HomeMy WebLinkAbout4.F.4. Authorize Fee Study Update 9 . F•Li •
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To: Mayor and City Council
From: Mark McNeill, City Administrator
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Julie A. Linnihan, Finance Director
Subject: Fee Study Update
Date: October 2 " 2012
Action Requested:
The City Council is requested to approve initiation of an updated Fee Study. This will apply to the 2013
fees, approved by the Council in late 2012, early 2013. The study will encompass the General fund fees
of the City, excluding the Enterprise portions of Sewer and Storm Water fees.
Introduction:
During the 2013 budget work sessions, staff and Council have discussed the development of an updated
fee schedule. This has been integrated into the preliminary budget presentations as a potential revenue
source, allowing for the addition of new fees, updates to existing fees and confirmation of the current
fee rates for specific transactions. The City has not undertaken an extensive fee review since the mid
2000's. In 2005, the City undertook a fee study as a result of the negotiated settlement of the BATC
lawsuit, and this study primarily focused on inspection and permit fees. Later, in 2007 -2008 a smaller
study was undertaken to review the recreation fees.
Staff has worked with Springsted in the past to develop fees and charges that reflect coverage for the
identified costs of City services. A primary goal of this study is to enhance a fee structure that can be
established and updated by City Staff. This will allow staff to maintain and confirm the charges on an
annual basis, as well as establishing a consistent system of fee structures, throughout all City
departments.
This will allow staff to compile adequate and accurate documentation for the presentation of the 2013
Fee Schedule.
Budget Impact:
The estimated fee for this study is $15,000. The funding for this project will be from the Inspections,
Planning, Finance and Administrative departments of the General fund. Costs will be allocated per
specific work tracking, throughout the study.
Recommendation:
Council is asked to authorize the initiation of a fee study in 2012, to prepare for departmental review of
the fees for 2013. Upon completion of the fee review, staff from Springsted will present a Report of
Findings, as discussed in the attached memo. The fees and adjustments will be provided to the Council
in 2013 for approval upon completion of the departmental review of existing fees as well as possible
introduction of new fees. Any new fees will be provided to Council for discussion prior to
implementation.
Action Requested:
If Council concurs, they should move to approve the initiation of an updated Fee Study.
Springsted
City of Shakopee, Minnesota
Fee Study Update
Work Plan September 2012
Objective(s)
The purpose of this study is to assist the City of Shakopee in updating and evaluating the fees it charges for
various City services to determine the actual cost of providing the services supported by these fees and to
recommend a user fee system that is defensible and easily updated by the City staff. The fees to be included
within the scope of this study include those fees listed in the City's Fee Schedule for 2013 excluding fees for
sewer and storm water utilities services.
Task I - Review Background Information
D Review background information and analyze Study assumptions by reviewing:
— The City's current user fee system
— All current revenue policies, both written and implied, especially those related to
establishing and adjusting user fees and charges
— Historical information related to the City's user fee system
— Review the current allocation of overhead and other indirect costs to user fees and charges
— The 2012 fiscal -year budget, the proposed 2013 fiscal -year budget and past year's actual
expenditures, as they relate to user fees and charges
Task II - Data Collection
D Meet with City department heads and staff:
— Develop a schedule of which departments fees are to be developed for and in what order
(Responsible party: Springsted & City Staff)
— Work with the Finance Director to develop a rational system for determining City -wide
overhead /administrative functions and costs (Responsible party: Springsted & City Staff)
— Work with department heads and appropriate staff determining the time and the resources
allocated in providing user fee services:
• Review current list of user fees and charges and the most recent cost allocation
plan(s) established (Responsible party: Springsted & City Staff)
• Identify specific services provided for user fee for which the department contributes
time or resource (City Staff)
• Identify services the City provides for which a user fee could be established (City
Staff)
• Estimate the average time and resources to provide each service (City Staff)
• Identify any training and /or continuing educational requirements for providing the
service (City Staff)
• Identify department overhead and indirect costs associated with providing each
service (Responsible party: Springsted & City Staff)
— Review preliminary findings with appropriate staff
City of Shakopee, Minnesota
Fee Study Update
September 2012
Page 2
Task III - Data Analysis (Responsible party: Springsted)
➢ Develop a schedule of costs for each service in Task II to include:
— Amount of time each employee devotes
— Direct salary cost for each employee
— Related personnel costs for each employee (i.e. fringe benefits, vacation, sick leave costs,
etc.)
— Related supplies consumed in the provision of the service
— Related training and /or continuing education costs
— Related indirect administrative and overhead costs including as developed with Finance
Director in Task II :
• Supervision and management
• Planning
• Accounting
• Reporting
• Payroll and investment services
• Management information systems
• Buildings
• Vehicles
• Equipment
• Property maintenance
• Insurances
• Any other indirect costs
— The total cost for each service
➢ Calculate projected cost recovery ratios for current user fees and for services for which a user
fee could be charged, and prepare comparative analysis.
Task IV - Develop User Fee Model
➢ A computer model (based in Excel) will be developed that will enable the City to maintain their
user fees and charges system on a current basis. Key staff members responsible for
maintaining the system will be trained in the use of the model.
Task V - Present and Review Report of Findings
➢ Springsted will prepare a Report of Findings that will detail our approach, methodology and the
cost of providing each service. We will present the Report of Findings to the City in a workshop
session
➢ We will provide fifteen bound copies of the Report plus one reproducible copy in PDF format
Expectations
In order to conduct this study, the City will need to designate a staff member to serve as a project manager. This
person will be responsible for assisting Springsted with gathering accurate and timely data needed to complete the
City of Shakopee, Minnesota
Fee Study Update
September 2012
Page 3
project and to assist in arranging for required meetings. At a minimum the following information will be needed to
complete the study:
User Fee Study Required Information
➢ Most recent cost allocation plan(s) for current user fees
➢ Salary and benefit information for all employees including, but not limited to, annual wages,
benefit structure, workers' compensation rates, etc. in a format provided by Springsted
➢ Copy of the City's current user fees and charges (to be included in this study)
➢ Historical information related to the City's user fee system and charges for services, including
actual revenues and frequencies, by fee type
➢ The current method of allocating overhead and other indirect costs to user fees and charges
➢ The City's 2012 fiscal -year budget, proposed fiscal -year 2013 budget and past year's actual
expenditures
➢ The City's current policy related to paying and /or reimbursing for training and continuing
education for staff providing services which a building permit related fee has been established
➢ Other relevant information as requested
City of Shakopee, Minnesota
Fee Study Update
September 2012
Page 4
Compensation
We propose to complete this study as described in this proposal for the lump sum fee of $15,000 exclusive of any
out -of- pocket expenses such as travel and copying. This amount would include two on -site meetings. We will
complete the study within 10 —12 weeks of receiving the notice to proceed provided that all necessary information
is made available to Springsted in a timely manner and that City staff is available for required meetings. Should
the City wish to do this one department at a time, the initial department is projected to take 4 -6 weeks, with each
department taking 4 weeks thereafter.
This draft schedule does not anticipate any unforeseen delays or other circumstances that would result in a later
completion date. Should any unforeseen delays or circumstances arise, Springsted can draw on its staff of 60
professionals to keep the project on schedule to the greatest extent possible.
Springsted would invoice the City for work completed based on the following schedule:
Cumulative
Percentage Percentage
Time of Invoice Invoiced Invoiced
Completion of Task 11 25% j 25%
Completion of Task III 25% 50%
Completion of Task IV 40% 90%
Completion of Task V 10% 100%
Should the City request and authorize additional work outside the scope of services described in this proposal or
additional revisions beyond those agreed upon at the discussion and review of the draft report and preliminary
model, we would invoice the City at our standard hourly fees.
2012 Standard Hourly
Fee Schedule
Title Rate
Principal & Senior Officer $220
Officer & Project Manager $190
Senior Associate $155
Associate $145
Support Staff $ 65