Revenue Opportunities Through User Fees

Thursday, June 23, 2011

City Managers/Administrators Committee Meeting – June 23, 2011 | 2

Introduction

Chris Fisher – Willdan Financial Services:

• User Fee Studies, Cost Allocation Plans• Special District Formations

– CFDs, Assessments, Fire, BIDs• Utility Rate Studies

– Water, Wastewater• Economic and Fiscal Analysis• Impact Fees

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Case 1: Comprehensive User Fee Study

• Undertaken as part of annual budget process

• First comprehensive review of citywide fee programs in many years

• Review and analysis of fee-based services

• Coordinated with cooperation of Finance Department staff

• City goal: find $1.5MM to $2MM revenue

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Study Objectives• Identify true cost of providing user fee

services– Survey of services for which fees are in place– Understand the service delivery processes– Analysis of staff involved, time survey, and cost

• Determine level of subsidy and revenue impacts

• Identify new fees, cost recovery strategies• Appropriately distribute overhead costs• Develop defensible fee schedule

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Findings• Developed revenue projections based

upon estimated activity levels, new fees

• City addressed more formal fee policies during budget workshops

• Identified approximately $1.2MM in additional revenue through fee increases

• Recommended implementation of two new fee programs

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Case 2: Market Study Approach• Programmatic cost review• Market analysis - comparison of city

programs to neighboring or similar profile cities– Ten benchmark cities– Close proximity, similar program offerings,

profiles• Targeted recreation programs, sports,

leagues, classes, arts programs, etc• Graphic presentation of results, cost per

hour of programs calculated for comparison purposes

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Approach and Considerations• Highlight where fees are too low• Identify potential program

reductions– Low participation– Similar offerings from other cities,

lower cost– Alternatives for participants

• Selected comparison city subsidy policies or true costs are not known

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Findings• Some program offerings were reduced or

eliminated– Lower cost alternatives, participation– Market saturated for some programs

• City policy to continue subsidizing indirect costs of running programs

• Only target direct costs for full recovery• Netted approximately $200K per year

based upon reductions, fee adjustments

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Case 3: Global Review• Review of revenue generating programs

– Taxes, assessments– User Fees, impact fees– Parking fees, franchise fees– Rentals, facility use fees

• Comparison of target city to benchmark cities– Important to select appropriate benchmarks– Collaborative selection, vetting process

• Identified and quantified opportunities, steps

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Questions