TO: Honorable Mayor and Members of the City Council
THRU: Jarad Hildenbrand, City Manager
FROM: Trang Nguyen, Finance Director
1. Subject
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Public Hearing to consider revision of the Master Schedule of Fees and Charges for various City services
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2. Summary
The City periodically updates its Master Schedule of Fees and Charges to reflect changes in service delivery costs and operational requirements. The Master Schedule of Fees is reviewed and updated at least annually to ensure fees remain current, appropriately reflecting the cost of providing City services, and accounting for changes in operational requirements. This item proposes a limited update to the Master Schedule of Fees to authorize a credit card processing fee of up to 4% of the transaction amount, various Community Development Department fees, and Animal Control fees to improve accuracy, consistency, and alignment with the City’s cost recovery objectives.
3. Recommended Action
recommendation
1. Conduct and close the Public Hearing.
2. Adopt Resolution No. 11721. A Resolution of the City Council of the City of Orange amending the Master Schedule of Fees and Charges for various City services.
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4. Fiscal Impact
The proposed fee updates are intended to maintain appropriate cost recovery for City services and third-party payment processing costs. The revisions are not intended to generate revenue in excess of the cost of providing the applicable services.
5. Strategic Plan Goals
Goal 2: Enhance Economic Development and Achieve Fiscal Stability
6. Discussion and Background
Background
The City of Orange maintains a Master Schedule of Fees that establishes charges for services provided by various City departments. The Master Schedule of Fees is periodically reviewed and updated to reflect changes in service delivery costs, operational requirements, and applicable regulatory requirements.
The City Council adopted Resolution No. 11665 on April 28, 2026, establishing the current charges for City services. Since its adoption, staff has identified several fees that require updates to better align with the City’s cost recovery objectives.
Proposed Fee Updates
Credit Card Processing Fee
The City provides customers with several options for making payments for City services, including electronic payment methods. When credit card payments are accepted, the City may incur transaction and processing fees assessed by third-party payment processors. These costs vary depending on the payment platform, processor, transaction type, and services provided.
As the City continues to modernize its payment systems, staff reviewed the existing credit card processing fee to ensure the Master Schedule provides sufficient flexibility to recover these third-party processing costs.
Staff recommends updating the Master Schedule of Fees to authorize a credit card processing fee of up to 4% of the transaction amount, subject to any applicable minimum service charge imposed by the City’s payment processor.
Establishing the fee as a maximum rather than a fixed percentage will allow the City to assess the applicable processing charge associated with each payment platform, not to exceed the amount authorized by the Master Schedule. This approach provides flexibility as payment-processing agreements and technology change while maintaining the City’s cost-recovery objective.
The proposed update is also timely as the City prepares to implement new payment-processing services in conjunction with upcoming system improvements. Under the payment services associated with the new utility billing system, for example, electronic payments will be subject to a third-party service charge of 3.95%, with a minimum charge of $2.50. The proposed Master Schedule language accommodates this arrangement while providing a consistent framework for other City payment-processing services.
The processing fee is intended solely to recover costs associated with providing electronic payment options and is not intended to generate additional revenue.
Community Development Department Fees
As part of the proposed update to the Master Schedule of Fees, staff recommends several revisions to Community Development Department fees to better align the schedule with current services and cost-recovery requirements. The Building and Safety Division proposes a new Combination Heating and Air Conditioning (HVAC) permit fee that includes associated ducting and electrical work. While the existing schedule provides separate fees for heating and air conditioning, the proposed combination fee creates a more appropriate and cost-effective option for residents and businesses installing packaged HVAC systems while maintaining full cost recovery. The proposed fee is $651 for systems under 100,000 BTU and $875 for systems over 100,000 BTU.
The proposed update also includes several Code Enforcement fee revisions, including a new Board of Appeals deposit related to Title 15, an Illegal Sign Impoundment fee, updated Massage Establishment Permit fees, and corrections to Mobile Vehicle Vending Permit fees.
Board of Appeals Relating to Building Codes - Proposed Fee
State law requires the City to provide an administrative process for hearing and deciding appeals of orders, decisions, or determinations made by the Building Official and/or Code Official (referred to herein as the Code Compliance Manager) concerning the application and interpretation of the City's adopted California Building Codes and the International Property Maintenance Code (IPMC), as incorporated into Title 15 of the Orange Municipal Code (OMC).
The applicable requirements provide for the establishment of a Board of Appeals composed of individuals who are qualified through experience and training in matters related to the adopted codes. Board members may not be City employees. The importance of maintaining an appropriate appeals process was reinforced by the California Court of Appeal's decision in Temple of 1001 Buddhas v. City of Fremont (2024), which addressed the statutory requirement for cities to provide an authorized body or agency to hear appeals, or otherwise provide an appeal to the governing body, consistent with the California Building Code.
As the City establishes and implements this appeals process, there will be costs associated with convening and administering a qualified Board of Appeals, including staff coordination, meeting preparation, technical expertise, administrative support, and other costs necessary to conduct an appeal based on the specific building code or IPMC matter being challenged.
The proposed $1,000 Board of Appeals fee, structured as an advance deposit, would provide the City with a mechanism to recover the reasonable costs associated with convening and conducting an appeal. The deposit would help ensure that costs associated with specialized appeal proceedings are appropriately allocated to the appellant rather than absorbed by the City's General Fund.
Illegal Sign Impoundment - Proposed Fee
The Code Enforcement Division has been tasked with developing and implementing procedures for the impoundment of unpermitted signs placed within the City's right-of-way, as authorized under the existing Sign Code. The current fee structure, however, does not provide for recovery of the City's costs associated with the staffing, collection, transportation, storage, administrative processing, and disposition of impounded signs, including the release of signs to their owners upon proper notice or the disposal of signs that remain unclaimed.
The proposed $195 Illegal Sign Impoundment Fee would provide a mechanism for the City to recover the reasonable costs associated with administering and enforcing the sign impoundment program. Establishing the fee is particularly important as the City prepares to consider amendments to the Sign Code later this year that would strengthen enforcement provisions and expand the City's ability to address illegally placed and unpermitted signs. The proposed fee would help ensure that the costs associated with sign impoundment and disposition are appropriately borne by responsible parties rather than absorbed by the City's General Fund.
Massage Establishment Permit - Proposed Fee Increase
Earlier this year, the Code Enforcement Division was directed to begin assuming regulatory oversight of the City's Massage Establishment Permit Program pursuant to Chapter 5.56 of the Orange Municipal Code (OMC). Under the current process, massage establishment operators are required to obtain a City business license, complete a fingerprint-based background check conducted by the Police Department, and satisfy applicable zoning requirements before a Massage Establishment Permit is issued by the Finance Department. The existing $651 application processing fee primarily covers Finance Department application and permit processing and does not provide for recovery of the City's ongoing Code Enforcement or Police Department costs associated with regulatory monitoring, inspections, investigations, and enforcement.
The number of massage establishments operating in the City has increased significantly, with nearly 100 establishments currently operating citywide. This growth has increased the need for consistent regulatory oversight, routine inspections, complaint response, and proactive enforcement to ensure compliance with City regulations and applicable State law.
On May 26, 2026, the City Council adopted Urgency Ordinance No. 08-26, establishing a temporary 45-day moratorium on the approval, issuance, acceptance, or processing of permits, business licenses, and land use entitlements for new massage establishments. Pursuant to California Government Code Section 65858, the interim ordinance was scheduled to expire on July 10, 2026, unless extended following a duly noticed public hearing and a four-fifths vote of the City Council. On June 29, 2026, the City Council held the required public hearing and extended the interim urgency ordinance pursuant to Government Code Section 65858(b) for an additional 22 months and 15 days, through May 25, 2028. Existing massage establishments may continue to apply for permits and renewals, and the City may continue to make final decisions on those applications.
During the moratorium period, Code Enforcement is developing an online application intake and processing system for Massage Establishment Permit renewals and anticipates beginning application processing in November 2026. In preparation for this expanded regulatory role, the City conducted a fee study to determine the appropriate level of cost recovery for the personnel, equipment, and resources necessary to administer the program.
The fee study considers the costs associated with application processing, permit review, routine on-site inspections, complaint investigations, proactive compliance activities, and enforcement actions. It also accounts for necessary inspection and investigative equipment, printing and administrative expenses, Police Department services, City prosecution, and other personnel resources required to address violations, including allegations of unprofessional conduct and other violations of State law and the OMC.
Based on the results of the fee study, a proposed Massage Establishment Permit fee of $870 is recommended. The proposed fee is intended to provide a more appropriate level of cost recovery for the City's expanded regulatory oversight, including application processing, inspections, investigations, equipment, and enforcement activities associated with massage establishments citywide. A $240 change fee is also proposed.
Without approval of the proposed fee increase, the City does not have sufficient existing funding within the current budget to absorb the additional costs associated with Code Enforcement assuming responsibility for this expanded regulatory oversight. The proposed fee therefore provides a necessary mechanism to align permit revenues with the City's actual costs of administering and enforcing the Massage Establishment Permit Program.
Mobile Vehicle Vending Permit - Fee Corrections
Staff also recommends correcting two Mobile Vehicle Vending Permit fees that were previously adopted at amounts inconsistent with the applicable time-estimate worksheets. The per-employee permit fee would be adjusted from $674 to $406, and the change fee from $337 to $240. These corrections align the adopted fees with the underlying cost-recovery calculations.
Animal Control Fees
The proposed update also includes revisions to animal care and control fees reflected in the Master Schedule of Fees. Animal care and control is provided by the County of Orange through a contract with Orange County Animal Care (OCAC). Since OCAC is a separate government entity, these fees were not evaluated as part of the Matrix fee study. However, OCAC has conducted fee studies in the past, helping cities adopt fee schedules that offset service costs. In relying on OCAC's fee study and meeting with OCAC staff, City staff identified select animal care and control fees that may be increased pursuant to the Consumer Price Index without exceeding full cost recovery. The City Council previously approved animal care and control fee increases on April 28, 2026. However, after the City Council's approval, staff noticed minor errors in the fee schedule, and therefore, the increases were placed on hold until they could be corrected. Should the City Council approve the proposed increases, staff will submit the revised Master Schedule of Fees to OCAC so they may be implemented.
Conclusion
The proposed amendments update several areas of the Master Schedule of Fees to better reflect current service delivery, third-party processing costs, regulatory responsibilities, and the City's cost-recovery objectives. The revisions provide a flexible framework for credit card processing charges; add and correct Community Development fees, including fees associated with building code appeals, illegal sign impoundment, massage establishment regulation, HVAC permits, and mobile vehicle vending permits; and update Animal Control fees. Collectively, the changes are intended to improve the accuracy and consistency of the Master Schedule while ensuring charges remain appropriately tied to the cost of providing City services.
7. ATTACHMENTS
• Resolution No. 11721