Making an argument for police enforcement costs: the St. Paul fee study experience.

• Author: Cordes, Scott

The mortgage foreclosure crisis and the related downturn in tax revenues have forced city finance professionals to develop creative approaches to combat revenue shortages. Cities such as Baltimore, Buffalo, and Cleveland are suing mortgage companies for foreclosure-related costs arising from vacant and abandoned buildings. The lawsuits include both direct monitoring costs and associated public safety enforcement costs.

To prove their cases, these cities will need a rigorous determination of the actual costs they incur when a building becomes vacant. Direct costs for inspecting, boarding, and maintaining a building can be accounted for in a straightforward manner, but how does a city measure the police cost related to increased responses at an address that is vacant?

A lesson can be gleaned from the City of St. Paul's 2007 fee study, which measured the costs resulting from increased police response to certain types of addresses. The study conducted by St. Paul, Minnesota, determined the cost of police enforcement at specific addresses with a shared characteristic: a business license. The same methodology can be used if the relevant characteristic of the address is that the building is vacant. Working with its consultant, the city (population 285,000) developed a rigorous methodology for directly measuring the differential police response cost for certain types of licensed establishments--bars, restaurants, grocery stores--versus that for other non-residential addresses.

The study employed data mining and data fusion techniques, combining information from license, police call, and zoning databases to measure this cost differential. This analysis provided the city with a justification for raising license fees, and this increase is expected to generate an additional $135,000 in fiscal 2008 from the actual users of these police enforcement services.

ST. PAUL'S FEE STUDY

The catalyst for the St. Paul study was a practical problem similar to the challenges associated with measuring the full cost of vacant building monitoring and enforcement. In 1992 and 1994, St. Paul conducted a series of fee studies to review the cost structure for business licenses because city officials wanted to determine whether the direct enforcement agencies were recovering their direct costs. While that analysis addressed police enforcement costs that are the specific result of a license application (i.e., activities related to administration of the license), it did not address police enforcement costs generated during the course of activities at the actual business.

An additional challenge occurred when business license activities were shifted to a self-supporting special fund in 1996. Because policymakers decided to include police enforcement costs in the cost-recovery model, and since related police costs remained in the general fund, a decision needed to be made regarding the appropriate amount of business license revenue that should be dedicated to the general fund. Based on the 1994 study, policymakers and city staff reached an informal agreement to distribute 71 percent of license revenue to the business license enforcement fund and...