The Board adopted the 2018-19 Master Fee resolution on June 26, 2018. Since that time, departments have identified the need for new fees and certain fee revisions. In total, 175 existing fees are proposed for revision, 49 new fees are proposed to be added to the Master Fee schedule, and 26 fees are proposed to be deleted. The sections below describe the proposed fee changes and rationale for each department.
Agriculture
Each year the agriculture department issues Phytosanitary Certificates for commodities to enter both domestic and foreign commerce. These certificates (through inspection of the proposed shipment “lot”) attest to the freedom of pathogens, weeds and insects, which may be detrimental to agriculture, and help ensure they are not shipped to areas, regions and countries where they do not occur. Certificates for shipments within the United States are issued under the authority of the California Department of Food and Agriculture (CDFA) and foreign shipments under a cooperative agreement with the United States Department of Agriculture (USDA).
The fee increase is proposed to recover costs, based on the revised department hourly rate, associated with the certification of these commodities via field walking by department staff. Analysis indicates that the department spends $15.26/acre to complete field inspections of various commodities, while the current fee is $10.00/acre. The Department proposes to increase the fee to $13.00/acre. The increase in revenue will vary from year to year based on number of acres to certify. Based on figures from calendar year 2018, the department estimates approximately $75,000 in additional revenue as a result of the proposed fee changes. The last increase for phytosanitary inspection was 12/15/2015.
In addition, The Department of Agriculture is proposing to increase a variety of other fees that are charged on an hourly basis due to salary increases approved by the Board in July and increasing benefit costs, including pension and OPEB (Other Post-Employment Benefits) charges. The fees are proposed to be increased from $118.00/hour to $123.00/hour based on revised calculations performed by the Department of Financial Services. The total revenue impact from this increase has not been determined at this time.
The Department of Agriculture is also proposing to adjust the commercial device testing fees to be consistent with the new schedule of uniform fees that went into effect on June 1, 2018. Currently, the California Business and Professions Code 12210.5 requires that charges for testing commercial devices be based upon a uniform schedule of fees established by the California Department of Food & Agriculture and be comparable with rates charged by a Registered Service Agency. Since these types of inspections are rare, the proposed fee adjustments will not have a significant impact (increased revenue) to the department budget. The last revision for fees for testing commercial scales was in May of 2009. For all other devices the last revision was in May of 2015.
Community Services
Cannabis Taskforce
In 2016, the Board approved a series of regulatory fees designed to recover the cost of administering and enforcing the interim ordinance regulating the cultivation of medical cannabis which, at that time, was administered by the Department of Agriculture. In 2017, additional fees related to Track and Trace and cannabis product laboratory analysis were adopted.
In July of 2018 the cannabis program was moved from the Department of Agriculture to the Department of Community Services (DCS). As the program, service delivery, structure and the administering department has evolved, this has spurred a need to evaluate the fees and fee structure.
The Department of Community Services engaged Wohlford Consulting to conduct a third-party analysis of the full cost of the cannabis regulatory services for which user fees are charged. To ensure accuracy and establish a clear nexus between the cost of services and the fees charged, the study required a detailed analysis of time required for staff to provide each component of service delivery.
The current fee structure for annual cultivation licenses are based on a fee per square foot of cultivation area for plants containing CBD ($1.60 per square foot) or THC ($2.48 per square foot) cannabinoid constituent. However, this structure presented several difficulties in implementation. Specifically, the per-square foot charge sometimes led to disagreement between the inspector and the cultivator on the precise measurement of the canopy and multiple fee adjustments based on seasonal canopy expansions. In addition, while the current cultivation fees provide a different cost for CBD verses THC, the staff time and cost to provide services are the same whether or not CBD or THC plants are grown.
The proposed fees represent a new fee structure that is easier to administer, and accurately reflects the costs of services. The proposed annual cultivation fees are simplified based on whether the cultivation is seasonal (typically an outdoor cultivation site) or year-round (typically an indoor or mixed-light cultivation site). Each fee is based on an average of one inspection per month per facility during the cultivation period. Therefore, the seasonal cultivation fee is based on an 8-month cultivation period with 8 routine inspections per year, while the year-round cultivation site is based on a 12-month cultivation period with an average of one routine inspection per month. Complaint inspections, follow-up inspections, or other work not anticipated in the routine inspection fee will be charged per inspection or at the hourly rate.
In addition, the proposed cultivation fees are based on quarter-acre increments. The first quarter acre is the bulk of the charge, taking into account the travel time, research and preparation time, documentation time, etc. The “additional quarter acre” fee is the charge to cover the incremental increase in cost for a larger cultivation site.
Fees are calculated to cover the direct and indirect costs associated with the application, licensing, inspection, and enforcement efforts related to the cannabis interim ordinance. All pertinent cost elements were considered and cost calculations were based on county staff hours estimated for each activity. The proposed fee changes will result in estimated annual revenues of $2,378,044. Under the current fee structure, the projected revenue was higher, which reflected the high program startup costs, including purchase of vehicles and equipment, and the cost of consultants associated with development of the Cannabis Land Use Ordinance. The estimated revenue from the proposed fees reflects a leveling off of start-up and other one-time costs and will sustain the program in the long term. Careful analysis was conducted with the Department of Financial Services staff to assure the projected revenue under the proposed fee structure is adequate to sustain the program. Staff will provide an updated fiscal analysis of the Cannabis program as part of the 2018-19 Midyear Budget Monitoring report in February.
The Summary of Proposed Fee Changes (Attachment B) does not show a side-by-side comparison of the current fees and proposed fees as the proposed fees represent a new fee structure. The table below summarizes some of the proposed fees and compares current cultivation fees for THC to proposed cultivation fees.
| Fee Title |
Current Fee
(Cultivation Fees
are estimates and
assume THC) |
Proposed
Fee |
Percent
Change |
| Annual Cultivation License Application Renewal Fee |
$ 1,500.00 |
$ 4,158 |
177% |
| Seasonal Cultivation License (April 1 to Nov 30) - 0 to 10,890 SF (1/4 acre) net cultivation area |
$27,007.20 |
$ 15,833 |
-41% |
| Seasonal Cultivation License (April 1 to November 30) - Each Additional 10,890 SF (1/4 acre) net cultivation area, or portion thereof |
$27,007.20 |
$ 4,737 |
-82% |
| Year Round Cultivation (Cultivation starts before April and/or extends past November) 0 to 10,890 (1/4 acre) |
$27,007.20 |
$ 22,931 |
-15% |
| Year-Rounds Cultivation(Cultivation starts before April and / or extends after November 1) - Each Additional 10,890 SF (1/4 acre) net cultivation area, or portion thereof |
$27,007.20 |
$ 7,547 |
-72% |
| Additional Time at the Hourly Rate |
$142.00 |
$211.00 |
149% |
Under the proposed fee structure, licensees with cultivation sites equal to or greater than one-quarter acre (10,890 square feet) of cultivation area will see an overall decrease in their annual cultivation license. For example, a licensee paying an annual cultivation license application renewal plus an acre of cannabis cultivation with a seasonal cultivation license, would see a reduction of approximately 69% in their annual fees ($34,202 per year under the proposed fee structure, as opposed to $109,529 under the current fee structure). The estimated reduction in total annual fees includes an increase in the Annual Cultivation License Application Renewal Fee, which now better reflects staff’s time in processing annual application license renewals.
However, licensees with cultivation canopy sizes less than 6,250 square feet will see an increase in their annual fees, since the smallest fee increment is one-quarter acre. There were nine cultivators that cultivated canopies between 1,000 square feet to 6,250 square feet in 2018. A fee for a small cultivation site was initially considered in the study; however, the costs were approximately the same as a site cultivating one-quarter acre, because the same number of inspections and roughly the same inspection time is required.
The fee study also considered the cost estimates for services and fees for the license types considered under the current “Request for Proposals” and early Development Agreement process, such as nursery, processor, distributor, etc. These fees are included in the fee proposal in anticipation of these license types receiving approval before the end of the fiscal year.
The laboratory testing fees that were adopted in 2017 are being deleted as this testing now occurs at the state level. The Track and Trace program fees remain in place and no changes are proposed for those fees at this time.
Staff conducted two stakeholder outreach meetings on November 27 and December 4, 2018, and industry stakeholders were generally supportive of the new fee structure.
Environmental Health
The Environmental Health Services Division (EHD) contracted with Wohlford Consulting to conduct an analysis of the full costs incurred by the County in support of the Consumer Protection, Hazardous Materials, and Land Use services for which the County charges user fees. In order to ensure accuracy and establish a clear nexus between the cost of services and the fees, the study required a detailed analysis of time required for staff to provide each component of service delivery. The cost analysis revealed a need to increase certain fees and decrease others to achieve full cost recovery without overcharging fee payers.
As a result of the study, EHD is proposing changes to Consumer Protection and Land Use fees. The revenue generated will be used to sustain minimal mandated services and reduce reliance on the County’s general fund. Although the study also looked at a potential new fee structure for Hazardous Materials fees, that was determined to not be feasible at this time and as a result a new analysis on the existing fee structure will be conducted next year.
As with all departments, EHD continues to experience cost increases each year due to pension and OPEB costs. However, due to cost saving measures in other areas, EHD was able to submit a balanced budget with only a small overall proposed fee increase. Reasonable efforts have been made to reduce or retain costs within the Division, including using special non-fee funds to purchase a replacement vehicle and construct a new building to house the Hazardous Materials Unit Emergency Response truck and storage. Also, additional revenues have been secured with contract services and grants.
Notwithstanding, some EHD programs remain underfunded because the current fees in those areas are less than the full cost of service. Because Yolo County is committed to creating an environment where businesses can succeed, small incremental increases in fees are favored over large increases when it is determined the fees are below the full cost of service. Therefore, where full cost was determined to be greater than 10% as compared to the current fee, the proposed fee was capped at an amount that represents a reasonable incremental increase. Although the current year’s budget will be balanced if the fees being requested are approved, it is important to note that in order to reach a point of full cost recovery, additional marginal fee increases will be required in the future.
The Public Drinking Water Program inspects and monitors public drinking water systems that have fewer than 200 connections. These systems typically serve small communities or businesses in the unincorporated area of the county. The drinking water standards require that the quality of the water provided to customers meets minimum chemical, radiological and bacteriological standards, assuring the water is safe to drink. In 2014, the Environmental Health Services Division changed the fee structure for this program. The 2014 fee revisions represented a cap of no more than a 10% fee increase for any one system. However, it is important to note that these fees were significantly lower than full cost. The overall cost recovery is about 74% and the range of cost recovery is between 30% to 100% of full cost. Continued incremental increases will be required for many years in order to reach full cost recovery for this program.
In addition to the Public Drinking Water Program fees, there are a number of other EHD fees that would require large increases to achieve full cost recovery. These fees are also recommended to be incrementally increased by no more than 10% per year. Attachment C provides a listing of the fees that are recommended at a level that is less than the full cost of service, including the anticipated number of years it will take to achieve full cost recovery. For the current fiscal year, a combination of salary savings, prior year fund balance, available grant funds, a small amount of general fund and, where appropriate, use of fines and penalty funds are being used to offset the anticipated shortfall of revenue associated with not being able to cover the full cost recovery of fees.
In total, the department estimates that the proposed fee increases will result in $32,545 in additional fee revenue which will be attributable to the Environmental Health Fund.
Financial Services
The property tax accounting division of the Department of Financial Services adds eligible assessments, charges, and items onto the tax bill. Agencies and departments are required to submit their correct and authorized charges for the tax bill by August 10, 2018. However, there are certain times in which after tax bills have been printed, due to errors by the agency submitting charges, they request Property Tax Accounting to correct the tax roll. In the past volumes of roll corrections have been minimal however the time and effort has increased due to the volume of programs that are collected on the tax bill and number of agencies using the tax bill as a mechanism for collection. As a result, property tax accounting is setting a fee to ensure costs are recovered using allowable codes for the effort spent in tax roll correction. It is estimated that the proposed fee increase will generate an additional $20,000 in General Fund revenue.
Library
The Library is proposing changes to fees for the Archives in order to eliminate outdated service options and to simplify the fee structure for digital and print reproduction of historical material.
The Library added replacement fees for grant-funded equipment that is currently available for customers to borrow, or will likely be available for circulation in the future, including GoPro cameras, Dell Inspiron laptops, Apple iPads, Samsung Galaxy Tabs, and related chargers or carrying cases. Additionally, the replacement fees for hotspots and Chromebooks were both increased to reflect increased vendor replacement costs and the additional $5.00 processing fee for lost or damaged equipment.
Effective January 1, 2019, the Library’s current extended use fees on regular items, special materials, and electronic equipment are proposed to be modified to only apply to customers age 18 and over. Consistent with results nationwide, elimination of extended use fees for children and youth under age 18 will reduce barriers to access library resources and lead to increased use for our youngest customers. This change in practice is consistent with the Library’s mission to provide access for all, to ideas that inform, entertain, and inspire. The financial impact is projected to be a decrease in revenue of approximately $25,000 per fiscal year, which was included in the 2018-19 Adopted Budget.
In addition, the Library Department is requesting approval to discharge all outstanding fees on accounts belonging to customers under age 18 on December 31, 2018. Currently over 2,700 cardholders under age 18 are blocked from borrowing library materials because of outstanding fee balances. The discharge of accountability will provide a clean slate to all youth as of January 1, 2019, allowing them barrier-free access to our collection of electronic equipment and print, audio-visual, and online materials. The total value of the outstanding fees to be discharged is $122,644, although the impact on revenue will be less as most of the fees are deemed uncollectible, and will be absorbed within in the existing budget allocation. |