HomeMy WebLinkAboutItem 02 Master Fees & Charges Schedule Update AGENDA ITEM SUMMARY Meeting Date: 2/25/2019
Meeting Type: Work Session
Staff Contact/Dept.: Neil Obringer/Finance Staff Phone No: 541.736.1032
Estimated Time: 15 Minutes
S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Provide Financially Responsible and
Innovative Government Services ITEM TITLE:
MASTER FEES & CHARGES SCHEDULE UPDATE
ACTION
REQUESTED:
Provide guidance to staff on which cost escalator to apply to fees in the 2019 update to the Master Fees and Charges Schedule.
ISSUE STATEMENT:
Each year, Council and staff review existing fees and charges for appropriateness of
rates for meeting cost recovery targets. Staff is preparing to update the fees and
charges schedule for 2019 and want to ensure that the cost index is selected based on guidance from Council.
ATTACHMENTS:
Attachment 1: Council Briefing Memorandum
DISCUSSION/ FINANCIAL
IMPACT:
The City’s schedule of fees and charges are established by Council action. Staff
consolidated past documents describing the City’s various fees and the method for making changes into a single document titled Master Fees and Charges Schedule. This document provides an easy reference for citizens, Councilors, and staff to
identify the current fees authorized to be levied and collected by the City.
Staff is requesting guidance from the Council on which cost escalator to apply to this year’s fee update. Staff will apply the cost escalator as directed and bring back the complete updated fee schedule for review and adoption by Council later in the
Spring. The attached Council Briefing Memorandum summarizes several indexes which the
Council may select as the basis for the 2019 Master Fees and Charges Schedule update. The options presented include; actual City of Springfield projected labor costs, the CPI-U West Region, Construction Cost Index and Building Cost Index.
The index selected has a direct impact on the level of cost recovery for City programs.
M E M O R A N D U M City of Springfield
Date: 2/25/2019
To: Gino Grimaldi COUNCIL
From: Nathan Bell, Finance Director
Neil Obringer, Budget Officer
BRIEFING
Subject: MASTER FEES & CHARGES SCHEDULE
UPDATE MEMORANDUM
ISSUE: Each year, Council and staff review existing fees and charges for appropriateness of rates
for meeting cost recovery targets. Staff is preparing to update the fees and charges schedule for
2019 and want to ensure that the cost index is selected based on guidance from Council.
COUNCIL GOALS/
MANDATE: Financially Responsible and Stable Government Services
BACKGROUND:
The City’s schedule of fees and charges are established by Council action. Staff consolidated past
documents describing the City’s various fees and the method for making changes into a single
document titled Master Fees and Charges Schedule. This document provides an easy reference for
citizens, Councilors, and staff to identify the current fees authorized to be levied and collected by the
City.
Changes to the City of Springfield’s fees and charges can be modified through action by the Council
or staff. The most common action taken by the Council is by simple resolution. The authorization to
levy the fee may be contained in the municipal, building, development, or fire codes, but the actual
amount of the fee itself is established by resolution. These are most commonly brought to the
Council with a public hearing and are adopted at that time.
Other fees may be authorized by the municipal, building, development, or fire codes, and the specific
amount of the fee is also contained within that same code. In those cases, the code itself must be
amended and most commonly requires a public hearing, a first reading, and a second reading prior to
adoption.
COST INDEX TO USE FOR 2019 UPDATE:
Staff is requesting guidance from the Council on which cost escalator to apply to this year’s fee
update. Staff will apply the cost escalator as directed and bring back the complete updated fee
schedule for review and adoption by Council later in the Spring.
There are a range of indexes available to use. Below is a summary of some of the indexes the Council
may select, some information about how they are calculated, and their relevance as it relates to City
of Springfield.
a.) Projected Actual Labor Cost:
As part of the budget process, the Finance Department develops a 5 year projection of the City’s
personnel costs. This projection takes into account projected increases in salary and benefits based on
the actual labor force employed by the City. Though there are a range of assumptions built into this
projection it represents the most current projection of the true cost of City operations.
Attachment 1, Page 1 of 3
The most current personnel services projection puts the 5 year average annual increase at 4.6%.
The primary advantage to using our actual projected labor increase is that we are more likely to
ensure that the fees charged to our customers increase in line with the City’s actual cost of operations.
Using a 5 year average helps to flatten yearly variation caused by fluctuations in labor cost, such as
the variation caused by the cycle of PERS increases. A disadvantage to using actual cost is that in
certain years our actual costs may not be comparable to price changes experienced in the broader
economy and may either be higher or lower than price changes resulting from the use of other
indexes.
b.) CPI-U, West Region:
The Portland-Salem CPI-U has historically been a common index used by the City for annual fee
updates. However, with the discontinuation of this index by the Bureau of Labor Statistics this is no
longer an option. Another index which may be used in its place is the CPI-U, West Region. This
index measures price change in urban communities in 13 western states including Oregon.
The January 2019 CPI-U, West Region increase was 2.9%.
A potential benefit to using the CPI-U, West Region index is that it ties the increase in City fees to
general economic and market conditions experienced by consumers. Also, because of the broad
geographic span of this index it may tend to flatten any dramatic changes in cost that are specifically
regional in nature. However, since this index is influenced by a range of industries other than
municipal government, this index may not keep up with the City’s cost of doing business.
c.) Construction Cost Index & Building Cost Index:
Since many City fees and charges are borne by the development community, two other indexes which
the Council may consider are the Construction Cost Index and Building Cost Index. These indexes are
published by the Engineering News-Record and are meant to represent increases in cost for the
construction industry.
Each index is calculated as described below;
Construction Cost Index: 200 hours of common labor at the 20-city average of common
labor rates, plus 25 cwt of standard structural steel shapes at the mill price prior to 1996 and
the fabricated 20-city price from 1996, plus 1.128 tons of portland cement at the 20-city
price, plus 1,088 board-ft of 2 x 4 lumber at the 20-city price.
Building Cost Index: 68.38 hours of skilled labor at the 20-city average of bricklayers,
carpenters and structural ironworkers rates, plus 25 cwt of standard structural steel shapes at
the mill price prior to 1996 and the fabricated 20-city price from 1996, plus 1.128 tons of
portland cement at the 20-city price, plus 1,088 board ft of 2 x 4 lumber at the 20-city price.
For January 2019, the Construction Cost Index was 3% and the Building Cost Index was 3.1%.
Though the cost increases represented here may match the operating cost increases incurred by the
development community, they are not generally representative of the City’s overall cost of doing
business and, additionally, may be susceptible to variations caused by changes in economic and
development activity that are out of the City’s control.
Attachment 1, Page 2 of 3
RECOMMENDED ACTION:
Provide guidance to staff on which cost escalator to apply to fees listed in the 2019 update to the
Master Fees and Charges Schedule.
Attachment 1, Page 3 of 3