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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Public Hearing for Fiscal Year 2024/25 Citywide User Fee Update and First Reading for the Ordinance Adopting the Updated User Fees
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RECOMMENDATION
recommendation
Conduct a Public Hearing, waive full reading, and introduce 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 on 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 (Non-Action).
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).
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 to conduct a Comprehensive 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 the City Council's and public feedback, City staff updated the fee recommendations. On March 21, 2023, the City held a public hearing where they presented 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 User Fee Schedule in 2023. Because of this, the adopted resolution stated that the City would adjust fees each year by the Bureau of Labor Statistics 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 a best practice, the City will perform a full User Fee Study every five years. This is the first CPI adjustment that the City has made to the User Fee Schedule.
Taxpayer Protection and Government Accountability Act
The Taxpayer Protection and Government Accountability Act (Act) is a currently pending initiative sponsored by the California Business Roundtable that, if approved during the November 2024 election, would, among other things, require that all changes to any fees imposed by the City be adopted by Ordinance, instead of the current process by which fees are adopted by Resolution. The Act is currently the subject of a lawsuit that may affect its eligibility for the State ballot. The Act further provides that cities will have one year to re-adopt existing fees by Ordinance if such fees were originally adopted by Resolution. To prevent the possibility of having to come back to the Council with these fees early next year, the present fee adoption is being proposed by Ordinance. If the Act survives legal challenge and passes in November, the City's fees will be lawfully established and will not require two new public hearings. If the Act is defeated, the Ordinance provides that any future modifications to the fee schedule may be made by Resolution as has historically been the practice.
Cost Recovery
User Fees are intended to offset the cost of providing existing services that are recoverable from fees. Recovering the cost of delivering 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 of the provided service. 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. At the same time, 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
From March to March, the year-over-year CPI for the Riverside-San Bernardino-Ontario area was released on April 10, 2024, at 4.3% (Attachment 4). The release date of this measurement has caused the Fiscal Year 2024/25 User Fee Schedule to not go into effect at the start of the fiscal year. If the Proposed User Fee Schedule Update is approved on May 7, the effective date for the new fee schedule will be August 3, 2024. To allow future updates to the User Fee Schedule to be effective at the beginning of a fiscal year, staff proposes changing the year-over-year CPI measurement date from March to January.
The Proposed User Fee Schedule is included in this report as Exhibit 1 to Ordinance No. 603-24. Attachment 3 details the dollar and percentage change for each proposed fee. All fees have been adjusted by the 4.3% change in CPI unless they are statutory fees imposed by the Municipal Code, the State, or other county agencies and cannot be increased.
New Fees
Short-Term Vacation Rental Fees
Short-Term Vacation Rental Fees were adopted before 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 Fiscal Year 2022/23 User Fee Schedule.
|
Short-Term Vacation Rentals |
Proposed Fee Amount |
|
Non-Hosted Application/Renewal Fee |
323.33 |
|
Hosted Application/Renewal Fee |
234.68 |
Fire Fees
Fire and Fire Consultant plan review services that are provided in conjunction with Engineering Plan Review 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 of $178.35 was based on fully-burdened hourly rates determined in last year's User Fee Study for one hour each of the Fire Prevention Coordinator and Deputy Fire Marshal. A Fire Consultant review fee of $391.13 was also added to each fee type based on Fire's Developmental Review Fee adopted in last year's User Fee Schedule under the Fire section.
Hourly rates for Fire for the below positions were included in the User Fee Study in 2023 but were not added to the User Fee Schedule. This action will incorporate the hourly rates below into the User Fee Schedule.
|
Fire |
|
Description |
Proposed 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 |
Medicinal Cannabis Permit
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 below was calculated using last year's User Fee Study model, the estimated time to process the permit using the established fully burdened hourly rates.
|
|
Police - POLICE SERVICES TECHNICIAN II |
Police - POLICE SERGEANT |
|
|
|
Fully Burdened Hourly Rates |
$68.94 |
$204.80 |
Full Cost |
Proposed Fee |
|
Medicinal Cannabis Permit |
2.00 hours |
1.00 hour |
$342.68 |
$342.00 |
Town Square Park Amphitheater
A Public Hearing for proposed fees related to use of the Town Square Park and Amphitheater will be presented to the City Council at the meeting on June 4, 2024. If approved, those fees will be incorporated into the User Fee Schedule.
Planning Fees
Fees for Planning's staff hourly rates were determined in the User Fee Study taken to Council on March 21, 2023 but the positions were not added to the Fiscal Year 2023-2024 User Fee Schedule. Planning has 15 deposit-based fees. This requires them to charge time for staff working on a project. The current Fee Schedule only includes a Plan Check fee that is based on an Associate Planner's hourly rate. The proposed Fiscal Year 2024-2025 User Fee schedule will incorporate all of Planning's staff hourly rates and will allow Planning to bill projects accurately.
Fees Set By Other Agencies
The User Fee Schedule includes current fees set by the State of California, the County of Riverside, and other external agencies. The City collects and remits these fees to the respective agencies as mandated. These fees will not change as part of this proceeding.
Downtown Application Fee Reduction Program
The Downtown Application Fee Reduction Program was established by Resolution in 2018 and provides a fee reduction to certain development applications for projects within the Downtown Murrieta Specific Plan. The proposed Ordinance maintains this program.
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 2024/25, which is dependent on the level of service activities provided. 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, labor and contract services costs (the primary driver of fee-related costs) also increase annually. Recalibrating these fees provides an offset of existing expenditures/needs rather than a source of funding for expanded service levels.
ENVIRONMENTAL IMPACT
There is no environmental impact.
ATTACHMENTS
1. Ordinance No. 603-24
2. FY 2024/25 Fee Dollar Amount Changes
3. USBLS CPI March to March 2024 News Release