AGENDA #4d

BUDGET WORKING PAPER

TO:                  W. Calvin Horton, Town Manager

FROM:            Roger S. Waldon, Planning Director

SUBJECT:       Proposed Cap on Development Application Fees

DATE:             June 5, 2000

As the Council has been discussing a proposed new fee structure, one that would significantly increase application fees for new development, two issues have come up.  One is the impact on private non-profit organizations, and a separate Budget Working Paper has been prepared on that topic (suggesting the possibility of exemption).  The second issue is a possible “cap” on application fees.  This is the subject of this paper.

WHY A CAP?

The proposed fee schedule sets the “typical” application at 25,000 square feet of floor area.  This means that applications for developments larger than this benchmark pay increasingly higher fees.  It can be argued that, at some point, the increasing size of a proposed project ceases to create increasing needs for staff time. 

For example:  If The Cedars project came in under the proposed fee structure, the Special Use Permit fee would be about $150,000.  Once approved, final plans are prepared and submitted, along with an application fee that is ½ of what an initial fee would be.  Therefore, the final plan application for The Cedars would be approximately $75,000.  We believe it would be unreasonable to project that $225,000 worth of staff time would be spent on processing this Special Use Permit application and final plan application.  We do not anticipate another application like The Cedars, with over 700,000 square feet of floor area;  but the point is still valid.

PROPOSED CAP

I believe that it would be reasonable to place a “maximum” on application fees.  One way to do this would be to include in the fee structure a cap on any original application fee at, for example, $60,000.  This would be the approximate fee paid for a project with about 300,000 square feet of floor area (the size of the recent application for Providence Glen condominium project).  This would then cap the total fee for any project (SUP and final plan) at $90,000.  This cap would not necessarily affect our revenue projections for next year, because I did not assume that any large projects like the Cedars (700,000+ square feet) would be coming in next year.

For purposes of comparison:  The Cedars paid a Special Use Permit application fee of $30,000.  Under the current fee schedule, their final plan application fee would be $15,000.   Under the proposed fee schedule currently before the Council, if a final plan application were to be submitted after July 1, the final plan application fee would be $75,000.   Under the “cap” idea described above, the final plan fee would be $30,000.

CONCLUSION

I suggest that, if the Council adopts the proposed new fee schedule for development applications, the Council consider adding a footnote to the schedule setting $60,000 as the maximum application fee for any Special Use Permit, Rezoning, or Subdivision application.  I do not believe that this change would affect our projections of revenues for the 2000-2001 fiscal year that we have prepared for the Council’s consideration.