Background
As directed by the Council-adopted Financial Management Policy Statements (FMPS), the Office of Budget & Strategy annually reviews the City’s fees for various services to ensure they accurately reflect market conditions and makes recommendations for new fees that may be needed. Charges for services ensure that those who benefit from services are supporting the cost of those services.
Limitations on property taxes mean that user fees are an important resource to the City and help to manage growth in tax bills. The FY24 proposed budget includes increases to existing fees, such as EMS transport fees and permits/inspection fees, as well as CPI adjustments to other fees.
Existing Fee Changes
As part of a commitment to financial stewardship, user fees are an important resource to the City and help to manage growth in tax bills. The FY24 budget includes increases to existing fees based on CPI adjustments and changes in state law.
CPI Adjustment
Following FMPS guidance, fees for various services across the City would be adjusted using the April CPI of 4.0%. Fees were also evaluated by their respective departments to ensure the market conditions warranted a CPI increase on the individual fees.
Some departments do not recommend changing fees if the new fee amount would put the City out-of-market or if the current fee is sufficient to recover the cost of services.
New Fees and Other Adjustments
Tourism
New fees were added for long-term rentals of Crown Festival Park for events that are three or more days. These fees are tiered based on attendance.
Fire
A Fire Watch Personnel fee has been added. The International Fire Code requires, where in the opinion of the fire code official, it is essential for public safety in a place of assembly or any other place where people congregate, because of the number of persons or the nature of the performance, exhibition, display, contest or activity, the owner, agent, or lessee shall provide one or more fire watch personnel, as required and approved. These fees are based on the personnel assigned.
Airport
There was a change to the wording in the discount programs regarding adjustments to the margin rate percentage and City Manager approval. The ordinance now reads, “Airport Management is authorized to adjust the Margin Rate for any fuel type during the year to ensure the margin does not fall below the established minimum margin revenue approved by City Management.” This is to add flexibility for management due to fluctuating fuel costs.
Residential Solid Waste Rates
In 2022, the City finalized a new contract with Republic Services that began in 2023. The contract outlines an annual increase of the greater of a baseline or CPI adjustment to service charge rates. The recommended rate for 2024 is $20.84, a 5% increase based on CPI, and $0.99 per month greater than the current year rate of $19.85. The 5% increase will also apply to all other listed solid waste fees, including commercial waste fees, rates, and licenses.
The new rates are effective for bills issued on or after January 1, 2024.
Utility Rates
The City utilizes the Integrated Water Resource Plan (IWRP) to evaluate and address the long-term infrastructure and water supply needs of our community. The plan considers the City’s ultimate water needs versus costs from sources such as groundwater, surface water, raw and reclaimed water, with a recommended portfolio of resources that is diverse, balanced, and cost-effective. The plan also incorporates the mandated 60% reduction in groundwater usage by 2027.
The annual update of the rate model and analysis of the operational and capital needs recommended a maintenance increase of approximately 3% on the total water and wastewater bill. Water rates are increasing by 5.1%, wastewater rates increase by 2%, and surface water rates increase by 2%. The recommended rates will result in an increase of $2.98 per month to residential utility bills (based on 10,000 gallons of water usage with a 6,000-gallon winter average) for bills issued after January 1, 2024.
Community Development
House Bill 3492, effective September 1, prohibits cities from charging a public infrastructure inspection fee based on the value of the infrastructure. These plan and field inspection fees have been revised from 2% of the value of the infrastructure to a flat rate for new lift stations and a per-foot charge for other improvements.
Summary
Most departments chose to either keep their current fee or adjust according to the CPI of 4%. Any changes outside of that were minor administrative changes.
Recommendation
A Public Hearing and First Reading of Ordinance No. 2314 were held during the September 5, 2023, City Council Meeting. Most fees and rates are effective January 1, 2024. To comply with a change in state law, public infrastructure construction plan review and engineering inspection fees are effective immediately, and the City Council will ratify the acceptance of these modified fees from September 1 to the effective date of the ordinance.