Short answer: No, user fees covered one-third of the costs in FY2016, and 100% cost recovery isn’t the goal for most services

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The City of West Hollywood charges user fees for some services it provides, such as recreation classes, residential parking permits, development permits, special event permits, and the rent stabilization program. Parking fines and meter rates do not fall in this category.

A consultant recently studied the cost of these services and the level of fees. If the fee exceeds the cost, the City must cut it for legal reasons. If the cost exceeds the fee, the City has a choice: raise the fee or make up the difference with general City revenues.


Cost of service

The chart below shows the cost of selected user-fee-based services, grouped by City division. The total was about $12 million in fiscal year 2016 (July 2015 to June 2016). That includes indirect and overhead costs.

Note: Some user-fee-based services, such as facility rentals and the City Engineer’s services, were not included in the numbers. We excluded groups of services costing less than $50,000. Source: City of West Hollywood, Cost of Services Study, Report of Findings, May, 2016.


Funding

Users paid $4 million in fees for these services in FY2016. The City covered the other $8 million in costs with general revenues. In that sense, the services were subsidized. The chart below shows the split between user fees and subsidies for each division.

Note and source: Same as above

The user-fee/subsidy split varied within each division. For example, user fees covered 12% of the cost of fee-based services in the recreation division overall. Specific recreation fees covered anywhere from 6% (Tiny Tots) to 67% (Baby Boogie). It was 10% for the aquatics program, 11% for day camp, 25% for classes and contract classes, 33% for the farmers’ market, and 41% for excursions.


Subsidies

Four groups of services received almost 95% of the subsidies. They were recreation (44%), rent stabilization and housing (23%), special events (16%), and planning (11%).

Note and source: Same as above.


Cost-recovery goals

For most services, the City doesn’t expect user fees to cover 100% of the costs. In some cases, the City is keeping fees competitive with other jurisdictions. In other cases, big increases could drive away the very users the programs were created to serve (e.g., recreation users).

The chart below shows the cost-recovery goal (by division) recommended in the consultant’s report. The bars are split into the percentage of costs that were covered by user fees in FY2016 (green) and the extra amount that would be needed to meet the goal in the future (yellow).

Note and source: Same as above.

The lowest recommended goal is 6% for special events — unchanged from FY2016 — pending a future City Council discussion about special event funding. The highest recommended goal is 100% for services provided by the facilities and field services division.

Within each division, cost-recovery goals may vary. For example, the City is raising some development permit fees to 100% of cost over four years, while others stay the same. The June 6, 2016, staff report to the City Council discusses cost-recovery goals in more detail.


http://wehobythenumbers.com/wp-content/uploads/2016/09/201609-fees.jpghttp://wehobythenumbers.com/wp-content/uploads/2016/09/201609-fees-300x300.jpgDavid WarrenBudgetHousingPerformance (efficiency)Recreation and culturerenting,special events
Short answer: No, user fees covered one-third of the costs in FY2016, and 100% cost recovery isn't the goal for most services| The City of West Hollywood charges user fees for some services it provides, such as recreation classes, residential parking permits, development permits, special event permits, and the...