
▪Suggested fee notes:
o An increase to 143 fees
o 11 fees would decrease
o 4 fees would remain as currently set
o 106 new fees would be added
o Average change would be an increase of 17% for current fees
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Library
▪Time based cost analysis
▪Fee increases primarily related to room rental rates
▪Fees related books and non-resident borrows reduced or
remain the same
▪Suggested fee notes:
o An increase to 14 fees
o 3 fees would decrease
o 18 fees would remain as currently set
o 8 new fees would be added
o Average change would be an increase of 17% for current fees
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Special Programs/Compliance
▪Time based cost analysis
▪Analysis found that some fees are currently not in line
with the updated full cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 11 fees
o 25 fees would decrease
o 5 fees would remain as currently set
o 2 new fees would be added
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Planning
▪Time based cost analysis
▪Analysis found that many fees are currently not in line
with the updated full cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 85 fees
o 11 fees would decrease
o 61 fees would remain as currently set
o 15 new fees would be added
o Average fee change would be an increase of 6% for current
fees
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Police
▪Time based cost analysis
▪Analysis found that some fees are currently not in line
with the updated full cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 15 fees
o 5 fees would decrease
o 23 fees would remain as currently set
o 2 new fees would be added
o Average fee change would be an increase of 16% for current
fees
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Housing
▪Time based cost analysis
▪Analysis found that a few fees are currently not in line
with the updated full cost of providing services
o Full cost recovery for services recommended
▪Suggested fee notes:
o An increase to 1 fee
o 0 fees would decrease
o 4 fees would remain as currently set
o 1 new fee would be added
o Average fee change would be an increase of 14% for current
fees
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Annual Revenue Change
Estimate
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Summary of Policy
Considerations
▪General standard: individuals or groups who receive private
benefit from service should pay 100% of cost
▪In certain situations, subsidization is an effective public policy
tool:
o Encourage participation
o Ensure compliance when cost is prohibitive to residents
o Promote access to services
▪Recommend that City utilize compensation factor to annually
adjust fees
▪Comprehensive analysis every 5 years
Questions
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Disclosure