HomeMy WebLinkAboutItem 02- Master Fees and Charges AGENDA ITEM SUMMARY Meeting Date: 2/26/2024
Meeting Type: Work Session
Staff Contact/Dept.: Nathan Bell/Finance
Staff Phone No: 541-726-2364
Estimated Time: 30 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 ANNUAL ADJUSTMENT
ACTION
REQUESTED:
Provide guidance to staff on the percentage increase to the Master Fees & Charges
(MF&C) Schedule for Fiscal Year 2025 (FY25).
ISSUE
STATEMENT:
Each year, Council and staff review existing fees and charges for appropriateness of
rates for meeting cost recovery targets. In prior years, Council has used a Consumer
Price Index (CPI), an escalator based on the growth of the City’s labor costs, or an
escalator based on what felt appropriate within the given year’s economic
environment. Staff is looking for guidance from Council on an escalator percentage
for the upcoming year’s MF&C update.
ATTACHMENTS: 1: Council Briefing Memorandum
DISCUSSION/
FINANCIAL
IMPACT:
The City's schedule of fees and charges is established through Council action. To
provide an easy reference for citizens, councilors, and staff to identify the current
fees authorized to be levied and collected by the City, staff has consolidated past
documents describing the City's various fees and the method for making changes
into a single document titled Master Fees and Charges (MF&C) Schedule.
The MF&C Schedule serves as a comprehensive guide that outlines the City's fees
and charges. This document helps to simplify the fee structure and provides clarity
to stakeholders regarding the fees that are currently in place. It also assists in
identifying any new and removed fees that have been proposed by staff.
The accompanying Council Briefing Memorandum provides some history on how
rate increases were determined in prior years, a table reflecting actual increases for
the last four years contrasted with a consumer price index, potential rate escalators
for the upcoming year, and the potential impacts of a percentage increase.
M E M O R A N D U M City of Springfield
Date: 2/26/2024
To: Nancy Newton COUNCIL
From: Nathan Bell, Finance Director
Jessica Mumme, Budget & Procurement Manager
BRIEFING
Subject: MASTER FEES & CHARGES ANNUAL
ADJUSTMENT
MEMORANDUM
ISSUE: Each year, Council and staff review existing fees and charges for appropriateness of rates
for meeting cost recovery targets. In prior years, Council has used a variety of escalators such as a
Consumer Price Index (CPI), an escalator based on the growth of the City’s labor costs, or an
escalator based on what felt appropriate within the given year’s economic environment. Staff is
looking for guidance from Council on an escalator percentage for the upcoming year’s MF&C
update.
COUNCIL GOALS/
MANDATE: Financially Responsible and Stable Government Services
BACKGROUND:
The City Council is responsible for determining the schedule of City fees and charges. To streamline
the process, Staff consolidate various fee documents into a single fee schedule known as the Master
Fees and Charges (MF&C) Schedule. This document serves as a reference for citizens, Councilors,
and staff to quickly identify the current fees authorized by the City for collection. The MF&C
Schedule includes fees for all City service areas such as Fire Line Services, Library, Municipal Court,
Police, Building Safety, Engineering, Planning, Utilities, and System Development Costs.
Fees are a necessary source of revenue to support City services and programs. City staff are
committed to ensuring that our fee structures are fair and reasonable and welcome feedback from the
Council on how the City can improve its fee policies and/or adjust its programs and service levels in
line with the fee levels the Council deems appropriate.
Based on the guidance provided by Council this evening, staff will prepare a redlined version of the
Master Fees and Charges Schedule that will come back to Council for review in a work session
scheduled for April 8, 2024.
PLANNING FEES:
A study of the City’s Planning Fees was conducted by Portland State University in collaboration with
the Development and Public Works Community Development Division. The Community
Development Director will be scheduling a future work session to seek guidance from Council in
determining planning fees. The guidance from this evening’s work session will not apply to planning
fees.
Attachment 1 Page 1 of 3
2
SYSTEM DEVELOPMENT CHARGES:
System Development Charges are updated annually using the construction cost index listed in the
Engineering News Record (ENR). The CPI advertised by the ENR for January 2024 is 2.6%.
CONSUMER PRICE INDEX (CPI):
The CPI represents the rate of increase in prices for goods and/or services over a given period of time
and affects City budgets by raising costs relating to materials, services, and personnel. When fees do
not keep up with inflation, fee revenue may fall behind costs, resulting in a deficit that is either
subsidized by other funding or balanced through cost reductions.
To streamline the process of preparing fee changes, staff requested guidance from the Council on
February 25th, 2019 in the selection of an inflation rate index to use as an escalator for fees. After
reviewing several different indexes, the Council chose the Bureau of Labor Statistics (BLS)
Consumer Price Index (CPI), specifically the CPI for All Urban Customers (CPI-U), West Region
Size Class B/C. This index has been used as a guide for the past six years to aid in the process of
updating the MF&C schedule. As of January 31, 2024, the CPI for our region, according to the U.S.
Bureau of Labor Statistics, is 3.3%.
ALTERNATIVE ESCALATOR – LABOR RATE:
At the work session held on February 27th, 2023 to discuss the MF&C escalator for FY24, the
Council was presented with the published CPI rate information for January 2023. After two
consecutive years of high inflation, Council directed Staff to conduct additional analysis to identify an
alternative escalator for FY24 which was more reflective of the true operating costs of the City.
Staff evaluated each of the MF&C sections through a lens of cost recovery appropriate to each
section. Since the fees listed in the MF&C schedule are derived from multiple departments within the
City, the City's labor rate is a significant factor that can influence fees. Staff has calculated the year-
over-year rate of change in the City's labor rate at 5%.
The following CPI summary table reflects the last four (4) fiscal years. The table identifies both the
U.S. Bureau of Labor Statistics (BLS) West Region City Size B/C CPI and the Council approved
escalator that was implemented.
FY21 FY22 FY23 FY24
BLS CPI 2.8% 1.6% 8.1% 6.0%
Escalator
Implemented
0.0% 1.6% 5.0% 4.4%
Attachment 1 Page 2 of 3
3
IMPACT OF 1% FEE CHANGE:
When it comes to the magnitude of changing fees up or down by 1%, using the average aggregate fee
collection over the past three fiscal years, a 1% change would result in an approximate change of
$308,000. Please find the following table reflecting impacts to funds and or categories:
Fund/Category % Change $ Change
General Fund 1.0% $50,000
Street Fund 1.0% $2,000
Special Revenue Fund 1.0% $2,000
Building Fund 1.0% $18,000
Police Local Option Levy Fund 1.0% $1,000
Street Capital Fund 1.0% $9,000
Sanitary Sewer Fund 1.0% $93,000
Ambulance Fund 1.0% $50,000
Storm Drainage Fund 1.0% $82,000
SDC Administration Fund 1.0% $2,000
TOTAL FEES 1.0% $308,000
RECOMMENDED ACTION:
Provide guidance to staff on the percentage increase to the Master Fees & Charges Schedule for
Fiscal Year 2025 (FY25).
Attachment 1 Page 3 of 3