County plans a price hike for building fees

“We recommend that development pay its own way and not place the burden on taxpayers”

[  By Katherine Nettles  ]

As the cost of real estate and building continues to climb in Gunnison County, homebuilders can expect some additional costs to the process in the coming years. Gunnison County’s Community Development Department is proposing a revised fee schedule for land use change, building, and onsite wastewater treatment system (OWTS) permits, which in some cases might double the current rates if approved. 

The idea is to address a serious shortfall in the revenue these applications, permits and inspections generate compared with the true costs of processing them. Commissioners have loosely agreed to support the rate hikes while recognizing that these changes will contribute further to increasing building costs.

“We are otherwise asking taxpayers to subsidize this development,” noted county manager Matthew Birnie as he and commissioners reviewed a presentation on the subject from assistant county manager for community and economic development Cathie Pagano during a work session on April 12. 

“Staff has analyzed the Community Development department revenue and expenses for the past six years to identify the cost to the County of the development review program,” explained Pagano in a memo prior to the meeting. The expenses include the departmental expenses related to development review, long range planning (excluding grant programs and activities), codes & regulations oversight and sage grouse considerations. 

“Each of these programs include resources dedicated to development review including supporting permit/application processes, inspections, or prospective planning. The County has not recovered its costs for the development review program in any of the years analyzed and likely has not in many years,” wrote Pagano.

Pagano showed a typical annual loss to the department of up to $250,000, which the county has then subsidized from its general fund. “As we started looking [at certain permit fees] we realized we really needed to dive in and take a more comprehensive look.”

She said as the number of building permits have increased over the past few years with no signs of slowing, her staff has had to cover more complex projects that at times require multiple inspections and site visits, such as those associated with large homes and multiple building phases. Pagano suggested that adding an additional staff position to her department, alongside an additional fleet vehicle, could help handle the increasing numbers and provide more timely application processing procedures to those using the county’s services. 

“Structures have gotten larger and more complex,” said Pagano. She described a current 10,000 square foot home being built in the county that needs several foundations poured and inspected in different phases, for example. The county also now performs insulation, air barrier, radon mitigation and ventilation inspections. 

Land use changes (LUC) fees were last updated in 2012, including an annual increase based on the consumer price index. The current fees do not include county attorney costs or public works costs, which can be significant, and are based on a 2011 building valuation calculation of $148 per square foot. Commissioners acknowledged that building costs are now in the range of $300 to $450 per square foot in the south end of the valley, and often between $700 and $1,000 per square foot in the North Valley. 

“The International Code Council (ICC) recommends adopting a regional cost modifier,” said Pagano as a way to update those valuations.

 Pagano said she understands how this proposal could affect what is already an “incredibly high cost of construction.” But she pointed out that with the development review program forcing a county subsidy every year, the program takes funding that could be used for other projects such as affordable housing or emergency services. “We recommend that development pay its own way and not place the burden on taxpayers” she concluded.

Commissioner Roland Mason, who runs a building contracting business, said staffing up could help on the customer side of it, and reduce delays to projects. 

He said with the cost modifier, the middle class will be impacted by these fee increases.

“That said, I do see the need for it,” said Mason.

Commissioners agreed that adding staff could prevent potential burnout within the department, and that scaling the needed cost increases out over a period of years would be the best approach. Commissioners will hold another work session to fine-tune some changes and then determine that schedule.