City Council Meeting on Cost of Service Study - August 19, 2026
City Council Meeting on Cost of Service Study - August 19, 2026
The city council met to discuss the findings of a cost of service study conducted by the finance department for general fund departments. The study analyzed fees for public safety, health, community development, and housing/neighborhood services to understand cost recovery and inform future fee adjustments. Council members deliberated on the methodology, specific fee recovery rates, and the potential for a cost recovery model to guide fee-setting policy.
Discussion Items
- False Alarm Fees (Police & Fire): Matt Liu presented data on false alarms: police had 2,256 false alarms in FY25 (about 2% of all calls), fire had 1,828 (about 10.8% of calls). Currently no fee is charged. The study estimated annual costs of approximately $120,000 for police and $377,650 for fire. Council discussed reinstating a fee to disincentivize false alarms, noting that a previous fee was repealed around 2017 due to data ownership issues with joint communications. The potential for escalating fees after the third or fourth call was mentioned.
- Health Department Fees: Fees for birth and death certificates (set by state contract, recovering 94% and 88% respectively) and domestic partner registry (157% recovery, only 15 uses per year) were reviewed. Council questioned the high recovery for domestic partner registry but acknowledged low usage. Animal control fees showed low recovery: dangerous/aggressive animal permit (69% recovery, $300), licensing (69% recovery, $10), impoundments (23% recovery, $35), boarding (14% recovery, $20/night). The $200,000+ annual cost for humane society boarding was noted as a significant overhead not included in the recovery calculation. Council expressed interest in re-evaluating these fees.
- Clinical and Environmental Health Fees: Tuberculosis testing, STI services, immunizations, and pool inspection fees were discussed. Pool inspection fees recover about 37% for annual pools (indoor, inspected 12+ times/year) and 26% for seasonal (outdoor) pools. Council considered the appropriate cost recovery tier, noting that private and public pools might warrant different treatment.
- Community Development Fees: Planning and zoning fees (e.g., concept review, land disturbance) showed low recovery rates, many around 12%. New single-family dwelling fees recovered 107% (based on $225 per $1,000 assessed value, an average). Council discussed whether averaging obscures cost differences between simple and complex projects, and whether fees should be adjusted to incentivize desired development (e.g., affordable housing). The existing 75% cost recovery mandate for construction fees was mentioned, with current recovery at about 65%.
- Cost Recovery Model Framework: Liu introduced a tiered model ranging from fully tax-supported (Tier 1) to fully fee-supported (Tier 5). Council discussed the need to decide where each fee falls, and that this determination could change over time. Questions arose about how to objectively score fees into tiers and whether incentives should influence placement.
- Incentives and Behavioral Effects: Council members emphasized that fee setting should consider behavioral incentives. Examples included keeping immunization fees low to encourage vaccination, and potentially lowering fees for new residential dwellings to promote housing development. The need for formal incentive programs and fee waivers was raised.
- Data and Methodology: Liu explained that staff spent time with departmental personnel to calculate time and overhead costs for each fee. Some fees (e.g., concept review) were averaged due to high variability. Council questioned whether some costs were underestimated (e.g., staff time for planning reviews) and whether sliding scales based on project complexity were feasible. Liu noted that the city already uses sliding scales for some fees (e.g., per-lot subdivision fees).
Key Outcomes
- No formal votes were taken during this session. The discussion was informational.
- The council received the cost of service study and framework for future use.
- Staff indicated they will use the framework to evaluate fees on a year-to-year basis, with full recalculations likely every other year.
- Council directed staff to incorporate considerations of incentives and behavioral effects into fee-setting analysis.
- The issue of implementing a false alarm fee remains open; staff noted they need to assess data availability and tracking capabilities before proceeding.
- Fee increases for the upcoming fiscal year (FY26) were already approved as part of the budget with a maximum 25% increase per fee (except dangerous animal permits). These changes take effect in October 2026.
- Further discussions are anticipated on the cost recovery model and annexation cost evaluations.
Meeting Transcript
An item on our main agenda, which is the cost of service study. So Matt Liu, I'm thinking I'm kicking this to you. So this is our cost of service study that uh we produced through the finance department. Uh here are a few of our discussion points for today. We'll talk a little bit about the background of the project, the scope of the project, uh, some methodology, the findings, and then proposed changes that came from this project. So background, uh the city manager had requested a cost of service study uh for general fund departments to ensure that we are looking at all of our revenue sources that that we have control over and making sure we're we're uh in a good place with them. And so the departments that we looked at were public safety, uh the health department, community development, and office of neighborhood services. So a little bit about each one. So the public safety uh basically they're in charge of protecting preserving the safety of the community. They have two fees that were involved in the study. Uh that is false alarms for police and fire. So for police, they had uh 2,256 false alarms and fiscal year 25. It's around 2% of all calls, and for fire, they had 1,828 false alarms, and that's about 10.8% of all calls. What is a false alarm for? Um mostly for the security systems, things of that nature. I said that's right. Yeah, that's what it is. It's it's something that didn't it doesn't require a police response or a fire response, but the alarm got those people there anyway. So not like somebody called and they didn't actually need you, you mean an alarm system? Or the dog barked and set the alarm off, or somebody at a nursing home pulls the fire alarm and gets, you know, because they're not of sound mind, for example, and then that sets you know that sets that into motion. And one of the things with false alarms, you see that it's something that a lot of cities go through. And part of the reason why you actually have a fee for that is to disincentivize people for not so to incentivize people to take care of their systems, so they're making sure they do rental checks so they're not getting that false alarm. Um, it's a drain on resources every time a police department police officer has to respond to a call, well, there's not really a call, an assembly for fire, and so that's part of the look. It's part of it repeat, like you know what I mean. Like, do we have one for repeat ones? So that's the first something we need to establish. So most cities what happens is your first call or your first or second call, there's no charge. After the third or fourth call, you start charging, and sometimes you do it on an escalating basis in order to incentivize somebody to actually fix our system. I believe in 2017 we had off the fourth call. We used to, yeah, yes. Why did we repeal it? Not sure. Any what? Do you know why we no longer why we stopped doing it? The charge after the fourth call. I wasn't aware that we ever did it. Uh-huh. Okay. I know they've been working on like not they, but I mean it's just as a whole, the city's been working on this. This has been one of those projects that has been ongoing for the better part 15 years that I can remember, and it just never gained traction. But I don't ever remember anybody charging to my knowledge for that. Okay. Yeah, there'd have to be some way for us to track it. Like how many, you know what I mean? How does it get known? Yeah. Lisa said it was when joint communications left. So jointly. Okay. Since when joint left, we don't own the data, and it was just hard working with them to get information.
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