Sunday, June 10, 2018

City Council, June 11th - Planning Fees and Music

Council meets on Monday, and it is very nice to start with a proclamation for Make Music Day on the 21st. There is also a proposal on development fees that is interesting.

Official Make Music Day!

Sites all over downtown
See the Salem Weekly piece for more on Make Music Day.

Because there is more building and more permitting, there is a proposal to increase planning fees.
Since 2012, planning applications have increased by 50% while staffing levels have remained the same. This has created a significant workload for our staff that is becoming less manageable as trends suggest volumes will not decrease anytime soon. Due to the workload, cases are taking longer to review, with less time dedicated to the review, even as the cases themselves are increasing in complexity. As the data shows below, the increased workload translates to 338 cases (on average) for a staff of 7.2 FTE. Based on analysis of prior year volumes, it appears that the best ratio of cases per planner is in the range of 225 - 250 per year. So current volumes exceed the ideal workload by 35%....We recommend 9.2 FTEs given the known activity of previous years.
So a problem here may be that the revenue stream and corresponding staffing level is driving the proposal. As a revenue project, the first "stakeholder" consulted was apparently the Home Builders Association and the City sought alignment with their politics first:
The disadvantage of this proposal is primarily found in the cost recovery ratio . In 2014, the City resolved to work towards a 50% cost recovery ratio so that fees didn’t increase too quickly or too high and thus create an significant, new cost to applicants. The City’s planning review service adhered to 50% or less cost recovery for several years....

In the high - volume scenario, the new fee increases will lead to 66% cost recovery. Staff has presented this to the Homebuilders Association, along with other members of the stakeholder community, and has pledged to embark on improvements to the service so that this higher cost, and higher revenue, is invested in material benefits that enhance their experience of the service. So the disadvantage (e.g. cost recovery that is higher than the 50% threshold) should be buffeted by positive improvements for customers.
This is really outside the scope here, so just some questions:
  1. Is 50% cost recovery sustainable? Why not 100% recovery?
  2. Why don't we align fees with "what we want?" and with larger City values, policies, and politics? Are we lowering fees on things we want more of? And raising fees on things we want less of? (Some things should have a higher cost!) There's no discussion here of the way our fees align with policy goals. Does this adequately align with the proposals on SDCs, especially concepts for variable SDCs? Maybe this fee schedule accomplishes this, but shouldn't citizens see a discussion of how this fits with the new strategic plan and other high-level policy documents? It all just looks like it's tailored to the Home Builders - an instance of regulatory capture? - rather than to the interests of the broader citizenry.
Proposal to annex about 20 acres near Creekside and Lone Oak
And as it happens, there is a convenient example at hand on the agenda. There is "a petitioner-initiated annexation of a 20.35-acre territory" on Devon Avenue out south. You'll recognize the area from the wrangling for the Lone Oak Reimbursement District.

The latest map for the Lone Oak Reimbursement District
In all the complexities and perplexities, it hadn't registered that some of the areas in the reimbursement district were outside the City and would need to be annexed.

So just in general terms here is a claim: It is reasonable for costs to develop property that is not yet inside the City limits to be significantly higher than costs to redevelop property on the interior like the North Campus of the State Hospital. There ought to be pricing signals that encourage interior projects.

Do our planning fees accomplish this? Or do we incent development on the edges and retard interior redevelopment by making it more costly? Do we unnecessarily subsidize luxury housing outside of the city limits and near a golf course, and penalize affordable housing on the interior?

If there is rhyme and reason here, the Staff Report is thin on it.

Maybe you will know the answers, or know more anyway.

Bullets for the rest:


Susann Kaltwasser said...

There was a policy discussion at one time by the City that all fees should try to reflect the real cost of service. I guess that idea got lost somewhere along the way when the development community had great sway with the Council. Time to revisit that notion.

Also, the City is in the process of reviewing their SDC formulas. Some suggestion has been made that those fees should be adjusted to encourage some kinds of development, such as low-income housing. We already have a new ordinance that allows reduced taxes for non-profits who are building or renovating low-income housing.

The idea of using fee as incentive to get what we want and to discourage what we do not want is worthy of some community discussion.

Anonymous said...

Strong Towns offers some annexation skepticism here -