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Item 3.
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| City Council Regular | |
| Date: | 09/08/2025 |
| Title: | Public Hearing and Resolution Revising and Assessing Encroachment Rental Fees |
| Presented by: | Jennifer Duray |
| Department: | Public Works |
| Presentation: | Yes |
| Legal Review: | Yes |
| Project Number: | N/A |
RECOMMENDATION
Staff recommends Council conduct a public hearing and approve the resolution setting and assessing the fees for encroachment rentals for FY26.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
The City imposes an annual rental fee for approved encroachments within the right-of-way. Encroachments can include structures like fences, restaurant patios, signs, and conduit. To ensure safety and accessibility, the City requires property owners to obtain an encroachment permit whenever they wish to use any part of the right-of-way. The Public Works Department processes and approves these permit applications with an associated permit fee to cover the administrative costs of processing the application. Once an encroachment is approved, annual assessments of the rental fee for the right-of-way begin and continue until the permit is revoked. Awnings and canopies in the Central Business District are not charged an annual rental fee in accordance with Resolution 86-15316.
From 1988 until FY21, the annual encroachment rental fee was set at $1.00 per square foot of the encroachment area. However, in FY21, Council adopted new fees and methodology. The current methodology is a tier structure consisting of two tiers. Tier 1 encroachments have minimal impact to the right-of-way and include awnings, overhanging signs, conduit, and other encroachments that minimally impact the accessibility of the right-of-way. Tier 1 encroachments are recommended to be $2.32 per square foot in FY26, an increase of $.11 per square foot. Tier 2 encroachments have a major impact to the right-of-way and cause the part of the right-of-way that is encroached on to be unusable. Some types of Tier 2 encroachments are restaurant patios on the sidewalk, fences, stairs, and sheds. The City began increasing Tier 2 fees in FY21, with a five-year plan to gradually increase the rates to 50% of the average assessed value of adjacent properties. Last year, the plan was extended by three years due to a higher-than-expected increase in assessed values. Staff proposes raising Tier 2 fees from $6.45 to $7.80 per square foot, a 21% increase, and recommends increasing the minimum fee from $26.50 to $28.00 per year to cover administrative costs. The additional revenue is intended to support right-of-way beautification efforts.
Included in the resolution is the list of property owners and assessments of the proposed FY26 encroachment rental fee amounts.
From 1988 until FY21, the annual encroachment rental fee was set at $1.00 per square foot of the encroachment area. However, in FY21, Council adopted new fees and methodology. The current methodology is a tier structure consisting of two tiers. Tier 1 encroachments have minimal impact to the right-of-way and include awnings, overhanging signs, conduit, and other encroachments that minimally impact the accessibility of the right-of-way. Tier 1 encroachments are recommended to be $2.32 per square foot in FY26, an increase of $.11 per square foot. Tier 2 encroachments have a major impact to the right-of-way and cause the part of the right-of-way that is encroached on to be unusable. Some types of Tier 2 encroachments are restaurant patios on the sidewalk, fences, stairs, and sheds. The City began increasing Tier 2 fees in FY21, with a five-year plan to gradually increase the rates to 50% of the average assessed value of adjacent properties. Last year, the plan was extended by three years due to a higher-than-expected increase in assessed values. Staff proposes raising Tier 2 fees from $6.45 to $7.80 per square foot, a 21% increase, and recommends increasing the minimum fee from $26.50 to $28.00 per year to cover administrative costs. The additional revenue is intended to support right-of-way beautification efforts.
Included in the resolution is the list of property owners and assessments of the proposed FY26 encroachment rental fee amounts.
ALTERNATIVES
City Council may:
- Approve the Resolution to revise the encroachment rental fees; or,
- Approve an amended resolution to revise and assess the fees at another specified rate, or;
- Not approve the Resolution. If not approved, Council will need to approve a resolution at the September 22, 2025, Council meeting or no encroachment fees will be assessed for FY26.
FISCAL EFFECTS
The proposed FY26 encroachment rental fee will generate $128,703.79 for FY26. This is an increase of $18,584.61 over the FY25 revenues.