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City considering upping development service fees

ConstructionOutlookCHARLOTTE – The city’s Budget and Evaluation Office is considering increasing development service fees – among other avenues – to help relieve a $21.7 million budget deficit it’s facing for 2016.

The deficit is a result of two factors: an ongoing revaluation of all Mecklenburg County properties, which is estimated to cost the city $10.8 million, and the elimination by the General Assembly last year of the Business Privilege License Tax, an $18.1 million loss.

On Wednesday, David Weekly, the city’s land development manager, presented proposed service fee increases to the Development Services Technical Advisory Committee, which advises the city on implementing and governing regulations related to development, at a budget workshop meeting.

“Some fees may decrease, some (may) remain flat, but some – maybe the majority – could increase,” Weekly said Thursday in an email. “The amount increase depends on whether we move toward 100 percent cost recovery.”

The city’s regulatory services departments are funded through two sources: service fee revenue and the city’s general budget.

For example, the existing cost for the city to do a plan review for a 10-acre, single-family subdivision with 40 lots is $23,276, but the current fees associated with a plan review for that proposed subdivision would cover only $18,890, or 81.2 percent, of the cost. With the existing fee structure, the remaining 18.8 percent, or $4,386, of the plan review would come out of the city’s general funds.

But some services require much more financial help from the city, such as rezoning petitions. Under the existing fee requirements, fees associated with a rezoning petition cover only 37.5 percent of the cost. For a rezoning petition, that would cost the city $13,574; service fees would cover only $5,090.

Ideally, the city’s regulatory services departments would be funded solely by service fee revenue, but that would require that existing fees be increased.

The county’s Code Enforcement department also handles inspections, plan reviews and permits. But Ebenezer Gujjarlapudi, director of the county’s Land Use and Environmental Services Agency, which oversees the Code Enforcement Department, said the county’s service fees will not increase this year.

Although the city’s Budget and Evaluation Office estimates that increasing all regulatory service fees – most of which are for development services – could reduce the budget deficit by up to $2.1 million, Eric Hershberger, the city’s budget manager, said increased fees could reduce the deficit by as little as $500,000.

In 2006, the city’s regulatory services departments achieved a 100 percent recovery rate, but the recession forced the city to flatten its service fees between July 2008 and June 2012 in order to keep fees down for service users.

The recession – combined with flat service fees – caused recovery rates to slowly decline, and it wasn’t until 2013 that the city began working its way back up to 100 percent recovery.

In 2013, regulatory service departments recovered 75 percent of all service costs, and that number rose to 80 percent in 2014. For fiscal year 2015, regulatory service departments have recovered 83.3 percent of service costs since July.

“The reality is that it probably won’t be brought up to 100 percent,” Hershberger  said on Thursday.

“The goal is to provide the right level of resources (and) staff to meet service level goals so that projects are not delayed unnecessarily in the plan review and inspection services that we provide,” Weekly said.

The city will have another budget workshop at 1:30 p.m. on Friday, April 17, and potential changes to development services fees are expected to be presented at that meeting, according to the Real Estate and Building Industry Coalition.

A public hearing on the city’s 2016 budget is scheduled for 5:30 p.m. May 11, and the final vote is scheduled for June 8.

 

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