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HomeMy WebLinkAboutNB 4 NON-RESIDENT REG 08-06-90DATE: TO: FROM: SUBJECT: JULY 30, 1990 WILLIAM A. HUSTON, CITY MANAGER COMMUNITY SERVICES DEPARTMENT NON-RESIDENT REGISTRATION FEES RECOMMENDATION NEW BUSINESS N0. 4 8-6-90 Inter - Com To revise Section #1 of Policy 4-05 (see attached) regarding non- resident fees for recreation programs to be a separate $5 per class instead of the percentage, and earmark those funds for park development as recommended by the Parks and Recreation Commission and the Community Services Staff. With Council approval , this change could be effective Winter Session 1991. FISCAL IMPACT Since the current non-resident fees are combined with the class fee, there may be a slight decrease in revenues. There would also be a decrease in expenditures. With the average non-resident fee differential $8.79, the City only retains 30 percent of that amount, or $2.64. The separate $5 flat fee would increase the amount of money retained by the City. Instead of retaining 30 percent of the non-resident fee differential, the City would retain the entire amount. Net revenue loss to the General Fund staff estimates could be about $3000 to $5000. However, with the separate $5.00 flat fee, an additional $10,000 could be generated for the Park Development Fund. Recreation programs shall continue to be self-sustaining as far as direct costs are concerned with an appropriate administrative overhead added. All other portions of Council Policy 4-05 shall remain the same. SUMMARY The Parks and Recreation Commission began discussing the policy in November, 1989. Several alternatives were explored in an effort to be equitable to all class participants, residents and non- residents. The Commission reviewed the pros and cons of all the alternatives. The recommendation to the Council is what the Commission thought was the best alternative. Totally eliminating Page 2 Non -Resident Registration Fees the fee would decrease revenues and not provide an advantage for Tustin tax payers. Not allowing non-residents in Tustin programs would be discriminatory and would decrease participation by as much as 45 percent. Not changing the policy didn't solve the confusion of setting fees and administering the program. Changing to a standard non-resident registration fee would simplify the entire process with a minimum loss of overall revenues. Revenues may possibly increase by encouraging more participation from non- residents. Under the current system of compensation and because of the way the fees are structured, the instructors receive 70 percent of total class fees for both the residents and non-residents. Separating the fee from the class gives the entire amount to the City instead of just 30 percent. The 70 percent instructor, 30 percent City split was adopted by the City of Tustin in 1981, and is the standard for most Orange County cities. This was done in order to attract and retain quality instructors and to streamline staff operations as there were no computer programs at the time to process registration or payment of instructors. When the policy was first discussed with the Parks and Recreation Commission, staff recommended total elimination of the non- resident fee differential, for the negative feelings the policy created with all of our non-resident customers. The Commission could not support this and felt that the $5 increment could be justified by the fact that non-residents do not pay property tax to the City and that the "new fee" could be considered a processing fee. The Commission's recommendation could provide an estimated $10,000 in revenue each year to be used toward park development. Since the Department's registrations and class operations are all computerized, it would take a relatively little amount of time with a standard fee to set up a separate account. The fact that the fee is a single amount, and $5, would simplify the process. Also, there may be an increase in revenue by encouraging more non- residents to participate in City programs. BACKGROUNDIRELEVANT ISSUES The present Policy 4-05 adds a surcharge up to 50 percent in addition to regular class fees. These surcharge fees vary according to the cost of providing the class and are included in the class fee. The differential for non-resident fees ranges from $5 to $15 per class with an average difference of $8.79. Currently each class is listed with two fees, one for residents and one for non-residents. There is no uniformity and the system is confusing to participants and for staff to administer. Under the present system every registration must be checked for residency. Extra computer codes are needed to differentiate residents and non-residents. The double pricing standards make the Tustin Today brochure difficult to read. Also, due to the irregularities of the City's boundaries, many customers do not know if they are residents. Sometimes it is difficult to determine who is a resident by address only. Some areas of the county have a Page 3 Non -Resident Registration Fees Tustin address and zip code while other areas recently annexed still have a Santa Ana address and zip code even though the area is now within the City limits. Because the Tustin Unified School District boundaries and the City boundaries do not coincide, many of the students are non-residents, however, many students and their families identify very strongly with Tustin and think of themselves as Tustin residents. Many of the same citizens are involved in the sensitive issue of annexation. Strong feelings and positive attitudes towards the City foster good relationships. All the current class instructors are independent contractors and are not City employees. Instructors set their own fees, hours, days, length of classes, and minimum/maximum number of students. The non-resident fee structure makes pricing difficult affecting residents as well as non-residents. In a recent survey, the majority of the class instructors were in favor of eliminating the non-resident fee. Many thought that elimination of the fee would encourage more participation in their classes. ALTERNATIVES I. Charge a non-resident fee differential as a standard fee and earmark the surcharge to construction of new recreation facilities. A. Advantages 1. This would secure future revenues for new facilities. 2. Non-residents would know exactly how the surcharges are being used. Residents already pay taxes earmarked for City services and Capital Improvements. 3. There would be one standard fee instead of the variable percentage that now exists. B. Disadvantages 1. The revenue generated would be minimal versus the staff time to administer. Estimated yearly revenue would possibly be up to $10,000 a year. The difference in staff time for the computer data entry for non-resident fees does not reflect the extra time needed to explain the policy or to handle unhappy customers. 2. This system would not simplify the operation as much as total elimination of the fee. The cost in time would be the same as not changing the policy. II. Eliminate non-resident fee differential. Page 4 Non -Resident Registration Fees A. Advantages 1. The elimination of the non-resident surcharges would be in accordance with the City's commitment to customer service. There are at least 10 disgruntled customers every quarter who adamantly complain to the staff about the fee structure. 2. Elimination of the non-resident fee differential could increase the demand for classes. The lower cost might encourage greater participation, therefore increase revenues. 3. The current industry standard is not to have surcharges. Eighteen Orange County cities do not have surcharges. Five have a small surcharge of $2 to $3 per class. Tustin's average surcharge is $8.79 with a range of $5 to $15. 4. The deletion of the non-resident surcharge would simplify the operation of the Community Services Department, saving time and money. B. Disadvantages 1. There is a possibility of a negative reaction from Tustin residents. Residents would still retain the two week priority registration in order to have the first opportunity at class registration. 2. There is a possibility of revenue loss the first few months. However, staff believes the loss would be short termed as new customers are attracted to the program and instructors adjust their fees. III. Do not allow any non-residents in Recreation Programs. A. Advantages 1. There would be one fee schedule. B. Disadvantages 1. This could cause a negative reaction from all non- residents using recreation classes. Some non- residents have been in the program for many years. This might also be a form of discrimination. 2. This alternative would eliminate most of the current recreation classes. Without non-residents, most classes would not be able to meet their minimum number of students. 40 to 45 percent of the students are non-residents. There could be a drastic drop in revenue and participation. 3. This alternative may be illegal if the facilities Page 5 Non -Resident Registration Fees used for classes were built with State or Federal monies. IV. Recommend no policy changes, keep non-resident differential as is. A. Advantages 1. The policies are currently in place. 2. Current residents and non-residents are used to the system. B. Disadvantages 1. The current system causes confusion for clients. Staff time is used trying to explain and justify the system. 2. The City's customer service policy is not served by this system. Many customers have negative reactions when told they are not Tustin residents. 3. Some non-residents are priced out of the class, causing the City to lose participants and revenue. 4. The policy of charging a surcharge to non-residents is not an industry standard. Buena Park is the only other city in orange County that charges a 50 percent non-resident surcharge. 5. The policy is costly to administer. Each registration must be checked for residency and separate computer codes and prices are entered. Susan M. Jones Recreation Superintendent RAW/SMJ/svr Attachment a:#lwah.non Royleen White, Director Community & Administrative Services COUNCIL POLICY SUBJECT: Recreation Program Fees PURPOSE POLICY NO: 4-05 SECTION: Human Services APPROVED: 4-6-81 EFFECTIVE:4-6-81 To charge the user his or her appropriate share of the operational cost of special recreation programs, classes, and leagues. The fees for recreation and cultural arts classes, special recreation programs, and sport leagues will be set by the Community Services Director within the following guidelines: $5.00 per class fee 1. Non-residents will be assessed a/5fl--slue- in addition to the resident fee,and earmark the fee for the Park Development Fund. (Unless prohibited by a joint powers agreement, such as the one in effect at Columbus Tustin Park.) 2. Fees for recreation and cultural arts classes, special recreation programs, and sport leagues shall be based on a cost-plus basis. These particular programs shall be self-sustaining as far as their direct costs are concerned, and an appropriate administrative overhead shall be added. 3. It is the intent of this policy that the individuals who benefit directly from these types of programs shall be the ones to bear the burden of the costs. 4. Exceptions to the "cost-plus" basis shall be made at the discretion of the Community Services Director, in cases where special consideration may be warranted. This Council policy supersedes Section "C" of Resolution 80- 28. This affects recreation and cultural arts classes, special recreation programs, and sport leagues. The fees for building rental, sport facilities, and parks will still be handled by the appropriate Resolution of the City Council.