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Hermosa Beach weighs large fee increases after cost-of-service study; council phases changes and pulls contested items for review
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Summary
City staff presented a cost-of-service study recommending broader fee changes to recover costs across departments. Council approved moving the package forward with a phased implementation but pulled a set of specific fees — including some planning and encroachment items — for additional staff analysis after residents raised concerns about community impacts.
City staff told the Hermosa Beach City Council on April 28 that a consultant-led cost-of-service study found many municipal fees were substantially below the cost to provide those services, creating hidden subsidies paid from the general fund.
“At a department level, roughly 63% of costs are recovered on the community development planning and building side and roughly 78% on the public works side,” said Director Brandon Walker during a presentation opening the public hearing on the draft master fee schedule. Walker said a full implementation of the study’s recommendations could yield about $1,000,000 in additional annual revenue for the city while warning that many residents would feel “sticker shock.”
The study, completed by RCS Revenue Cost Specialists and presented by staff, excluded parks and recreation and certain market-based event fees from the current analysis; staff said those areas will receive a separate, parallel review. Walker said the analysis recommends shifting most planning fees from a property-value basis to a square-footage basis to improve transparency and predictability for applicants.
The proposal prompted more than two hours of questions from council members and detailed public comment. Council member Jackson asked whether the city could phase increases to avoid abrupt price shocks; Walker said a phased approach is possible and could be structured over multiple years. Planning staff described several new or revised fees included in the packet: a conditional use permit (CUP) annual monitoring fee intended to recover the cost of inspections, substantially higher mural review fees tied to planning commission review, and revised encroachment and special-event permit fees.
Residents and business owners repeatedly urged caution. “If the only way to avoid these fees is to take away our umbrellas, benches and tables, you will be left with an ugly open dead waste of space,” said Patty Gregorian, owner of Granny’s on Monterey Boulevard, arguing her long-standing neighborhood business and its public-facing patio should not be treated as a commercial encroachment. Multiple speakers provided petitions or asked council to exempt small, community-serving businesses located in residentially zoned properties.
Council members responded by compiling a list of specific fee items they wanted staff to revisit, including several large jumps in CUP and variance fees and mural permitting costs. After deliberation, council approved a motion to advance the fee adjustments in concept with a phased implementation and to pull roughly two dozen specific fee items for further study. That motion also directed staff to prepare a grid explaining each pulled fee and to return for more detailed review. The motion was recorded and moved forward by majority vote; staff recorded individual votes in the minutes and will return with revised materials before the next hearing.
In addition, after hearing public testimony about a perceived oversight in the encroachment fee mapping, council directed staff to return a modified resolution clarifying that the newly created commercial encroachment category will not apply to commercial activity located on residentially zoned lots unless council directs otherwise. That instruction followed concerns that a small number of businesses — including Granny’s, which sits in an R-3 residential zone — were not previously notified and that applying the commercial encroachment fee retroactively would impose a disproportionate, unexpected burden.
Staff told council they will bring the pulled items back for additional analysis and suggested tiering or exemptions where appropriate. Walker also said staff will return the parks and recreation fee recommendations as a separate, more granular report so that event, recreation and youth program costs can be analyzed with proper local context.
The council’s next step is for staff to compile the council-member edits, the list of pulled items and a revised resolution for a future meeting; several members asked that the results be available before the next council session to allow time for public review and comment.
