Our View: Permit fee increase not so cut and dry
November 22, 2009
Steamboat Springs — Logic says it's counterintuitive to raise building permit fees during a construction slump, but deciding whether to approve the Routt County Regional Building Department's controversial proposal is not so black and white.
Last week, Building Department manager Carl Dunham made his case for a 58 percent permit fee hike to the Routt County Board of Commissioners and the Steamboat Springs City Council. Both entities would have to sign off on the proposal because the Building Department operates under an intergovernmental agreement between Routt County and Steamboat Springs.
According to Dunham, the fee increase is needed to maintain an acceptable level of service while not further cutting staff. Dunham's department, which is responsible for issuing permits and inspecting all construction projects in Routt County (with the exception of Hayden), has shrunk this year from 13.7 full-time equivalent employees to nine, the result of a significant decrease in projects moving through the Building Department.
Because the Building Department is an enterprise fund — it operates solely off the revenues it collects for the services it provides — the drop off in construction activity throughout the county has dramatically decreased the revenues and service calls for his department. After anticipating revenues of $1.4 million in 2009, the Building Department is on track to collect about $550,000 or $600,000.
Furthermore, Dunham says his department's fund balance has decreased by more than $800,000 in 2009. Even with the proposed permit fee increases, he forecasts that fund to decrease by another $365,000 in 2010. The department plans to carry a $1 million fund balance into 2010, but $800,000 of that total represents money collected for existing construction projects that still must be inspected. In other words, it was money collected up front for services not yet rendered.
The problem with the proposed fee increases is that they still won't be enough to sustain the Building Department at current staffing levels — unless, of course, there's a significant rebound in the construction industry. It's hard to imagine that rebound will occur in 2010.
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We understand and support the desire to ensure adequate staffing levels for existing workload, as well as the department's ability to quickly respond to increased demands when building projects pick up again. We similarly recognize the Building Department's need to have experienced employees with the professionalism and expertise to oversee safety issues inherent in building inspections. And we wonder whether the modest overall cost increases to permit fees — it's important to analyze the increases in relation to the total cost of the construction project, not simply the percent increase of the permit fee — would actually deter new construction. It's important to note that Dunham's proposal was made after consultation with an oversight committee of city and county government representatives, as well as a local construction trade group.
Finally, we can't help but recall the county commissioners' decision two years ago to transfer $1.4 million from the Building Department's fund reserve to the county's general fund. That was when times were good, and the commissioners wanted to repay the county for what they said was money owed to it after years of subsidizing the Building Department through lean times. The ensuing controversy nearly led to the city contracting for its own building department services. Regardless, it's a reminder for why hanging onto reserves in the good times can help us through the bad times.
What's important today is for neither the City Council nor the county commissioners to react hastily to Dunham's proposal. Rather, a thorough analysis of the staffing required for maintaining a high level of service and the effect added fees would have on encouraging or discouraging new construction should lead to a reasonable solution.