Administrative Policy #5.16 - Cost Recovery
Purpose
To govern the establishment of user fees to recover the cost of providing services taking into consideration equitable access to City services by all users.
Scope
Applies to all City Departments and charge for service considerations
Goals
The City will seek to recover the cost of services through fees whenever users receive specific benefits. Cost recovery fees and charges will be set at a level sufficient to recover full cost of service whenever practical to minimize subsidization by taxpayers.
Guidelines
General
a. Fees and charges other than those identified elsewhere in City Council policy or via Corvallis Municipal Code will use the following criteria to determine the ratio of cost recovery:
- Whether the person paying the fee can avoid it;
- Whether the program supported by the fee is designed to benefit the entire community or only a small segment of the population;
- Whether the fee is set high or low to incentivize something (i.e., change behavior);
- Whether the fee should be earmarked for a specific use or should be treated as a general revenue available for operations;
- Whether there are extenuating circumstances where the Council believes the fee should not cover all of the costs associated with the service; and
- Whether the fee costs less to collect/administer than the revenue it brings in.
b. Fees and charges are reviewed regularly and are updated via Council action when necessary. The City will consider full cost recovery, equitable access to services, and comparable rates charged by other municipalities of similar size in establishing rates, fees, and charges.
Parks and Recreation Department
a. Cost Recovery -- Parks and Recreation services fees and charges will be assessed in an equitable manner in accordance with the following fee and charge assessment schedule.
b. Through a special initiative, services that provide recreational opportunities for populations with the fewest recreational alternatives (youth, limited income, senior adults, and families) may be more heavily supported by grants, donations, or property taxes than user fees to ensure that the population is well served by Parks & Recreation programs.
c. Percentages will be considered as guidelines; however, special circumstances, the nature and cost of each program, and persons to be served will be taken into consideration.
d. Fee Model -- the following lists represent all categories of services currently provided or those which may be provided in the future by the Parks & Recreation Department. The model is based upon the degree of benefit to the community or to the individual of the service provided, the values of the Corvallis community, and the vision and mission of the Parks & Recreation Department. This model and policy form the basis for setting fees and charges. (Tier 1 -- mostly a community benefit; Tier 5 -- mostly an individual benefit)
- Revenue positive cost recovery (Tier 5 services are targeted to recover a minimum of 200 percent of direct costs):
- concession/vending
- merchandise for resale
- private/semi-private lesson
- rentals – private/commercial
- long-term leases
- equipment rentals
- trips
- organized parties
- drop-in childcare/babysitting
- leased services – private/commercial
- permitted services
- Totally fee supported with no tax investment (Tier 4 services are targeted to recover a minimum of 100 percent of direct costs, and some of these services may be appropriate for use of alternative funding sources such as grants, donations, and use of volunteers):
- classes and programs – intermediate/advanced
- leased services – non-profit/governmental agency
- preschool
- social clubs
- Primarily fee supported with little or no tax investment (Tier 3 services are targeted to recover a minimum of 90 percent of direct costs, and some of these services may be appropriate for use of alternative funding sources such as grants, donations, and use of volunteers):
- health services, wellness clinics, and therapeutic recreation
- classes and programs – beginning/multi-ability
- tournaments and leagues
- rentals – non-profit/governmental agency
- specialized events/activities
- camps/after school care
- leased services – affiliates
- work study/internship/community service program
- Partial tax investment with minimal to partial fee support (Tier 2 services are targeted to recover a minimum of 45 percent of direct costs, and many of these services may be appropriate for use of alternative funding sources such as grants, donations and use of volunteers):
- life/safety classes
- rentals – affiliates
- supervised park/facility
- community-wide events
- volunteer program
- Full tax investment with little or no fee support (Tier 1 services are targeted to recover zero percent of direct costs, although some of these services may be appropriate for use of alternative funding sources such as grants, donations, and volunteers):
- non-supervised park/facility
- inclusionary services
- support services
e. Setting Fees -- The Parks & Recreation Department Director will set fees for programs and services in compliance with the targets listed above. Fees will be adjusted during the course of each year as needed to ensure the cost recovery targets are achieved. The following pricing strategies will be used by the Parks & Recreation Director in setting fees:
- Market pricing: a fee based on demand for a service or facility or what the target market is willing to pay for a service. One consideration for establishing a market fee is determined by identifying all providers of identical service (i.e., private sector providers, municipalities), and setting the highest fee. Another consideration is setting the fee at the highest level the market will bear.
- Competitive pricing: a fee based on what similar service providers or close proximity competitors are charging for service. One consideration for establishing a competitive fee is determined by identifying all providers of an identical service (i.e., private sector providers, municipalities), and setting the mid-point or lowest fee.
- Cost recovery pricing: a fee based on cost recovery goals within market pricing ranges.
f. Fee Review -- The Park and Recreation Department will conduct an annual comprehensive review of cost recovery targets in compliance with the targets in this procedure policy targets; this review will be forwarded to the City Manager.
g. Use of Volunteers -- Through an aggressive volunteer recruitment program, the Parks and Recreation Department will seek to minimize the amount required for full tax investment with little to no fee support (Tier 1 services) and partial tax investment with minimal to partial fee support (Tier 2 services).
h. Alternate Funding Sources -- Solicitation of funds through donations, fund-raising events, nontraditional sources, and various other modes will be encouraged. Funds collected for any special purpose will be earmarked for that purpose.
Review/Update
The Finance Director will prepare this Administrative Procedure for review as needed for City Manager approval.
Last reviewed: 10-2022
