Loading...
HomeMy WebLinkAboutRCS-Diamond Bar Fee Study Proposal (1).pdf Proposal for the City of Diamond Bar CITYWIDE FEE STUDY & COST ALLOCATION PLAN 1519 E Chapman Ave Suite C Fullerton, CA 92831 (714) 992-9020 www.revenuecost.com Proposal for Citywide Fee Study & Cost Allocation Plan Page | 2 TABLE OF CONTENTS FEBRUARY 9, 2024 Cover Letter ................................................................................................................................................................ 3 Project Team ............................................................................................................................................................... 4 Firm’s Experience/References ........................................................................................................................... 8 Methodology/Project Understanding ............................................................................................................ 10 Cost for Services ...................................................................................................................................................... 17 Proposal for Citywide Fee Study & Cost Allocation Plan Page | 3 February 9, 2024 City of Diamond Bar 21810 Copley Drive Diamond Bar California 91765 Proposal – Citywide Fee Study & Cost Allocation Plan Revenue & Cost Specialists, LLC (RCS) enjoyed the experience of updating Diamond Bar’s Citywide Fees in 2016 and appreciates the opportunity to respond with this proposal to develop a Citywide Fee Study and Cost Allocation Plan. We have been providing fee studies and other costing services since 1980, making us the first and foremost expert in costing services for California. RCS’ skill set will generate maximum accountability for the City of Diamond Bar. We have a history of delivering quality reports with defensible data that can be acted on and adopted. Our processes are straightforward, analytical and require minimal staff time. In the end, we strive to ensure that the City of Diamond Bar will be able to confidently stand behind the information and recommendations in the Report. As former city staff ourselves, we understand how Diamond Bar operates, what you want, and that your time is precious. If selected, RCS can begin work immediately, and proposes project completion in May 2024. Based in Fullerton, we can provide timely support to City staff for years to come. The terms of this proposal will be honored for 60 calendar days from the date of submittal. Please contact Eric at (714) 992-9027 or eric@revenuecost.com with any questions. Sincerely, ERIC S. JOHNSON CHU THAI President Partner Proposal for Citywide Fee Study & Cost Allocation Plan Page | 4 DIAMOND BAR PROJECT TEAM While all RCS principals have worked independently on projects, Eric Johnson and Chu Thai would both be primarily involved with the City of Diamond Bar. Prior to the project kick-off, we will designate one principal as the Project Manager and primary contact. The other principal will work behind the scenes, compiling and analyzing the data. RCS assigns two principals for several reasons. Often, both principals will attend the public hearing because two are better than one at convincing the policy makers. Two principals allow us to discuss high-level issues for each project. Most important to RCS, we want our principals to build long-term relationships with all our clients. RCS may assign additional specialists to the project to help maintain the proposed schedule and ensure the quality of the product. For the sake of continuity, only RCS principals will interact with City staff, as our specialization and expertise will allow staff to focus on other City functions. We thoroughly understand and will be involved in every phase of the fee study, advising City staff when necessary. RCS resumes for the project team are included in this proposal on the following pages. Proposal for Citywide Fee Study & Cost Allocation Plan Page | 5 EDUCATION Bachelor of Arts in Political Science - University of Redlands AFFILIATIONS California Society of Municipal Finance Officers Government Finance Officers Association Eric S. Johnson President Mr. Johnson serves as President of Revenue & Cost Specialists with over 30 years of professional knowledge in cost recovery model and user fee studies. He focuses on providing a positive experience for RCS clients, which minimizes staff interruptions yet still produces a comprehensive, defensible study that is adopted by the governing board. Municipal Experience City of Redlands – Redevelopment Intern (1987-1989) Relevant Project Experience City of Carmel-by-the-Sea – Comprehensive Fee Study: RCS completed a Comprehensive Fee Study for the City in 2016 and most recently in 2020. The City Council reviewed and approved fee recommendations. City of City of La Habra Heights – Cost recovery model and Comprehensive Fee Study: Mr. Johnson developed a Cost recovery model and Comprehensive Study for the City in 2018. The City Council reviewed and approved fee recommendations. City of Lancaster – Cost recovery model and Comprehensive Fee Study: Mr. Johnson developed a Cost recovery model and Comprehensive Fee Study for the City most recently in 2006, 2009 and 2014. He also updated the Cost recovery model in 2010, 2011, 2012, 2016, and 2019. City of Diamond Bar – Cost recovery model and Comprehensive Fee Study: Mr. Johnson developed a Cost recovery model and Comprehensive Fee Study in 2017. The City Council is currently reviewing the fee recommendations. City of San Bernardino Municipal Water – Cost recovery model and Comprehensive Fee Study: Mr. Johnson developed a Cost recovery model and Comprehensive Fee Study for the Water Agency in 2016 and 2019. Review of the Fee recommendations by the Water Board is upcoming. Proposal for Citywide Fee Study & Cost Allocation Plan Page | 6 EDUCATION Claremont Graduate University – Completed coursework towards Masters in Public Policy Cal State Northridge – MA Public Administration Cal Poly, Pomona – BS in Urban and Regional Planning AFFILIATIONS California Society of Municipal Finance Officers (CSMFO – Board Member) Government Finance Officers Association (GFOA) International City/County Management Association (ICMA) (Cal-ICMA) Municipal Information Systems Association of California (MISAC) Chu Thai Partner Mr. Thai provides multiple aspects to the implementation of user fees, impact fees and utility rates. His experience as a municipal finance officer helps clients reach their goal of fee adoption. Chu keeps current of all legal policies which impact the noticing, calculation and reporting of fees. Municipal Experience Impact Fees: Cities of Morgan Hill and Monterey Park Utility Rates: Cities of Morgan Hill, Beverly Hills, South Pasadena and Monterey Park User Fees: Cities of Claremont, Morgan Hill, Beverly Hills, South Pasadena and Monterey Park Director of Management Services, City of Monterey Park, CA • Managed department of 15 to provide financial planning and reporting, revenue collections, treasury, information technology, telecommunication and support services • Improved city's revenues through updated user fees, utility rates, and impact fees • Conducted long-term financial forecasting and analysis • Streamlined and enforced purchasing process Administrative Services Director, City of Eastvale, CA • Managed department providing general accounting, accounts payable, purchasing, payroll, business tax, treasury, IT and communication services • Updated the City's Investment Policy and strategy • Developed long-term revenue strategy • Performed communications audit and reduced expenses by 75% Finance Director, City of South Pasadena, CA • Outsourced utility billing and customer service • Completed $43.4 Million Water Bond Issuance and $12 Million Refunding • Coordinated the passage of Utility Users Tax Ballot Measure • Negotiated lease agreements for city property and cell towers Proposal for Citywide Fee Study & Cost Allocation Plan Page | 7 Chu Thai Partner Municipal Experience (continued) Budget and Management Officer, City of Beverly Hills, CA • Managed $400 million citywide budget for 750 full- time employees • Developed comprehensive capital improvement program • Developed quarterly performance report presented to the City Council • Implemented performance-based budget, including goals and objectives • Updated the city's user fees and utility rates Budget Manager, City of Morgan Hill, CA • Managed utility billing, purchasing, business license and accounts receivable functions • Coordinated IT overhaul, including finance, utility billing and recreation software conversions, standardization, training, disaster recovery and outsourcing. • Developed pro-formas for proposed aquatics and community centers • Updated the city's impact fees, user fees and utility rates Senior Management Analyst, City of Tustin, CA • Coordinated the City’s $80 million operating and CIP budget with all departments • Managed finance software upgrade, focusing on departmental reports • Deployed online payment system for utility customers Management Analyst, City of Claremont, CA • Assisted in the development of effective parks and recreation programs • Assisted in the construction and programming of the Claremont Youth Activity Center, Claremont Skate Park and Hughes Community Center • Coordinated budget and evaluated cost recovery for the department Proposal for Citywide Fee Study & Cost Allocation Plan Page | 8 FIRM’S E XPERIENCE AND REFERENCES RCS HISTORY Revenue & Cost Specialists, LLC (Taxpayer ID No. 330787781) was founded in 1980 by two former City Managers and a Finance Director who, after the passage of Propositions 13 and 4, discovered that user fees were a legal option to recover lost municipal revenues. Four decades later, RCS continues its focus on cost allocation and fee calculation services. After the passage of AB 1600 in 1988, our company added impact fee calculation services to help municipalities finance public facility expansion. In those early years, RCS principals published articles and presented at conferences, helping California municipal employees understand how fees work. Our early work is the foundation of how fees and cost allocation plans are calculated today. In 2000, RCS created Government Software Systems to develop robust costing software that serves fee calculation needs better than spreadsheets. Our company has provided additional services to municipalities that include long-range financial planning, accounting procedures and utility rate studies. RCS continues to thrive through repeat business, referrals and references. As a small business, RCS takes only a handful of new clients each year, allowing us to spend substantial time with them. In 2024, RCS celebrates its 44th year in business and is looking forward to another 40 plus years of partnering with municipalities. QUALIFICATIONS RCS’ principals make up the Limited Liability Company, which has been financially stable since the company started. Combined, RCS principals have over 100 years of experience in cost allocation plans and fee studies and served over 250 municipalities. We have provided these services to a wide array of public agencies, from the smallest special district to larger and more complex cities and counties. Though based in Orange County, we engage in projects throughout the State of California. RCS principals specialize in: • User Fee Studies • Cost Allocation Plans • Development Impact Fee Studies • Special Financial Management Studies and Reports Proposal for Citywide Fee Study & Cost Allocation Plan Page | 9 These specializations allow RCS to focus on every aspect of municipal fees and be the best of what we do. We are confident in our project time estimates and do not respond to RFPs when the project workload exceeds our capacity. We have suggested new fees that are not common practice throughout the state and have challenged and removed municipal fees that were not defensible. We have assisted municipalities in streamlining their fee-based processes. All RCS principals have prior city experience, serving as analysts, managers or directors. We are all knowledgeable in fund accounting, department structures and municipal services. We stay current on pending financial and legal issues that challenge municipalities. All principals are comfortable speaking with city staff at all levels, drafting reports and resolutions, and presenting them to the public, stakeholders and City Council members. Eric Johnson, President, has streamlined and perfected the process of CAP and User Fee Study engagements. With over 30 years and hundreds of studies completed, Eric has created a superior process that demands little staff time while obtaining maximum results. Eric quickly understands complex city services and how to calculate fees for them. He relates well with elected officials because he responds with candor and brevity. If you speak to any of Eric’s prior or current clients, they will tell you how easy the process was. Chu Thai, Partner, joined RCS after 22 years of municipal experience. As a budget manager and finance director, Chu has successfully coordinated user fee increases, impact fee increases, utility rate increases and tax ballot measures. His experience helps clients avoid the unseen perils that jeopardize municipal projects. After project completion, Chu leaves behind well-documented reports and spreadsheets for City staff. The focus of his career has been to improve cities’ financial stability and implement operational effectiveness and efficiencies in local government. Scott Thorpe, Senior Vice President, joined RCS in 1985. Before that, he spent 13 years at the cities of Chula Vista, Covina, Anaheim and Brea, serving in various roles within the city manager’s offices. Scott performed user fee studies for several years, transitioning to development impact fees when AB 1600 went into effect. He has written articles laying out the fundamentals of impact fees, and his work has generated tens of millions in fee revenues for cities. Rick Kermer, Partner, was one of the founders of RCS. Rick used his CPA and audit experience to build cost allocation and user fee spreadsheets and software that passes rigorous analysis and reporting accounting standards. Rick’s work is the foundation of all the fee study work offered today. He is now semi-retired, taking only a handful of projects each year. Proposal for Citywide Fee Study & Cost Allocation Plan Page | 10 METHODOLOGY/PROJECT UNDERSTANDING The City of Diamond Bar wants to identify the full costs of all operational services that are either currently charged a fee or could be charged a fee. RCS will first update the City’s Cost Allocation Plan (CAP), which is necessary in calculating the fully burdened hourly rates for employees and is an effective way to distribute the overhead costs to other funds, departments, and the end-user services. Our Cost Allocation Plan is powerful in capturing the maximum overhead charges to enterprise funds. If excluded from this Citywide Fee Study, RCS will use the City’s prior Cost Allocation Plan. Next, RCS will perform the fee study, reviewing the staff time and program costs involved with each service and calculating the full cost of services for each fee. The proposed fee structure will recover these costs in the most equitable and efficient way possible. The user fees will represent how operations are conducted in the City, and may involve flat fees, deposits, valuation-based fees, step-increase fees, or a combination of these. The eventual fee recommendations included in the final report and master fee resolution will be defensible, easy to understand, and be supported by City staff. The most important part of our work is performed through a series of focused meetings with staff. Scheduled meetings commit staff to the timeline and ensure that our study draws from the most knowledgeable person on the subject matter. A series of meetings also gives City staff time to digest and reflect on the information generated. RCS uses only company principals with more than 20-plus years of experience to conduct these meetings, which makes the process quicker and the results more accurate. Our process provides the City with well-documented and defensible service costs that will be used to develop fees that comply with Propositions 4, 218 and 26. We also identify 100% of the staff time on 100% of the services they provide. This gives City staff a complete perspective on their time allocations instead of merely looking at time allocations for individual services in a vacuum. These methods will ensure that City staff feels confident about the data and, therefore, confident in supporting the results in public hearings. The other key result of identifying 100% of City services is that we are identifying not only the cost of fee services, but of community-supported services, such as police, street and park maintenance services. This allows us to have a real discussion with real numbers with the City Council about tax subsidy policy. Since we are identifying the full costs of fee services, we are also identifying the current subsidy of general tax dollars for these services. Therefore, we can show the City Council how much fee services are subsidized at the expense Proposal for Citywide Fee Study & Cost Allocation Plan Page | 11 of community-supported services. Does the City want to continue to use precious tax dollars to support, for instance, a bathroom remodel and permitting inspection that only benefits a particular property owner or use those tax dollars on things that can only be supported by tax dollars, like police patrol and park maintenance? They will now have that information to be able to make that conscious choice. Changing the discussion from fee increases to tax subsidy policy along with RCS’ experience in successfully presenting the results of similar studies to City Councils ensures that the City will be able to meet its policy objectives. RCS will provide the City of Diamond Bar with the requested printed and electronic copies of the final versions of the Cost of Services Study and Cost Allocation Plan, including related schedules and cost documentation in a format that can be edited and updated by City staff to accommodate desired changes. Project Kick-Off Task 1: Prepare City Data RCS will review and prepare necessary files for the project. This includes obtaining and reviewing prior user fee reports and fee schedules, line-item budget details, salary schedules, MOUs and fringe benefit details. Task 2: Kick-off Meeting RCS will conduct a Citywide meeting, explaining the operational methodology of the study and the role of staff. We will review any possible issues that may arise as well as answer any questions from staff about the process. This meeting is crucial for the process as we want to ensure that everyone understands the various steps in the process and what is expected of them. Cost Allocation Plan Task 1: Identify Central Services and Allocate Staff Time RCS will meet with various departments to identify and review central services and allocate staff time and costs for those services. Examples of central services include payroll, risk management, and facility maintenance. City staff time involved in the meetings would be approximately 1-2 hours per central service department. Task 2: Develop Allocation Factors RCS will meet with City staff to develop the allocation factors for each central service identified in the above task. These factors will form the basis for determining fully burdened hourly rates and allocating central service costs. This meeting will be Proposal for Citywide Fee Study & Cost Allocation Plan Page | 12 concurrent with the time allocation meeting. Though City staff involvement in data gathering is a function of the availability of the required information, RCS will develop allocation factors that are easily reproducible from year to year but still equitably allocate central service costs. RCS will calculate allocations to the functional centers and review the results with the managers of the various central service departments. City staff time to review the results of the allocations will be less than 1 hour per department. Task 3: Prepare and Review Draft Cost Allocation Plan with City RCS will prepare a Draft Report with allocations to end user departments using our 20-step allocation model. RCS will review this Draft Report with the City’s management, making any necessary adjustments to ensure that costs are allocated properly. Task 4: Prepare Final Cost Allocation Plan RCS will then prepare a Final Report with allocations to end user departments. These results will be used for the general overhead component of the Fee Study and can also be used to determine the amounts for transfers to the General Fund for support provided to other funds. RCS will provide the City’s requested number of printed copies, as well as a PDF file of the Overhead Cost Allocation Study. RSC will also provide a computer-based model for adjusting these fees and charges for the City’s current and future needs, providing an electronic copy of the final study that can be edited and updated as needed. RCS will consult with City Staff as necessary to defend the cost allocation plan in the event of audits or other challenges. User Fee Study Task 1: Review the Service List with Staff RCS will review the service list through meetings with City staff. We will also work with Departmental staff to determine any changes to the fee calculation methods. The end result, whichever method is used, will be a fee structure that best fits the City going forward. While this list will change during the course of the Study as it is refined, it will be the initial basis from where we start. City staff time for this review will be approximately 1 hour per department. Proposal for Citywide Fee Study & Cost Allocation Plan Page | 13 Task 2: Staff Time/Contract Cost Allocations RCS will interview personnel providing end-user services to ensure that costs from all functional areas directly involved with a service are included in the cost of that service. This component will form the bulk of the time spent by staff. There will be two to four meetings with supervisory level staff in each functional area to create and verify the amount of time spent by staff on the services identified in the task above. We do not ask City staff to do our job by filling out forms detailing how they spend their time. This interactive process, and the fact that we allocate 100% of all departmental staff, ensures that the information being generated is valid and reliable. Total time commitment per department varies from 2-20 hours, through a series of working meetings. Task 3: Develop Fully Burdened Hourly Rates RCS will develop a fully burdened hourly rate for each departmental employee, including salaries and benefits, miscellaneous operating services and supply costs, citywide overhead and departmental overhead. Task 4: Prepare Draft Report RCS will prepare a Draft Report that identifies the total costs for each service, along with current fees, and makes fee recommendations for each service presented as well potential new fees for services the City provides but does not charge for. Service costs will be compared with existing recovery levels. RCS will review this report with the departments so that each will have input on the fees presented in the Final Report. City staff time would be approximately 1-2 hours per department for those departments that have fee services. Task 5: Prepare Final Report Based on staff input, RCS will prepare a Final Report, which will have recommendations for new fees, subsidy percentages and revenue projections from those fees. The Report will include text and summary tables that will clearly explain the results and the context. All recommended fees will comply with Propositions 4, 218, 26 and any other applicable laws. RCS will provide the requested number of copies and a Microsoft Word and PDF file of the Final Report. Any Master Fee Schedule revisions will also be made available in Word, Excel and/or PDF formats. RSC will provide a computer-based model for adjusting these fees and charges for the City’s current and future needs, providing an electronic copy of the final study that can be edited and updated as the need arises and allowing for the requirements referred to in the City’s RFP. RCS will consult with staff as needed to defend the fee study in the event of audits or other challenges. Proposal for Citywide Fee Study & Cost Allocation Plan Page | 14 Task 6: Survey Similar Municipalities RCS will survey other municipalities and document the findings. The survey summary would compare similar fees for services at different cities, however our results cannot explain why the fees differ. Task 7: Present Report to the City Council and Committees RCS will assist City staff, the City Council and any Committee in the review and adoption of revised service fees and subsidy percentages, at up to three public meetings. RCS will assist City staff in the implementation of the revised service fees. PROJECT TIMELINE RCS is available to begin work immediately and will present the Final Report to the City Council in July 2024. This schedule, of course, will require the cooperative participation of City staff. Project Timeline Mar 2024 Apr 2024 May 2024 Jun 2024 Jul 2024 User Fee Study Obtain Budget & Personnel Data Review Service List Review Staff Time Allocations Develop Fully Burdened Hourly Rates Review Draft & Final Report Prepare for City Council Meeting ONSITE MEETINGS AND VIDEO CONFERENCING MEETINGS RCS is available to be onsite at the City for the project kick-off meeting, all working meetings occurring the same day, and when we present the draft reports to each department/division. RCS Partner(s) will also be present at all public meetings involving the City Council or City Committees. RCS will utilize our Zoom account, or any video conferencing platform of the City’s choosing, to facilitate all other working meetings. Our experience has determined that the use of video conferencing is more flexible in scheduling meetings, permitting City staff to quickly access reports and files on their computers, and allowing everyone to view and discuss the same documents at the same time. Department meetings will be 30 minutes to two hours each. Proposal for Citywide Fee Study & Cost Allocation Plan Page | 15 CLIENT INPUT RCS will make every effort to advise, seek input from and, in general, explain the work as it is being performed. For a project to be completed successfully, we depend on dedicated and engaged staff participation. Most of the staff participation is to attend working meetings with RCS. There will be no “homework” to be completed and returned to us. The City should also designate a Project Coordinator for the fee study who will: 1) Identify key City staff and coordinate the kick-off meeting(s) 2) Assist in obtaining requested information 3) Coordinate the review of draft reports, and 4) Provide project direction if needed Proposal for Citywide Fee Study & Cost Allocation Plan Page | 16 REFERENCES Jurisdiction Contact Title City of Carson Tarik Rahmani (310) 952-1755 Deputy City Manager trahmani@carsonca.gov RCS completed a Cost Allocation Plan and Comprehensive Fee Study for the City in 2022, and the City Council adopted the suggested user fees in 2023. City of Lompoc Dean Albro (805) 875-8274 City Manager D_albro@ci.lompoc.ca.us RCS assisted the City of Lompoc update their Impact Fees in 2018, and currently updating their User Fees. We are preparing the final report for review and presentation to the City Council. City of Long Beach Geraldine Alejo (562) 570-5478 Revenue Management Officer Geraldine.Alejo@longbeach.gov RCS was selected in 2019 to perform a three-year comprehensive update of Long Beach’s 2,850 fees, fines and permits. City of Santa Barbara James Hamilton (805) 564-5504 Comm Dev Business Manager JHamilton@SantaBarbaraCA.gov RCS recently completed a Development Services Fee Study for the City in 2019. The City Council recently adopted changes to its fee schedule, including Building fees. City of Santa Clarita Carmen Magana (661) 255-4997 Admin Services Director cmagana@santa-clarita.com RCS developed a Cost Allocation Plan and Comprehensive Fee Study for the City most recently in 2014 and has also updated the Cost Allocation Plan in 2011, 2012, and 2013, 2014, 2015, and 2016. RCS has been providing these services for the City since 1995. Proposal for Citywide Fee Study & Cost Allocation Plan Page | 17 COST FOR SERVICES Revenue & Cost Specialists propose the following project costs, with a NOT TO EXCEED AMOUNT OF $35,000. Task Milestones/Deliverables Hours Total Cost Cost Allocation Plan Review Central Services/Times List of Central Services 12 2,100 Develop Allocation Factors Index of Allocation Factors 16 2,800 Initial Calculation Review Draft Cost Allocation Plan 8 1,400 Prepare Final Cost Allocation Plan Final Cost Allocation Plan 12 2,100 Cost Allocation Plan 48 $8,400 User Fee Study Kick-Off Meeting Informational Meeting 8 1,400 Build Budget and Positions Schedule of Positions and Budget 24 4,200 Develop Service List Preliminary Service List 8 1,400 Develop Staff Time Allocations Time Detail Reports 32 5,600 Develop Fully Alloc. Hourly Rates Fully Alloc. Hourly Rate Reports 16 2,800 Prepare Draft Report Draft Fee Study Report 32 5,600 Prepare Final Report Final Report 24 4,200 Public Meetings Presentations 8 1,400 User Fee Study 152 $26,600 PROJECT TOTAL 200 $35,000 The above proposal is based on a cost of $175 per hour. The billing rate for any additional work not covered by this proposal would be $195 per hour. Our proposal covers all costs except for the following additional costs that the City may incur: • Report reproduction beyond identified number of copies of the final reports. • Meeting attendance beyond those identified in this proposal. • Insurance coverage beyond our basic general liability and workers compensation requiring an additional premium. RCS standard coverage includes workers compensation pursuant to state law, comprehensive liability Insurance with a combined single limit coverage of $2,000,000 and professional liability insurance with a combined coverage of $2,000,000. RCS will submit four equal invoices plus any miscellaneous costs from the previous paragraph. The first invoice will be submitted ten days after notice to proceed. Each invoice will be due within 30 days of submission.