That the City Council:
A.  APPROVE AND ADOPT RESOLUTION NO. ____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA, ORANGE COUNTY, CALIFORNIA, AMENDING THE MASTER SCHEDULE OF FEES PERTAINING TO FEES FOR GENERAL SERVICES, ADMINISTRATIVE SERVICES, COMMUNITY DEVELOPMENT SERVICES, BUILDING SERVICES, FIRE SERVICES, POLICE SERVICES, AMBULANCE SERVICES, PUBLIC WORKS SERVICES, UTILITY SERVICES AND PENALTIES FOR MUNICIPAL CODE AND VEHICLE CODE PARKING VIOLATIONS; and

B. APPROVE AND ADOPT RESOLUTION NO. ____ ENTITLED: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA HABRA, ORANGE COUNTY, CALIFORNIA, AMENDING THE MASTER SCHEDULE OF FEES PERTAINING TO FEES FOR PUBLIC WORKS SERVICES

Section 4.08.010 of the La Habra Municipal Code requires the City to adjust various fees and charges it assesses for services by the increase or decrease in the Bureau of Labor Statistics Consumer Price Index for all Urban Consumers.  The City utilizes changes in the Consumer Price Index (CPI) for the Los Angeles-Orange-Riverside Metropolitan Statistical Area as the benchmark for these annual adjustments.  The CPI change for this index in 2020 was 1.6 percent higher than 2019; therefore, it is recommended that eligible user fees contained in the Master Schedule of Fees be increased by 1.6 percent, rounded to the nearest whole dollar. A side by side comparison of the fees proposed to be increased by the 1.6 CPI adjustment is listed in Attachment 5.

Some fees contained in the Master Schedule of Fees may not be adjusted by the Consumer Price Index.  These include fees related to Enterprise Funds (water, sewer, refuse), franchises (such as cable, pipelines, etc.), or fees for which the State sets the rate.  These fees, while listed in the Master Schedule of Fees, remain at the levels, rates and formulas previously authorized by Council or other governing law.

User fees listed in the Master Schedule of Fees were most recently set in 2015-16, after the completion of a comprehensive user fee study (Attachment 4) to determine the actual cost of providing the services that the fees paid for.  Under state law, fees may only be set in an amount not to exceed the actual cost of providing the service for which the fee is being assessed.  The cost to provide the service is based on factors such as personnel costs, materials, personnel time and overhead. 

As a policy decision, the City Council may set fees at levels lower than the actual cost to provide the service.  Based on prior Council policy and action, the majority of La Habra’s fees are set at full cost recovery, with the exception of certain City Engineering services. Those services have fees that range from 60 percent to 100 percent cost recovery.  The setting of any fee associated with general City services at a level below full cost recovery means that the General Fund would be partially subsidizing that service to offset its full cost.
 
Comparison of Costs Recovery Level and General Fund Subsidy
Based on the data listed in the table below, staff recommends that fees associated with certain Engineering services, which are currently set at a 60% to 85% recovery rate of the actual cost for those services, be set at a 100% recovery rate for those services based on MGT’s fee study (Attachment 4) that was completed in 2016.  
 

	Current Revenue from:		Staff		Estimated Revenue Increase:
	July 2020 to April 2021		Recommendation		July 2020 to April 2021
Services	Amount	Recovery %	Amount	Recovery %	Amount	%
Encroachment Permit	$10,270	60%	$15,145	100%	$4,875	40%
Permit Issuance Fee	$6,278	83%	$6,789	100%	$511	17%
Land Development	$2,861	75%	$3,276	100%	$415	25%
NPDES-Inspections	$23,822	75%	$30,960	100%	$7,138	25%
Street & Sidewalk Construction	$27,351	85%	$32,178	100%	$4,827	15%
Subdivisions-Lot Line Adjustment Application	$0	75%	$0	100%	$0	25%
Traffic Phasing Program	$0	85%	$0	100%	$0	15%
Total	$70,582		$88,348		$17,766

 

If approved, the increase in revenue from CPI adjustments will result in additional resources for the City’s General Fund; however, new revenues will be used to directly offset the existing costs currently being incurred by the City’s General Fund to provide those services.  Fee adjustments will become effective upon passage of the resolution, with the exception of Community Development and certain Public Works related fees which, consistent with State law, will become effective 60 days after passage of the resolution.

ED 9.1 Balanced Fiscal Practices