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FINANCIAL STATEMENT Based upon 2014/15FY data for over 200 development related user fees, the City is expending $8.840 million for private development related services and recovering approximately $4.254 million in revenue. The net result is an annual subsidy of approximately $4.586 million by the General Fund of development related services. The recommended fee increases would reduce this subsidy by approximately $2.739 million to a new annual subsidy of approximately $1.847 million based on development volume anticipated in the 2014/15FY. If the Council adopts the new fee schedule in June 2015 the recommendation is for the new fees to take effect on September 1, 2015. The Two Year Budget, to be adopted by the Council in June 2015 will be updated to reflect the new fees and the reduced subsidy from the General Fund for these services starting in the 2015/16FY. BACKGROUND The City conducted a fee study of certain development related services based on the premise that there are certain services that the City provides that are of special benefit to an individual or business that should not be a cost or financial burden to the general taxpayer. Additionally, there are certain development related activities by individuals or businesses that require specific additional regulation that are appropriately considered not the financial responsibility of the general taxpayer. One of the City's financial policies is to have development pay 100% of the cost to provide City services. In 2009, the City hired PRM to prepare a review and analysis of the City's direct and indirect costs associated with the delivery of development related services (Study). Based on the City's accounting records, the analysis tabulated the full cost of providing development related services including both direct and indirect costs. The review and analysis then recommended certain cost recovery levels for each fee based on economic and policy considerations (the "Recommended Cost Recovery Level"). The Recommended Cost Recovery Level was then compared with revenues currently received for these services to determine the recommended cost recovery rate for each service. DISCUSSION The Study presented the cost of providing development related services by individual divisions including building and safety, fire prevention, planning and engineering. Staff has updated the Study's findings which were based on the 2007/08FY expenditures to the current budget year (2014/15FY) revenue and expenditures. The following is a brief summary of the findings by division: Building and Safety Division The Building and Safety Division (Building Division) provides the following services: permit processing, plan checking, building inspections and investigations of complaints regarding potentially dangerous buildings. The City's goal has been to recover 100% of the cost of these services in the fees charged by the Building Division. However, the Study found that in 2007/08FY the Building Division recovered approximately 88% of the cost of these services. In the past several years the Building Division's cost recovery Page 2 of 9