D:\Council_Items\REGULAR MEETING\2024\11 - Nov\11.12
Title
A Resolution of the City Council of the City of Colorado Springs, Colorado rescinding Resolution No. 136-19 and establishing fees and charges associated with the building permit applications for the Development Review Enterprise.
(Legislative)
Presenter:
Dan Sexton, Development Review Enterprise Manager, Planning Department
Kevin Walker, Planning Director, Planning Department
Body
Summary:
Representative: City of Colorado Springs Planning Department
Location: City-wide
The City’s Planning Department is recommending changes to the fees and charges collected for the review and processing of land development and building permits applications for developments of all types throughout the City of Colorado Springs. The proposed fees and charges have been adjusted based on cost of service, capacity analysis and level of service programming for the respective divisions of the Planning Department which is the managing City agency for land development and building permit applications.
Background:
The Development Review Enterprise (DRE) is a financially self-sufficient Division (Enterprise) of the City Planning Department and is solely supported by the fees it collects. The DRE, which was created in 2000 (Ordinance No. 00-201), provides review, inspection and oversight services throughout the building permit process to ensure compliance with City land use and zoning regulations as well as conformity with all applicable Colorado laws. The DRE is comprised of two separate workgroups: (1) Planning and (2) Fire Construction Services (FCS). While the DRE budget is administered by the City Planning Department, the Planning staff report to the Planning Director and FCS staff report to the Fire Department’s Division of the Fire Marshal. The proposed DRE Fee Schedule ensures that Enterprise will be a financially self-sufficient organization supported by the fees it collects.
The recommended fees and charges have been calibrated based on current and forecasted costs of service, capacity analysis, and level of service programming. For the DRE fee schedule, specifically, additional consideration was given to the right-sizing of the DRE’s Reserve Fund, which has been used historically for one-time expenditures or during periods of low recognized revenue.
Cost of Service: A cost of service and capacity analysis for the proposed land development and building permit application fees was completed. This analysis provided data on the full spectrum of service programming provided by each Division to implement designated processes and tasks. The DRE fees and charges support the review, inspection and oversight services throughout the building permit process, which also includes, but is not limited too, the administrative of financial assurances, compliance with the City’s Hillside Ordinance and Sign Permit program.
To understand the spectrum of variables impacting cost of service, staff tracked time and resources required to complete the review of each application. The data showed that the previously set fees were not sufficient to balance forecasted revenue projections with anticipated expenditures. The recent volatility of the building and development industry which is further compounded by federal funds rate decisions has made it difficult for City staff to reasonably predict revenue and expenditures overages and shortfalls. While the recommended fees and charges do not achieve a100% cost recovery rate, the Planning Department is evaluating with agency partner whether to establish of more frequent or regularly scheduled audits and adjustment of fees.
Capacity of Service: A capacity of service analysis was conducted. This analysis was critical to support City staff’s methodologies for the proposed fees and charges adjustments as many of the regulatory parameters for development and building permit applications were refined as a result of the City’s recently codified Unified Development Code (UDC). Furthermore, the Planning Department is now in it’s second year of implementation of the Accela “Planning” module which was a technological solution that has decreased overall review times and refined staff workloads. The efficiencies and improvements that were anticipated as a result of the refined regulatory environment and technological enhancements were diminished by the recent freezing of positions within the Planning Department. The Department’s management team continues to evaluate and implement opportunities to adjust and improve our service capacity.
Level of Service: The overall level of customer service and customer need was evaluated. In general, this analysis focused on review and inspection times, front counter staff availability to answer calls and customer inquiries, and service programming changes stemming from recent regulatory changes. It should be noted that during the period of analysis applications within all the Divisions are stable, the year-over-year trend is a slight increase.
Review Criteria:
There are no set criteria for determining the appropriate fees and charges for land development and building permit applications. Per UDC Section 7.5.404 Fees, all “Application fees are established by City Council...”. Similar to the analysis above, prior fee and charge adjustments have been based on costs of service, capacity, and level of service analysis for the respective divisions of the Planning Department.
DRE and the Planning Department are committed to a full and transparent review of the data used in drafting these fees as updated for 2025 with the affected stakeholders and fee payers in anticipation of a more comprehensive plan for fee increases and financial management for the next budget cycle.
Previous Council Action:
In May 2023, City Council approved Resolution No. 77-23 which set the current land development application fees. On December 5, 2019, City approved Resolution No. 136-19 which set the current building permit fees. Both fee schedules are in use today.
Financial Implications:
The current DRE reserve fund balance covers approximately 80% of the 2025 budget with some additional contributions anticipated at the end of 2024 and into 2025. Under the DRE’s 2023 and 2024 budgets, strategic drawdowns of the reserve fund occurred in response to industry’s concerns regarding a ballooning reserve fund and unanticipated revenue shortfalls due to a slowing of development. The proposed fee schedule, which recommends an increase of fees, will be implemented concurrently with the 2025 budget and will lessen future reserve fund draws in an effort to maintain a health balance such that the DRE could absorb future revenue shortfalls if need be.
For further reference, side-by-side comparisons of the DRE Fee Schedule current and proposed fee rates and structure are attached.
City Council Appointed Board/Commission/Committee Recommendation:
The City’s Development Review Enterprise Advisory Committee (DREAC) voted unanimously to approve the proposed DRE Fee Schedule at the October 30, 2024 meeting. The DREAC recommends the modest fee increase as a balanced measure to lessen excess revenue going into the DRE reserve fund and supports the proposed DRE Fee Schedule.
Recommended Action
Proposed Motions:
Should the City Council wish to approve the DRE Funding application, the following motion is suggested:
Adopt a Resolution rescinding Resolution No. 136-19 and establishing fees and charges associated with the building permit applications for the Development Review Enterprise.