Last Updated 5/2/07

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City Commissioning Cost Allocation, Utility Fees Study

By Allison Jean Eaton
Bulletin Staff Writer

The city is shelling out just over $72,000 to a contractor for a cost allocation plan and utility rates study.

At its meeting last Tuesday, the City Council approved the city’s entering into an agreement with MuniFinancial to complete the comprehensive analysis.

“A cost allocation plan is an analysis of how the city incurs costs to perform the services that it offers,” said City Manager Barbara Kilroy. She explained that the city wants to ensure that citizens receiving services are bearing the cost, but that they are not bearing an “unreasonable cost.”

According to a staff report, the City Controller’s Office sent out a request for proposals last November, and MuniFinancial, which turned in the second highest quote, was selected out of a pool of four applicant firms.

In addition to the cost factor, city staff selected the company based on four items: it is a highly specialized public sector financial consulting firm; it has an experienced project team with an extensive background in municipal government; its technical approach and project schedule relative to the work plan for completion; and a user-friendly end product that staff will have the ability to amend in the future.

The overall objective is to ensure that the city is utilizing appropriate fees for services and accurate overhead rates. Additionally, it will illustrate whether or not the city is accurately accounting for and recovering the true cost of providing various services relative to operations, according to the report.

Water and trash fees will also be studied to ensure the cost to residents is evenly and equitably distributed, Kilroy said.

“A major goal of the study is to re-establish basic fairness and equity between users of city services and those who pay for them, and controlling those costs on a continuing basis,” according to the staff report. It notes that a direct fee/service and tax equity relationship is nonexistent when taxpayer dollars are used to subsidize services that only a small sector of the community receives.

Basically, the study will weigh in on how much people pay in contrast to the amount of services they receive.

MuniFinancial, said Kilroy, will come in and evaluate how the city provides its services, what it costs the city to provide its services, and how those costs should be spread across the taxpayer base and other funding sources such as federal grants and, in Compton’s case, an Enterprise Zone.




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