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Report regarding a resolution to approve proposed amendments to the Master Fee Schedule for Fiscal Year 2021-2022 (Heather Enders, Management Analyst II)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council of South San Francisco adopt a resolution to approve proposed updates to the City of South San Francisco Fiscal Year (FY) 2021-22 Master Fee Schedule.
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BACKGROUND/DISCUSSION
Under state law, public agencies are permitted to recover the costs associated with providing certain services considered to be a “personal choice” or “user fees.” All fees on the Master Fee Schedule are for services that are considered user fees.
Services provided by the City which are discretionary in nature and benefit a specific user rather than the entire community are typically funded in whole, or in part, by user fees. General Fund tax dollars then subsidize any amount not covered by user fees. Such services are provided to a specific customer for their singular benefit. Some examples of these types of services are building permits or recreation classes. By law, most user fees may not exceed the estimated reasonable cost of the service for which they are collected.
Best practices are to complete a user fee study roughly every five years. The last comprehensive user fee study adopted by Council was in FY 2016-17. On August 28, 2019, City Council passed resolution number 113-2019 approving a contract with Matrix Consulting Group to conduct a comprehensive user fee analysis. The goal of the contract was to study the actual cost of delivering fee-related City services, of which the largest component is labor costs. From there, it would allow the City to update the overall fee schedule to align with the data. However, in March 2020, South San Francisco, like so many businesses worldwide, had to adjust its business practices quickly as the pandemic gripped the country. Given the paradigm shift on City operations, as well as the number of programs that were forced to shutter, much of the assumptions related to labor costs are no longer valid. As a result, staff intends to return to Council next year to seek approval to conduct an updated user fee study that will take into account a “post-COVID” business reality.
In the interim years between comprehensive user studies, the Master Fee Schedule is typically updated annually by the Consumer Price Index (CPI). Staff did not seek an update or increase to the fees for FY 2020-21 in consideration of the deep economic impacts of the pandemic on the community. As we enter FY 2021-22, staff recommends that the City Council adjust the Master Fee Schedule across the board by up to 2%. In addition, as described further below, we are asking that Council approve a limited number of necessary changes that were identified during the prior year study. The proposed FY 2021-22 Master Fee Schedule is provided in Attachment 1.
Summary of Proposed Changes
The proposed FY 2021-22 Master Fee Schedule largely reflects a 2% across the board increase to most fees. Some fees remain the same due to state mandates and some fees have been rounded up or down to the nearest dollar. The following highlights the notable Master Fee changes:
Parks and Recreation Fees
The Parks and Recreation Commission met on June 15, 2021 and provided input on proposed changes to the Parks and Rec fees. Those recommendations are reflected in Attachment 1. Many, but not all, Parks and Recreation fees were increased by up to 2%.
Library Fees
The attached proposed Master Fee Schedule eliminates overdue fines for adult borrowers. Per an article published by the National League of Cities’ Katherine Carter (Senior Program Specialist) and Denise Belser (Program Director), “Research shows that communities of color are more likely to be impacted by unpaid library fees and are grappling with a higher percentage of suspended library cards.” Further, library late fines often disproportionately affect income insecure residents, as late fees often become insurmountable. By eliminating overdue fines, South San Francisco would be aligned to other libraries in the Peninsula Library System, including Burlingame, Redwood City, and San Mateo County, which have recently eliminated such fines.
Overdue library fees account for a very small fraction of the Library’s operating budget; money would continue to be collected for lost materials. Incentives to return materials to the library would remain in place.
The South San Francisco Library Board of Trustees met on August 25, 2020, and again on April 27, 2021, to approve and re-affirm their support of the elimination of overdue fines for adult borrowers. During the stay-at-home orders, late fees for adult borrowers were waived. Since the libraries re-opened in May 2021, overdue fees have started to be collected on late materials. Staff supports the elimination of overdue fines for adult borrowers.
(NEW) Housing Fees
The housing division is responsible for managing the City’s affordable housing program, which includes creating affordable housing units, regulating the housing program, and monitoring compliance with City regulations. The City currently does not have fees associated with housing program services. The proposed new fees (reflected in Attachment 1 as fees H1-H19) will cover staff time to manage the program related to development applications, initial sale or lease of BMR units, BMR monitoring, and real estate transactions of affordable units in the City.
(NEW) Planning Fees
PL51 is a proposed new flat fee to cover Planning staff review of Single-Family new home or remodel submittals.
PL52 is a proposed new percentage-based fee to cover Planning staff review of multifamily and commercial projects.
PL53 is a proposed new percentage-based fee for the ongoing construction coordination of complicated multifamily and commercial projects which require the use of outsourced consultants.
The Construction Coordination Committee is led by a consultant and manages all active building permits. Total cost of the consultant annually for proposed fee PL53 is approximately $100,000 and focuses on multi-family, commercial, and industrial projects. With building permit revenue annually assumed at about $3.7 million (commercial + residential) combined, 100% cost recovery of this fee would require 3% of the Building Permit Fee for a dedicated deposit account.
The amounts of the new fees do not exceed a reasonable estimate of the costs of providing the associated services.
FISCAL IMPACT
The proposed Master Fee Schedule reflects a nominal change in overall fees taking into consideration that it was not modified for CPI increases in FY 2020-21 and proposes a modest 2% CPI adjustment for the current year (FY 2021-22). For perspective, the CPI increase for All Urban Consumers in the San Francisco - Oakland - Hayward area from April 2020 to April 2021 was 3.8%.
To the extent the fees charged do not fully recover the actual cost for services means that the General Fund subsidizes the activity. Staff expects to undertake a full user fee study in calendar year 2022 that allows a comprehensive understanding of the cost recovery of the services provided by the City.
RELATIONSHIP TO STRATEGIC PLAN
As part of an ongoing strategic initiative to improve the fiscal sustainability of the City of South San Francisco, the proposed Master Fee Schedule aligns with Priority Area 3.
CONCLUSION
If approved as proposed, the increases to existing and the new fees for development-related services (planning applications and building permits) will go into effect 60 days after approval on September 13, 2021. The other fees go into effect immediately.