The common understanding is that a fee study is performed to increase city revenues (even though the conversation should be about recovering costs). How much money? RCS studies identify cost recovery from $200,000 per year for a small agency to over $1,000,000 per year for mid-size agencies. If that alone is not enough to convince you to make it happen, a Comprehensive Fee Study will also do the following and making you look like a municipal rock star in the process.
Update Current Fees – Within your agency, there will be someone moaning and groaning about fees which make no sense compared to the time related to performing the service. With a comprehensive fee study, staff can confidently respond that, “yes the time and cost it takes to process a Conditional Use Permit is $8,000.” There are also fees subsidized for some reason, and a Comprehensive Fee Study will determine the full cost of providing the service and allow you to eliminate those subsidies which no longer makes sense. Some fees may be reduced because of changes in staffing or processes, and the Fee Study will recommend reducing the fee. I’m sure you want to be good stewards of public funds and not overcharge the public.
Add, Remove, Redefine Fees – The list of user fees range from 100 to 2,500 for an agency. With a Comprehensive Fee Study, RCS will go over every fee row by row, introduce potential new fees, and make a recommendation to add, remove or redefine the comprehensive list. City services are constantly evolving. For example, we often remove fingerprinting fees, because it’s now provided by private companies. Sometimes, we recommend combining multiple fees, because it simplifies city processes. There are many reasons to add, remove and redefine fees, and the study will result in a clean master fee schedule.
Legally Defensible Fees – The comprehensive fee study will make city staff, decision makers and the Attorney’s office comfortable with the adopted fees. The calculation methodology is clearly laid out, and data details the allocated times and costs. Through the process, RCS also highlight new laws affecting user fees, and suggests removing fees which are no longer allowed.
Confirm Revenue Collection – Since this is a comprehensive process, RCS wants to determine that all fees are being collected accordingly. There are times which Engineering staff will review a Planning application, but then the city does not charge a fee for that Engineering cost. This could also happen when a home occupation permit is routed to other departments, but staff does not realize there is a home occupation fee. Deposit based fees are challenging, and the Fee Study allows all departments to collectively discuss and agree upon a fee collection process.
Evaluate Market Demand – With every fee study, someone will always ask, “How does the suggested fee compare to other agencies?” While we have written about why cities cannot and should not compare themselves to each other, we still look at other market-based fees, such as rentals and permitted use of equipment. When asked, we will provide our clients with master fee schedules from other cities, so that we can all confusingly stare at them before setting them aside.
The additional annual revenues recovered from a fee study should be enough reason to do it once every five years. If you’re tired of working with a fee schedule that staff does not understand how it was calculated, then you should go ahead and send out that Request for Proposal.