January 13, 2004

SUBJECT: Current Fee Waiver Practices and the Feasibility of a City-Wide Fee Waiver Policy

REPORT IN BRIEF

This report reviews existing City fee waiver practices, and examines the feasibility of a City-wide fee waiver policy.  Given the impracticality of developing a general policy that could apply to all City fees, and the administrative costs of implementing such a policy, staff recommends that the City not develop a City-wide fee waiver policy.  Instead, staff recommends developing fee waivers on a case-by-case basis.

BACKGROUND

On May 6, 2003, during City Council’s review of proposed fees to offset the City’s budget deficit  (in particular, the proposed sidewalk maintenance fee), Council directed staff to research the possibility of implementing a City-wide fee waiver policy.  This report reviews existing City fee waiver practices, and examines the feasibility of a City-wide fee waiver policy. 

EXISTING POLICY

Recreation Sub Element Policy 6.1C.4: Provide a system to allow persons who are economically disadvantaged to participate and use recreation programs, facilities, and services. 

Recreation Sub Element Action Statement 6.1C.4a: Evaluate the effectiveness of the fee waiver program and the criteria to determine eligibility, and make appropriate adjustments.

Recreation Sub Element Action Statement 6.1C.4b: Provide pricing advantages to economically disadvantaged individuals for programs, facilities, and services.

Recreation Sub Element Action Statement 6.1C.4c: Provide some program and facility use opportunities on a no-fee basis. 

Fiscal Management Sub Element Action Statement 7.1A.1i: Establish user charges and fees at a level closely related to the cost of providing those services. 

Fiscal Management Sub Element Action Statement 7.1A.1k: For each enterprise fund, review user fees annually and set them at a level that will support the total direct and indirect costs of the activity. 

DISCUSSION

City Fees

The City charges fees to recover costs for a number of City services.  Some examples of the fees listed in the FY2003/2004 Fee Schedule include: municipal golf course green fees, lost library card fee, credit card convenience fee, copy of Sunnyvale Municipal Code fee, concealed weapons permit fee, public art permit fee, administrative citation fee, building permit fee, water service fee, encroachment permit fee, sewer connection fee, combustible material storage fee, vehicle impound fee, environmental assessment fee, and copy of zoning map fee. 

Fee Waiver Practices

The City of Sunnyvale does not have a general City-wide fee waiver policy.  The Parks and Recreation Department is the only City department that has a formal policy of providing fee waivers for recreation programs and services based on economic hardship.  However, some departments may waive fees only in very rare situations on a case-by-case basis.

Parks and Recreation Fee Waiver Program

The purpose of the Parks and Recreation fee waiver program is to ensure that very low income City residents have access to City recreation classes and programs that they would not otherwise be able to afford.  The fee waiver allots $250 per income-eligible individual per calendar year to use towards any combination of Sunnyvale Recreation activities or programs.  Prices of activities range from under $5 for drop-in programs to several hundred dollars for summer camps. 

Sunnyvale Community Services (SCS) plays a major role in the Parks and Recreation fee waiver program.  SCS qualifies fee waiver participants based on annual income using the Community Development Block Grant (CDBG) Income Guidelines (See Attachment A, Income Guidelines for the Parks and Recreation Fee Waiver Program).  SCS estimates that it takes an average of 20 minutes to process each fee waiver.  It takes less time if families are already SCS clients who have been qualified for services in the current fiscal year, and slightly more time if they are not already clients.  City staff estimates that it takes an additional five minutes to process and report on each fee waiver that is turned in at the Sunnyvale Community Center.

Once the income guidelines are met and the participant chooses a Parks and Recreation activity, SCS provides the participant with a Fee Waiver authorization form.   Participants take this form to the Sunnyvale Community Center and register in person for the activity or activities in which they wish to participate.  Participants must reapply at SCS for financial assistance with each activity.

$80,540 was expended in FY02/03 on the Parks and Recreation fee waiver program.  Last year, SCS issued 1,313 fee waiver forms, which allowed 895 low-income residents to access Sunnyvale recreation programs.  The Parks and Recreation department has $111,700 budgeted for the fee waiver program in FY03-04.

The following chart shows that most surrounding cities have a fee waiver policy for recreation activities:

City	Fee Waiver Policy for Recreation Activities ?
City of Mountain View	Yes
Cupertino	Yes
City of Santa Clara	Yes
Gilroy	Currently developing formal policy
Palo Alto	Yes
Redwood City	Yes
San Jose	Yes, per City District
Sacramento	No

Fee Waiver Practices by Other City Departments

Notwithstanding the Parks and Recreation fee waiver program, most City fees are not waived (for example: development fees, fees for copies of City records, and fees to cover the costs incurred by Public Works for events on public property.)  However, some City departments may waive fees in very rare situations on a case-by-case basis.  For example, the Library may waive overdue book fees under extenuating circumstances (e.g. a family emergency caused a person to be out of town and books to go overdue.)  Neighborhood Preservation may waive the fee for a garbage bin to be placed in front of a resident’s home whose yard is full of debris and who could not afford to pay for the garbage bin.  The Public Safety fingerprinting fee is waived for City volunteers. 

Feasibility of a City-Wide Fee Waiver Policy 

A City-wide fee waiver policy is problematic for several reasons.  First, since City fee waivers may serve different purposes (for example: providing equitable access to a City service, or out of hardship to a City customer), it would be difficult, if not impossible, to develop eligibility criteria for a general City-wide fee waiver policy.  Second, while it may be appropriate that the City subsidize recreation activities for lower income residents, it may not be appropriate for the City to subsidize other special benefit fees such as the building permit fee.

Third, the cost of administering a general fee waiver policy could be significant.  Each fee waiver application would require staff time to determine fee waiver eligibility, calculate fee waiver amounts, and process fee waivers.  Finally, in addition to the increased administrative costs associated with a general fee waiver policy, as more fee waivers are issued, City revenues will decrease accordingly.  

Comparison with other Cities 

There is no City in the area which has a general City-wide fee waiver policy (see chart below).

At the time that this report was requested (May 2003), Council was exploring imposing additional fees for services to address the City's budget crisis. Council expressed interest in exploring the possibility of fee waiver policies to specifically address new fees for sidewalk repairs and sewer lateral repairs.  Council subsequently chose not to impose new fees for sewer lateral or sidewalk repairs, opting instead for delayed services in the case of sidewalk repairs, and service level reductions for sewer lateral repairs.  As this report recommends, should Council decide to explore fees for these services, and at Council direction, staff will draft a specific fee waiver policy as appropriate.

Staff Recommendation

Due to the high cost and impracticality of developing a City-wide fee waiver policy, staff recommends that the City not develop a general City-wide policy.  Instead, staff recommends developing fee waivers on a case-by-case basis.  Staff recommends that Council direct staff to develop fee waivers for specific City services as identified by Council.

FISCAL IMPACT

None at this time. 

PUBLIC CONTACT

Public contact was made through the posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, publication of the Council agenda in the San Jose Mercury News, and the availability of the report in the Library and the City Clerk’s Office.

ALTERNATIVES

1. Council directs staff to develop fee waivers for specific City services as identified by Council.

2. Council directs staff to develop a general City-wide fee waiver policy.

3. Council directs staff to take no action at this time.

4. Other actions as determined by Council.

RECOMMENDATION

Staff recommends Alternative 1. 

Prepared by:

Peter Bassett
Legislative Analyst

Reviewed by:

Coryn Campbell
Manager, Neighborhood and Community Services

Approved by:

Amy Chan
Acting City Manager 

Attachments

A. Income Guidelines for the Parks and Recreation Fee Waiver Program (pdf format)