Background
As directed by the Council adopted Financial Management Policy Statements (FMPS), the Budget Office annually reviews the City's fees for various services to ensure they accurately reflect market conditions and makes recommendations of 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 FY25 proposed budget includes increases to existing fees, the addition of some new 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 FY25 budget includes increases to existing fees based on CPI adjustments.
CPI Adjustments
Following FMPS guidance, fees for various services across the City would be adjusted using the CPI rate of 3.5%. 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
Animal Services
New fees were added this summer which included a dangerous dog renewal fee and added aggressive animal provisions with associated fees and penalties.
Parks
New fees were added for room rental rates at the T.E. Harman Center for non-residents and residents.
Residential Solid Waste
In FY22 City staff finalized a new contract with Republic Services that began in 2023. The contract allows for a yearly increase in the amount equal to the higher of 2.5% or CPI not to exceed 5%. The recommended rate for 2025 is $21.88, a 5% increase based on CPI, and about $1.00 greater than the current year rate of $20.84. 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, 2025.
Water 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, which staff continues to monitor the regulations.
The annual update of the rate model and analysis of the operational and capital needs recommended a maintenance increase of approximately 2% for water rates and approximately 3.2% for wastewater rates as part of the total water and wastewater bill. The recommended rates will result in an increase of $3.10 per month to residential utility bills based on 10,000 gallons of water usage.
Overall
Most departments chose to either keep their current fee or adjust according to the CPI of 3.5%. Any changes outside of that were minor administrative changes.
Recommendation
Staff recommends approval on first reading of Ordinance No. 2355. Second reading will be placed on the September 17, 2024 agenda for consideration. All fees and rates are effective January 1, 2025.