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HomeMy WebLinkAbout06 - Fee Schedule AdjustmentsAgenda Item No. 6 CITY OF NEWPORT BEACH ADMINISTRATIVE SERVICES DEPARTMENT Resource Management • Human Resources • Risk Management • Fiscal Services • M.I.S. • Revenue • Accounting June 27, 2000 TO: MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Glen Everroad, Revenue Manager SUBJECT: FEE SCHEDULE ADJUSTMENTS BACKGROUND: In 1996, the City of Newport Beach retained KPMG Peat Marwick LLP (KPMG) to conduct a cost of services study for City services requested and initiated by residents, businesses and others who most benefit from the City service. The KPMG study determined the actual cost of providing the services, including direct labor costs, administration or "overhead" costs and the cost of materials and supplies based on 1994 -1995 actual costs for those City fees for service. At the City Council meeting of February 101h, 1997 the Council adopted Ordinance 97 -8 establishing Chapter 3.36 (COST RECOVERY FOR USER SERVICES) of the Municipal Code. The Ordinance codified the Council's decision regarding the percentage of the cost of various services which should be recovered from direct user fees. The remaining cost of these services is therefore subsidized by tax revenues derived from the general population. At the same meeting the Council adopted Resolution 97 -15 establishing a Fee Schedule for City services. The fees in the Fee Schedule were based on the 1996 study and Chapter 3.36 of the Municipal Code. The intent was to update the Fee Schedule regularly by resolution to reflect changes in costs, and revise Chapter 3.36 of the Municipal Code whenever the City Council wished to change the percentage of cost recovery. Additionally, the fee schedule has provided a centralized location for the myriad of fees previously located in individual ordinances and resolutions. During the three -year period following 1994 -95 many costs changed. In order to keep the fees consistent with Chapter 3.36 of the Municipal Code, the City retained KPMG in March 1998 to conduct a follow up study and calculate the increase in the cost of service. KPMG only calculated an adjustment to the actual costs at that time. No adjustment was made to the underlying allocation. The 1998 fee adjustment increased the labor portion of the cost for each service by the salary and benefit increase (6.5 %) and the non -labor cost portion of each fee by the local area CPI change (4.27 %). On June 22, 1998 the City Council adopted Resolution 98 -45 approving the fee adjustment. Fee Schedule Adjustments Page Two DISCUSSION: At some point, the City should probably do a detailed examination of fees by replicating the KPMG study, or something along those lines. For three reasons, staff believes the appropriate time to undertake that effort would be in two to three years. 1. It is a costly and time consuming endeavor involving a large number of employees in every department, and it has not been that long since the original study was completed. 2. Although there have been some organizational changes, these have not generally had that great of an impact on the costs of service upon which the fees are ultimately based. To the extent that some individual costs have changed (other than the generic changes discussed below), staff has made an effort to accurately quantify those changes and capture them as part of the interim adjustments. 3. With the potential annexations and other significant developments on the near term horizon, it would be best to postpone a new study until these matters have been consummated. RECOMMENDATION: Along the lines of what was done the last time these fees were adjusted, staff recommends another interim fee adjustment this year. Since the 1998 fee adjustment, the City has experienced a net 2.53 percent increase in salaries and benefits through fiscal year 2000 -01 and a 5.1 percent CPI change through April 2000. Using the methodology developed by KPMG, staff applied the 2.53 percent increase to that portion of the fees that relate to salary and benefit expenses and the 5.1 percent increase to that portion of the fees that relate to the maintenance and operation expenses, and prepared adjustments to the fee schedule by these amounts. Attached to the resolution as EXHIBIT "A" is the new recommended fee schedule. This schedule was distributed to the appropriate City departments for review. Staff was asked to identify existing fees not previously represented in this fee schedule, any changes in service for existing fees, any new services for which fees should be established, and any fees that should be dropped from the schedule. As in the 1998 adjustments, staff provided recommendations on minor rounding of some of the calculated fees in the interest of simplicity. In some cases, fees were not increased in 1998 and are being increased for the first time since the 1996 study. The resolutions for those fees previously found outside this fee schedule, that have been added to this schedule, are either repealed or amended by Council's action to adopt the proposed resolution establishing this fee schedule. Attachments: Resolution EXHIBIT "A" 2 RESOLUTION NO. 2000 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ESTABLISHING A SCHEDULE OF FEES TO BE CHARGED FOR SPECIFIC SERVICES WHEREAS, in 1996 the City of Newport Beach retained KPMG Peat Marwick LLP (KPMG) to conduct a cost of services study for City services requested and initiated by residents, businesses and others who are most benefited by the service; and WHEREAS, the KPMG study determined the actual cost of providing the services including direct labor costs, administration or "overhead" costs and the cost of materials and supplies based on 1994 -1995 actual costs; and WHEREAS, on February 10, 1997 the City Council of the City of Newport Beach adopted Ordinance 97 -8 establishing Chapter 3.36 (COST RECOVERY FOR USER SERVICES) of the Municipal Code; and WHEREAS, Chapter 3.36 of the Municipal Code contains cost recovery percentages for specific services contained in the 1996 study; and WHEREAS, the City Council of the City of Newport Beach adopted Resolution 97 -15 on February 10, 1997 establishing a Fee Schedule for municipal services based on the 1996 study and Chapter 3.36 of the Municipal Code; and WHEREAS, it is the desire of the City Council to maintain the City's Fee Schedule in order that it be complete and up to date; and WHEREAS, in March of 1998, the City of Newport Beach retained KPMG to review City fees and develop a method of calculating a cost of living adjustment for the fees; and WHEREAS, in 1998 KPMG calculated the cost of living adjustment for the fees contained in the City's Fee Schedule in order to keep the fees consistent with the City's Cost Recovery Ordinance, and WHEREAS, the City Council adopted resolution 98 -45 approving the adjustments, and WHEREAS, over the past two years the cost for services has increased and staff used the method developed by KPMG to adjust the fees in the City's Fee Schedule to keep the fees consistent with the City's Cost Recovery Ordinance Users\ Rev \Cbluell\ Revenue\ Cityfees\rceRessolution2000.doc NOW, THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1: The schedule of fees for service attached to this Resolution as EXHIBIT "A" is hereby established. Section 2: If fees for services are not paid when due, then in addition to the fees for services a late payment penalty in the amount equal to ten percent (10 %) of the unpaid amount shall be imposed. If fees for services remain unpaid for thirty (30) days from the date due, a second late payment penalty in the amount equal to ten percent (10 %) of the unpaid amount shall be imposed. The second late payment penalty shall be in addition to the first late payment penalty. In addition, interest shall be imposed on all unpaid fees for services at the rate of ten percent (10 %) per annum or the legal rate allowed, whichever is less, from the date the fees were due and payable to the date actually paid. Section 3: Resolution numbers 97 -10, 97 -15, 97 -18, 97 -30, 98 -22, 98 -45, 98 -52, 99 -17, 99 -53 and 2000 -1 are hereby rescinded. Section 4: This Resolution shall take effect July 1, 2000. Passed and adopted by the City Council of the City of Newport Beach at the regular meeting held on the 27th day of June 2000. 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C C K C C C K K C K C C K C C K C C ° 3 C E E ffi .5 .5 ac gg ky dI 3 i e. � a s O LL a° < o` o` �� e. � i d i2 i � i i g 9$� a a m m nnnnh e ate” 3 s � F _`s o.°n` e i Bin c J g S g a e e e e e A I I -a //\ }j\\ @ 2.= - |,. \�) $ / .. .. ; Q ;!!II| {f!ƒ!!! ;! APPENDIX Overhead Department Factor Administrative Services 1.82 City Attorney 1.73 City Clerk 1.73 Community Development: Building 2.13 Planning 1.97 Community Services 2.11 Fire and Marine: Safety 2.16 Non -Safety 1.92 General Services 1.78 Police: Safety 2.07 Non - Safety 1.83 Public Works 1.83