Audit reveals big trouble with PDR fees

A city audit of the Planning and Development Review Department has found that the Office of the City Auditor “cannot provide assurance that development-related fees are charged accurately and consistently.”

In one part of the audit, 40 percent of the fee transactions tracked were incorrect. The audit evaluated 30 transactions, and found that 12 were not assessed in accordance with the fee schedule — resulting in individual undercharges of as much as $28,800 and overcharges as high as $2,400 in the sample.

The audit also took a look at two specific fee types and reviewed all of the transactions during Fiscal Year 2014. That audit found that the majority were charged incorrectly, which cost the city about $100,000.

Specifically, the audit determined that staff applied the Landscape Inspection Fee correctly only 1 percent of the time — or for two transactions — during this year. It said that 74 percent of the time, the 2013 fee was applied, and the remaining incorrect fees were due to some other error.

The stats for the Phase Inspection Fee were a bit better, with staff correctly assessing the fee 41 percent of the time. During this fiscal year, the 2013 fee was applied in error 42 percent of the time.

The audit evaluated whether the Planning and Development Review Department assesses its fees in accordance with the fee schedule established in 2012. Department Director Greg Guernsey explained that some of the trouble came out of the fact that, before 2012, department fees hadn’t changed for about 19 years.

“The fees were part of our applications, so they were easily applied,” said Guernsey, who explained at the most recent Audit and Finance Committee meeting that in 2012 a phased change to the fee schedule had begun, and fees had been “in flux” since then.

Additionally, the audit found problems with Tree Mitigation and Fair Notice fees. From the report:

“PDRD staff charged customers $200 per caliper inch (or $75 for certified affordable developments). While these amounts are included in the City’s environmental criteria manual, they differ from the amount of $75 per caliper inch which is included in the FY2014 Council-approved fee schedule. Also, we noted that during our scope period PDRD staff charged customers a Fair Notice fee ($200), which is paid by the applicant to establish vested rights for a new project. However, this fee was not included in the FY 2014 Council- approved fee schedule.”

The audit states that, based on conversations about the mistakes with Planning and Development Review, “the correct information for these two fees was inadvertently left out of the fee schedule.”

A letter from Guernsey concurred with the findings of the audit and outlined a long list of things he planned to implement in order to address the problem. Those steps include automating the fee calculation, limiting the number and type of employees who can alter fee amounts, updating information in the AMANDA system so that it is accurate and providing more training on fees for staff.