Title
Adopt a Resolution Approving Amendments to the City Master Fee Schedule for FY 2025-2026 and Introduce; and
Adopt Three (3) Ordinances to Amend Various San Leandro Municipal Code Sections Providing for Annual Rate Adjustments for 2025-2026 to 1) Business License Fees; 2) Emergency Medical Services Tax; and 3) Emergency Communications System Access Tax
Staffreport
COUNCIL PRIORITY
• Fiscal Sustainability and Transparency
SUMMARY AND RECOMMENDATIONS
Staff recommend the City Council adopt a resolution updating certain City fees and service charges and amending the Master Fee Schedule for FY 2025-2026. Additionally, staff recommend the City Council introduce and adopt ordinances amending various San Leandro Municipal Code Sections providing annual rate adjustments to Business License fees, the Emergency Medical Services tax, and the Emergency Communications System Access tax for FY 2025-2026.
BACKGROUND
Master Fee Schedule
The Master Fee Schedule is a compilation of City Council approved fees for services provided to residents and businesses. The City strives to balance maximizing cost recovery with manageable fees to facilitate economic investment in San Leandro, ensure programs and services are accessible to the community as well to incentivize compliance with regulatory requirements.
In 2021, the City convened an Advisory Budget Task Force to develop an understanding of the City’s financial outlook. Building on this initiative, the City Council authorized the City Manager to contract with NBS Government Finance Group to prepare a User Fee Study that was completed in 2024. The FY 2025-2026 Recommended Fee Schedule incorporates these results.
A Development Impact Fee Study is underway and expected to be completed summer 2025.
Business License Fees, Emergency Medical Services Tax, and Emergency Communications System Access Tax
The San Leandro Municipal Code Sections provide for annual rate adjustments to the Business License tax, the Emergency Medical Services tax, and the Emergency Communications System Access tax.
Analysis
Master Fee Schedule
A fee schedule maximizing cost recovery opportunities through appropriate fee revenues is a critical component of the City’s ongoing financial stability. Agencies are allowed to set fees at rates providing for recovery of reasonable costs incurred in providing the service or product, which is critical to minimizing use of general tax revenues for services that provide a benefit to specific user groups.
All user fees and service charges are reviewed annually and adjusted based on criteria such as change in the Consumer Price Index (CPI), comparable fees in other cities, review of direct costs, etc. to stay aligned with the cost to provide the service. It is best practice to review fees in depth every several years to ensure that fees are set to reflect current costs and business processes. To this end, the focus of the City’s user fee study were cost-based user fees governed by Proposition 26, Article XIIIC§1(e).
With NBS, the City reviewed processes to provide each service, including time to complete the service across all departments, direct costs, indirect costs, and support costs. Based on current fees, cost recovery is estimated at 53% of the total annual cost of providing services. The recommended FY 2025-2026 fees are anticipated to increase revenue by 13% to increase the rate of cost recovery.
Business License Fees, Emergency Medical Services Tax, and Emergency Communications System Access Tax
Business licenses are permits allowing an organization to conduct business in the City. Organizations may be a sole proprietor, a company, or other business entity with a product or service to sell. Depending on the business classification, business license fees are a flat annual fee or a base fee and a per unit fee.
The Emergency Communications System Access Tax requires subscribers of telephone services within the City to pay for improvements and operations of the 911 communication (call processing and call dispatch) system. The 911-communication system provides immediate access to emergency services. The access tax is imposed on a per line basis, made up of single access lines, trunk lines, and super trunk lines.
The Emergency Medical Services Tax allows for providing paramedic emergency services. The paramedic engine company program ensures residents receive timely responses from paramedics to all medical emergencies. The tax is calculated based on a Benefit Unit. The number of benefit units charged to a property is determined by use of the property.
To cover the increasing costs of providing services, each tax is adjusted annually by the amount of the change in the Consumer Price Index (CPI). Municipal Code §2-2-500, §2-13-140, and §2-18-210 guide annual CPI adjustments. The change in CPI is calculated using the Bureau of Labor Statistics for the Consolidated Metropolitan Statistical Area (CMSA covering San Francisco-Oakland-Hayward) year-over-year change from December 2023 to December 2024. In accordance with the Municipal Code, the tax schedules for business licenses, EMS, and 911 access are adjusted by 2.4%. as follows:
• Business Licenses: annual base fee and the unit fee for retail, wholesale/distribution (large local seller), and manufacturing will increase from $167.00 to $171.00 and from $50.60 to $52.70 (per each owner and each employee)
• Emergency Communications System Access Tax: single access line rate for 911 will increase from $3.14 to $3.22
• Emergency Medical Services and a benefit unit tax under the EMS will increase from $22.08 to $22.60.
Committee Review and Actions
The City Council Finance Committee reviewed FY 2025-2026 proposed fees at Finance Committee meetings from June 2024 to March 2025. The Committee recommended moving the fees forward to City Council with the input from the Committee. Accordingly, changes proposed by the Committee have been included in the FY 2025-2026 Recommended Fee Schedule.
• 06/24/2024 - User Fee Study Presentation
• 09/25/2024 - Review of Planning, Building, Housing, Fire fees
• 10/23/2024 - Review of Library fees
• 12/18/2024 - Review of Police and Finance fees
• 02/26/2025 - Review of: PW Maintenance, PW Engineering, and Environmental Services fees
• 03/26/2025 - Review of CMO, City Clerk, Recreation & Parks, and Golf fees
Environmental Review
This activity is not a project under CEQA as defined in CEQA Guidelines, Section 15378, because it has no potential for resulting in either a direct or a reasonably foreseeable indirect physical change in the environment.
Summary of Public Outreach Efforts
A Public Hearing Notice was published in the San Leandro Times April 24, 2025 and May 1, 2025. The FY 2025-2026 Recommended Fee Schedule has been posted on the Finance Department’s website and available for in person review as of April 25, 2025.
Financial Impacts
Master Fee Schedule
If adopted and approved, most of the proposed changes for FY 2025-2026 will go into effect July 1, 2025. Development-related fees go into effect 60 days after Council adoption.
Estimating the fiscal impact from the changes in the Master Fee Schedule relies on assumptions related to the demand for fee-based services. Fees related to Charges and Services, and Licenses and Permits are expected to increase General Fund revenues by approximately $945,000 and will be incorporated into the Recommended FY 2025-2026 Budget.
Business License Fees, Emergency Medical Services Tax, and Emergency Communications System Access Tax
Business License revenue is anticipated to increase General Fund revenues by $153,720, Emergency Medical Services Tax by $25,000, and Emergency System Access Tax by $117,123. These revenue estimates will be included in the proposed FY 2025-2026 Budget.
ATTACHMENTS
A: Resolution Amending Master Fee Schedule for FY 2025-26
B: Ordinance Amending Business License Tax for 2025-26
C: Ordinance Amending Emergency Medical Services Tax for 2025-26
D: Ordinance Amending Emergency Communications System Access Tax
E. FY 2025-26 Recommended Master Fee Schedule
F: FY 2025-26 Fee Presentation
PREPARED BY: Felicia Silva, Assistant Finance Director, Finance Department