The Aspen city government is considering raising the fees it charges for development reviews and permitting, as the building, planning and engineering departments face combined deficits projected to reach above $1 million in the coming years.
While the city community development department during the 2004-2007 development boom was collecting surpluses, development fee revenues have slipped 60 percent from those mid-decade peaks. Even with staff cutbacks of about 20 full-time employees in the building, planning and engineering departments, an “unsustainable” structural deficit has developed, community development director Chris Bendon said.
Something must be done, “otherwise it gets to the point where (the deficits) threaten the general fund,” Bendon told City Council this week.
Community development, which encompasses building and planning, has projected revenues of $1.5 million in 2011 and $2.2 million in expenses, creating an $830,000 deficit. That grows to $941,000 in 2013, according to a city analysis. The picture isn’t much better in the engineering department, which oversees construction management, stormwater quality and city right-of-way issues. Revenues, minus expenses for engineering, are projected at $713,000 in the red for 2012.
“Some level of subsidy is normal, but this is not sustainable,” Bendon said, adding that he has been instructed by the city manager to aim for a general fund subsidy of $250,000.
The building, planning and engineering departments provide a variety of services, some of which are directly billable to developers, such as examining plans for specific projects, and some of which are absorbed by taxpayer dollars, such as the long-range planning associated with the Aspen Area Community Plan. City officials are examining areas where they might be able to directly bill where they are not currently.
The biggest area identified has been in the engineering department, Bendon said. While the development community is directly billed for the time city planners spend working on their projects, they are not billed for engineering department work such as construction management plan reviews, and enforcement and building permit reviews. That might change in the future.
The city has done just one analysis on how much more a permit would cost if those engineering fees were added on. That analysis was done on a 6,000-square-foot luxury home project, and the additional fees were around 30 percent, Bendon said.
That may sound like a lot, but Bendon said he wants any fee increase program to scale upward, depending on the intensity of the project.
“One of the things we want to ensure is that little projects that represent a small amount of service don’t get an inordinate fee increase,” Bendon said, adding that the bigger projects take up a majority of the department’s time, even while the amount of small projects increase.
Council members reiterated the philosophy that “development should pay its own way,” but recognized that any fee increases are likely to be criticized.
“There’s going to be comment that (increasing fees) is further piling on … and snuffing out activity,” Councilman Dwayne Romero said. “But frankly, [the development community] has seen a bit of a free ride in some elements of the service.”
Mayor Mick Ireland suggested that the department look into capital investments, such as a better software system, that might bring operating costs down.
Bendon acknowledged that the department has acted inefficiently in the past, and that officials are focused on addressing those inefficiencies.
“We have to get the goopiness out of the system and now is the time to do it,” Bendon said, referencing the slow pace of development currently coming through the city.