The Santa Rosa City Council narrowly approved steep increases to permit and development fees Tuesday over the objections of industry leaders who warned doing so could jeopardize a fragile economic recovery.
Mayor Scott Bartley cast the deciding vote in the 4-3 decision to approve the higher fees, which cover everything from constructing an office building to replacing a water heater.
As an architect, Bartley said he never likes to see permit fees increase, but as mayor he said he couldn't justify spending $2.4 million per year effectively subsidizing private development projects when city parks and roads have such pressing needs.
"It's a painful vote, but I think it's the right thing for us to do," Bartley said.
Three council members and several members of the building community disagreed.
Ernesto Olivares and Erin Carlstrom said they wanted to take the industry up on its offer of forming a task force to find ways to raise fees without harming the economy.
"We need to work together in our economic recovery efforts," Olivares said.
Carlstrom noted that because the increases will be phased in over five years, there was ample time to work with the industry, which had proposed a six-week study group to examine the fees more closely.
"The last thing I think we want to be doing is to be seen as attempting to stifle our economic recovery, either intentionally or unintentionally," she said.
Councilman Gary Wysocky also voted against the measure, expressing concern that the city's figures weren't detailed enough to truly compare the new fees to those in other cities.
But the balance of the council felt it was time for the building industry to start paying a greater share of the costs of reviewing, approving and inspecting their development projects.
"In my opinion, it's not going to be stifling to economic development at all," Councilman Jake Ours said. "It's a cost of doing business."
Ours and others noted that the city had gone to great lengths in recent years to streamline city permit processes, in many cases eliminating the need for some permits entirely.
Currently, the city spends just over $5 million annually on development activities but collects $2.6 million in fees, effectively subsidizing private development activities to the tune of $2.4 million a year. The new fee structure is estimated to generate an additional $1.4 million after five years, a 54 percent increase.
Several council members noted that even after five years, the city will still be recovering only 80 percent of its costs while numerous other communities seek to recover 100 percent of such costs.
"From my perspective ... Santa Rosa is on sale -#8211; 20 percent off!" Councilwoman Julie Combs said.
But many industry leaders didn't see it that way. Some took issue with the use of the term "subsidy," arguing instead that the costs should be seen as an "investment." Some worried the city's approach would burden projects with even higher development costs, making them untenable.
The new fees need to be considered in the context of a variety of other land-use and impact fees that already can add up to over $60,000 for a 1,800-square-foot home, said Curtis Nichols, vice president of development firm Carlile Macy.
"We're still at a very tentative stage of recovery for our industry, and it's still difficult for new projects to be deemed feasible enough to proceed beyond the conceptual stage," Nichols said.
Others noted that the higher development costs would simply be passed on to the homeowners, making it even harder for young families to live here.
Community Development Director Chuck Regalia said he would work with the industry officials on a task force if the council wanted him to, but he didn't see the point. He noted that he had met with officials on numerous occasions over several months.
"Mostly, I'm unsure of what we would be spending our time on," Regalia said.
In the final analysis, council members seemed more swayed by the need to make the city's budget -#8212; not developers' budgets -#8212; pencil out.
"We're in tough times, and our city needs to get the most community benefit bang for our general fund buck," Combs said.
You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @citybeater.
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