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HomeMy WebLinkAbout2023-03-14; Municipal Water District; Resolution 1701RESOLUTION NO. 1701 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL WATER DISTRICT OF THE CITY OF CARLSBAD, CALIFORNIA, ADOPTING A COST RECOVERY POLICY WHEREAS, the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad, California has the authority to establish fees for district services; and WHEREAS, the Board of Directors finds it necessary to recover the costs of district services; and WHEREAS, the Board of Directors believes that each district service provides varying benefits to individuals, business and community groups and warrants particular cost recovery structures based on the types of benefits conferred by each service; and WHEREAS, the Board of Directors desires to implement a cost recovery policy in order to establish a set of guidelines for target cost recovery ratios for each category of services for which the district charges a fee; and WHEREAS, the Board of Directors wishes to outline a set of procedures for the periodic evaluation of district fees and cost recovery levels. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad, California, as follows: 1.That the above recitations are true and correct. 2.That the Board adopts the City of Carlsbad's Cost Recovery Policy (Attachment A), as it may be amended from time by the City of Carlsbad City Council, as the District's Cost Recovery Policy. PASSED, APPROVED AND ADOPTED at a Joint Special Meeting of the Board of Directors of the Carlsbad Municipal Water District, the City Council of the City of Carlsbad and the Community Development Commission of the City of Carlsbad, California, on the 14th day of March, 2023, by the following vote, to wit: AYES: NAYS: ABSTAIN: ABSENT: Blackburn, Bhat-Patel, Acosta, Burkholder, Luna. None. None. None. KEITH BLACKBURN, President SHERRY FREISINGER, Secretary (SEAL) City Council POLICY STATEMENT Policy No. Date Issued 95 March 14, 2023 Resolution No. 2023-082 Subject: Cost Recovery Policy for Fees and Charges for Services Purpose It is important for the city to have a sound and consistent cost recovery policy that will serve as a management tool for establishing, implementing, and evaluating fees and charges.1 This policy ensures that the city's fees and charges are managed in a manner that will: •Provide for the delivery of quality services •Maintain and enhance service delivery •Support a balanced budget through evaluation and review of the city's total estimated and reasonable cost of providing services •Set fee amounts in accordance with local goals as pertains to code compliance, cost recovery, economic development, and community values •Ensure that any action to establish, increase, or impose a fee is conducted in a manner that satisfies the requirements of state law The City of Carlsbad is authorized to adopt and implement fees and charges for certain municipal services, provided the fees and charges do not exceed the reasonable cost of providing such services. This policy sets forth cost recovery targets, timelines for fee increases, annual cost inflation adjustments, and frequency of comprehensive review for all city fees and charges. Background The city's fees for services, products, and regulatory activities are not taxes requiring voter approval under California State Constitution, Article XIII C, Section 1 (a voter initiative added by Proposition 218 and amended by Proposition 26) if the fees do not exceed the reasonable cost of the services, products or regulatory activities. In addition to the Constitution, state and local laws also provide authorization to charge fees for services. For example, Government Code 66014 governs many fees as it pertains to development approvals. The language of Government Code 66014 mirrors the reasonable cost limitation expressed by the Constitution. This policy addresses all city fees and charges included in the city's Master Fee Schedule, with a few exceptions. Fees for services not subject to this policy typically require different analyses and adoption processes than the fees that are subject to this policy. 1 The policy, as it applies to Carlsbad Municipal Water District fees and housing services fees, was approved by the Board of Directors of Carlsbad Municipal Water District of the City of Carlsbad on [date) by Resolution No. [number] and the Community Development Commission on [date] by Resolution No. [number]. Page 1 of 7 Attachment A City Council Policy Statement March 14, 2023 Page 2 Subject to this Policy Not Subject to this Policy •Miscellaneous administrative fees •Special events fees •Streetlight energizing fees •City Clerk’s Office fees •Library fees •Fire fees: o Fire extinguishing and alarm systems permit fees o Annual inspections and fire code permits o Other fire fees •Fees for development applications, including entitlements, plan review, permit issuance, inspections •Police administrative and service fees •Utility account and service fees •Utility meter installation fees •Fees charged on an hourly, time and materials, or actual cost of service basis •Permit fees required to operate a business •Any fees prohibited by law from exceeding the reasonable cost of providing services •Deposits and securities •Safety Training Center facility fees •All fees for rental or use of city facilities and/or equipment •Administrative citation penalties •Vehicle, traffic and parking civil penalties •Development impact fees, utility connection fees •Trash collection rates •Fees set through contracts with third-party vendors •Water and wastewater service rates and property related fees and taxes governed by Proposition 218 •Fees set by external agencies •Other monetary exactions imposed on a project on an ad hoc basis in connection with the approval of a development project •Business license taxes •Emergency medical services, paramedic and ambulance fees •Parks & Recreation and Library & Cultural Arts program and class fees2 •All fees for services set by state or federal statute Statement of policy It is the policy of the City of Carlsbad that the following guidelines will be used in establishing and maintaining fees and charges: 1.Revenues for individual fees and in aggregate for any fee program shall not exceed the reasonable cost of providing services. 2.Comprehensive review of all city fees and charges shall occur every five to seven years. 2 Resolutions No. 2008-192 and No. 2015-173 authorized the City Manager or a designee to set all fees included in the Community Services Guide provided that fees both do not exceed the cost of providing the program and that these fees are no lower than the lowest fee charged for similar programs in the cities of Oceanside, Vista, San Marcos, Escondido, or Encinitas. City Council Policy Statement March 14, 2023 Page 3 3.In certain circumstances where cost recovery may be unrealistic or undesirable, the City Council may subsidize a portion of or an entire fee program and/or individual fees. 4.In certain circumstances where immediate adjustments to full cost recovery may be impractical, it may be appropriate to phase in fee increases over multiple years. 5.The procedures for adopting fees for development applications or projects shall follow the procedures for adopting various fees provided by Government Code sections 66016- 66019, or other applicable law, and shall be effective no sooner than 60 days following the final action. 6.Fees and charges should be sensitive to the “market” for similar services. 7.A unified approach should be used in determining cost recovery levels for various programs and their individual fees and charges based on this policy. Influential Factors to Cost Recovery Policy Reasonable, routinely reviewed, and well managed fees for services are one of the many responsible financial steps needed to support the city’s overall financial sustainability. When considering whether fees and charges should be adopted to recover 100% of the costs of providing services, city staff and the City Council will consider the following influential factors: •The level of cost recovery should consider the degree to which the public benefits from the service versus the degree to which the user of the service themselves benefits. •The level of cost recovery should consider how the pricing of services can affect the demand and subsequent level of services provided. Based on the consideration of factors that influence cost recovery policy, the degree to which pricing for services recovers the city’s costs of providing the service will vary. •Low-level cost recovery services should aim to recover between 0%-30% of their costs. These include services where there is no intended relationship between the fee and the benefit received, that are essential to community safety, or for services where collecting fees would discourage compliance. •Mid-level cost recovery services should aim to recover between 31%-80% of their costs. These include services where the specific user of the service receives a higher level of benefit than the general taxpayer, but where the city has an interest in encouraging compliance by subsidizing the cost of the service. •High-level cost recovery services should recover between 81%-100% of their costs. These include services where the individual primarily and directly benefits from the service, not the community at large. These may be services that could otherwise be provided by the private sector or use of the service is not encouraged. City Council Policy Statement March 14, 2023 Page 4 Service/Program Cost Recovery Target Pricing Strategy General and Administrative Fees – Finance, Clerk, City Manager Appeals to City Council MID (31%-80%) Both individual and community benefit from the service Business license master list of new/active licenses HIGH (81%-100%) Individual benefit received from the service Community facilities district annexation services HIGH (81%-100%) Individual benefit received from the service Miscellaneous services where amount of the fee is not set by state or federal statute HIGH (81%-100%) Individual benefit received from the service Special Events Fees City-sponsored special events. Special events sponsored by the city or a non-profit organization with a community-wide benefit that are free and open to the public LOW (0%-30%) Community primarily benefits from the service Special events that are open to the public where admission or fees for participation are not charged MID (31%-80%) Both the event sponsor and the community benefit from the service Special events where admission is ticketed or fees for participation are charged HIGH (81%-100%) Individual benefit received from the service Library Fees Library card replacement, hold requests, interlibrary loans, general day-to-day service fees LOW (0%-30%) Community primarily benefits from the service Refund processing initiated by customer LOW (0%-30%) Community primarily benefits from the service Fire Fees Fire code permits, annual occupancy regulatory inspections (both state-mandated and non-mandated) MID (31%-80%) Both individual and community benefit from the service Fire/life safety plan check and inspection fees for development services (e.g., sprinkler, alarms, new construction) MID (31%-80%) Individual benefit received from the service. Fees should generally be set at the higher end of the mid- range City Council Policy Statement March 14, 2023 Page 5 Police Fees Patrol and general enforcement services MID (31%-80%) Community primarily benefits from the service Copies of reports for victims of crimes MID (31%-80%) Ensure access to valuable service All fees for records management, towing, or other items which are not limited per state or federal statute MID (31%-80%) Individual benefit received from the service, or fee is administrative as pertains to a violation of code/law Utility Administrative Fees New account set up, reinstating of service for delinquent accounts to the extent not limited by SB 998, meter installation, all other fees for services MID (31%-80%) Individual benefit received from the service Land Development Permitting & Inspection Services Discretionary Entitlement Permit (review and processing, including but not limited to general plan amendment, rezone, local coastal plan amendment, conditional use permit, coastal development permit, site development plan) HIGH (81%-100%) Individual directly benefiting from the permitted action pays a majority, if not all the permit processing costs Minor Discretionary Permit (review and processing, including but not limited to permits that are more administrative in nature (i.e., accessory dwelling units) LOW (0%-30%) Ensure compliance with essential regulatory codes and standards by minimizing the permit application costs Ministerial Permit (review and processing, including but not limited to building, grading, map, and improvement plan) HIGH (81%-100%) Individual directly benefiting from the permitted action pays a majority, if not all the permit processing costs Minor Ministerial Permit (review and processing, including but not limited to minor commercial or industrial tenant improvements, adjustment plats, right-of- way use or encroachment agreements) MID (31%-80%) Ensure compliance with essential regulatory codes and standards by minimizing the permit application costs City Council Policy Statement March 14, 2023 Page 6 Administrative Ministerial Permit (review and processing, including but not limited to minor and/or routine residential repairs LOW (0%-30%) Ensure compliance with essential regulatory codes and standards by minimizing the permit application costs Permit Inspection Services HIGH (81%-100%) Individual directly benefiting from the permitted action pays a majority, if not all the permit processing costs Procedures This Cost Recovery Policy establishes a scheduled program to comprehensively review the fee schedule to determine if the current fee amounts are reflective of the costs to provide such services and are consistent with best practices and statutory requirements. •A comprehensive analysis of city service delivery costs associated with fees and charges shall be made approximately every five to seven years. •Off-cycle updates will occur annually, where fees will be adjusted by a percentage equal to the change in the San Diego Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics or another reasonable inflationary factor. •Individual fees may be adjusted during the interim period based on supplemental analysis whenever there have been significant changes in costs. •The City Council shall have the opportunity to review and the authority to approve any changes to the Master Fee Schedule. •The City Council may decide to increase fees over a period not to exceed three years in certain circumstances where immediate adjustments to targeted cost recovery amounts may be unrealistic. Comparability with Other Communities Comparing the city’s fees to other communities provides useful background information in setting fees. It allows the city to assess the market price of the service as compared to other agencies as well as to learn about alternative methods of charging fees for certain services. However, fee surveys should never be the sole or primary criteria in setting city fees as there are many factors that affect how and why other communities have set their fees at their levels. Terms and Limitations 1.All rights and obligations existing under any user fee schedule in effect prior to the effective date of a resolution approving a user fee update, shall continue in full force and effect. Updates to user fee schedules should not affect or disrupt the continuity of the city’s business or administration of its law, including: •Actions and proceedings that began before the effective date of the resolution. City Council Policy Statement March 14, 2023 Page 7 •Prosecution for ordinance violations committed before the effective date of the resolution. •The amount, or collection, of license, fee, penalty debt, forfeiture, or obligations due and unpaid as of the effective date of the resolution. 2.This Cost Recovery Policy does not invalidate any action taken prior to its effective date if the action was proper under the law governing the action at the time the action was taken.