Struggling building department seeks 58 percent fee increase | SteamboatToday.com

Struggling building department seeks 58 percent fee increase

— The Steamboat Springs City Council is expected to vote tonight on a proposal to raise building permit and plan check fees by 58 percent to help offset declining revenues collected by the building department. A similar measure is being considered by the Routt County Board of Commissioners.

Routt County Building Dep­artment Official Carl Dun­ham said Monday that he already has reduced his staff from 13.7 full-time equivalent employees to nine. But slipping revenues suggest more cuts could be necessary if the construction industry doesn't turn around.

The building department is feeling the same fiscal squeeze that building contractors are going through.

"By raising fees, we can extend services. When things turn around, our hope is to be able to return to the lower fee structure," Dunham said.

The department's fund balance has declined by about $800,000 this year, he said.

"We started 2009 with $2.33 million in our operating fund," Dunham wrote in a memo to the City Council. "With projected revenue of $600,000 in 2009, our fund will diminish to $1.53 million at the end of the year. We are budgeting that our level of construction will be consistent from 2009 to 2010."

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If construction activity rem­ains flat next year, and the fee increases are approved, the building department expects to receive $900,000 in revenues against a personnel and operations budget of $1.265 million. The deficit would eat further into the fund balance.

The Building Department will carry a fund balance of about $1 million into the new year, but of the total, $800,000 represents money collected in advance for existing construction projects for which inspections still must be conducted, County Manager Tom Sullivan said.

"It's unearned revenues," County Commission Chair­man Doug Monger said. "The building department collects its fees up front, and we have a liability of service out there. We're basically a $1 million department, and although we've reduced our staff, we're still looking at a deficit."

The fee increase would translate into about $1,335 on a modest 2,000-square-foot single family home with a construction permit valuation (not the same as the cost to build) of $316,600.

The increase translates into about four-tenths of 1 percent of the permit value assigned to the house.

For a hypothetical 10,000-

square-foot office building in the city with a valuation of $1.56 million, the fees for permits and plan checks would increase from about $7,700 to $12,500, an increase of 64 percent.

When all construction fees in the city are taken into consideration, including planning fees, city use and excise taxes and county use tax, the building permit increases are 7 percent of the total and residential increases are 8.4 percent.

The county building department, which serves the city and county, as well as the smaller communities of Oak Creek and Yampa, is unlike any other department at the county. It does not receive any of its budget from city and county general funds. Instead, it is an enterprise fund, operating from year to year on the fees it collects from contractors and private individuals undertaking their own construction projects.

Construction valuation and fees have slipped dramatically this year. Valuation is on track to reach $80 million compared to the record $155 million of 2000.

At the beginning of the year and mindful of the recession, Dunham calculated the average of the four worst revenue years of this decade and used that number to project 2009 revenues of $1.4 million. But after the first 10 months of the year, fees collected are on track to hit less than half of that number — perhaps $550,000 or $600,000.

Preparing for a recovery

Dunham works with an oversight committee comprising representatives from city and county government. He also consulted with a construction trade group, which he said, acknowledged the need to increase fees in order to preserve services.

The commissioners cautioned that even the rate increase does not indefinitely sustain the building department at its current staffing levels without a rebound in the construction industry. And when the industry turns around, they want to be in a position to ensure the building department can respond.

"The worst thing that could happen for contractors when things start to get better would be getting held up by building department inspections," Monger said.

The fact that building permit and plan check fees are paid in advance would help the department rehire, but Commissioner Diane Mitsch Bush expects the timing of rehires to be tricky.

"At first electrical inspection (for example) those subs are going to be tightly scheduled," Mitsch Bush said. "If one inspection stalls, it gets backed up."

Dunham said the next round of layoffs would be painful because the next employees to go would each represent 27 years of experience and training.

"We're a construction company, one with a specialized skill set," Dunham said. "It's tough. We've had a good run."

Stagecoach sewer vaults a hot topic

The Routt County Board of Commissioners will conduct a public hearing at 5:30 p.m. today in the Routt County Courthouse to consider a bid by the Morrison Creek Water and Sanitation District Board to reduce from 600 to 30 the number of permits allowing sewage vaults for 1,500 platted lots in Stagecoach.

The district maintains that its treatment plant could not cope with the abrupt increase in loads that resulted when the contents of the number of approved vaults were pumped and delivered to the treatment plant by truck.

The implications are that subdivisions in Stagecoach would have to pursue other means of wastewater treatment, including forming local improvement districts to install the sewer lines needed to tie into the district’s wastewater treatment facilities.

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