South Pas Raises Some Fees in Response to Budget Crunch

With South Pasadena strapped by a budget crisis, residents will pay higher fees for some services, but lower ones for others, starting in July.

That’s after the City Council unanimously voted during a continued public hearing to adjust the Master Schedule of Fees for Service (Fee Schedule) starting July 1 and established a plan for annual adjustments per the Consumer Price Index (CPI).

Amended fees are included within community services, planning, fire fees, rentals and building. The adjusted fees are projected to make a median cost recovery rate of 84 percent, which is expected to increase annual revenues by $350,000, according to a staff report.

“The finances of the city are such that we can really not continue to subsidize some of these fees and we need to come out more even on the fees,” said Mayor Marina Khubesrian. “That’s just kind of how things are right now.”

Added  Council Member Diana Mahmud: “We’ve heard from time to time suggestions that the city ought to function more like a business, and this is our effort to the extent that we can to implement that recommendation. There are some things for which there’s going to be very significant subsidies, particularly in the area of community services, where it’s impossible to recover even 50 percent of the cost of providing those services.”

The public hearing was a continuation of a May 21 meeting at which proposed fee adjustments were reviewed. An ad hoc committee comprised of Khubesrian and Mahmud delved into looking at fees to fine tune and standardize them, comparing them to what a consultant estimated was the actual cost of the services. A tiered fee schedule for residents was also outlined with feedback from the Finance Commission.

A User Fee Study engaged by the city to review current fees as part of the 2018-19 fiscal plan showed that the majority of city fees were set “at a rate far below the cost of providing the service and that additional fees would be appropriate to align with new services.”

The study took into account delivery methods, staffing and overhead costs to calculate appropriate fees structures and full cost-recovery potential of individual services. The study showed that the city recovers cost of services at an average of 59 percent, with planning fee cost recovery at the lowest at 21 percent.

“Some of the study, you can’t charge above and beyond what the cost of the service is,” said Khubesrian. “There was a couple of instances where we actually reduced fees because we kind of had to.”

From the study, one of the largest gaps between cost of service and user fees was located in the community services department. The study showed that the department’s fees were aligned below the cost of service and netted around 62 percent. Staff recommended “most increases” to change the recovery rate from 62 percent to 68 percent, so that participation levels could be maintained and would more closely meet with other jurisdiction fees (Camp Med Fees).

The planning department analyzed maintaining fees at a “reasonable rate” for small businesses and single-family homeowners while adopting higher cost recovery for development fees. The report noted that development project fees should be set at market rate. The development fees were noted as below average in comparison to surrounding jurisdictions. Based on the study, current planning fees are recovering at 21 percent of the cost of service, which the city said was “not sustainable for the division or the City.”

The ad hoc committee also analyzed fire fees, and the largest deficiency was found in the false-alarm response fee. The deficit was noted as a result of city policy to waive charges for the initial three responses to false alarms. The fee schedule will now waive the fee for the first false alarm, set a penalty for the second and third, and adopt a higher rate for the fourth and so forth.

For rentals, the committee worked with staff to make sure that fees were closer to market rate for the size and type of the facility. Tiered rates were created for residents (which include local businesses), nonprofits and non-residents/all others.

“We spent a lot of time working with city staff fine tuning our rate schedule such that we’re charging a similar fee for the use of a similar facility and also charging premium time, so that if you want to use the War Memorial now, you’re going to pay a premium on Saturday nights because that’s when the War Memorial is most requested,” said Mahmud.

“So we’re trying to, as is much as is reasonably feasible, bring in some additional income to the community, but still being sensitive to areas where we simply can’t. In particular, our focuses were on trying to keep the fees as low as we thought was reasonably possible for the combination of small businesses and our residents.”