Tuesday, June 13, 2023

Update on Master Fee Schedule (6.6.23 Meeting)

At our marathon meeting on 6.6.23, we discussed the proposed update to the City's Master Fee Schedule.  Any change to the fee schedule requires a public hearing that is properly noticed at least 14 days in advance.  As such at this meeting we were not poised to make any changes, rather the purpose was to give guidance to staff so they could come back with a refined draft that could be properly noticed and acted upon.  Unfortunately our consultant from GovInvest was unavailable at this meeting so several questions regarding the proposal were tabled to our next Special Meeting tentatively scheduled for June 26.

Much has been said about fees and the rules around fees both before and during this meeting.  When Prop 26 and 218 were passed, they created rules around what types of fees could be charged, and how much those fees could be.  Fees for service (those fees that may be charged for a specific service for the benefit of a specific person), like a building or tree removal permit, are limited to the cost of performing that service.  The City has not performed an analysis of its fees in many years, so long that no one can remember when it was last done. We know costs have risen over time in both materials, and the compensation for those performing the work.  Without an actual analysis it is likely that the City was not recouping the full costs of performing various services. 

For certain fees, those for entrance to or use of local government property, or the purchase, rental, or lease of local government property, the same prop 26 and 218 limitations do not apply.  These types of fees are set on a market basis - an agreed upon price between a willing seller and a willing buyer.  Many special events that are held in town would fall in this category.

In order to assess the adequacy of our Master Fee Schedule, the City engaged GovInvest for approximately $15K to assess and make recommendations on any potential updates to the Master Fee Schedule.  In performing this assessment, the Budget and Audit Committee gave direction to GovInvest to review the entire schedule and among other things:

1. Ensure the fees were based on a full recovery method, including direct costs such as salaries and benefits, indirect costs such as departmental administration costs, and citywide support costs such as accounting, personnel, data processing, vehicle maintenance, and insurance.

2. Bring forward a proposal for fees for Special Events.   

The proposed update to the Master Fee Schedule did both of these things.  Fees for various services like a tree removal permit, or a building permit were adjusted to reflect actual costs.  In addition, a new category of fees for Special Events was created.  This would be applicable for a large event that would require streets to be closed, such as Oktoberfest or a parade.  For those types of events with 100 participants or greater, a daily Special Event Fee was proposed that would be based on the number of participants, with the smallest tier at $700 for up to 499 participants, and $10K for events with 5,000 participants or greater.

Historically the majority of events that would be subject to the proposed Special Event Fee were those sponsored by the CBCA.  Under the Master Use Agreement that will end at the beginning of July, the fees for the Grove rental, temporary use permit, noise permit, special event permit, amplified sound equipment use permit, and the street closure fee were all waived, and the only costs recovered by the City were for some but not all direct labor for police and maintenance, and materials usage.  

For Art and Wine 2022, BBQ 2022, Oktoberfest 2022, and Art and Wine 2023, this portion of direct staff charges were $9,888, $6,676, $10,369, and $9,075, respectively.  The fees waived for each event represented approximately $5K - $7K.  In comparison, the revenue for the first three events were $284K, $95K, and $281K, and after associated expenses inclusive of the staff time noted above, net income of $137K, $24K, and $115K.

After an extended discussion, the Council was largely okay with the fees for service.  The Council gave feedback to Staff regarding the Special Events fees and asked them to bring back the following for our next discussion:

- Provide examples of a few common use cases for facility rental and illustrate what that cost would be.
- Define what counts as a participant for Special Events and what would be included in the Special Event fee.
- Include a non-profit rate for Special Events

We are tentatively scheduled to continue our discussion at a Special Meeting on June 26.

Separately there have been questions regarding certain City sponsored events, such as Concerts in the Grove and the Classic Car shows, and why these events pulled permits and fee waivers in the past.  It's unclear why this was our practice but in discussion with Staff and our City Attorney, this was never necessary and as such we will be discontinuing this practice so as to avoid confusion and eliminate unnecessary administrative burden.  City sponsored events do not require permits to use City facilities, and are not subject to any fees.