Fees and �Charges Policy�Final Report

Presentation to the All Recreation Committee of RDCK Board

Overview of the Project

Purpose of the Strategy

• To ensure a practical, transparent, consistent, and fair approach to setting fees and charges for recreation facilities, programs and services.

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Process Update

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The Benefits Based Approach

An approach which defines public benefits (public goods) and connects the user fees to the achievement of those benefits

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The more public benefits that can be achieved, the more public subsidy that can be justified.

Public Good

Public Good is defined as indirect benefit to all citizens from which they cannot escape

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Demand is a private sector terms that says demand is always a function of price. There is a direct connection between what one pays for a good or service and the amount of direct benefit they receive from it

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Need is a public sector term. Need is always a subset of demand. In order for a demand to also become a need, there must be some indirect benefit to all citizens that results from that good or service

Examples of Indirect Benefits

Benefits Continuum

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Policy

Those who benefit from a good or service should pay in proportion to the benefit they receive.

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If all or substantially all benefits are direct benefits that accrue only to users, those users should pay all of the costs.

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If all or substantially all of the benefits accrue to all citizens independently of whether or not they use the service, then all citizens should pay (through their taxes).

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If some benefits accrue directly to users and some benefits accrue to the community at large, then both should pay in proportion to the benefits they receive.

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Process for Determining Fees

1. Calculate unit costs
2. Assign Recovery Rates based on benefits received (justification)
3. Calculate Initial Fees
4. Adjust upwards if justified level of subsidy is not needed
5. Adjust further for practical reasons
6. Develop implementation plan if change is significant
7. Ensure a robust Safety Net

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Recovery Rate Matrix

Implementing the Policy

1. Where the fee indicated within the proposed policy is within 10% of what is currently being charged, the policy should simply be applied and the fee for next year adjusted to be in full compliance with the policy.
2. Where there is no fee currently in place, the indicated fee should simply be applied.
3. The first two points above will apply to a majority of all fees in all facilities. The subsequent points in this list will then deal with the minority of cases.
4. Where current fees are higher than the fee indicated in the policy, they should be “red circled” and allowed to remain at that level until costs catch up and then they will rise with costs. This assumes that current fees are deemed as presenting no barrier to participation to the vast majority of patrons, and therefore, they can continue for some time even though the newly indicated fee is below this level.
5. Where current fees are lower than what is indicated in the proposed policy for categories of private user group or commercial user group or commercial use, they need to be increased to what is indicated in the proposed policy, as there is no justification for subsidy for these groups. In these cases, even if the fees need to be raised a substantial amount, the fee increase is entirely justified and must be applied as there is no public good that results from these uses.
6. If the current fee is between 10% and 25% lower than what the proposed policy indicates it should be, the current fees should be gradually increased to the indicated levels over a three year period to reduce the impact of significant fee increases where there is substantial public good delivered by those uses.

Some Tentative Decisions

• We divided all unit costs at the three centres by the total use of each type of space, rather than capacity for use.
• We averaged the resultant unit costs at the three centres into a single average cost of providing each service.
• We then applied the recovery rates to those averages to render a single fee across the region.

Recommendations 1

1. Adopt the policy outlined in sections 2, 3, 4 and 5 of this report. These four sections can be copied directly into an RDCK policy format.
2. Separately, endorse the recovery rates shown in Figure Six which may be updated more frequently than the policy and therefore this decision is made separately.
3. Endorse the specific fees in Appendix C and instruct the operating entities to implement them for 2020.
4. Instruct staff to recalculate the cost base for publicly provided recreation services every three years and use that revised cost base to recalculate fees for the subsequent year.
5. In the years between the three year update, the cost of living index should be used to adjust fees annually.

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Recommendations 2

6. Once the fees have been calculated using updated costs and the recovery rates, the fees may be adjusted either up or down for market forces and other practical matters.
7. During the initial three year period of implementing this policy, there will more significant adjustments. These will require careful attention to impacts and phasing in of the most significant changes in order to reduce stress to users and user groups.
8. Once base fees are determined, uses of public recreation facilities can be “packaged” into bulk purchases through the use of strip tickets, programs, passes or memberships, offering some discounts per use to reflect the reduced administration costs and provide the appropriate incentive to generate more use.
9. Also, fees can be discounted to encourage behaviour which is desirable to the community. For example, non-prime use can be encouraged through incentive pricing.
10. A set of “safety net” strategies will be required to reduce barriers to participation.

Some problem areas

• Adult group rentals of ice in Castlegar and Creston. The current rates in both cases are substantially lower than what is indicated by the proposed policy. In these two cases, fees should be increased over five years to the indicated fee level.
• Youth recreation group rentals of ice in all three communities. The current fees are substantially lower than what is indicated in the proposed policy. In the case of Nelson, it may be possible to increase fees over five years to approach the indicated level. In the other two centres the current fees are even lower and moves to substantially increase fees may be counter-productive, causing reduced use by youth instead of bringing the recovery rates into alignment. Instead, additional investments should be made in all three centres to increase ice use, or find alternative users of the ice; either of which will reduce the unit costs and bring the current fees closer to what is required by the proposed policy.
• Drop in public skate admissions in all three centres for all classes of users. As with the ice rental situation above, the approach here should be to focus on increasing use, thereby reducing unit costs in underutilized arenas to achieve alignment instead of substantial increases in fees.
• Most groups using ball diamonds and soccer fields have become used to not paying a fee for that use. However, to be consistent, a fee should be charged. Because of the difference between expectation and consistent policy, a special strategy needs to be devised to deal with this issue. It should include sitting down with the major user groups and individual municipalities (where applicable) and working out some form of phasing in of fees over time to be consistent with the proposed policy and best practice in BC. The arrangement might also include strategies to make better use of existing assets, thereby reducing unit costs, and/or allowing for some form of payment in kind as an alternative to fees.

Questions and Comments?