In the city of Auburn, would-be developers, builders, fixers, plumbers and electricians can apply to the public works, engineering, community development and building departments for any of 200 different sorts of permits and development applications.
And of course, each one has its own fee to cover the cost of processing, review and inspection.
One question: how much of the cost that Auburn incurs by shepherding permits and applications from A to Z does it actually recover? According to a Cost Recovery Study FCS Consultants completed for the city in 2018, the answer is anywhere from 6 to 100 percent, depending upon the type of request.
Community Development Director Jeff Tate told the City Council on Sept. 28 that the cost matters because whenever the city does not charge 100 percent of the recovery cost, it has to make up the difference from somewhere — and its go-to is the general fund.
That’s where your property and sales tax dollars go to fund most city services.
So, in March 2020, the Auburn City Council asked staff to work up a more formal cost-recovery policy that would increase the reimbursement rate and establish a basis for different recovery rates for varying types of development services.
But there is a dilemma.
“We want to be developer-friendly, and we don’t want to have financial barriers for working in the city. At the same time, whenever we don’t achieve a 100 percent recovery rate, it’s important to keep in mind how that would be subsidized,” Tate said.
The city intends to include whatever changes it makes to the 2021 development fee schedule.
A few examples of suggested changes:
• Commercial, mechanical and plumbing permits for new buildings, for new multi-family housing or tenant improvements: from $28 to $139. Tate said that’s a significant increase, but, he added, such projects are generally worth hundreds of thousands or millions of dollars.
• Residential mechanical and plumbing permits associated with a new house: from $28 to $46.
• Home repairs: $28 to $35.
Tate suggested the city council consider the following when drawing up a policy affecting such a broad spectrum of fees:
1. What are the compliance rates?
2. If the customer is already paying in other ways to the city, for instance in property tax, and business license fees, is there a way to recognize that in the policy by providing credit to the customer?
3. Is it a for-profit commercial activity, opposed to something a property owner wants to do to their home?
4. Does the service benefit only the customer who is making the request, or will it have a broader impact on the community?
5. Is it appropriate to consider whether the service is occurring during an early, exploratory phase of development activity. In other words, if the city achieves 100 percent recovery on some earlier items, that could pose a problem to completing a multi-phased project that may become increasingly expensive as the project moves forward.
6. Is the requested service seeking something outside the city’s standard procedures, the codes that outline how things should be done? Because, while all cities offer variances and the like, such detours take more time.
7. Does the fee preclude the customer from taking part in a public process? That is, if you have a process that allows an appeal, the city shouldn’t make it so pricey that the would-be appellant can’t do it.
Tate said it is also important to incorporate an annual increase that adjusts for the city’s own cost increases — for instance, insurance and salaries — and to include the cost of maintaining systems like online permitting services and the ability to pay with credit cards.
In 2018 and 2019, the previous city council adjusted some 15 development fees that were badly out of line but achieved only two significantly low-cost recovery rates, Tate said.
City council responses
Councilmember Robyn Mulenga wanted to know whether the city provides fee discounts for its low-income residents.
While there is no specific section that ties discounts to income levels, Tate said, the city can still do a few things. For instance, there is the Housing Home Repair program wherein the city does work for people and waives permit fees for such projects.
The city code, Tate said, also grants the mayor authority to modify some fees — for instance for nonprofits or for certain, individual projects.
“It may be something we should look into,” Mulenga said. “The council’s been working really hard on equity training and looking at our policies through an equity lens, and I think this would be an example of how we can apply equity in this situation.”
Councilmember Chris Stearns asked about adult family home inspections, for which, to achieve 100 percent recovery, the city would have to hike the current $175 fee to $350.
“Have we ever considered, instead of just charging a flat fee, basing it on square footage?” Stearns asked. “So, in other words, if I own a small cottage, why should I pay the same amount as someone who owns a giant mansion?”
One reason the city has avoided charging square footage fees for adult family homes, Tate replied, is that, big house or small, state law limits them to six people.
“There haven’t been many [cases] where people are applying for four people, so it ties back to that, but state law precludes the city from prohibiting adult family homes anywhere, so we have to accommodate them, and we accommodate them up to the maximum size, probably 90 plus percent of the time,” Tate said.
The changes could affect:
• Plans and permits for a new building, or to modify an existing building, or to add or replace mechanical and plumbing equipment.
• Land use and environmental applications encompassing shoreline permits, altering critical areas like wetlands and streams and subdivisions and land use permits.
• Development and engineering civil plan review, including extensions for water and sewer storm systems built by private developers, but on completion handed over to the city for future management.
• Construction permits, say for Comcast or PSE, which works in city rights of way.