HomeMy WebLinkAbout09-28-2020 STUDY SESSION AGENDACity Council Study Session Finance,
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I I .V I RT UA L PA RT I C I PAT I O N L I NK
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I V.F I NA NC E, T E C HNO L O G Y A ND E C O NO MI C D E V E L O P ME NT D I S C US S I O N I T E MS
A .Cost Recovery Policy for Development F ees (Tate, Gaub, T homas)
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A n overview of a Cost Recovery P olicy related to development fees that guides the
permit and application fees associated with land use, building and civil fees
V.O T HE R D I S C US S I O N I T E MS
V I .NE W B US I NE S S
V I I .A D J O UR NME NT
Agendas and minutes are available to the public at the City Clerk's Office, on the City website
(http://www.auburnwa.gov), and via e-mail. Complete agenda packets are available for review
at the City Clerk's Office.
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AGENDA BILL APPROVAL FORM
Agenda Subject:
Cost Recovery Policy for Development Fees (Tate, Gaub,
Thomas)
Date:
September 21, 2020
Department:
Community Development
Attachments:
Cos t Recovery Policy
Cos t Recovery Rate Targets
Examples of Fee Changes if Policy is
Implemented
Budget Impact:
Current Budget: $0
Proposed Revision: $0
Revised Budget: $0
Administrativ e Recommendation:
Implement the cost recovery policy and defined percentage targets in future fee schedule
updates.
Background Summary:
During the March 2020 City Council staff presented an overview of development fees and the
rate of cost recovery associated with each type of application. The presentation provided the
following basic information:
A summary of the Cost Recovery Study prepared in 2018 by FCS Consultants. The
FCS report provided an itemized breakdown of the more than 200 different types of
permits and applications to show the city’s processing, review and inspection costs.
And to show the percentage of reimbursement that the city receives from the permit or
application fee (e.g. cost recovery). City fees covered anywhere from 6% of the cost to
100% depending upon the type of request.
Actions that were taken in 2018 and 2019 to adjust a few select development fees that
were identified as having significantly low cost recovery rates.
The presentation concluded with a question to Council: Should city staff work on a more
formal cost recovery policy that would (1) increase the rate of cost recovery and (2)
establish a basis different recovery rates for different types of development services.
Council requested that staff develop a formal cost recovery policy and to present the
policy in advance of the update to the 2021 development fee schedule.
Since the March Council retreat staff has developed a policy for Council consideration
that contains two main elements. First, the policy includes a narrative that provides
background explanation for why a policy is necessary as well as factors that are used to
define different recovery rates for different types of development services. Second,
the policy includes a cost recovery table that sets forth groupings of different services,
the intended percent recovery rate, and references back to the narrative that help inform
the reader of why a percentage rate has been selected within the specific category.
The version included for Study Session also shows percentage recovery rates for a few
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recent years. This information is included for the benefit of advancing the cost recovery
policy discussion. The final policy would remove the reference to prior years and only
list the percent recovery without any reference to a year since it is not the intent of staff
to have Council review and modify the rate of recovery each year; it is staff’s intent to
have the rate of recovery be consistent year over year.
During staff’s review and development of the draft policy there were a few fees that
were left out of the policy. Staff opted to leave some fees out of the policy because
they are influenced by other factors that need further consideration and/or interface with
other funds. For example, utility permit fees tie back to capital facility plans, utility rates,
and system development charges. Staff intends to propose future additions to the cost
recovery policy that will add utility permit fees but recommends that this be done in
coordination with the city’s next utility rate study which is scheduled for 2023.
Rev iewed by Council Committees:
Councilmember:Brown Staff:Tate
Meeting Date:September 28, 2020 Item Number:
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CITY OF AUBURN
POLICY
TITLE: Cost recovery policy related to
development fees
SUBJECT: Establishing a rate of cost recovery
for building, land use, environmental and
engineering fees charged for development related
permits and approvals.
DATE: December
1, 2020
PAGES: 1 PREPARER: JEFF TATE, Director of Community
Development
Overview When development or site improvements are proposed within the City of Auburn there are generally
permit applications that must be submitted for review and approval. The purpose of reviewing proposed
development activity is to ensure that the activity is consistent with Auburn City Code and other
development standards. Once permits or plans are approved and issued city staff assigns inspectors to
monitor the construction activity to ensure that the site work and/or buildings are carried out in a manner
that is consistent with the approved permits and plans.
The City of Auburn allocates substantial financial resources to ensure that it is providing timely and
useful services to customers seeking to develop their land, construct new buildings, or alter existing
buildings. In order to achieve positive customer service outcomes there is a need to develop and
implement innovative and convenient tools to meet customer expectations, employ an adequate number
of staff, ensure that they maintain certificates and education of new codes and construction techniques,
ensure that the staff has a compensation package that attracts the highest caliber of person, develop
and maintain technological solutions that benefit the employee, provide for vehicles and gas for site
visits, etc. City Council can seek recovery of these costs through development fees or through general
fund tax dollars (meaning that the tax payers are subsidizing development activity).
The City of Auburn adopts a fee schedule each year that identifies all of the various permit and plan
review application fees. The purpose of this policy is to establish a percent of cost recovery that the city
seeks to collect in order to provide plan review and inspection services. Cost recovery targets are
intended to identify services that should be fully funded by the customer or partially funded by the
customer with the balance being covered by the general fund (e.g. proceeds from sales tax and property
tax revenues).
Policy There are several principles and considerations that guide this cost recover policy. They are as follows:
1. The cost of a service may impact the level of compliance. If a service is expensive, there may be a
lower rate of compliance as property owners seek to avoid the additional cost.
2. It is appropriate to consider whether the customer is already paying into the general fund in other
ways (e.g. property taxes, sales taxes) when determining if a fee should be set to achieve less than
100% cost recovery.
3. It is appropriate to consider whether the request is submitted by a developer or property owner who
is seeking to profit from a commercial activity vs a property owner who is seeking to improve their
home and/or residential property.
4. It is appropriate to consider whether the service benefits only the customer who is making the
request.
5. It is appropriate to consider whether the service has a larger community benefit.
6. It is appropriate to consider whether the service is occurring during an early phase of exploring a
development opportunity. If the cost to explore the viability of a development is excessive it may
cause the developer to look outside Auburn.
7. It is appropriate to consider whether the requested service is seeking something that is outside the
standard process and/or that the request is not something mandated by the City. These types of
requests cause city staff to deviate from normal procedures which results in more staff time than
typically required.
8. It is appropriate to ensure that a fee does not preclude a person’s ability to participate in a public Page 5 of 10
process.
9. It is appropriate to tie annual permit fee adjustments to the City’s approximate annual increase in
costs.
10. Since some fees are tied to the value of the construction activity that is occurring it is appropriate to
ensure that the City is using realistic construction valuations.
11. It is appropriate to include the cost of recurring technology and transaction service fees the City
incurs that directly benefit development customers.
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Cost Recovery Policy (references that appear next to the % recovery relate back to the written policy)
Building Permits
Service Cost Recovery Policy 2017 2018 2019
Building Plan Review (new construction,
tenant improvements, additions, alterations,
stock plan review, demolition, signs)
100%
(4)
100% 100% 100%
Building Permits (new construction, tenant
improvements, additions, alterations, stock
plan permits, signs)
100%
(4)
100% 100% 100%
Mechanical and Plumbing Permits 100% Commercial
(4)
33% Residential
(1) (2) (3) (4)
25% OTC
(1) (2) (3)
20% 19% 18%
Adult Family Home Inspections 100%
(4)
53% 52% 51%
Additional Inspections and Re-Inspections 100%
(4)
42% 41% 100%
Appeals of Building Official Decisions 25%
(8)
2% 2% 2%
Temporary Certificate of Occupancy 125%
(7)
50% 50% 50%
Land Use and Environmental
Service Cost Recovery Policy 2017 2018 2019
Land Use (Variance, Conditional Use
Permits, Design Review, Lot Line
Adjustments, Temporary Uses)
75%
(4) (6)
50% for single SFR
(2) (3) (6)
10-51% 10-51% 10-
51%
Environmental w/o Alteration (Critical
Areas, Shoreline, Floodplain)
75%
(4) (6)
50% for single SFR
(2) (3) (6)
6-42% 6-42% 6-42%
Environmental w/ Alteration (Critical Areas,
Shoreline, Floodplain)
100%
(4)
25% for proposals that
enhance critical areas.
(5)
6-42% 6-42% 6-42%
SEPA 50%
(6)
28% 50% 49%
Comprehensive Plan (Zoning Maps, Text
Changes, Code Changes)
100%
(4)
17-40% 17-40% 17-
40%
Subdivisions (Short Plat, Long Plat, Plat
Alterations)
75%
(4) (6)
12-68% 50% 49%
Grading (Timber Removal, Land Grading) 100%
(4)
3-11% 3-11% 100%
Pre-Application Meetings 10%
(6)
12% 11% 10%
Appeals 25%
(8)
26% 25% 24%
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*2018 Fee Adjustments (SEPA, Preliminary Plats, Rezones, and Design Review elevated to 50%)
*2019 19 applications were raised to achieve 25% or 50% recovery; Grading increased to 100%
The intent of keeping most cost land recovery rates at less than 100% is because most land use
applications precede engineering and architectural work. A recovery rate that is less than 100% is
intended to make it more affordable for customers to explore feasibility of projects before investing in
high cost architectural and engineering design work.
Development Engineering
Service Cost Recovery Policy 2017 2018 2019
Construction Permits 100%
(4)
10-32% 100% 98%
Facility Extensions 100%
(4)
11-40% 60% 100%
Right of Way Use Permits – Long Term (Type
C) – Private Benefit
100%
(3) (4)
20% 19% 18%
Right of Way Use Permits – Long Term (Type
C) – Public/Community Benefit
20%
(5)
20% 19% 18%
Appeals 25%
(8)
0% 0% 0%
Deviations and Deferrals 125%
(7)
0% 0% 75%
*2018 Fee Adjustments (Construction Permits elevated to 100%, FAC’s elevated to 25%)
*2019 Fee Adjustments (FAC Permits, Deviations and Deferrals)
Annual Adjustments
The construction valuation used to calculate building permit fees will be adjusted each year by using the
“Building Valuation Data” published by the International Code Council each August.
In order to keep pace with the annual increase in costs that are experienced by the City, all fees will be
increased by 6% each year. In 2021 fees will reflect the above cost recovery objectives plus 6%.
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Sample Fee Increases Based on Targets Established in Draft Policy
Building Permits
Permit/Project Current Fee Adjusted Fee Notes
Commercial Mechanical or
Plumbing Permit (new and
modified commercial and
multifamily)
$28.00
(18% recovery)
$139.00
(100% recovery)
Note that we currently have the same fee for
all types of plumbing and mechanical
permits. This policy would create 3
categories with different fees for each.
Residential Mechanical or
Plumbing Permit (associated
with a new house)
$28.00
(18% recovery)
$46.00
(33% recovery)
Over the Counter (OTC)
Mechanical or Plumbing
Permit (home remodels,
repairs, replacements)
$28.00
(18% recovery)
$35.00
(25% recovery)
Adult Family Home
Inspections
$175.00
(51% recovery)
$350.00
(100% recovery)
Temporary Certificate of
Occupancy (TCO)
$500.00
(50% recovery)
$1,250.00
(125% recovery)
TCO’s are very labor intensive because they
require city staff to take a timeout from the
normal process for obtaining occupancy and
coordinate with a number of outside
agencies and internal departments. And they
are only necessary if a developer has not
completed their project on time.
Land Use and Environmental Fees
Permit/Project Current Fee Adjusted Fee Notes
Residential Variance $291.00
(7% recovery)
$2,422.00
(50% recovery) It costs the city approximately $4,844 for the
city to process a variance request. Commercial Variance $1,114.00
(23% recovery)
$3,633.00
(75% recovery)
Residential Boundary Line
Adjustment
$715.00
(25% recovery)
$1,430.00
(50% recovery) It costs approximately $2,860.00 for the city
to process a boundary line adjustment. Commercial Boundary Line
Adjustment
$1,430.00
(50% recovery)
$2,145.00
(75% recovery)
Comprehensive Plan
Amendment
$3,106.00
(50% recovery)
$7,212.00
(100% recovery)
If the City chooses to sponsor an amendment
the fee won’t be charged. This typically a
request to change the land use designation
and zoning of property. It must go through
Planning Commission and City Council which
makes this process time consuming for staff.
Residential Conditional Use
Permit
$1,126.00
(26% recovery)
$2,252.00
(50% recovery) It costs approximately $4,502 for the city to
process a conditional use permit request. Commercial Conditional Use
Permit
$2,252.00
(50% recovery)
$3,378.00
(75% recovery)
Preliminary Short Plat (9 lots
or fewer)
$1,630.00
(30% recovery)
$4,075.00
(75% recovery)
Smaller land divisions that are typically less
complicated.
Preliminary Subdivision
(more than 9 lots)
$6,305.00
(50% recovery)
$9,437.50
(75% recovery)
Larger land divisions that typically have a
great deal of complexity.
Development Engineering Fees
Page 9 of 10
Permit/Project Current Fee Adjusted Fee Proposed Recovery %
Deviations and Deferrals
$400
(75% recovery)
$440
(125% recovery)
These are requests from developers to design
and building something that is not consistent
with the prescriptive/adopted engineering
design standards. They require extra review
and coordination. They are not mandated by
the city and are a choice made by the
developer.
*Did not include the following types of permits because they already achieve a 100% cost recovery:
• Building Permits (residential and commercial)
• Construction Permits
• Facility Extensions
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