The City of Healdsburg is a full service city situated in the California wine country. The City had never previously conducted a comprehensive fee study. Suspecting that many fees were not recovering the full cost of service provision, and recognizing that many recent State requirements have resulted in additional costs not reflected in the existing fee structure, they contacted MGT for assistance.
The City was interested in accurately reporting the true cost of providing various fee-related services, and exploring the possibility of modifying current fees to better reflect the increasing cost of providing services over time.
The analysis was guided by several requested services to:
- Calculate the fully burdened cost of providing user fee services.
- Identify creative fees employed by other cities that can be adopted by Healdsburg.
- Provide the City’s management with the information required to make informed pricing decisions.
- Advise the City regarding potential fee policy issues, strategy, implementation, and appropriate fee resetting/review practices.
- Forecast potential revenue impacts of the new fees.
Looking to ensure that all objectives were met, our staff:
- Applied fully burdened labor rates to time requirement estimates and annual workload figures.
- Reviewed cross check results to ensure data validity.
- Benchmarked existing and proposed fees against those charged by neighboring jurisdictions.
Our study indicated a majority of the City’s fees were set below the actual cost of providing services. Most fees were recalibrated to full cost levels. However, the Council chose to subsidize select fees, which were determined to have public benefit or where a full cost fee would substantially reduce participation. The project culminated in the institution of a master fee schedule that fully complies with Proposition 218 and all applicable State and local fee laws. The new master fee schedule resulted in a 36 percent annual revenue increase.