Title
Report regarding a resolution approving proposed changes to the Master Fee Schedule for the Fiscal Year 2026-27. (Christie Donnelly, Finance Director)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council (1) hold a public hearing to receive input regarding the adoption of proposed updates to the City of South San Francisco Master Fee Schedule; and (2) at the conclusion of the public hearing, consider adopting a resolution approving updates to the City of South San Francisco Master Fee Schedule.
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BACKGROUND/DISCUSSION
Tax revenues support City services such as public safety, streets, and other infrastructures. Discretionary services that benefit a specific user group (rather than the entire community) are funded in whole, or part, by user fees. Under state law, public agencies, like the City of South San Francisco, are permitted to recover the costs associated with providing certain services considered to be a “personal choice” or “user fees.” Any amount not covered by user fees is then subsidized by General Fund tax dollars or other available sources. Such services are provided to a specific customer for their singular benefit. Some examples of those services are building permits or commercial film permit fees, which benefit the individual and not the community.
By law, most user fees may not exceed the reasonable cost of the service. Propositions 218 and 26 amended Article XIIIC of the California Constitution to require that user fees be limited to the City's reasonable cost of providing the service or benefit. The City Council can set fees by a simple majority vote. Subject to other exceptions in Article XIIIC and XIIID, a fee for service that exceeds the reasonable cost of providing the service or benefit becomes a tax, which requires a vote of the electorate. Cities perform periodic studies to assess their costs of providing services before increasing existing fees or adopting new fees. The purpose of a cost of services study is to evaluate and determine the full cost (direct and indirect) of providing a variety of city services.
Under best business practices, a user fee study should be conducted every three to five years to ensure the City’s fee structure is well aligned with the goal of cost recovery and fees being charged do not exceed the City’s cost of providing the services. The last time the City of South San Francisco underwent a comprehensive Cost Allocation Plan and User Fee study was in Fiscal Year (“FY”) 2023-24.
The Bureau of Labor Statistics calculated the change in Consumer Price Index (CPI) for All Urban Consumers for the San Francisco - Oakland - Hayward area between February 2025 and February 2026 to be 2.5%. Staff recommend that the Master Fee Schedule for FY 2026-27 be amended to reflect a 2.5% increase from prior fiscal year.
SUMMARY OF PROPOSED CHANGES
The proposed FY 2026-27 Master Fee Schedule largely reflects a 2.5% across the board increase to most fees. Some fees remain unchanged due to state mandate limits, fees set by a different entity (such as the parking commission), and some fees have been rounded down to the nearest fifty cents. The following highlights other notable changes:
Fire Department
Last year, the State and City were required to adopt new building standards that went into effect on January 1, 2026, in accordance with State Statutes. The State Fire Marshal is required to adopt new codes every three years by State Statutes. These changes are reflected in the proposed FY 2026-27 Master Fee Schedule.
Park and Recreation Department
Due to an exception within Prop 26 for charges “not imposed upon residents,” certain Recreation charges are allowed to be set based on a market rate rather than restricted to the cost-of-service limitation. As such, the Park and Recreation Department modernized its fees by implementing a series of updates. These include the addition, deletion, increase, and reduction of various fees. The Department also made administrative corrections and updated certain names to ensure consistency and clarity.
The Parks and Recreation Department presented the proposed FY 2026-27 Master Fee Schedule to the Parks and Recreation Commission on Tuesday, April 21, 2026, which the Parks and Recreation Commission approved.
Library Department
The Library Department presented the proposed FY 2026-27 Master Fee Schedule to the Library Board of Trustees on Tuesday, April 28, 2026, which the Library Board approved.
Economic and Community Development Department - Building Division
The Building Division recommends that the City Council approve a fee for commercial solar energy system permits that exceed the fee amounts established by California Government Code Section 66015. The recommended fee is based upon the costs to the City of using the services of independent contractors who are immediately available to review these complex permit applications and who have the necessary expertise and experience to expeditiously review the applications, as well as the actual costs of City staff involved in the application review. In support of the adoption of the fees, the Building Division provides substantial evidence of the reasonable cost to issue the permits, as required by Section 66015(c). The necessary findings are included in Exhibit B to the resolution.
The Economic and Community Development (ECD) Department also recommends re-introducing the “City Attorney Cost Recovery Fee” that would require actual cost reimbursement for any entitlement application or building permit. The City utilizes outside counsel through Redwood Public Law and has structured ECD Department user fees based on average time by reviewing Departments/Divisions. The City Attorney’s office reviews all entitlement applications and typically, their costs are covered by the existing fee schedule. When a project requires substantial legal review or determination after entitlements, during Building Division permit issuance, and through the course of construction, however, user fees do not sufficiently cover legal costs for the City. This fee will be introduced on a per application basis and cover actual costs incurred by the City for legal review.
RECOMMENDATION
Staff recommend that the City Council (1) hold a public hearing to receive input regarding the adoption of proposed updates to the City of South San Francisco Master Fee Schedule; and (2) at the conclusion of the public hearing, consider adopting a resolution approving updates to the City of South San Francisco Master Fee Schedule. The proposed FY 2026-27 Master Fee Schedule is Attachment 1 of this staff report.
FISCAL IMPACT
The proposed Master Fee schedule reflects a reasonable change in overall fees taking into consideration the change in Consumer Price Index.
RELATIONSHIP TO CITY COUNCIL PRIORITIES ACTION PLAN
This effort supports the City Council major focus area of “Modern and Sustainable Organization” and specifically the key strategy to ensure financial sustainability (including revenue generation).
CONCLUSION
If approved as proposed, based on the current schedule, the new Master Fee Schedule will go into effect on or around July 13, 2026.
ASSOCIATED DOCUMENTS
1. PowerPoint Presentation