Port Hueneme Could Reap More Revenue From Its Services, Study Says

The city of Port Hueneme is running a sale on fingerprint cards, dog licenses, fence permits and police-report copies--from 25% to 80% below cost.

But city officials have only recently realized just how much money they’ve been losing. So hurry on down to City Hall. The bargains might not last.

The City Council, seeking ways to raise money, has identified nearly $1.4 million in services that are provided to individuals and groups of residents at below or no cost.

A $55,000 management study commissioned by the council has broken down the per-unit costs of selected services--from tennis-court rental to police false-alarm responses.

The report’s bottom line: The local treasury could reap $519,000 through new and increased fees, a hefty sum for a city whose total operating budget this year is $11.9 million.

“The extent to which fees and charges are being subsidized is a significant tax burden to the city,” said Rick Kermer, president of Anaheim-based Management Services Institute Inc., which conducted the cost-recovery study.

“If my neighbor wants to put in a patio, why should my tax dollars go into paying for his inspection instead of paying for police service?”

The unshakable constraints of Proposition 13’s property-tax limits and the weak sales-tax income caused by the recession have forced many cities to closely scrutinize their fees to see where they are selling themselves short.

“When tax revenues are limited, as they are now, you want to make sure people receiving special services are paying fees equal to the cost of providing them,” said Bob Heitzman, deputy city manager of Simi Valley, which reviews its fee schedule annually.

Port Hueneme is harder pressed than most cities in the county. It has the lowest per-capita tax revenue after Fillmore. Sales-tax revenues, the largest income source in many larger cities, rank fourth on Port Hueneme’s revenue list, totaling less than 5% of Ventura’s annual take.

“All governments have been scrambling,” Jim Hanks, Port Hueneme’s finance director, said. “We’re just trying to make sure the city can operate in the future.”

The Port Hueneme study goes further than others in the county in that it applies every “cost” allowable under state law to determine appropriate fees, city officials said.

The study factors in not only staff time, insurance and utility costs, and equipment and building depreciation, but also replacement costs for the city’s $63 million in fixed assets, from street curbs and police radios to softball fields and the Hueneme Pier.

In explaining his findings to the City Council last week, Kermer said the city in some instances could impose fees where none exist. For instance, he suggested charging drunk drivers for the cost of investigating their accidents. Other recommendations include raising water and garbage-collection rates.

Kermer also identified many instances where the city’s fees are higher than their costs.

For example, the city charges $775 for variance reviews that cost only $492 on average to conduct. Kermer recommended cutting that fee to $500. On the other hand, Kermer recommending maintaining the 300% markup on permits to shoot movies and TV shows in public areas, because of the inconvenience that film crews can cause.

The council must now tackle the politically sticky question of what fees to raise, and on what services new ones might be imposed.

Developers, for instance, pay an average $1,724 in filing fees for planned-development permits that cost the city $2,432 to review and evaluate. The net result: Local taxpayers are picking up the $708 difference that the city could rightfully make the developer pay.

School crossing guards cost the city $40,000 a year, which Kermer described as “a private good because it does not serve the community as a whole.” Kermer, however, conceded: “There is no practical way to charge the parents, the children or the school districts for the cost.”

General tax revenues underwrite about 77% of the $88,000 annual operating cost of the municipal athletic center. But if the council raises current fees for playing racquetball or basketball, or for using showers, sauna or weight rooms to reflect the true cost, the recreation department risks losing patrons to private health clubs.

“Our tennis facility is probably the nicest in the county, absolutely gorgeous, but there’s no way we could recover the cost of providing that service,” City Manager Dick Velthoen said. “The fees would be so prohibitive, no one would play.”

“This city has a poor revenue base,” Velthoen added. “We have to take advantage of every opportunity we can find.”