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RPVCCA_SR_2010_12_21_07_Neighborhood_Parking_FeesDate: PUBLIC HEARING December 21,2010 Subject:NEIGHBORHOOD PARKING PERMIT FEES AND OTHER COST BASED FEES Subject Property:Citywide 1.Declare the Hearing Open:Mayor Long 2.Report of Notice Given:City Clerk Morreale 3.Staff Report &Recommendation:Kathryn Downs,Deputy Director of Finance &Information Technology 4.Public Testimony: Appellants:N/A Applicant:N/A 5.Council Questions: 6.Rebuttal: 7.Declare Hearing Closed:Mayor Long 8.Council Deliberation: 9.Council Action: 7-1 CITY OF MEMORANDUM RANCHO PALOS VERDES TO: FROM: DATE: SUBJECT: REVIEWED: HONORABLE MAYOR &CITY COUNCIL MEMBERS DENNIS MCLEAN,DIRECTOR OF FINANCE AND ~ INFORMATION TECHNOLOGY ~ DECEMBER 21,2010 NEIGHBORHOOD PARKING PERMIT FEES AND OTHER COST BASED FEES CAROLYN LEHR,CITY MANAGER ~ Project Managers:Kathryn Downs,Deputy Director of Finance &Information Technology RECOMMENDATION 1.ADOPT RESOLUTION NO.2010-_A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES ESTABLISHING FEES TO REIMBURSE THE CITY FOR THE COSTS INCURRED IN CONNECTION WITH THE ADMINISTRATION OF THE NEIGHBORHOOD PARKING PERMIT PROGRAM AND REVOKING BUSINESS LICENSE PROCESSING FEES. 2.Select either Alternative 1 to charge full fees for neighborhood parking permits,or Alternative 2 to charge only the City's costs for establishing a parking program in a neighborhood and the costs of decals issued. DISCUSSION According to state law,City fees for services cannot exceed the estimated reasonable costs of providing the service.Fees are based on the City's direct costs (Le.consultants, materials,etc.)and/or staffs'Fully Burdened Hourly Rates (FBHR),and may be adjusted annually to reflect increases to the City's costs. The City Council is requested to conduct a public hearing.Noticing requirements have been satisfied as required by law. 7-2 NEIGHBORHOOD PARKING PERMIT FEES AND OTHER COST BASED FEES December 21 ,2010 Page 2 of 6 NEIGHBORHOOD PARKING PERMIT FEES On November 4,2010,the City Council directed Staff to proceed with preparation of a resolution to establish Neighborhood Parking Permit Fees.In addition,Council directed Staff to develop a proposal for a reduced or waived fee for those households in close proximity to schools,parks,and trailheads. Based on the estimated number of households that may participate in the program during the first year (50-100),Staff has calculated that household permit fee revenue is unlikely to exceed $4,000 during the next year.The additional administrative staff time necessary to verify the proximity of households to schools,parks and trail heads would negate the estimated fee revenue.Therefore,Staff proposes that the City Council choose to either charge the full neighborhood parking permit fees to all participating households (including those in proximity to schools and parks),or refrain from charging the per-household permit fee. Alternative 1 -Full Permit Fees ~Neighborhood establishes a trust deposit to pay for the City's actual costs of establishing the parking program in the neighborhood (field investigation,sign installation,etc.).Depending upon the neighborhood and circumstances,the trust deposit could require one-time funding of between $1,000 and $2,000. ~Each household pays a fee of $34 for new issuance of a household parking permit or $17 for renewal (required every 3 years). ~Participating households pay a fee of $2.50 for each decal purchased (estimated at 3 per household). Alternative 2 -No Per-Household Permit Fees ~Neighborhood establishes a trust deposit to pay for the City's actual costs of establishing the parking program in the neighborhood (field investigation,sign installation,etc.).Depending upon the neighborhood and circumstances,the trust deposit could require one-time funding of between $1,000 and $2,000. ~Participating households pay a fee of $2.50 for each decal purchased (estimated at 3 per household). The Neighborhood Parking Permit Program Fee Schedule and the Neighborhood Parking Permit Program Analysis of Fees,Charges and Rates (the fixed fee cost summary worksheets)are attached as Resolution Exhibits 1 and 2 for each alternative. If City Council adopts the attached resolution,the new parking permit fees will become effective February 19,2011. 7-3 NEIGHBORHOOD PARKING PERMIT FEES AND OTHER COST BASED FEES December 21 ,2010 Page 3 of6 OTHER COST BASED FEES As a housekeeping item,Staff proposes to remove the business license processing fee of $20 for new licenses and $13 for renewing licenses from the Master Fee Schedule - Finance.On November 3,2010,based on advice from the City Attorney's office,the City discontinued charging these fees.Recently,there has been successful litigation challenging this type of fee.In Weisblat v.San Diego (4 Dist.2009)176 Cal.App.4th 1022,the Court of Appeal held that a city's business tax processing fee was a general tax requiring voter approval.The fee was adopted for the purpose of recovering the cost of collecting and administering a rental unit business tax.Even though the fee did not exceed the costs associated with processing applications,the court determined it was a tax because the rental unit business tax was solely a taxing measure and provided no services or regulation.Staff does not wish for the City to incur legal fees defending the City's business license processing fee;and has therefore decided to discontinue charging the fees and recommends the City Council revoke the fees. 2009 COST BASED FEE STUDY The City engaged Revenue &Costs Specialists,LLC (RCS)to conduct a Cost-Based Fee Study,which was completed in 2009.Similar to many cities in California,Rancho Palos Verdes had gaps existing between the cost of services and the fees collected to pay for those services.These studies are conducted to provide information to the City on what its Personal Choice Public Services are costing.Personal Choice Public Services are defined by RCS as services where the customer is identifiable and service is measurable and can be withheld for non-payment.These differ from Community-Supported Public Services which RCS defines as services that are 100 percent supported by taxes.The Council decided on March 17,2009 (Resolution No.2009-19),to adjust most fees to achieve full cost recovery with the exception of certain fees which were adjusted to less than 100 percent cost recovery to achieve certain policy objectives. Fee levels are set according to the methodology described in the RCS report and are based on staffs'FBHR.RCS uses a methodology that is modeled after the federal government's method of calculating indirect support costs for grant reimbursement.This is a widely accepted methodology which has been used in many cities across the state since 1975.RCS has used this methodology in more than 100 cities in California and other various government agencies in seven other states.There are two main components of the study which include the Fully Burdened Hourly Rate (FBHR)and the Total Cost Allocation Plan (CAP).The methodology for each of these components of the study is described below. Fully Burdened Hourly Rate (FBHR) To calculate direct costs for each f~e,departmental employees were asked to provide time estimates for each fee and non-fee activity performed.The FBHR was determined based 7-4 NEIGHBORHOOD PARKING PERMIT FEES AND OTHER COST BASED FEES December 21 ,2010 Page 4 of 6 on salary,benefits and a proportionate share of the accounting activity's "general"costs for indirect costs,operating expenses and overhead expenses.When all of these costs are added together for a position,the result is the total cost of that position to the City.The FBHR is then calculated by taking the total cost of the position and dividing it by the number of available work hours.It is important to note that the FBHR methodology does not account for staff overtime charges.The FBHR would be calculated as follows: Direct Expenses Direct Hourly Salary:Includes employee salary and benefits and is based on a 1,580 hour productive work year. Services and Supplies:A proportionate share is based on total departmental services and supplies divided by productive work hours multiplied by the ratio of the employee's salary and benefits to all department employees'salary and benefits. Indirect Expenses Departmental Support:A proportionate share is based on the departmental overhead cost (e.g.Department Director salary)divided by productive work hours (1,580)multiplied by the ratio of the employee's salary and benefits to all department employees'salaries and benefits. Citywide Support:A proportionate share is based on the citywide support (e.g. public liability insurance,property insurance,information technology,fleet maintenance and building maintenance and annual replacement expenses)divided by productive work hours (1 ,580)multiplied by the employee's salary and benefits to all department employees'salaries and benefits. FBHR=Direct Expenses +Indirect Expenses The City Council recently adjusted FBHRs to compensate for increases in City employee salaries and benefits (Resolution 2010-77).A trust deposit will be required to cover the actual costs associated with the addition of a new street to the Neighborhood Parking Permit Program,and will be based,in part,on the applicable FBHR as more fully detailed on the worksheet.The Neighborhood Parking Permit household application fees have been calculated based upon a reasonable estimate of staff time to process those applications multiplied by the FBHR for the City employee who would perform the tasks enumerated on the worksheets.The cost of the permit decal is based upon the cost charged to the City by the vendor supplying the decals. Total Cost Allocation Plan (CAP) The CAP is the plan which was used to calculate the overhead expenses.Costs in this category are for general administration (e.g.City Council,City Manager,City Clerk,City Attorney,Personnel,and Finance)and support services (e.g.public liability insurance, 7-5 NEIGHBORHOOD PARKING PERMIT FEES AND OTHER COST BASED FEES December 21,2010 Page 5 of 6 property insurance,information technology,fleet maintenance and building maintenance and annual replacement expenses).RCS took the following steps when allocating these internal services: 1.Created cost "pools"called "subpools"for each of the above internal services. 2.Calculated the costs for each subpool. 3.Identified departments receiving support from each internal service subpool. 4.Selected a method for allocating the costs to other departments. 5.Reviewed the allocations for Reasonableness with City staff. This methodology allocates all general administrative time that was not specifically charged to a service to the rest of the organization.As such,fee services only have a share of general administration proportionate to those costs compared to all City non-administrative costs.It is important to note that this methodology does not result in full absorption because employees quantified work time for non-fee activities and some administrative items were excluded from being allocated (e.g.City Attorney's and City Clerk's time supporting the Council). FISCAL IMPACT The Trust Deposit to establish a neighborhood parking program will not generate any fee revenue for the City,but would provide cost recovery of about $1,000 to $2,000 per neighborhood.If City Council chooses Alternative 1,household permit fee revenue may be as much as $4,000 during FY1 0-11 (based upon 50-100 participating households).At the same assumed level of participation, decal fee revenue could reach up to $1 ,000.Due to the potentially immaterial amounts of cost recovery,Staff does not propose any budget adjustments to fee revenue at this time. By adopting either Alternative 1 or Alternative 2,the fees collected will not exceed the cost of providing service. Eliminating the Business License Processing Fees will likely reduce General Fund revenue by about $24,000 annually.Staff believes that other favorable General Fund revenue variances may offset this potential loss.Staff recommends waiting until General Fund revenue is analyzed as part of the Midyear Financial Review in February 2011 before proposing any revenue budget adjustment to account for the potential loss. ATTACHMENTS RESOLUTION NO.2010-A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES ESTABLISHING FEES TO REIMBURSE THE CITY FOR THE COSTS INCURRED IN CONNECTION WITH THE ADMINISTRATION OF THE NEIGHBORHOOD PARKING PERMIT PROGRAM AND REVOKING BUSINESS LICENSE PROCESSING FEES. 7-6 NEIGHBORHOOD PARKING PERMIT FEES AND OTHER COST BASED FEES December 21,2010 Page 6 of6 Resolution Exhibit 1: Neighborhood Parking Permit Program Fee Schedule Resolution Exhibit 2: Neighborhood Parking Permit Program Analysis of Fees,Charges and Rates (Fixed Fee Cost Summary Worksheets) 7-7 RESOLUTION NO.2010-_ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES ESTABLISHING FEES TO REIMBURSE THE CITY FOR THE COSTS INCURRED IN CONNECTION WITH THE ADMINISTRATION OF THE NEIGHBORHOOD PARKING PERMIT PROGRAM AND REVOKING BUSINESS LICENSE PROCESSING FEES. THE CITY COUNCil OF THE CITY OF RANCHO PALOS VERDES DOES RESOLVE AS FOllOWS: WHEREAS,the City of Rancho Palos Verdes ("City")currently has a neighborhood parking permit program as set forth in Chapter 10.20 of the Rancho Palos Verdes Municipal Code that regulates parking in certain areas of the City,which areas are defined by City Council resolution ("Neighborhood Parking Permit Program");and WHEREAS,Section 10.20.11 OA authorizes the City Council,by resolution,to set parking permit fees for the Neighborhood Parking Permit Program;and WHEREAS,the City conducted an analysis of the costs incurred by the City in providing regulatory services relating to the administration of the Neighborhood Parking Permit Program and has based the proposed fees,charges and rates for the Neighborhood Parking Permit Program on that analysis;and WHEREAS,the City desires to eliminate business license processing fees from the Finance Schedule of the City's previously-adopted Master Fee Schedule;and WHEREAS,California Government Code Section 66000,et.seq.authorizes the City to adopt fees for municipal services,provided such fees do not exceed the estimated reasonable cost to the City of providing the service;and WHEREAS,on December 21,2010,the City Council conducted a duly noticed public hearing concerning the fees,charges and rates proposed to be adopted;and WHEREAS,the adoption of this Resolution approves and sets forth fees,charges and rates for the purpose of meeting the operating expenses of City departments and is, therefore,exempt from the California Environmental Quality Act (Public Resources Code Sections 21080 et seq.)pursuant to Public Resources Code Section 21 080(b )(8)(A);and WHEREAS,all requirements of California Government Code Sections 66016 and 66018 are hereby found to have been satisfied. 7-8 NOW,THEREFORE,the City Council of the City of Rancho Palos Verdes does hereby resolve as follows: Section 1.The facts set forth in the Recitals of this Resolution are true and correct and are hereby incorporated by reference as though set forth in full. Section 2.The City Council hereby finds that none of the fees,charges and rates set forth in the Neighborhood Parking Permit Program Fee Schedule ("Parking Permit Fee Schedule")attached hereto as Exhibit 1 and incorporated by this reference, exceeds the cost to the City of providing the permit or service to which such fee,charge or rate applies.The basis for the fees,charges and rates is set forth in the Neighborhood Parking Permit Program Analysis of Fees,Charges and Rates,which is attached hereto as Exhibit 2 and incorporated herein by this reference. Section 3.The City Council hereby approves and adopts the Parking Permit Fee Schedule as the schedule of fees,charges and rates applicable to the City's Neighborhood Parking Permit Program. Section 4.The fees,charges and rates specified in the Parking Permit Fee Schedule shall become effective on February 19,2011;provided,however,that those fees,charges and rates for processing an application shall not be applicable to any "deemed complete"application received by the City prior to February 19,2011,and such applications shall continue to be subject to the fee schedule,if any,in effect when the application was deemed complete. Section 5.Any person paying a fee set forth on the Parking Permit Fee Schedule who feels that any fee,charge or rate determined and set is in excess of the percentage of costs reasonably borne by the City and to be recovered as set out in this Resolution,or has not been reviewed and approved by the City Council,may appeal in writing to the City Council. Section 6.The City Council hereby revokes,effective immediately,the "Business License Processing Fee -New"and the "Business License Processing Fee -Renewal"as set forth on the City's Master Fee Schedule adopted by Resolution No.2010-77.All other existing rates,charges and amounts on the Master Fee Schedule for previously imposed fees shall continue unmodified by this Resolution and this Resolution is not intended,and shall not be construed,as the imposition,extension,or increase of any such fees. Section 7.The City Clerk shall certify to the passage,approval,and adoption of this Resolution,and shall cause this Resolution and her certification to be entered in the Book of Resolutions of the City Council of the City. PASSED,APPROVED and ADOPTED this 21 st day of December 2010. 7-9 Mayor ATTEST: City Clerk State of California ) County of Los Angeles )ss City of Rancho Palos Verdes ) I,Carla Morreale,City Clerk of the City of Rancho Palos Verdes,hereby certify that the above Resolution No.__,was duly and regularly passed and adopted by the said City Council at a regular meeting thereof held on December 21,2010. City Clerk 7-10 EXHIBIT 1 Neighborhood Parking Permit Program Fee Schedule Alternative 1 7-11 Alternative 1 RESOLUTION NO.2010-XX EXHIBIT 1 NEIGHBORHOOD PARKING PERMIT PROGRAM FEE SCHEDULE PROPOSED FEE EFFECTIVE 2/19/2011 NEIGHBORHOOD PARKING PERMIT NEIGHBORHOOD PROGRAM ESTABLISHMENT TRUSTDEP. TRUST DEPOSIT FOR ACTUAL STAFF TIME AT THE FULLY BURDENED HOURLY RATE AND DIRECT COSTS (SUCH AS PURCHASE OF SIGNS)TO PROCESS AN APPLICATION TO ESTABLISH A NEIGHBORHOOD PARKING PERMIT PROGRAM. HOUSEHOLD-NEWISSUANCE $34 HOUSEHOLD-RENEWAL $17 DECAL $2.50 NOTE:MINIMUM INITIAL DEPOSIT TO BE DETERMINED BY STAFF FOR ALL TRUST DEPOSITS.TRUST DEPOSITS MAY BE USED TO PAY FOR SERVICES FROM THE CITY ATTORNEY,TRAFFIC COMMITTEE,NPDES CONSULTANT,OR OTHER CONSULTANTS,AS SET FORTH IN RESOLUTION 2009-19. OTHER: ADDITIONAL SERVICES FOR WHICH A FEE HAS NOT BEEN ESTABLISHED SHALL BE CHARGED AT THE CITY'S FULLY BURDENED HOURLY RATE. 7-12 Alternative 1 EXHIBIT 2 Neighborhood Parking Permit Program Analysis of Fees,Charges and Rates 7-13 Alternative 1 FIXED FEE COST SUMMARY WORKSHEET FISCAL YEAR 2010-2011 SERVICE NEIGHBORHOOD PARKING PERMIT -NEIGHBORHOOD PROGRAM ESTABLISHMENT REFERENCE #S-290 PRIMARY DEPARTMENT PW-ADMINISTRATION UNIT OF SERVICE APPLICATION DESCRIPTION OF SERVICE Evaluate a neighborhood petition to establish a neighborhood parking permit program.Attend neighborhood meeting(s),investigate the site, evaluate signage needs, purchase and install new signs. SUBORG ID#POSITION DIRECT COST HOURS 2010 FBR COST For actual staff time at the fUlly burdened hourly rate and direct costs (such as purchase of signs)to process an application to establish a neighborhood parking permit TRUST DEPOSIT Iprogram.Variable Variable Variable Actual 7-14 Alternative 1 FIXED FEE COST SUMMARY WORKSHEET FISCAL YEAR 2010·2011 SERVICE NEIGHBORHOOD PARKING PERMIT -HOUSEHOLD - NEW ISSUANCE REFERENCE #S-291 PRIMARY DEPARTMENT PW-ADMINISTRATION UNIT OF SERVICE APPLICATION DESCRIPTION OF SERVICE Process a new permit application for a household, verify proof of residency,log permit in database and issuing decals. SUBORG ID#POSITION DIRECT COST HOURS 2010 FBR COST 101-D-3006 1178 PERMIT CLERK 0.33 $102.69 $34 TOTAL $34 RECOMMENDED NEW FEE $34 7-15 Alternative 1 FIXED FEE COST SUMMARY WORKSHEET FISCAL YEAR 2010·2011 SERVICE NEIGHBORHOOD PARKING PERMIT-HOUSEHOLD- RENEWAL REFERENCE #S-292 PRIMARY DEPARTMENT PW-ADMINISTRATION UNIT OF SERVICE APPLICATION DESCRIPTION OF SERVICE Process permit renewal application for a household, verify residency information and issue decal(s). SUBORG ID#POSITION DIRECT COST HOURS 2010 FBR COST 101-D-3006 1178 PERMIT CLERK 0.17 $102.69 $17 TOTAL $17 RECOMMENDED NEW FEE $17 7-16 Alternative 1 FIXED FEE COST SUMMARY WORKSHEET FISCAL YEAR 2010·2011 SERVICE NEIGHBORHOOD PARKING PERMIT -DECAL REFERENCE #8-293 PRIMARY DEPARTMENT PW-ADMINI8TRATION UNIT OF SERVICE DECAL DESCRIPTION OF SERVICE Purchase one neighborhood parking permit decal SUBORG ID#POSITION DIRECT COST HOURS 2010 FBR COST $2.64 $2.64 TOTAL $2.64 RECOMMENDED NEW FEE $2.50 7-17 EXHIBIT 1 Neighborhood Parking Permit Program Fee Schedule Alternative 2 7-18 Alternative 2 RESOLUTION NO.2010-XX EXHIBIT 1 NEIGHBORHOOD PARKING PERMIT PROGRAM FEE SCHEDULE PROPOSED FEE EFFECTIVE 2/19/2011 NEIGHBORHOOD PARKING PERMIT NEIGHBORHOOD PROGRAM ESTABLISHMENT TRUST DEP. TRUST DEPOSIT FOR ACTUAL STAFF TIME AT THE FULLY BURDENED HOURLY RATE AND DIRECT COSTS (SUCH AS PURCHASE OF SIGNS)TO PROCESS AN APPLICATION TO ESTABLISH A NEIGHBORHOOD PARKING PERMIT PROGRAM. DECAL $2.50 NOTE:MINIMUM INITIAL DEPOSIT TO BE DETERMINED BY STAFF FOR ALL TRUST DEPOSITS.TRUST DEPOSITS MAY BE USED TO PAY FOR SERVICES FROM THE CITY ATTORNEY,TRAFFIC COMMITTEE,NPDES CONSULTANT,OR OTHER CONSULTANTS,AS SET FORTH IN RESOLUTION 2009-19. OTHER: ADDITIONAL SERVICES FOR WHICH A FEE HAS NOT BEEN ESTABLISHED SHALL BE CHARGED AT THE CITY'S FULLY BURDENED HOURLY RATE. 7-19 Alternative 2 EXHIBIT 2 Neighborhood Parking Permit Program Analysis of Fees,Charges and Rates 7-20 Alternative 2 FIXED FEE COST SUMMARY WORKSHEET FISCAL YEAR 2010·2011 SERVICE NEIGHBORHOOD PARKING PERMIT -NEIGHBORHOOD PROGRAM ESTABLISHMENT REFERENCE #S-290 PRIMARY DEPARTMENT PW-ADMINISTRATION UNIT OF SERVICE APPLICATION DESCRIPTION OF SERVICE Evaluate a neighborhood petition to establish a neighborhood parking permit program.Attend neighborhood meeting(s),investigate the site, evaluate signage needs, purchase and install new signs. SUBORG ID#POSITION DIRECT COST HOURS 2010 FBR COST For actual staff time at the fUlly burdened hourly rate and direct costs (such as purchase of signs)to process an application to establish a neighborhood parking permit TRUST DEPOSIT program.Variable Variable Variable Actual 7-21 Alternative 2 FIXED FEE COST SUMMARY WORKSHEET FISCAL YEAR 2010·2011 SERVICE NEIGHBORHOOD PARKING PERMIT -HOUSEHOLD - NEW ISSUANCE REFERENCE #S-291 PRIMARY DEPARTMENT PW-ADMINISTRATION UNIT OF SERVICE APPLICATION DESCRIPTION OF SERVICE Process a new permit application for a household, verify proof of residency,log permit in database and issuing decals. SUBORG ID#POSITION DIRECT COST HOURS 2010 FBR COST 101-D-3006 1178 PERMIT CLERK 0.33 $102.69 $34 TOTAL $34 RECOMMENDED NEW FEE None 7-22 Alternative 2 FIXED FEE COST SUMMARY WORKSHEET FISCAL YEAR 2010-2011 SERVICE NEIGHBORHOOD PARKING PERMIT -HOUSEHOLD - RENEWAL REFERENCE #S-292 PRIMARY DEPARTMENT PW-ADMINISTRATION UNIT OF SERVICE APPLICATION DESCRIPTION OF SERVICE Process permit renewal application for a household, verify residency information and issue decal(s). SUBORG 10#POSITION DIRECT COST HOURS 2010 FBR COST 101-D-3006 1178 PERMIT CLERK 0.17 $102.69 $17 TOTAL $17 RECOMMENDED NEW FEE None 7-23 Alternative 2 FIXED FEE COST SUMMARY WORKSHEET FISCAL YEAR 2010·2011 SERVICE NEIGHBORHOOD PARKING PERMIT -DECAL REFERENCE #8-293 PRIMARY DEPARTMENT PW-ADMINI8TRATION UNIT OF SERVICE DECAL DESCRIPTION OF SERVICE Purchase one neighborhood parking permit decal SUBORG ID#POSITION DIRECT COST HOURS 2010 FBR COST $2.64 $2.64 TOTAL $2.64 RECOMMENDED NEW FEE $2.50 7-24