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11 <br /> Individual 80-100%Cost <br /> Recovery <br /> Benefit <br /> Individual and 20—s°'Cot <br /> Recovery <br /> Public Benefit <br /> 0—20%Cost <br /> Community Benefit Recovery <br /> ♦ Private benefit - If a user fee primarily benefits the fee payer, we recommend the fee be <br /> set at, or close to, 100% full cost recovery. <br /> ♦ Service driver - In conjunction with the first point above,the issue of who is the service <br /> recipient versus the service driver should also be considered. <br /> ♦ Understanding demand - There are other considerations that might inform <br /> recommendations for fees not subject to cost recovery limitations. For example,elasticity <br /> of demand is a factor in pricing certain municipal services; increasing the price of some <br /> services could result in a reduction in the quantity demanded for other services, and vice <br /> versa. <br /> Competition - Certain services might be provided by neighboring communities or the <br /> private sector. Demand for these services can be highly dependent on what else might be <br /> available at lower prices. Furthermore, if Orange County's fees are too low, demand for <br /> services produced by private-sector competitors could decrease. <br /> ♦ Incentives - Fees can be set low to encourage participation in a service. <br /> Policy considerations - In North Carolina law there are provisions that limit certain <br /> government user fees to amounts that are reasonable and tied to the cost of providing <br /> services. <br /> MCIT PAGE 7 <br />