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Morgan Hill, California
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Zucker Systems
strongly support the need for jurisdictions to periodically conduct fee studies to
confirm the appropriateness of their fee schedule. Though we are working with
limited information about the scope of the fee study, we are concerned that the effort
may only be designed to justify the fees that are currently being charged based on the
current staffing levels.
Throughout this report we have identified programs that are not meeting the
performance standards that we believe represent best practices. Improving
performance in many situations will require the addition of staff resources, either as
full-time employees or contract staff. The fee study underway should include
sufficient detail to allow the City to easily make adjustments to reflect the actual full
cost of not only the current level of staffing but also the additional staffing that will be
required to meet the desired performance standards.
8.
Recommendation:
The fee study currently underway should include
sufficient detail to allow City staff to make adjustments as necessary to
reflect the addition of the staffing resources that will be needed to meet
appropriate performance standards.
Reserves
The City shall make every effort to keep a minimum reserve level of 30% of the
appropriated operating budget for the Community Development Fund, in order to
provide for those temporary periods when less development activity occurs and less
revenue is collected by the City.
We used to have a rule of thumb that the target for the reserve account should be three
(3) months or 25% of the normal operating budget. However, as part of a contract
with Calgary, Alberta, Zucker Systems did a detailed analysis for possible down
cycles similar to those experienced in the United States. As a part of that analysis we
concluded that a better rule of thumb would be a reserve equal to 12 months of the
normal budget. Based on our recommendation Calgary increased its reserve account
for development activities from $30 million to $60 million. We understand that the
city policy has been to top out reserves at 30%.
The 206 Fund balance at the end of FY 14-15 is $$3,738,706 and the budget for
FY15-16 at $4,687,920. The net operating expenses, as shown in Table 2, total
$4,165,118. Assuming that 100% of the fund should be available for operating
expenses, leaves a projected balance of $500,692 or the equivalent of 12%.
The high level of permit activity the City is currently experiencing, coupled with the
anticipated increase in fees from the revised fee study, represents an opportunity to
gradually increase the size of the Community Development Fund 206. Building a
reserve is best done during a time of high development activity, which is the current