1. 2010 User Fee Study RESULTS ORIENTATION 2010 User Fee Study RESULTS ORIENTATION Presentation to the Coronado City Council by: Chad Wohlford, MPPA June 15, 2010 WOHLFORD CONSULTING

2. © Wohlford Consulting - 20101 PRESENTATION GOALS Brief Project Orientation: Brief Methodology Overview Discuss Fee-Setting Issues Introduce and Explain the Final Study Results Answer Questions

3. © Wohlford Consulting - 20102 PROJECT REMINDERS

4. © Wohlford Consulting - 20103 USER FEE STUDY Project Objectives USER FEE STUDY Project Objectives q Establish Objective and Transparent Fee Information  Understand the Full Cost of Services (Direct and Indirect)  Develop Insight and a Rational Basis for Setting Fees q Understand Subsidies and Revenue Impacts  Understand User Fees Principles and Context  Enhance Fairness and Equity  Ensure Compliance with State Law  Simplify Fee Schedules

5. © Wohlford Consulting - 20104 Project Study Areas Determine the Full Cost of Services for: Community Development: Building Planning Engineering Private Projects Public Services Private Projects Police Services Administrative Fees Animal Control Fire Services Inspections Lifeguard Services Ambulance / EMS Recreation Services Activities & Programs

6. © Wohlford Consulting - 20105 Project Study Exclusions No Cost Analysis or Recommended Fees for : City Clerk / Admin. Public Information Requests Market-based Services Rentals Parking Permits, Meters, Tickets Fines and Penalties Impact Fees Enterprise Funds Utilities Golf Why Excluded? Not cost-based services Tax-based or revenue goal-oriented Market-based State-limited or directed Other recent studies Not a user fee Lack of consistent time, staff, or cost data Cost-effectiveness

7. © Wohlford Consulting - 20106 Project Focus A Study of the Cost of Services of User Fee Activities at Current or Expected Performance Levels Not a Management Analysis Performance or Productivity Efficiency or Effectiveness Service Level or Quality Staffing or Organizational Structure Comparison of Operations or Services

8. © Wohlford Consulting - 20107 Cost-Based Methodology Overview Analysis was based upon the current City organization and business practices Not Based on “Tax” Concepts Objective Unit Cost Analysis / Build-up Not Goal-Oriented or Based on Revenue Needs Calculation Factors: Staff Time to Complete Activities and Services Cost Recovery Rates of Individual Staff Positions Rational Distribution of Overhead and Support “Full Cost” Includes Direct and Indirect (OH) Costs Full Cost = Potential Fee (starting point)

9. © Wohlford Consulting - 20108 Simplified Conceptual Approach Service ("Fee“) / Activity Time to Complete 1 Activity (hours) X Productive Hourly Rate = Full Cost or Potential Unit Fee X Annual Volume of Activity = Annual Cost or Potential Revenue FEE #1: 10 Intake0.5 $ 50 $ 25 10 $ 250 Plan Check1.5 $ 100 $ 150 10 $ 1,500 Inspection2 $ 100 $ 200 10 $ 2,000 Filing0.5 $ 50 $ 25 10 $ 250 S&B Total:4.5 hrs. $89 (avg.) $ 400 10 $ 4,000 Other Cost$ 100 10 $ 1,000 TOTAL COST $ 50010$ 5,000 Current Fee $ 30010$ 3,000 SUBSIDY $20010$2,000

10. © Wohlford Consulting - 20109 FEE SETTING CONCEPTS

11. © Wohlford Consulting - 201010 User Fee Definition User Fee: A fee or rate charged to an individual or group that receives a private benefit from services provided by the City. Not a Tax: The service is usually a discretionary activity requested by the fee payer. If a User Fee does not cover the City’s cost for the service, taxes (General Fund) pay for the remainder.

12. © Wohlford Consulting - 201011 Fee Setting (Pricing) Considerations Fairness and Equity Consistency with City Public Policy Cost Recovery Subsidization Social Impacts / Affordability Revenue Impacts Activity Incentives / Disincentives Impact on Demand (elasticity) Legal Compliance Other Factors Comparable Fees Constituencies Affected

13. © Wohlford Consulting - 201012 Fees vs. Taxes (1) Building Permits; Some Rec. Programs (2)Youth Programs (3)Historic Preservation (4)Police Patrol Examples:

14. © Wohlford Consulting - 201013 FINDINGS and RESULTS

15. © Wohlford Consulting - 201014 The Meaning of “Results” Study “Results” will show the FULL COST of Services – Fee and Non-fee Results will not be the Fees: City Council will set the Fees “Recommended” fees will come later Some Fee recommendations will likely not be at 100% of Full Cost “Subsidy” is the gap between the Fee and the Full Cost Subsidies are normally covered by General Fund Revenues (i.e., taxes)

16. © Wohlford Consulting - 201015 $ Supervision and Support $ Capital, Growth, & Other Costs “Full Cost” Includes: $ Direct Salaries & Benefits $ Services and Supplies $ Department Administration $ Indirect Activities $ Inter-Department Support $ Citywide Administration (CAP)

17. © Wohlford Consulting - 201016 Sample UNIT COST Results – FIRE FEES (How to Read the Results Worksheets) Sample fees shown in order to demonstrate the results format for all fee areas (as will be included in the consultant’s report) Fee Title Current Fee / Deposit Full Cost per Unit Surplus / (Subsidy) per Unit Full Cost Recovery Rate Commercial Sprinkler Insp. $ 0$ 572( $ 572 )0 % Annual Multifamily (R-1) Occupancy Inspection $ 0$ 1,210( $ 1,210 )0 % Chemical Fire Extinguishing System Inspection $ 0$ 652( $ 652 )0 % Junior Lifeguard Program $ 400$ 624( $ 224 )64 % Surf Awareness Program $ 120$ 462( $ 342 )26 % Ambulance: ALS – Non-Res. $ 683$ 931( $ 248 )73 % Ambulance: BLS – Non-Res. $ 572$ 829( $ 257 )69 %

18. © Wohlford Consulting - 201017 The Nature of Revenue Results Revenue and Unit Fee Comparison: Current Fee vs. Full Cost Former Structure (department fees) vs. New Structure (city fees) Revenue results provide a common basis for comparison, not budget numbers Based on consistent assumptions and/or projections of annual activity levels for each fee Revenue estimates in the study may not match budgeted or actual revenues collected Actual future revenue levels will change: Fee-setting by the City Council Activity levels (market conditions) Change in the “mix” of services and fees Timing of the implementation of the fees and revenue collection

19. © Wohlford Consulting - 201018 General Findings All Departments have a significant overall current fee subsidy Coronado currently does not charge some common fees collected by other cities, such as: Engineering Inspections Stormwater Plan Check and Inspections Fire Plan Check and Inspections Admin costs for contractor-provided services Billable hours (one measure of productivity) are consistent with other studies. Changes to the Building Fee approach (from valuation to cost-based) will better align fees with effort and protect against downturns.

20. © Wohlford Consulting - 201019 General Findings (continued) All Staff Hourly Rates are less than full cost – averaging under 50% cost-recovery. Most of the current hourly rates are significantly lower than those from other cities’ studies. Calculated hourly rates are within the reasonable range of other studies. Some (few) fees have a surplus, but greater numbers and volumes of subsidized fees result in overall subsidies. 87% of current fees are subsidized

21. © Wohlford Consulting - 201020 CDD Planning Full Cost Results 100% of current fees under-recover full cost Staff rates are only 49% (avg.) of full cost Affects deposit-based fees (CEQA, EIR, Re-zone) Deposit-based fee revenues = deposit Cost of commonly free or subsidized services included in results (Historic Preservation - $74K) FULL COST: Annual Cost of Fee-Related Services CURRENT REVENUE: Projected @ Annual Current Fees CURRENT SURPLUS / (SUBSIDY): Annual Difference COST RECOVERY RATE: Current / Full Cost $ 425,000$ 56,000($ 369,000)13%

22. © Wohlford Consulting - 201021 CDD Building Full Cost Results Mix of current fees that over-recover (22%) and those that under-recover (78%) full cost Volumes primarily in subsidized fees, so overall impact is subsidy / potential revenue Staff rates are only 42% (avg.) of full cost Few Building fees are commonly subsidized FULL COST: Annual Cost of Fee-Related Services CURRENT REVENUE: Projected @ Annual Current Fees CURRENT SURPLUS / (SUBSIDY): Annual Difference COST RECOVERY RATE: Current / Full Cost $ 828,000$ 499,000($ 329,000)60%

23. © Wohlford Consulting - 201022 Engineering Full Cost Results 100% of current fees under-recover full cost Staff rates are only 49% (avg.) of full cost Standard fee for improvements is currently $46.50 for plan check and inspection New fees include Contract Administration on “pass-through” costs FULL COST: Annual Cost of Fee-Related Services CURRENT REVENUE: Projected @ Annual Current Fees CURRENT SURPLUS / (SUBSIDY): Annual Difference COST RECOVERY RATE: Current / Full Cost $ 106,000$ 17,000($ 89,000)16%

24. © Wohlford Consulting - 201023 Public Services Full Cost Results No fees for any development-related or other services = 0% Cost Recovery 51% of cost is related to Stormwater plan check and inspection services Staff rates are only 49% (avg.) of full cost FULL COST: Annual Cost of Fee-Related Services CURRENT REVENUE: Projected @ Annual Current Fees CURRENT SURPLUS / (SUBSIDY): Annual Difference COST RECOVERY RATE: Current / Full Cost $ 137,000$ 0($ 137,000)0%

25. © Wohlford Consulting - 201024 Police Full Cost Results 98% of Police fees under-recover full cost 78% of Animal Services fees under-recover full cost Staff rates are only 40% (avg.) of full cost FULL COST: Annual Cost of Fee-Related Services CURRENT REVENUE: Projected @ Annual Current Fees CURRENT SURPLUS / (SUBSIDY): Annual Difference COST RECOVERY RATE: Current / Full Cost $ 477,000$ 73,000($ 404,000)15%

26. © Wohlford Consulting - 201025 Fire Full Cost Results 100% of Fire, EMS, and Lifeguard current fees under-recover full cost No fees for Fire plan check and inspection = 0% cost recovery EMS costs are 38% of the total cost and 88% of current revenue Staff rates are only 44% (avg.) of full cost FULL COST: Annual Cost of Fee-Related Services CURRENT REVENUE: Projected @ Annual Current Fees CURRENT SURPLUS / (SUBSIDY): Annual Difference COST RECOVERY RATE: Current / Full Cost $ 1,497,000$ 636,000($ 861,000)42%

27. © Wohlford Consulting - 201026 Recreation Full Cost Results Cost-Recovery analysis at the program level Current fee levels under-recover full cost in all divisions and all except 2 program areas: Park and Beach Permits (119%) Fitness Center (101%) Cost Recovery rates range from 0% to 119% FULL COST: Annual Cost of Fee-Related Services CURRENT REVENUE: Projected @ Annual Current Fees CURRENT SURPLUS / (SUBSIDY): Annual Difference COST RECOVERY RATE: Current / Full Cost $ 4,368,000$ 1,294,000($ 3,074,000)30%

28. © Wohlford Consulting - 201027 Citywide Annual Full Cost Results Department / Division FULL COST: Annual Cost of Fee- Related Services CURRENT REVENUE: Projected (annual) @ Current Fees SURPLUS / (SUBSIDY) (Current Revenue – Full Cost) CURRENT COST RECOVERY RATE (Current / Full Cost) CDD Building$ 828,000$ 499,000($ 329,000)60% CDD Planning$ 425,000$ 56,000($ 369,000)13% Engineering$ 106,000$ 17,000($ 89,000)16% Public Serv.$ 137,000$ 0($ 137,000)0% Police$ 477,000$ 73,000($ 404,000)15% Fire$ 1,497,000$ 636,000($ 861,000)42% Recreation$ 4,368,000$ 1,294,000($ 3,074,000)30% TOTALS:$ 7,838,000$ 2,575,000($ 5,263,000)33%

29. © Wohlford Consulting - 201028 CITYWIDE RESULTS SUMMARY Current overall annual subsidy of $5,263,000 Overall Cost Recovery Rate for Fee Services Only is 33% 58% of the subsidy is in Recreation Development-related departments include $924,000 of the subsidy Excluding Recreation: Potential revenue increase (to Full Cost) of $2,189,000 Without a fee increase or reductions in operating costs, common taxes (General Fund) or other funds will continue to provide subsidies to fee payers

30. © Wohlford Consulting - 201029 Next Steps City Staff will recommend general fee-setting and cost recovery goals and solicit direction from the Council. City Staff will provide a comparison of other cities’ fees. City Staff will distribute Consultant's final report and detailed lists of cost results and findings. City Staff will develop “Recommended” fees for the Council’s consideration (based on Council goals). City Council will set the final fee levels and establish the implementation date. Departments will update fee schedules and reprogram electronic permit systems. New fees will go into effect on the designated date. Council may set an overall cost-recovery policy to guide future staff action.

31. © Wohlford Consulting - 201030 QUESTIONS? Chad Wohlford, Project Manager chad@wohlfordconsulting.com For further information, please contact: