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 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 TEMPORARILY REDUCING SOLID WASTE SANITATION FEES AND SOLID WASTE FRANCHISE FEES.

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-Long Beach-Anaheim “all items” as the benchmark for these annual adjustments.  The CPI change for this index in 2021 was 3.83 percent higher than 2020; therefore, it is recommended that eligible user fees contained in the Master Schedule of Fees be increased by 3.83 percent, rounded to the nearest whole dollar. 

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 the City Council or other governing law.
 
User fees listed in the Master Schedule of Fees were most recently set in 2015-2016, after the completion of a comprehensive user fee study to determine the actual cost of providing the services that 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. Staff will be conducting a new comprehensive user fee study in FY 22/23 to determine what, if any, adjustments may be recommended to City fees and will present its findings to the City Council for consideration at a future City Council meeting.

Refuse rates change each July 1 based on the contract formula from the City’s Solid Waste Franchise Agreement with CR&R. Due to recent unanticipated inflationary increases, refuse rates will have a larger than normal increase ranging from 9.93% on most regular service rates, up to 11.51% for service only rates. To help partially offset these above average increases in FY 22/23, staff recommends a temporary one-year reduction in the City's sanitation and franchise fees. The General Fund and Refuse Fund both have sufficient fund balances to absorb temporary reductions in these revenues. If approved by the City Council, the franchise fee for residential refuse rates will reduce from 9.5% to 9.0%, the franchise fee for commercial refuse rates will reduce from 11.5% to 11.0%, the sanitation fee for residential refuse rates will reduce from 22.3% to 18.0%, and the sanitation fee for commercial refuse rates will remain at 12.5%.

If approved, the recommended 3.83 percent CPI adjustment on eligible fees will result in approximately $79,000 in additional resources to the General Fund (based on FY 22/23 budgeted fee estimates); however, actual fee revenues will depend on the level of services being utilized over the course of the fiscal year. Any new revenues generated by a CPI adjustment will be used to directly offset the increased costs incurred by the General Fund to provide those services. Upon passage of the resolution amending the Master Schedule of Fees, the fee adjustments will become effective July 1, 2022, 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 attached resolutions.

If approved by the City Council, the temporary reduction in the refuse franchise fee percentages is expected to result in a temporary one-year reduction of approximately $75,000 in revenues to the General Fund, and the temporary reduction in the sanitation fee percentage is expected to result in a temporary one-year reduction of approximately $215,000 in revenues to the Refuse Fund.  Despite these temporary reductions in revenue, both the General Fund and Refuse Fund will have sufficient fund balances to maintain adequate reserves and to provide resources for budgeted expenses.