2010 user fee study results orientation 2010 user fee study results orientation presentation to the...
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2010 User Fee StudyRESULTS ORIENTATION
2010 User Fee StudyRESULTS ORIENTATION
Presentation to the Coronado City Council by:
Chad Wohlford, MPPA
June 15, 2010
WOHLFORD CONSULTING
© Wohlford Consulting - 2010 2
PRESENTATION GOALSPRESENTATION GOALS
Brief Project Orientation:• Brief Methodology Overview• Discuss Fee-Setting Issues• Introduce and Explain the
Final Study Results• Answer Questions
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PROJECTREMINDERS
PROJECTREMINDERS
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USER FEE STUDY Project ObjectivesUSER FEE STUDY
Project Objectives
Establish Objective and Transparent Fee Information
Understand the Full Cost of Services (Direct and Indirect)
Develop Insight and a Rational Basis for Setting Fees
Understand Subsidies and Revenue Impacts Understand User Fees Principles and
Context Enhance Fairness and Equity Ensure Compliance with State Law Simplify Fee Schedules
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Project Study AreasDetermine the Full Cost of Services
for:
Project Study AreasDetermine the Full Cost of Services
for:•Community Development:
• Building• Planning
•Engineering• Private Projects
•Public Services• Private Projects
• Police Services• Administrative Fees• Animal Control
• Fire Services• Inspections• Lifeguard Services• Ambulance / EMS
• Recreation Services• Activities & Programs
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Project Study ExclusionsNo Cost Analysis or Recommended
Fees for :
Project Study ExclusionsNo Cost Analysis or Recommended
Fees for :• City Clerk / Admin. Public Information Requests
• Market-based Services• Rentals• Parking Permits, Meters, Tickets
• Fines and Penalties• Impact Fees• Enterprise Funds
• Utilities• Golf
Why Excluded?
• Not cost-based services• Tax-based or revenue
goal-oriented• Market-based• State-limited or directed• Other recent studies• Not a user fee• Lack of consistent time,
staff, or cost data• Cost-effectiveness
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Project Focus
• A Study of the Cost of Services of User Fee Activities at Current or Expected Performance Levels
• Not a Management Analysis• Performance or Productivity• Efficiency or Effectiveness • Service Level or Quality • Staffing or Organizational Structure• Comparison of Operations or Services
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Cost-Based Methodology Overview
• Analysis was based upon the current City organization and business practices
• Not Based on “Tax” Concepts• Objective Unit Cost Analysis / Build-up• Not Goal-Oriented or Based on Revenue Needs
• Calculation Factors:• Staff Time to Complete Activities and Services• Cost Recovery Rates of Individual Staff Positions• Rational Distribution of Overhead and Support• “Full Cost” Includes Direct and Indirect (OH) Costs
• Full Cost = Potential Fee (starting point)
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Simplified Conceptual ApproachSimplified Conceptual Approach
Service ("Fee“) / Activity
Time to Complete 1 Activity (hours)
XProductive
Hourly Rate
=
Full Cost or
Potential Unit Fee
X
Annual Volume
of Activity
=
Annual Cost or
Potential Revenue
FEE #1: 10
Intake 0.5 $ 50 $ 25 10 $ 250
Plan Check 1.5 $ 100 $ 150 10 $ 1,500
Inspection 2 $ 100 $ 200 10 $ 2,000
Filing 0.5 $ 50 $ 25 10 $ 250
S&B Total: 4.5 hrs. $89 (avg.) $ 400 10 $ 4,000
Other Cost $ 100 10 $ 1,000
TOTAL COST $ 500 10 $ 5,000
Current Fee $ 300 10 $ 3,000
SUBSIDY $200 10 $2,000
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FEE SETTINGCONCEPTS
FEE SETTINGCONCEPTS
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User Fee DefinitionUser Fee:
A fee or rate charged to an individual or group that receives a
private benefit from services provided by the City.
Not a Tax: • The service is usually a discretionary
activity requested by the fee payer. • If a User Fee does not cover the City’s
cost for the service, taxes (General Fund) pay for the remainder.
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Fee Setting (Pricing) Considerations
• Fairness and Equity• Consistency with City Public Policy
• Cost Recovery
• Subsidization
• Social Impacts / Affordability
• Revenue Impacts
• Activity Incentives / Disincentives
• Impact on Demand (elasticity)• Legal Compliance• Other Factors
• Comparable Fees
• Constituencies Affected
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Fees vs. TaxesFees vs. Taxes
Source of Service Funding
User Fees
User Fees
User Fees
Taxes (GF)
Taxes (GF)
Taxes (GF)
0%
100%
100%PrivateBenefit
(1)
SomePublicBenefit
(2)
SomePrivateBenefit
(3)
100%PublicBenefit
(4)
(1) Building Permits; Some Rec. Programs
(2) Youth Programs
(3) Historic Preservation
(4) Police Patrol
Examples:
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FINDINGSand
RESULTS
FINDINGSand
RESULTS
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The Meaning of “Results”
• Study “Results” will show the FULL COST of Services – Fee and Non-fee
• Results will not be the Fees: City Council will set the Fees
• “Recommended” fees will come later
• Some Fee recommendations will likely not be at 100% of Full Cost
• “Subsidy” is the gap between the Fee and the Full Cost
• Subsidies are normally covered by General Fund Revenues (i.e., taxes)
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$ Supervision and Support
$ Capital, Growth, & Other Costs
“Full Cost” Includes:
$ Direct Salaries & Benefits
$ Services and Supplies
$ Department Administration
$ Indirect Activities
$ Inter-Department Support
$ Citywide Administration (CAP)
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Sample UNIT COST Results – FIRE FEES(How to Read the Results Worksheets)
Sample UNIT COST Results – FIRE FEES(How to Read the Results Worksheets)
• Sample fees shown in order to demonstrate the results format for all fee areas (as will be included in the consultant’s report)
Fee Title
Current Fee /
DepositFull Cost per Unit
Surplus / (Subsidy) per Unit
Full Cost Recovery
Rate
Commercial Sprinkler Insp. $ 0 $ 572 ( $ 572 ) 0 %
Annual Multifamily (R-1) Occupancy Inspection $ 0 $ 1,210 ( $ 1,210 ) 0 %
Chemical Fire Extinguishing System Inspection $ 0 $ 652 ( $ 652 ) 0 %
Junior Lifeguard Program $ 400 $ 624 ( $ 224 ) 64 %
Surf Awareness Program $ 120 $ 462 ( $ 342 ) 26 %
Ambulance: ALS – Non-Res. $ 683 $ 931 ( $ 248 ) 73 %
Ambulance: BLS – Non-Res. $ 572 $ 829 ( $ 257 ) 69 %
© Wohlford Consulting - 2010 18
The Nature of Revenue Results• Revenue and Unit Fee Comparison:
• Current Fee vs. Full Cost• Former Structure (department fees) vs. New Structure (city fees)
• Revenue results provide a common basis for comparison, not budget numbers
• Based on consistent assumptions and/or projections of annual activity levels for each fee
• Revenue estimates in the study may not match budgeted or actual revenues collected
• Actual future revenue levels will change:• Fee-setting by the City Council• Activity levels (market conditions)• Change in the “mix” of services and fees• Timing of the implementation of the fees and revenue collection
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General Findings• All Departments have a significant overall current
fee subsidy
• Coronado currently does not charge some common fees collected by other cities, such as:
• Engineering Inspections
• Stormwater Plan Check and Inspections
• Fire Plan Check and Inspections
• Admin costs for contractor-provided services
• Billable hours (one measure of productivity) are consistent with other studies.
• Changes to the Building Fee approach (from valuation to cost-based) will better align fees with effort and protect against downturns.
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General Findings (continued)
• All Staff Hourly Rates are less than full cost – averaging under 50% cost-recovery.
• Most of the current hourly rates are significantly lower than those from other cities’ studies.
• Calculated hourly rates are within the reasonable range of other studies.
• Some (few) fees have a surplus, but greater numbers and volumes of subsidized fees result in overall subsidies.
• 87% of current fees are subsidized
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CDD Planning Full Cost ResultsCDD Planning Full Cost Results
• 100% of current fees under-recover full cost
• Staff rates are only 49% (avg.) of full cost• Affects deposit-based fees (CEQA, EIR, Re-zone)
• Deposit-based fee revenues = deposit• Cost of commonly free or subsidized services
included in results (Historic Preservation - $74K)
FULL COST:Annual Cost of
Fee-Related Services
CURRENT REVENUE:
Projected @ Annual
Current Fees
CURRENT SURPLUS / (SUBSIDY):
Annual Difference
COST RECOVERY
RATE: Current / Full
Cost
$ 425,000 $ 56,000 ($ 369,000) 13%
© Wohlford Consulting - 2010 22
CDD Building Full Cost ResultsCDD Building Full Cost Results
• Mix of current fees that over-recover (22%) and those that under-recover (78%) full cost
• Volumes primarily in subsidized fees, so overall impact is subsidy / potential revenue
• Staff rates are only 42% (avg.) of full cost
• Few Building fees are commonly subsidized
FULL COST:Annual Cost of
Fee-Related Services
CURRENT REVENUE:
Projected @ Annual
Current Fees
CURRENT SURPLUS / (SUBSIDY):
Annual Difference
COST RECOVERY
RATE: Current / Full
Cost
$ 828,000 $ 499,000 ($ 329,000) 60%
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Engineering Full Cost ResultsEngineering Full Cost Results
• 100% of current fees under-recover full cost
• Staff rates are only 49% (avg.) of full cost
• Standard fee for improvements is currently $46.50 for plan check and inspection
• New fees include Contract Administration on “pass-through” costs
FULL COST:Annual Cost of
Fee-Related Services
CURRENT REVENUE:
Projected @ Annual
Current Fees
CURRENT SURPLUS / (SUBSIDY):
Annual Difference
COST RECOVERY
RATE: Current / Full
Cost
$ 106,000 $ 17,000 ($ 89,000) 16%
© Wohlford Consulting - 2010 24
Public Services Full Cost ResultsPublic Services Full Cost Results
• No fees for any development-related or other services = 0% Cost Recovery
• 51% of cost is related to Stormwater plan check and inspection services
• Staff rates are only 49% (avg.) of full cost
FULL COST:Annual Cost of
Fee-Related Services
CURRENT REVENUE:
Projected @ Annual
Current Fees
CURRENT SURPLUS / (SUBSIDY):
Annual Difference
COST RECOVERY
RATE: Current / Full
Cost
$ 137,000 $ 0 ($ 137,000) 0%
© Wohlford Consulting - 2010 25
Police Full Cost ResultsPolice Full Cost Results
• 98% of Police fees under-recover full cost
• 78% of Animal Services fees under-recover full cost
• Staff rates are only 40% (avg.) of full cost
FULL COST:Annual Cost of
Fee-Related Services
CURRENT REVENUE:
Projected @ Annual
Current Fees
CURRENT SURPLUS / (SUBSIDY):
Annual Difference
COST RECOVERY
RATE: Current / Full
Cost
$ 477,000 $ 73,000 ($ 404,000) 15%
© Wohlford Consulting - 2010 26
Fire Full Cost ResultsFire Full Cost Results
• 100% of Fire, EMS, and Lifeguard current fees under-recover full cost
• No fees for Fire plan check and inspection = 0% cost recovery
• EMS costs are 38% of the total cost and 88% of current revenue
• Staff rates are only 44% (avg.) of full cost
FULL COST:Annual Cost of
Fee-Related Services
CURRENT REVENUE:
Projected @ Annual
Current Fees
CURRENT SURPLUS / (SUBSIDY):
Annual Difference
COST RECOVERY
RATE: Current / Full
Cost
$ 1,497,000 $ 636,000 ($ 861,000) 42%
© Wohlford Consulting - 2010 27
Recreation Full Cost ResultsRecreation Full Cost Results
• Cost-Recovery analysis at the program level
• Current fee levels under-recover full cost in all divisions and all except 2 program areas:
• Park and Beach Permits (119%)• Fitness Center (101%)
• Cost Recovery rates range from 0% to 119%
FULL COST:Annual Cost of
Fee-Related Services
CURRENT REVENUE:
Projected @ Annual
Current Fees
CURRENT SURPLUS / (SUBSIDY):
Annual Difference
COST RECOVERY
RATE: Current / Full
Cost
$ 4,368,000 $ 1,294,000 ($ 3,074,000) 30%
© Wohlford Consulting - 2010 28
Citywide Annual Full Cost ResultsCitywide Annual Full Cost Results
Department / Division
FULL COST:Annual Cost
of Fee-Related
Services
CURRENT REVENUE:Projected
(annual) @ Current Fees
SURPLUS / (SUBSIDY)
(Current Revenue – Full
Cost)
CURRENT COST
RECOVERY RATE
(Current / Full Cost)
CDD Building $ 828,000 $ 499,000 ($ 329,000) 60%
CDD Planning $ 425,000 $ 56,000 ($ 369,000) 13%
Engineering $ 106,000 $ 17,000 ($ 89,000) 16%
Public Serv. $ 137,000 $ 0 ($ 137,000) 0%
Police $ 477,000 $ 73,000 ($ 404,000) 15%
Fire $ 1,497,000 $ 636,000 ($ 861,000) 42%
Recreation $ 4,368,000 $ 1,294,000($
3,074,000) 30%
TOTALS: $ 7,838,000 $ 2,575,000($
5,263,000) 33%
© Wohlford Consulting - 2010 29
CITYWIDERESULTS SUMMARY
• Current overall annual subsidy of $5,263,000
• Overall Cost Recovery Rate for Fee Services Only is 33%
• 58% of the subsidy is in Recreation
• Development-related departments include $924,000 of the subsidy
• Excluding Recreation: Potential revenue increase (to Full Cost) of $2,189,000
• Without a fee increase or reductions in operating costs, common taxes (General Fund) or other funds will continue to provide subsidies to fee payers
© Wohlford Consulting - 2010 30
Next Steps• City Staff will recommend general fee-setting and cost
recovery goals and solicit direction from the Council.
• City Staff will provide a comparison of other cities’ fees.
• City Staff will distribute Consultant's final report and detailed lists of cost results and findings.
• City Staff will develop “Recommended” fees for the Council’s consideration (based on Council goals).
• City Council will set the final fee levels and establish the implementation date.
• Departments will update fee schedules and reprogram electronic permit systems.
• New fees will go into effect on the designated date.
• Council may set an overall cost-recovery policy to guide future staff action.
© Wohlford Consulting - 2010 31
QUESTIONS?
Chad Wohlford, Project Manager
chad@wohlfordconsulting.com
For further information, please contact:
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