Finance Committee recommends citywide cost-of-service study and fee adjustments, asks staff to refine selected items

The Palo Alto Finance Committee on April 29 reviewed a citywide cost-of-service study prepared with Matrix Consulting Group and recommended that staff forward the proposed municipal fee adjustments to the City Council while returning with refinements on several items.

Lauren Lai, the city—s chief financial officer, presented the study, describing it as a time-based analysis of the city—s transactions and fee activities. Courtney Ramos of Matrix Consulting Group was available online to answer methodology questions. Lai said the study updates hourly rates and proposed fee schedules across multiple departments so fees better reflect the cost to provide services and align with the City Council—s cost-recovery policy.

The study proposes a mix of fee adjustments across administrative services, planning and development, community services, fire/EMS, police, public works and utilities. Key items discussed at length included a new "first responder" fee for certain EMS responses (a $497 fee line), adjustments to fire and ambulance cost recovery, updates to recreation and rental fees in Community Services, and updated hourly rates for maintenance, public-works inspections and industrial discharge review.

Lai told the committee that full implementation of the proposed schedule would raise approximately $1,000,000 of new General Fund revenue when fully implemented and that staff conservatively estimates $700,000 in FY 2026 because some items will not be fully implemented immediately.

Committee members asked for and received clarifications and several policy-level directions. Highlights of requested follow-ups include:

- Review whether the city should retain a local domestic-partner registration fee when the state issues domestic-partner documentation; staff agreed to confirm whether the local fee is still needed and to remove it if redundant.

- Apply full cost recovery to real-estate conveyance fees and re-check apparent inconsistencies in exhibit tables where identical costs were shown with different proposed fees.

- Revisit special-event permit pricing so that for-profit events pay full cost recovery while nonprofit events retain subsidized rates; staff will align police special-event charges with Community Services— nonprofit rental practice.

- Re-examine animal-impound and repeat-offender penalty structure (committee suggested steeper escalation after repeated offenses) and confirm which fees are penalties (allowed to exceed cost) versus cost-recovery fees.

- Review taxi-license application assumptions; staff reported a current estimate of roughly 30 staff-hours to process a new taxi-license application (versus a renewal) and the committee asked staff to validate that time estimate and the resulting $7,000 proposed application fee.

Committee members expressed questions about public-safety impacts, equity and behavioral incentives. Some members asked whether a new first-responder fee might dissuade emergency calls; Amber Cameron of the Fire Department clarified that the proposed first-responder fee would be billed only to commercial insurance (not to underinsured or uninsured patients).

Courtney Ramos acknowledged minor report artifacts (duplicate references to another jurisdiction in appendix pages) and confirmed the study uses standard cost-allocation approaches, including direct staff time, departmental overhead and citywide allocations for finance and HR to capture total service cost.

The committee voted unanimously to recommend the study and adjusted fee package to the City Council and asked staff to incorporate the committee—s directed refinements before the council—s June 16 fee schedule decision. Staff also committed to providing an addendum summarizing the edits for committee review prior to the council hearing.

Ending: The cost-of-service study and proposed fee schedule will go to the City Council as part of the FY 2026 budget and fee-schedule adoption; staff will return the requested clarifications and adjustments in memos and the June submission.