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<br />9 <br />Summary of methodology used to calculate estimated costs of service and cost recovery levels <br /> <br />Step One <br />Identify annual hours spent providing <br />fee services for each division <br />→ This information is developed and tested using a <br />combination of interviews, questionnaires, historical <br />project information, and historical revenue information. <br /> <br />Step Two <br />Identify annual cost of providing fee <br />services for each division <br />→ This information is developed and tested using a <br />combination of information found in the City’s adopted <br />budget, expenditure history, and the overhead cost plan. <br /> <br />Step Three <br />Calculate the estimated hourly rate <br />using information from Steps 1 and 2 <br />→ Annual cost ÷ Annual hours = Hourly rate <br /> <br />Step Four <br />Estimate labor time required to <br />process individual request for service <br />→ This information is developed and tested using a <br />combination of interviews, questionnaires, commonly- <br />used measures, and information developed in Step 1. <br /> <br />Step Five <br />Calculate estimated cost of service <br />using information from Steps 3 and 4 <br />→ Hourly rate * Labor hours = Cost of service <br /> <br />Step Six <br />Calculate current cost recovery level <br />for a specific service <br />→ Current fee ÷ Cost of service = Current <br />Cost recovery <br /> <br />Step Seven <br />Use laws, industry standards, goals <br />and policies, and historical trends to <br />determine targeted cost recovery <br />→ Proposed fee ÷ Cost of service = Targeted <br />Cost Recovery <br /> <br />Step Eight <br />Test to confirm forecast revenue from <br />fees will not exceed program costs <br />→ Use historical permit volume and proposed fees to <br />forecast anticipated revenue from fees. Forecast <br />revenues should not exceed program costs. <br /> <br />21