Comprehensive Fee Study Report
Laguna Beach County Water District has conducted a systematic and comprehensive fee study to update the District’s miscellaneous fees (user fees) and water capital fees (water capacity fees). The findings of this study indicate that revenues from both categories of current fees need revision to reflect the current cost of providing service to individual applicants, as well as adjusting the water capacity fees for new development to ensure available capacity for future demand. The proposed user fee and capacity fee schedules indicating the full cost recovery are attached in the Comprehensive Fee Study Report.
The District Audit Commission Committee reviewed and commented on the report. At its January 23, 2018 meeting, the Commission approved the report and proposed fee schedules with minor revisions. These revisions have been incorporated into the fee study report.
User Fee Study
User fees are imposed for a service provided or required due to the request or action of an individual/entity. The District charges user fees for a variety of specific services provided on behalf of a private citizen or group. The underlying assumption for the user fee is that costs of services benefiting individuals (not the entire District service area) should be borne by the individual(s) receiving the service.
Each department within the District provided input to the Fee Schedules, proposing additions and deletions, as well as renaming, reorganizing, and clarifying the fees imposed. These revisions are proposed to modify fees to current District practices, in addition to providing greater clarity and transparency to applicants, customers, and staff. Based on this analysis, most fees would need to be increased to reflect current costs for service. The final result is a proposed fee schedule derived using industry standard approaches, compliant with California law, and based on the full costs to provide District services to individual applicants.
Water Capacity Fee Study
Utility capacity fees are one-time payments imposed on new development for its proportional share for capital improvements, resulting in available capacity for future demand. Public utilities assess capacity fees to help offset costs for tapping into available system capacity and providing new facilities to support future development. Capacity fees are based on the principle that new development should pay for required water system capacity that existing customers initially funded. Collection of water capacity fees can, over time, reduce the magnitude of rate increases and the need for future debt financing that otherwise might be needed for capital improvement acquisition and/or replacement needs.
The District’s water capacity fee (currently called a ‘Reserve Storage Fee’) is imposed on new development connecting to the District water system for the first time or existing connections requiring additional capacity in the system. The fee calculations in the attached study use a recoupment (buy-in) approach that identifies the demand that new water connections place on the District’s water system. To calculate the capacity fee, industry standards and best practices were utilized within the guiding framework of California’s legal requirements related to utility capacity fees.