News

Nickel and dimed

Personnel costs are driving up fees in SLO

by

comment

Want to build or update your dream house? If you live in San Luis Obispo and want your latest home improvement project to be up to city code, it’s going to cost you.

Building fees for construction have always been high, but after a late-night vote at the Nov. 1 SLO City Council meeting, the cost will likely go up.

It will cost $951 to get the city to sign off on a porch for your house. A patio cover will run you $1,015. Want to build a closed trash enclosure to hide your garbage cans from the street? That will be $966.

If the city puts the kibosh on your project and you want to fight the decision, it’ll cost you $966 to appeal a building official’s ruling.

These figures are chump change compared to the price of permits needed to build a house. Want to build your small dream house? That will be $17,000, and that’s just for building fees; other fees will drive the costs much higher. A four-unit condo built by a developer will cost $37,000 in building fees.

If these fee costs seem really high, it’s because they are. According to a study conducted by a city consultant, SLO charges higher fees than any other city in the county—as well as cities outside the county, like Santa Maria and Monterey. Construction fees for a house in Monterey are half the cost SLO charges. Building permit fees for a house in the unincorporated areas of the county are only a third of the cost of building in SLO.

The city has long had a policy of charging developers, business owners, and residents to compensate for its regulatory services. The old fee rates only covered 92 percent of the cost, according to staff reports, and the revised fees should bring it in line with expenses.

The high costs are mostly driven by personnel costs, which include benefits like pension expenses. In most cases, the city pays for both its and its employees’ shares.

Personnel costs are staggering: $204 an hour and $193 an hour for projects that don’t involve land use.

There are some services, however, found to cost less than the old fee price warranted, and those fees were reduced. For example, the cost for a 50,000-square-foot industrial building’s fees went from $151,000 to $48,300.

 High fees are one of the major reasons housing costs are so high in SLO, said a real estate developer who didn’t want his name revealed because he does business with the city.

“It costs a lot more money to build anything in the city than anywhere else in Central California,” he said. “Houses are necessarily expensive, and so everyone suffers so the city can try to pay for their high costs.”

Construction fees aren’t the only fees on the rise. Water, sewer, and parking fees have all been going up, outpacing not only every other city in the region, but also far outpacing the rate of inflation.

As the city ratchets up fees, income from other sources isn’t matching pervious city estimates.

While income from sales and transit occupancy taxes are slowly rising, city income from property taxes is falling short of what officials estimated. The latest financial report showed that city revenues were “below target” by $568,000 for the last fiscal quarter.

SLO’s investment fund has suffered a precipitous decline since the spring. The city had about $77 million in its investment portfolio in late May and is down to about $65 million as of Sept. 30. Some of that decline was due to a $5.5 million payment toward the Nacimiento Water Project, for which the city is slated to make yearly payments for 30 years.

There was little debate by city councilmembers when they voted to raise the fees. The vote was 4-1, with Councilman Dan Carpenter voting against the hike.

Councilman Andrew Carter, a self-proclaimed numbers aficionado and fiscal watchdog, voted for the fee increase. Carter believes in the city’s policy of charging the cost of the services rendered in the fee process, but said he recognizes that the prices of services are too high. The best way to drive down fee prices is to reduce personnel costs, he said.

Presumably, that’s what will be happening soon. The city is in negotiations with its unions to squeeze millions of dollars of concessions out of its employees.

The single dissenter against the fee increases, Carpenter’s been a steady opponent of most of the city staff’s effort to increase taxes and fees.

“I just think we are not adequately looking at reducing costs,” he said. “I don’t want to raise fees without trying to reduce costs. I know that’s how government usually works, but I think that’s a mistake.”

Staff writer Robert A. McDonald can be reached at rmcdonald@newtimesslo.com.

Add a comment