City Looks to Raise Fees Across the Board, Banking on $1 Million in New Revenue

The Hermosa Beach City Council will hold a public hearing tonight on a proposal to overhaul the city's user fee schedule for the first time in nearly a decade, with staff projecting up to $1 million in additional annual revenue if the changes are adopted in full.

Proposals would take effect July 1, if approved by city council.

A Fiscal Squeeze, Ten Years in the Making

The proposal lands at a moment of mounting fiscal strain. The FY 2025-26 Midyear Budget Review identified a $548,000 General Fund shortfall, driven by expenditure increases that have consistently outpaced revenue growth. Staff describes the imbalance as structural rather than cyclical, warning that one-time funds and reserves cannot continue to absorb the gap.

Compounding the pressure are upcoming Capital Improvement Program demands competing for the same limited pool of money. A pier reconstruction alone carries a replacement cost estimate of $44.5 million, the city yard overhaul is estimated at $20 million, and the city's broader infrastructure requirements continue to grow. Every dollar the General Fund spends subsidizing permit fees is a dollar unavailable for public safety, street repair or capital projects. All this while facing significant renegotiations with LA County for the cost of fire and lifeguard services.

Hermosa Beach has not conducted a comprehensive fee study since 2016. In the decade since, personnel costs, benefits, materials and overhead have all risen substantially, but most fees have remained largely static. The result, staff says, is a growing gap between what services cost to deliver and what the city collects to deliver them.

According to the staff report, Community Development services currently recover only 63 percent of their costs, leaving an annual subsidy of more than $1 million. Public Works recovers about 78 percent, with subsidies above $200,000. The remainder is paid by the General Fund, which is funded primarily through property tax, sales tax and transient occupancy tax.

"The broader community subsidizes services that directly benefit individual users, such as permit applicants or project-specific activities," the staff report states.

The Big Increases

The largest jumps are concentrated in discretionary planning permits that staff describes as a correction of historically subsidized fees. A commercial Conditional Use Permit would more than double from $6,065 to $12,800. A standard Variance rises from $4,674 to $9,985. A Sign Variance jumps from $3,338 to $7,980. Mural review goes from $578 to $3,010.

Zone Changes and General Plan Amendments move to deposit-based billing at the fully allocated hourly rate, with deposits ranging from $12,000 to $18,000.

Concealed Weapons Permit applications would rise from $100 to $1,505, a 1,405 percent increase reflecting the actual cost of background investigation, live scan and psychological testing review.

Appeals to the City Council climb from $2,179 to $5,170. Initiative processing moves from $200 to $1,510, though the staff report notes State Elections Code caps the effective fee at $200 with refund provisions.

New Fees, Eliminated Fees

The schedule introduces a Food Truck Permit at $3,635 initial and $225 annual renewal, with City Council review built in. A new $570 annual monitoring fee would apply to active Conditional Use Permits to ensure ongoing compliance.

Several fees would disappear entirely. The Short-Term Vacation Rental annual renewal of $1,816 is eliminated and the initial permit drops from $2,100 to $660, a notable shift given the recent Koerner v. City of Hermosa Beach ruling on STR enforceability in the coastal zone. Booking processing, taxicab inspection, jail services, special event security and the duplicate business license fee are also struck from the schedule.

Building Permits Restructured

Building and Safety fees would shift from a valuation-based model to a square-footage model tied to occupancy type. The General Plan Maintenance surcharge moves from $3 per $1,000 of valuation to a flat 10 percent of all building permit and plan check fees, applied to every permit rather than only those above $100,000.

Staff explicitly compares Hermosa Beach to its neighbors. Manhattan Beach has run multiple fee studies generating 15 to 20 percent in additional revenue and bringing many services close to full cost recovery. Redondo Beach has taken an incremental approach with 5 to 10 percent increases per cycle, including a recent 6.7 percent building fee increase.

"Hermosa Beach remains behind its peers in cost recovery," the staff report concludes.

Pushback Likely

The scale of the proposed increases is likely to draw objections from residents and businesses, particularly on the larger-ticket planning permits. While the city frames the update as a long-overdue cost recovery exercise, some are already calling for a more careful and phased approach, arguing that triple-digit percentage hikes on individual permits, even after a decade without revision, risk chilling investment and discouraging applicants from working through proper channels.

Parks and recreation fees were carved out of the study. Staff cited demand sensitivity, demographics and competition as reasons to take a market-based approach, and will return to council in coming months with a separate analysis.

Fees would be adjusted annually based on the Los Angeles Consumer Price Index.