TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Ashley Lopez, Accounting Supervisor
SUBJECT:
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Second Reading of Ordinance No. 603-24 Adopting the Fiscal Year 2024/2025 Fee Schedule
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RECOMMENDATION
recommendation
Conduct the second reading and adopt Ordinance No. 603-24 entitled: An Ordinance of the City Council of the City of Murrieta, California, Adopting the Fiscal Year 2024/2025 Fee Schedule; and
Find that said actions are exempt from the California Environmental Quality Act (CEQA), as this Ordinance is exempt from CEQA under Section 15061(b)(3) of the CEQA Guidelines, which provides that CEQA only applies to projects that have the potential for causing a significant effect on the environment whereas here, it can be seen with certainty that there is no possibility that the activity in question would have a significant effect on the environment, the activity is not subject to CEQA.
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PRIOR ACTION/VOTE
On February 7, 2023, a workshop was held to present the Proposed Citywide User Fee Update. City Council direction was provided to staff regarding the updated Citywide fee structure to be incorporated for adoption at a future City Council meeting.
On March 21, 2023, the City Council adopted Resolution No. 23-4653, adopting the Fiscal Year 2023/24 Fee Schedule and an annual update of fees at the lesser of CPI or 5% (Vote 4-1).
On May 7, 2024, the City conducted a Public Hearing for Fiscal Year 2024/25 Citywide User Fee Update and First Reading for the Ordinance Adopting the Updated User Fees. City Council approved the First Reading of the Ordinance (Vote 4-1).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
In October 2021, the City of Murrieta (City) contracted with Willdan Financial Services (Willdan) to conduct a Comprehensive User Fee Study (User Fee Study) and to prepare a full Cost Allocation Plan to assist the City in determining appropriate fee levels for the various services provided by the City. It is considered a financial best management practice for local governments to periodically review and update their User Fee Schedules. A workshop was held on February 7, 2023, to present the results of the User Fee Study and gather input from the public and the City Council. The report and presentation focused on the purpose of the study, process, methodology, policy considerations, and recommended User Fee adjustments. Based on feedback from the City Council and the public, City staff updated the fee recommendations. On March 21, 2023, the City held a public hearing where they presented on the User Fee Study and the fiscal year 2023/24 User Fee Schedule was adopted by Council the same day.
Historically, the City of Murrieta updated and adopted its User Fee Schedule for City services every year; however, due to staffing constraints, the User Fee Schedule was not updated between January 16, 2018, and March 21, 2023, resulting in increases that were larger than normal when the City did update the Fee Schedule in 2023. Because of this, the adopted resolution stated that the City will adjust fees each year by the Consumer Price Index (CPI) for the Riverside-San Bernardino-Ontario area using the year-over-year percentage change from March to March, or five percent (5%), whichever is lower. As best practice, the City will perform a User Fee Study every five years. This is the first CPI adjustment that the City has made to the User Fee Schedule.
Cost Recovery
User Fees are intended to offset the costs of providing existing services that are recoverable from fees. Recovering the costs of providing fee-related services directly influences the City’s fiscal health and increases the City’s ability to meet the service level expectations. When a fee targets “100% or full cost recovery,” the individual bears the entire cost. When a fee targets less than full cost recovery, another City revenue source - in most cases, the General Fund - subsidizes the individualized service activity. The City subsidizes the majority of Library and Recreation fees, while development services are targeted for cost recovery, with the exceptions of fees that encourage resident safety when compliant, such as plan checks and inspections for water heater and air conditioner/furnace replacements.
User Fee Schedule Changes
Consumer Price Index
The March to March CPI for Riverside-San Bernardino-Ontario area was released April 10, 2024 at the rate of 4.3%. The release date of this measurement has caused the fiscal year 2024/25 User Fee Schedule to not be in effect at the start of the fiscal year. If the User Fee Schedule is adopted on May 6, the effective date for the new fee schedule will be July 6, 2024. To allow future adoptions of the User Fee Schedule to be effective at the beginning of a fiscal year, staff is proposing to change the CPI measurement date from March to March to January to January.
New Fees
Short-Term Vacation Rental Fees had been adopted prior to the last fee update on October 12, 2020 with Resolution No. 20-4324. The fees were included in the User Fee Study but were inadvertently omitted on the 2022/23 User Fee Schedule.
|
Short-Term Vacation Rentals |
Fee Amount |
|
Non-Hosted Application/Renewal Fee |
323.33 |
|
Hosted Application/Renewal Fee |
234.68 |
Fire and Fire Consultant plan review services that are provided for Engineering fees were inadvertently omitted as components to the following fee types: Grading (Clear and Grub, Stockpile, Mass, Rough), Precise Grade Residential, Revision - Grading, and Maps (Small, Med, Large, and Parcel). A Fire Plan Check review fee for $178.35 was based on fully-burdened hourly rates determined in last year’s user fee study for one hour each of Fire Prevention Coordinator and Deputy Fire Marshal. A Fire Consultant review fee for $391.13 was also added to each of these fee types based on Fire’s Developmental Review Fee adopted in last year’s User Fee Schedule under the Fire section plus CPI.
Hourly Rates for Fire the below positions were included in the User Fee Study in 2023 but were not added to the User Fee Schedule.
|
Fire |
|
Description |
Hourly Rate/Fee Amount |
|
Firefighter/Paramedic |
$ 125.98 |
|
Fire Engineer |
$ 178.85 |
|
Fire Captain |
$ 282.16 |
|
Fire Inspector |
$ 85.53 |
|
Fire Development Services Technician |
$ 81.31 |
|
Emergency Medical Services Coordinator |
$ 111.60 |
|
Disaster Preparedness Coordinator |
$ 89.02 |
Ordinance No. 602-24 adopted on March 20, 2024 allows medicinal cannabis delivery businesses to operate in the City. A fee to recover the costs to review these business-type applications by the Police Department is proposed to be added to the User Fee Schedule. The fee was determined using last year’s User Fee Study model and fully burdened hourly rates.
|
|
Police - POLICE SERVICES TECHNICIAN II |
Police - POLICE SERGEANT |
|
|
|
Fee |
$68.94 |
$204.80 |
Full Cost |
Suggested Fee |
|
Medicinal Cannabis Permit |
2.00 |
1.00 |
$342.68 |
$342.00 |
The City is creating fees related to Towns Square Park that are presented as a separate item on the same agenda. If these fees are adopted, they will be incorporated to the User Fee Schedule.
Fees Set By Other Agencies
The User Fee Study includes current fees set by the State of California, the County of Riverside, and other external agencies. As mandated, the City collects and remits these fees to the respective agencies. These fees will not change as part of this proceeding.
Public Notice and Notifications
A public notice was published on April 22, 2024, in the Press Enterprise, Daily Bulletin, and San Bernardino Sun newspaper and was made available for public review on April 22, 2024. The City Clerk's Department notified interested parties with an active notice on file.
FISCAL IMPACT
As currently drafted, the anticipated cumulative revenue impact of the proposed changes is approximately $375,530 for fiscal year 2024-2025, depending on the level of service activities. It is important to note that adjusting the User Fee Schedule will provide a fiscal impact in the form of additional revenue. The revenue is not intended to fund new services; rather, the revenue is intended to offset the costs of providing existing services that are recoverable from fees. Consequently, while fees may rise annually, typically, labor and contract services costs (the primary driver of fee-related costs) also rise annually. Recalibrating these fees provides an offset of existing expenditures/needs rather than a source of funding for expanded service levels.
ENVIRONMENTAL IMPACT
None.
ATTACHMENTS
1. Ordinance No. 603-24