Everybody's ready to go. Okay, let's
start this meeting then. We'll call this
Jeremy of the city council.
All members except uh council member
Lopez is present and u we'll have the workshop which is the master fee
schedule presentation. And who wants to
lead it off? You guys want to come up? Can you come up to the podium and I
think you have a presentation? Not sure
if Mikey's online or not.
line and Mike, you there.
>> Hey, John. Uh, hey, Mayor Drey, can
everybody hear me?
>> Yes, we can hear you.
>> Okay, perfect. So, for tonight's
presentation, we will be having Eric
Johnson. He's the president of revenue
cost services to be providing the
PowerPoint presentation as well as
Richard Wall from uh Special Legal
Council from Best in Creger to help
answer any other questions uh after the
uh presentation. So Eric, if you'd like
to go ahead and start, please do.
>> Great. Thank you, Mikey.
>> Thank you very much for being here. It's
all yours.
>> Great. Thank you. Well, good afternoon,
uh mayor, members of the council. I am
Eric Johnson from revenue and cost
specialist. So it's good to be here to
with you this afternoon this evening to
present the cost of services study that
we did for the city. So before we get
into that just briefly a little bit
about RCS revenue and cost specialist we
are actually founded 1980 um with the
wake of Proposition 13 and Proposition 4
the founders realized the cities would
need to know what their services cost.
So since then we've studied u over 250
agencies in five different states. I
myself have been doing this in since
1990 and I've worked with over almost
150 agencies in in five states also. So
this is what we do this these cost of
services studies. So first off what is a
cost study? So we've really recast the
city budget with a business orientation.
We did this because the voters told us
to. In 1978 they passed Proposition 13
which limited property taxes as we all
know. Then a year later they passed
Proposition 4 which said that fees that
do not exceed the cost reasonably be
born of providing the service are not
considered taxes. They wanted government
to act more like a business and know its
cost. But while governmental accounting
does a great job of identifying where
the cost funds departments and
divisions, it was never designed to
identify the cost of services.
So we had to create that information.
So working with city staff, we identify
what it costs, provide the full business
cost of services to your customers, to
the public.
So there's no city council service.
There's no city manager service. It's
like when you go to the the grocery
store and you buy a can of corn. You
know when you buy that can of corn that
it includes the cost of the farmer and
the distributor and the trucker and the
people at the grocery store and the
chucker there in front of you. You know
that. We've done that same kind of thing
here. So the city council city manager
overhead costs are part of the cost of
providing that service. So when you so
when we take a look at what is what are
these costs that we're saying that
you're providing to your customers,
these are the full business costs
including all these various overhead
costs.
So this is a comprehensive study. We've
looked at user fees. We've looked at
rents and use permits related to
facility and ballfield rentals. We've
looked at fines related to parking
fines. This does not we are not looking
at impact fees, inloo fees, utility
rates, any form of grants or any form of
taxes just these above services.
So of course there are many good reasons
to review these user fees. You want to
update your current fees to be able to
reflect what you're currently doing
today. And we also looked at adding,
removing, and redefining fees to again
reflect what you're doing today. Want to
make sure they're legally defensible.
they do not exceed the cost reasonably
born of providing the service. In some
cases, we look at the revenue collection
when we're taking a look at how is this
fee currently performing. And there is
many fees here that are more market
oriented, especially your human services
fees that we'll talk about a little
later.
As I mentioned, we're doing all this
because the voters told us to.
In pro in 1979 they passed proposition 4
as I mentioned defined service fees as
being limited to the full cost providing
the service. Rents and fines are exempt
from cost recovery limitations. In 1996
they passed Proposition 218 which placed
limits on the creation updates of
certain property related fees. And then
in 2010 they passed Proposition 26 which
codified a lot of existing kind of fee
setting practices as article 13C of the
state constitution. But it also said
that fees must be for for a service
directly benefiting the fee payer.
So how do we go about doing this? Well,
our first step was to sit down with
staff in all the various different
departments and identify what are the
services that you're currently
providing. Talk about services I've seen
in other places that maybe you want to
add here. And we went through that list
a couple of times to make sure that this
is what we want to take a look at. These
are the services that we're providing in
each department. We then sat down with
the departments again and in many cases
many many meetings who's spending time
on these services how much time is being
spent how many of these are you doing in
some cases in in planning area we broke
it out into steps because there are many
different steps in a planning
application so we broke out all the
various different steps identified time
to it and then we also looked at how
many of these you're doing so we could
look at what does all that time add up
to have we made sure that we're not
allocating time that doesn't exist
everyone everyone everyone only has so
many hours they can work a year and so
we reviewed that with that lens also. So
not just how much time for one but
what's that total time. So we added up
and allocated 100% of the of the time
for all positions doing something some of the time on fee services some of
the time on what what we call tax
supported services that we'll talk about
in a moment some of the time on on on
cost allocation plan services
administrative services providing
support to the other parts of the
organization.
We then developed a fully allocated
hourly rate for every position. So we
looked at the actual salaries for each
position. We looked at the actual
benefits for each position. We looked at
the adopted budget for the non-personnel
expenses, things like office supplies
and contract services.
Then we also looked at the overheads,
citywide overhead where we allocated, we
did a cost allocation plan where we
allocated the the cost of city council
and city manager and finance and city
clerk and human resources and facility
maintenance and um fleet maintenance,
all those things that people need to be
able to do their jobs.
We also looked at departmental overhead,
in some cases divisional overhead for
the administrative support provided
within a department. So we added all
that up together and we developed a
fully allocated hourly rate for every
position, a billing rate, a business
rate for every position. We then matched
that up with a time detail and now we
know what it costs provide that service.
So then we went back to the departments
and said here's the cost of the service,
here's the current fee, and then here
are some proposed fees. And then we went
through that with the departments again
a few times in in many of the
departments to make sure that a a the
information still looked good, but also
that the fees that we're recommending
here today are fees that if you were to
adopt, they could use and go into place
as something that would work at the
counter if you chose to adopt them.
So I mentioned tax services and fee
services.
tax services or what we call community
supported services typically benefits
the community as a whole
and supported by tax dollars. Things
like police and fire and streets and
parks. Those things when people say what
do my taxes pay for? This is what their
taxes pay for. We also identify personal
choice services, fee services. The
customer is identifiable. The service is
measurable. Most importantly, it
benefits an individual or group and not
the larger community. You can still
choose to subsidize if it for whatever
reason you as a council feel is
appropriate. Planning fees, development
fees, building fees, engineering fees
are good examples of these types of user
fees, personal choice services.
So when we looked at this for
Monontlair, we came up with this this
subsidy here. But the difference between
personal choice and and community
supported, I'm kind of a picture person.
So when I look at this, it makes a lot
more sense to me. If we look at the
yellow circle in the upper right, those
are taxes. Taxes are there to support
community supported services. In the
upper left, we have fees and charges and
they're designed to support personal
choice services. But to the extent that
the fee doesn't co cover the cost
providing the service
that co that money has to come from
somewhere that services are being
provided, the costs are occurring. So
the only other place it can come from is
tax dollars.
So, we identified about a $7.9 million
subsidy of fees that are that we've
identified as personal choice services.
Now, that's a big number. So, let's dive
into that a little bit
because you see at the bottom of that
third column of numbers over we see the
total subsidy $7.9 million. So we have
community development subsidi being
subsidized about 640,000.
Um public safety, police and fire
subsidi and code enforcement sub
subsidized about 4.1 million. Human
services about 3.1 million and
administrative services about 60,000.
Now if we look at the column on the far
right, that's what we think with the fee
recommendations that are in this report
if you were to adopt is the revenue you
would receive on an annual basis. It's a
much smaller number.
$736,000.
And the reason for the difference, let's
kind of walk through the reason for
those differences. Community development
services largely um 100% cost recovery,
but there is one service in their
general mainten general plan maintenance
search charge where we recommended a
subsidy that the development community
pay for half of it and the the taxpayer
pay for the other half of it. So that's
about $100,000 difference in what we
anticipate being the full cost. So
that's why there's a difference.
there on community development services,
public safety services. There are things
there are fee services in here which are
not really designed to recover the full
cost. Some of them are designed to get
people's attention. Um code enforcement
services, code enforcement inspections,
police false alarm response. Um
others are EMS response. There are EMS
fees that are you currently have and
we're making recommendations that
change, but they're never designed to
recover the cost of the program of a
very large program like emergency um
response, emergency medical response.
So, there's still going to be a large
subsidy there because this is one of
those market based fees. You can't
charge, you know, $5,000 for a response.
Um it just it just won't work. Um we've
also included engine company business
inspections as a as a no fee service in
here. Also,
human services, as we all know, are very
market based fees. They're they're a mix of providing services to
the community as well as being services
that you charge a fee for. So, there are
some recommendations in here from for
some modest changes and to better
reflect what the department's doing
today, but it's not designed to recover
its cost. It's it's going to be
subsidized um because otherwise, again,
you can't charge $500 for a class. No
one will come. Um, and so we wanted to
be conservative here. Even though we
recommended some some modest changes, we just put zero new revenue and let
that uh that roll out to how it's going
to roll out. And the administrative
services are largely recovering their
cost. Also,
we are also recommending future
increases for inflation be included in
the resolution so that the city adopt a
policy to increase fees annually for
inflation based on the CPI so that on an
annual basis you can have a two three 4%
increase so that you don't get in a
position where five years from now or 10
years from now you have to make large
increases to your fees. you've kind of
kept up with it modestly to um keep up
with your cost.
Now, the report itself, 501 pages, um is
a lot of information. And so, let me
just kind of walk you through how to
read the report and and get the
information out of it that you want.
The first 35 pages or so are explanatory
text going over a lot of what I just
said here in more detail um with with
some more um background schedules. also
chapter four there's when we first start
seeing the S numbers service numbers
what what we identified all your list of
the services you're providing to the
public that you could could either are
or could be charging a fee for so on
each of those um summary schedules
broken out by development services
public safety um human services and
administration you'll see the S number
the service title what the total fee
revenue is and on an annual basis
for that service, the total service cost
on an annual basis and therefore either
the profit or the subsidy because some
services we are actually recommending
that the fee go down because we're
showing that the costs are less than the
current fee
and then the possible new revenue off to
the right. Now remember that S number
because when we get to appendex A after
the text there's that S number again and
there appendex A you can see in one
place the current fee and the proposed
fee side by side so you can kind of see
what how the fees are changing on an
individual service basis and if you're
going why is this fee going up so much
you turn to appendix B and appendix B
for every one of these S numbers has
this detail two matching pages on the
left hand side will be a description of
service. Below that, what the current
fee is below that what the the current
fee is recovering in revenue and what it
cost on a on a total basis and a per
unit basis. That cost detail comes from
the righth hand page. And so you can see
all the positions involved in providing
that service, how much time they're
spending on each one of these, what that
turns into on a fully allocated hourly
rate basis, how many of these the city's
doing every year, and then the total
cost, and then over in the lower
lefthand corner will be that proposed um
fee to in most cases recover 100% of the
cost.
So you can see all that detail from all
the meetings that we had with staff to
identify who's spending time, how much
How are they spending? How many of these
we're doing?
There are some appendices in the back
because some of them just have more
detail. Um,
building safety fees. You'll see the the
details on the building safety fees. We
went into a lot of detail with the
department to to break out how much time
is actually being spent on all the
various different services whether it be
new construction which is square footage
based where some are going up some are
going down
buildings and then the um the trade
permits mechanical electrical plumbing
permits are in a separate schedule in
appendix C. So you can see the time
involved there and in most cases these a
lot of these fees are actually going
down when we looked at the time spent
and the updated cost. So you can see all
of that detail there. Appendix D has the
fire prevention fees which are really a pass through from your um fire
prevention consultant. So wanted to keep
up to date so that it's um the city's
not having to subsidize because the the
consultant is charging more than um you
guys are charging the applicant.
Parking enforcement fines. Those are u
we did a survey of the of the
surrounding area to see what other other
cities are charging for similar fines
and found that the city is is pretty
much in line with surrounding cities.
So, we did not recommend any any changes
to the parking enforcement fines,
human services fees. As I mentioned, we
do had some um recommendations in here
to make changes to the human services
fee schedule. So, anywhere from the
program fees to the facility and field
rental fees there there are not large
changes in the dollar amounts, but
there's a lot of structural changes. the existing fee schedule just didn't
reflect um what the department was
currently doing. So you'll see a lot of
services where the just remove this fee, and in some cases we
broke out in different detail.
So all of that is in this 501 pages to
provide this information to help you
make a decision
because our goal really is to identify
the full cost for all the various
services that the city's providing.
We have made fee recommendations for
every service that we think you can
either are charging a fee for and stay
within your cost or could charge a fee
for and still of course stay within your
cost. But of course, it's up to the city
council to decide which services should
be charged the full cost, which services
are subsidized with tax dollars because
again, the services are being provided,
the costs are occurring. The question
now is who's going to pay for it,
taxpayer or the person or group
receiving the service?
So that concludes the presentation. So
certainly available for questions.
>> Okay. Well, thank you very much. Uh I
want to ask my council colleagues they
have any questions. I have no speaker
currently on the queue. Anybody?
No. Nobody.
Okay. Well, um I would just say that I
think uh uh you guys done a pretty good
job in u calculating or updating the
fees for the city.
And uh I don't have an issue with it. I
think it's something that uh we haven't
done this in several years. And uh it's
good that we update our fees, but at
least we also when we update fees, we
also justify how we're going to go about
it. Making sure we're not technically
making a profit that we actually are
covering fees for the costs that that
been incurred. Uh Council Member Mendes,
go ahead.
>> Yeah. Um I I went through this um
500page report u which is u very
impressive. Um yeah and I understand you
know the costs of services and you know
trying to charge fees and you know just
going through them all. Um I mean I know
that human services is a very important
pro program with youth and senior
programs and afterchool programs but it
just seems like that's a lot that we're
not recouping and just I just feel like
maybe there can be some other way to you
know and I know you give suggestions in
there and I know it says you know zero
no we're not going to do anything but um
I I think it's just something maybe we
can look at even closer.
you know, just because I I feel like
there's a lot of room there and um you
know, right now, you know, budgets are
tight and, you know, we're trying to
figure everything out and, you know,
sometimes cuts need to be made just to
survive. But like I said, you know, I
I'll talk with my colleagues about that.
But, uh, everything it's a great report.
I like what you guys did and put it
together and like I said, I I went
through it and, um, it's very
explanatory, too. So appreciate that you make it user friendly.
>> So but that's just my comments right
now.
» Well, thank you. Can you discuss that a
little bit about human services? I know
the total fee revenue was projected to
be well total service cost is 5 million.
Total revenue fee revenue estimate is
1.9
with a being under 3.1. I'm assuming
there's a good justification for that.
Marsha, you want to tie in on this one?
Whoever wants to take the lead.
>> Uh, I don't know that you mentioned um
about grants that we receive. So, uh,
for example, the afterchool program, we
receive over a million dollars in grant
funding.
>> So, that's part of this $5 million
service cost. Okay. All right.
>> And we don't charge for the afterchool
programs, right? So, you know, those are
things to
>> So, there's really a million. So, it's
really $2.9 million if you throw the uh
the granny into it. Okay.
All right.
Anything else on that question? Anybody
else? Council Rue.
>> Yes. Thank you, Mr. Mayor. Um,
very good report. Well done.
I too had a question or comment
on human services
in many and and I understand where we're
going with some of this and I appreciate
where we can keep the costs low. Many of
our families have felt the economic
impact of this economy. You know, gas is
over $6 a gallon. In many cases, their
food bills have gone up quite a bit.
They're struggling. They, excuse me,
they may not have
necessarily had a raise. And in some
cases, these families just can't afford
it. And these programs are lifelines for
them. And so, as much as we can, if we
can try to keep the costs low, I
appreciate getting grants. I know we
were in Washington DC. We talked with
Congress member Torres and uh Congress
member Cisneros as well as a number of
different departments about funding we
might be able to get for some of these
programs. And I think we're going to
have to continue to pursue that because
for a lot of our families and our
seniors, these programs are all they
really have. And so whatever we can do
to continue to keep the costs low, it
would be greatly appreciated. Thank you.
Uh yes.
Did any of your
analysis or studies did you take into
account the income levels of our
residents? Did you look at those
demographics?
>> No, we just look at here are here are
the costs. We did break out a resident
versus non-resident, but it was working
with staff to okay because obviously
staff knows the community a lot better
than I do and and trying to set fees at
a level that will most people will be
able to afford um and and because you
don't want to get to a point where
you're you're pricing yourself out of
the market.
Um, I've seen other agencies where
they'll do scholarships for um,
residents that may not be able to afford
the fees that are in place. Uh, is one
option, but that ultimately is up to the
council to decide what level you want to
set the fees at. Well, the last time
figures were released on our
demographics with respect to income, I
believe it was at 60,000 for a family of
four, which is not a lot given today's
economic uh expenses that are required
of a family. Um,
and I know that there are presently we
don't have mass residents showing up to
meetings or even community events
saying, "I can't afford your fees." or
whenever they're asked to pay, they're
too high because we've keep we've kept
them down and they've been very
affordable. Um, so I I I
at this time and especially after what
my colleague just said, I would have to
back him up and agree with him as to the
current state of the economic uh
situation where they are paying more for
gas, for food, healthc care expenses are
high and I know those are external
issues that don't come to us directly
but Nonetheless, our residents are still
feeling the pinch. Now, I think you
might folks might even say, well, the
bulk of these fees, like development
fees are paid by developers or those
that have property and can afford it.
And that might be true to a certain
extent, but even then, um you can't
squeeze blood out of a turnup and you
can't get going to the well all the
time. It there's a cap and a limit to
that where even right now some
developers may um be holding back
because of interest rates and whatnot.
uh qualifying for loans with banks to
invest in their properties might be a
little bit too high for them right now.
So there is this um angst if you will or
some are just keeping their cards to
their vest close to their vest and
withholding from doing anything. I just
don't think this is an appropriate time
to do this. I know we maybe haven't done
it in a while. Um but I think our
budgets are absorbing whatever um
outstanding expenses that we are having
to face and endure. Um, and I think the
present situation is working and I would
hope that we would have some other uh
revenue streams coming in perhaps marijuana that we're going to
look at in a month or two. Um, that we
might have some additional income where
this probably isn't going to be so much
of a factor, but um, anyhow, if you have
any more comments, I'm welcome to hear
them.
>> No, ultimately this this does come down
to the the will of the council um, as to
like I said, these are market based
fees. We set them at a level that we
working with departmental staff was
appropriate for the market, but not
obviously everybody. And so it's up to
you as a council to decide where we want
to set these fees. And again, costs are
occurring, services are being
subsidized. They're going to continue to
be subsidized no matter what. It's just
a question of what level do you want to
subsidize it because these are something
services that are important to the
community.
>> Um, it's not just our residents that
sometimes have to pay fees. I understand
it's business owners, folks that don't
live in the city, but nonetheless, they
invest in the city because of their
business. And that's predominantly um
the main uh source where I can see folks
having to pay for fees, changes,
permitting, you name it, habitually or
continually more so than a resident
because I believe you stated you you
phrased it very well and I wanted to
quote you on it. The fees are e are
identifiable. They're measurable. the
benefits benefit an individual or group
and they are like a development permit
or inspection and that's very much an
accurate description. But that said, um
I just know you know folks that are even
having to do or wanting to do ADUs
presently and they're having to pay a
high number of fees and they're even
paying fees to the school district um
that is in the thousands and that's even
out of our hands but it's something that
is asked of them from a separate entity.
So, we're asking them to pay for
inspections and permitting and yet
they're having to also pay another
entity for for um requirements for
school uh fees and whatnot. So, um I've
always just been a little bit leerary of
this stuff whenever it comes up, but
thanks for your time. And if you didn't
look at the income of our residents,
staff should have, and I'm disappointed
that they didn't.
» Mr. Mayor, if if I may respond, go
ahead.
>> You know, I think the point here is that
the city is subsidizing fees by the tune
of $8 million on an annual basis. And if
we're only going to be recovering by
making adjustments here, the tune of
about uh uh $736,000.
I I think that the city is still making
an annual massive subsidy uh on fees
that are basically personal driven
personal choice services. Um, and so if
you're not going to make an adjustment
in relation to the fee schedule that is
being recommended here this evening, you
have to realize that in an effort to try
and uh protect low-income households
from not paying a personal choice
service fee, you're making them pay and
subsidize for any other household or a
developer that, for example, wants to do
a project. So, uh, either way, if you're
going to adjust the fees slightly and it
does impact, uh, households that are of
low income that have made a decision
that they want to, uh, get involved in
something that is a personal choice, um,
that seems to me to be a fair oppos
proposition as opposed to making those
individuals uh, subsidize everyone else
in the community uh, even those who are
higher income as well as developers uh,
in order to preserve serve and protect a
lower cost fee for them. So, as the
council goes forward and wants to weigh
this issue, uh I think this is an
important decision for you to make, but
also keep in mind that uh I think the
discussion in the report points out uh
revenues coming into cities are um
strained as it is now. uh particularly
with uh uh what is going on across the
nation uh right now in relation to the
impact on uh local revenue sources and
as we continue to struggle with trying
to produce a balanced budget for your
consideration. The fees that you're
asking to be the fees you're asked to
consider not tonight but at another time
when this comes back to you are part of
the effort to try and recover uh from
what is happening. And one of the big
issues that the council is struggling
with is in relation to sales tax revenue
and how other larger cities that have
brought in Amazon and other fulfillment
centers into their communities have
entered into tax sharing agreements with
them and in turn have changed the point
of sale uh to that particular community.
Uh those taxes for everything that is
purchased online is going to those
cities. it's not going to the cities of
Montlair or the 430 other cities in the
state of California that do not have
fulfillment centers. Uh so we're losing
tax revenues from that perspective as
well. So this is one effort to try and
recover and I ask that the council uh be
open-minded when we do bring it forward
for your consideration.
» Okay. C Mayor Pen Martinez.
>> Hi. No questions. I just wanted to thank
you for your time and your presentation
and the thoroughess of your report. It's
very well written, well thought out.
>> Right. Thank you.
>> Well, thank you very much. Uh I think
the biggest uh cost uh in the city of
Montlair, which is many cities, is
public safety. Uh which very few of that
cost is recovered. Kind of wish, you
know, somebody commit a crime, send them
a bill, and then uh you know, covers our
cost for that. It doesn't it's not the
way it works. But you know I I I
understand that uh you know we are
dealing with tiding propositions right
now as far as economy is concerned. I
realize budgets here in Monontlair
family budgets are also getting tighter.
Um I think uh when council member uh
Mendes brought up human services, you
know, we're talking about $5 million in
cost, but uh we're doing a 38.4%
recovery based on this proposal.
Um and then we go to community
development services which is really
greatly based on uh those those costs
and revenues are really based on um the
development community um who come to the
counter uh want to build something want
to have a use or or have other uh
service demands. Um this you know we're
looking at a 65.7% recovery here or
642,000 which I think is reasonable uh
for those services. um for here in
Montlair and that's pretty typical with
a lot of other cities too. This is kind
of usually community development but the
building department the uh the planning
division public works division again
deal with a lot of the developers um
that's where uh those those costs are
usually uh a high percentage of that is
recuperated by the cities those costs
the service provider those costs so at
this time um I will move that we just uh
direct staff to put this on future city
council meeting can I get a second that
motion
I We'll second that.
>> Got to second the motion. Any objections
to the motion? If there's no objections
to the motion, that's so ordered.
Thank you very much.
>> Thank you.
>> Uh this is the opportunity for members
of the public to uh address the uh the
council. I don't think any members of
the public want us want to talk to us
right now. So, we're ajourned. Thank
you.