Translate[Archived] Question #49: What would the revenue produced be if 1) there was no cap on development fees or 2) if the cap was lifted to $100,000?
Question:
What would the revenue produced be if 1) there was no cap on development fees or 2) if the cap was lifted to $100,000? (Councilman Chapman)
Background:
In the FY 2019 budget, City Council approved an increase in the development fee formula, including an increase in the fee cap from $60,000 to $80,000. In addition, a fee for zoning determination letters was instituted. Staff estimated that the fee increases would generate an additional $288,175 in revenue above the FY 2018 approved fees. The actual increase, year-to-date for the third quarter of the fiscal year, are running about 10 percent ahead of that estimate. The City budgeted $1.1 million in Planning & Zoning fee revenue for FY 2019, which equates to approximately $830,000 through three quarters. Fiscal year-to-date development fee revenues are $913,916 for FY 2019 compared to $476,893 for the same period in FY 2018.
Response:
Increasing the fee cap from $80,000 to $100,000 would increase revenues by approximately $120,000 per year. Removing the cap entirely would increase revenues by approximately $215,000 (or $94,800 more than a $100,000 fee cap).
Only the largest projects have fees that would exceed the current $80,000 cap if the cap were removed. A typical year may see, on average, 6 large projects (although it can vary greatly). The increase in the cap to $100,000 would result in an average fee increase of $20,000 per large project. The removal of the fee cap entirely would result in an average fee increase of $35,800 per large project.
These estimates are based on a typical mix of projects by type and size. Virtually no year is “typical,” particularly because the number of large projects has a major impact on revenues, and it is difficult to project how many large projects will be filed in a given year. As a result, revenues vary considerably from year to year.
It should be noted that increasing fees may negatively affect development activity, particularly as it relates to whether the public views the City as welcoming or unwelcoming to new development.
Normally staff would speak with the development community regarding any fee increases or fee changes and collect comparator information from local jurisdictions. Due to the timing of this question, staff will not be able to ensure that the development community is aware of any proposed change or ensure that they will have time to respond to it. Given the timing, staff recommends against adopting this type of fee increase on such short notice during the add/delete process.