The City’s fees and charges include two types of categories, user sees and regulatory fees. Both are included in the Citywide Master Fees and Charges Schedule.

• User fees are charged for the use of a public service or program (e.g. recreation programs).
• Regulatory fees are charged to pay for the cost of a government program which regulates fee payer activity or used to mitigate the impact of the payer’s activities (e.g. building permits, pet licenses).
• Rent and penalties are also included for convenience in the Master Fees and Charges Schedule but are not fees. Rents and penalties are set at the City’s discretion.

The City currently has approximately 2,800 fees and charges listed on the Master Fees and Charges schedule. This schedule should not be considered all-inclusive as it excludes certain fees and charges reviewed and approved outside of the typical citywide process, such as impact fees and Water Utility rates.

Revenues are not deposited and tracked by each individual fee charged by the City. Actual annual revenue received through fees and charges may fluctuate and is subject to the stability of a revenue source, as well as market and economic conditions. However, based on recent years, a ballpark estimate is roughly $160 million per year across all funds, of which an average of $55 million is deposited to the General Fund. This amount excludes utility rates, franchise, and impact fee revenues.

According to Propositions 218 and 26, the cost of a fee cannot exceed the “estimated reasonable cost of providing the service.” In accordance with Propositions 218 and 26, the City does not set rates to exceed the cost of service (to make a profit).

• Rents and penalties are not subject to the same “estimated reasonable cost” limitation and is set at the City’s discretion

The City’s financial policies require that fees are set at the cost of service, except where there is a greater public benefit using a lower fee. Therefore, user fees and regulatory fees may not exceed the “estimated reasonable cost” of providing a service or program.

There are many instances that the City actively sets fees lower than the cost of service to achieve other goals including: maintaining access to public programs and staying competitive with comparable jurisdictions or market rates.

 The full policy is as follows:

4. User Fees and Charges will be Set at the Cost of the Service

Background - Fees and associated charges are associated with recovering the cost of providing a service. The City can charge up to the full cost of providing a service.

Policy

a. Fees will be set to fully recover costs, except where there is a greater public benefit through use of a lower fee, such as where full recovery may adversely impact overall revenue or may discourage participation in programs where the participation benefits the overall community.

b. The City Manager will establish a process in-depth review of all fees over time. The review, while eventually covering all fees, should emphasize those that have or may have significant subvention (may not be at full cost).

Each year, departments may submit changes to align fees and charges to changes in costs, services, or operations. With the completion of each department fee study, departments may also submit changes to better align to study recommendations including cost recovery.

However, as noted in the City’s financial policies, full cost recovery is not advisable in various circumstances where this will limit access to services, negatively impact participation, or if adjustments will result in prices much higher than market/comparable jurisdictions.

The City may also decrease rates based on fee study recommendations for instances where the City may have been over-recovering for costs (charging higher than the cost of service). The City Council may also approve to continue (or increase the rate of) service subvention if decreasing a fee will positively impact the use of a certain program or service.

Fees are presented to the City Council and the public for consideration through the annual budget process. To capture annual cost increases, the City implements an annual inflation adjustment based on City cost increases (called the City Cost Index, or CCI).

The Master Fees and Charges Schedule is adopted each year with the Budget along with any proposed changes to fees by the departments. The proposed budget typically includes any CCI updates that have been applied to the fees.

Mid-year adjustments are also periodically submitted to City Council, either as part of a coordinated Citywide effort managed by the Financial Management Department or standalone items by individual departments on an as-needed basis.

In advance of hearings to change the Master Fees and Charges Schedule, the City issues public notifications. This is completed within 14 days prior to the hearing date and is in accordance with State Law.

Notifications are sent/posted via newspaper, public facility postings, and the City’s website. Further, a notice is sent to interested parties who have requested to receive notification though the Office of the City Clerk.

Each fee adjustment Council Letter includes a revenue impact estimated from a proposed fee change. The revenue impacts are theoretical and may not necessarily result in a budgeted revenue change by the same amount.

Any adjustments to actual budgeted revenues must be evaluated holistically and take into account a variety of factors such as the stability and certainty of the revenue source. This review and update is typically part of the overall budget development process.

In FY 19, at the City Council’s direction, staff initiated an updated citywide fee study to conduct a comprehensive cost of service analysis to determine the full business cost of providing each service and the subvention (subsidy) rates for services.

This is a multi-year project where all City fees will be evaluated, but there will be exceptions such as where there are separate rate studies or rates are set by external agencies.

An independent consultant has been selected to conduct a comprehensive cost of service analysis. The project is moving forward on a “rolling-basis” with multiple departments at any one time. The study is anticipated to conclude in 2022. Learn more about this project from the City Council Item for August 20, 2019.

The first round was completed in May 2021 and includes the Health & Human Services (partial review), Development Services, and Parks, Recreation and Marine Departments. The second round was completed in February 2022 and includes Public Works and Energy Resources Departments. The third round, was completed in April 2023, and includes the Police Department, Fire, and Health and Human Services (Environmental Health) Departments.

The first round of the fee study included Development Services, Parks, Recreation and Marine, and a portion of the Health & Human Services. Links to each report are below:

• Development Services
• Health and Human Services
• Parks, Recreation and Marine

The studies found that the City is generally under-recovering for costs:

The second round of the fee study included Energy Resources and Public Works. Links to each report are below:  

• Energy Resources
• Public Works

The third round of the fee study included the Police, Fire, and the Health & Human Services (Environmental Health) Departments. Links to each report are below:

• Police
• Fire
• Health & Human Services (Environmental Health)

Yes, prior to the 2019 Citywide Fee Study, the last fee study took place in 2006.

The City Cost Index is an adjustment factor calculated by an independent consultant to account for the annual change in expense.

The City has applied the City Cost Index each year to capture increased cost citywide, with the vast number of fees over the various service.

+View the most recent City Cost Index Report

More information about the City’s fees and charges can be found on the Fees and Charges page.