The Rapid City Council will consider a resolution raising fees for a number of city services and creating new fees for others at its meeting today.
The resolution was initially presented to the council on Nov. 19, when Community Development Director Ken Young — whose office has proposed many of the fee hikes — was peppered with questions seeking justification for the proposal.
Ultimately, the council asked city staff to gather data explaining the need for the fee hikes and delayed a decision on the matter. Ahead of today's meeting, which starts at 6:30 p.m., the Journal spoke with city directors and sat down with Young and Mayor Steve Allender to ask about the impetus behind and justification for the fee hikes.
A 2017 survey asking how Rapid Citians would allocate an imaginary $1,000 in city funds found that planning, zoning, code enforcement, building permits and inspections were low on citizen’s priority list.
“They want those things to be paid for by the users,” Allender said of his interpretation of the survey results. “That’s kind of the foundation behind the effort to make these charges realistic and appropriate. These services benefit the individual user, not the general community.”
When the cost of services aren’t covered by user fees, Allender said the city’s general fund has to cover the difference, in essence charging the general taxpayer for a city service that doesn’t benefit them.
“We should be working toward 100 percent [cost recovery] here,” he said. “In other words, saving the general-fund tax dollars for general-fund functions like public safety and streets.”
In a city document provided to the council, user fees recovered between 41 and 95 percent of the cost of services.
“In almost all instances, it shows that we are substantially charging less than what we should if we are trying to meet the level of effort that is being put into it,” Young said. “As we do our budgeting process, we’re struggling to meet the level of effort in our budget. That causes us to take a deeper look at, well, why are we having a shortfall? Why is this a struggle? When we look at our fees and we determine that there’s a gap in some of those areas, then I think there’s part of the answer.”
Below is a breakdown of a few of the proposed fee hikes.
The city is looking to raise the fee charged for each medical emergency that requires ambulance service and assistance from emergency medical technicians (EMT), known as a basic life-support emergency. The current fee is $578.58 per event but would rise to $655 under the new ordinance. Further, the fee for each mile of ambulance transport would rise from $13.50 to $14.30.
Rapid City Fire Chief Rod Seals, who oversees the ambulance service, said the increased cost is meant to help keep up with the reimbursement rates for Blue Cross/Blue Shield. Prior to 2012, Seals said, the rates were tied to the consumer price index (CPI), a measure of inflation expressed as a percentage and calculated annually.
Simultaneous to the proposed fee hikes, the council will also consider writing off more than $1.7 million in uncollectible ambulance bills at today's meeting. Rapid City EMS Chief Jason Culberson said there is no relationship between the rate hikes and uncollectible bill write-offs. Allender has said the city’s ambulance service — the only public or private ambulance operator in Rapid City — collects about 50 percent of the total amount it bills.
Almost every fee charged by the cemetery division, which is within the Parks and Recreation department, would rise by 5 percent in 2019, including the cost of a plot, grave, cremation and the cost to open and close — i.e. dig, backfill and sod — the grave. Parks and Recreation Director Jeff Biegler said the fee hikes are meant to help offset the operating expenses of the cemetery.
If you park in a city-owned lot, your permit is proposed to rise $4 per month regardless of the lot or spot. But whereas the old permit fee listed on city documents did not include tax, the new permit price includes that, meaning the fee increase is closer to $3, Finance Director Pauline Sumption said. The fees will continue to be tied to CPI.
Sumption said the hikes are because the city has failed to keep up with the rising costs of maintaining the lots, which became clear during the city’s recent downtown parking study.
“As costs continue to increase, we put our ability to meet our bond covenants at risk if we do not increase the revenues,” she said.
In 2019, water rates will rise by about 10 percent following the passage of an ordinance in August that will see them rise that amount each year through 2022. At today’s meeting, fee hikes for a variety of water-specific services are proposed, including a move in fee (from $40 to $45 in city limits, $44 to $52 outside city limits), a call for service fee (from $44 to $49 during business hours, $73 to $81 outside business hours) and a water-meter fee (from $90 to $100).
According to a city document drafted by Assistant Public Works Director Dan Coon, “…the above proposed fees reflect the increase in labor and equipment costs to provide these services.”
TIFs and annexations
For developers in search of tax subsidies and landowners outside of Rapid City limits looking to get in, it’s going to cost you. The application fee for a tax increment financing district (TIF) is proposed to jump from $1,000 to $2,500. According to city documents prepared by Young and his department, city staff spend an average of 123.5 hours reviewing and processing the applications, costing the city $6,093 based on the hourly rates of the staff involved.
The $2,500 fee, the document notes, represents a recovery cost percentage of 41 percent. If a TIF is approved, the city then charges a $20,000 administrative fee. The document also notes that the fee may be altered as soon as next year once the city unveils, and the council potentially approves, a new TIF policy. Young said the new policy, still under development, proposes altering the administrative fee to $20,000 or 5 percent of the total TIF amount, whichever is greater.
While it's currently free to apply for a property to be annexed into city limits, it may soon cost $250. City documents say it costs the city $387 in staff time to process the most straightforward of applications. Involuntary annexations cost the city more than $3,000 in staff time, documents say, though no fee would be charged in those cases when the city initiates the annexation.
The council will consider the resolution at 6:30 p.m. in the council chambers inside City Hall at 300 Sixth St.