AGENDA #3
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TO: |
Roger L. Stancil, Town Manager |
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FROM: |
J.B. Culpepper, Planning Director Gene Poveromo, Development Coordinator |
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SUBJECT: |
Planning Department, Current Development Fee Follow-Up |
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DATE: |
May 18, 2007 |
As requested, we are providing follow-up information from the May 9 Work Session on:
At the May 9, 2007 Work Session, the Council asked for information regarding Planning Department fees. There was an error on the line for planning permit revenues; those revenues should be budgeted as $200,000 in 2007-08, not $20,000 as included in the Recommended Budget document. With the correction, permit fees have increased in total. All other planning revenues have been accurately recorded.
Planning Department fees are higher than expected. Third quarter numbers indicated that Planning Department fees are coming in higher than the third quarter of last year. The following chart provides information for the last several years.
Planning Department Revenue
Actual 02-03 $188,691
Actual 03-04 $367,386
Actual 04-05 $318,985
Actual 05-06 $386,289
YTD 06-07 $362,353 (through 03/31/07)
Revenue from application fees can fluctuate significantly from year to year, with little predictability. There is no way to project how many or what kinds of applications might be submitted in any given year.
Also, at the Work Session, a Council member asked for an explanation of current development staffing and recovery of costs based on the incorrect information that application revenue had declined. Information about development application cost recovery is provided below.
NC case law from the 1990s offered us guidance as to the reasonableness of a fee structure and the Town’s authority to charge fees in order to cover the full cost of a particular regulatory program. In 2000, following review of this case law, an extensive study of fees was conducted. Significant fee increases were initiated for the Planning Department. We conducted a study of the estimated cost of staff time (all departments) that is spent on review of major applications (Master Plan, Special Use Permit, Major Subdivision, Site Plan Review), from the point of application to issuance of a Zoning Compliance Permit, over the course of a year. These figures were then used as a benchmark to determine the average staff cost involved in processing a major development application. Using the benchmark, the fee schedule was adjusted. As a result of the study, a cap on development application fees was introduced as well.
Subsequently, as part of the 2005-2006 Budget, the following adjustments were made to the Planning Department Fee Schedule:
In general (except as modified for certain types of applications, noted below), the Town’s policy, supported by guidance from the NC Courts, has been to recover 100 percent of direct Town costs of processing development applications.
The staff work that is accounted for in the structuring of the fee schedule includes the work of all Town departments involved in review of major development applications, from the time an application is originally submitted through the time that the application has been approved for construction and a Zoning Compliance Permit has been issued. Our estimates have included staff time from the Planning, Inspections, Engineering, Fire, and Public Works Departments, along with work by the Town Attorney and Town Manager’s office.
Other staff time involved in inspection of construction is covered by other fees: by a building permit fee for building inspections, and by an Engineering Construction Permit fee for inspections of construction by our Engineering Department. None of this accounts for fees paid to the Orange Water and Sewer Authority, or the school impact fees paid to Orange County.
Application fees for certain types of applications intentionally remain low (at levels below our direct costs). Those types of applications include:
A waiver remains for Planning Department development review fees associated with non-profit organizations if 100 percent of dwelling units meet affordable criteria.
We recommend the following changes:
We do not believe that these later two adjustments will result in a significant change to revenue beyond the 3.4 percent service increase.
Our review of Planning Department fees highlighted the following two recommended adjustments:
Cost of Service Adjustment: On April 18, a Council member suggested consideration of an annual adjustment. We have considered cost adjustments which are typically based on the consumer price index. We found the following adjustment figure for the southeastern region of the United States, which relates to services (rather than products), from the Bureau of Labor Statistics: 2005 to 2006 -- 3.4 percent.
We believe small incremental changes are better received than larger increases in fees, as occurred with the 2005-06 budget. We propose an annual consumer price index cost of service adjustment associated with the most recent southern regional urban average percent provided by the Bureau of Labor Statistics which would result in a 3.4 percent increase with the 2006-07 budget.
Administrative Zoning Compliance Permits (non Single-Family/Two-Family Permits): Administrative Zoning Compliance Permits are applications that propose minor adjustments to office buildings, commercial buildings, and multi-family residential buildings. These applications are first determined to be within the administrative limits of the terms of a Special Use Permit or Site Plan Review before they are reviewed by staff from the Fire Department, Engineering Department, Public Works Department and Planning Department. The current fee for this type of application does not reflect the average staff time expended. The current fee is $200. We recommend that this fee be increased to $400.
For the first three quarters of 2006-2007, we have received 53 administrative Zoning Compliance Permit applications. If the trend continues, we expect approximately 70 such applications for the fiscal year. Though the revenue addition is small, we believe the adjustment to the fee schedule is appropriate to better reflect staff time spent. We recommend that the administrative Zoning Compliance Permit fee be increased from $200 to $400 to better take into account the amount of staff time spent during a typical review.
During our review, we considered the Historic District Commission request for a fee reduction. As part of the 05-06 Budget, the Historic District Commission fee for a Certificate of Appropriateness was initiated. The fee had been zero and was introduced at $300 in 2006.
On January 8, 2007, the Historic District Commission petitioned the Council with proposed changes to the Certificate of Appropriateness fee schedule. A Certificate of Appropriateness is required for any change to structures in a historic district. The Commission’s proposal would reduce the Certificate of Appropriateness application fee from $300 to $200 for new structure construction projects and $50 for all other applications.
We have reviewed the Commission’s proposal and find some merit in developing categories for historic district fees. We propose the following change for Certificate of Appropriateness fees:
We believe this approach recognizes that some historic district applications take less staff time and would be a more equitable approach. We do not believe this change will result in any substantive change to fees collected.
We recommend three adjustments to the Planning Department fee schedules. We do not believe that the proposed changes will result in significant change to revenue collected.