Many, but not all, development fees to climb

Last year, Rodney Gonzales, director of Austin’s Development Services Department, asked Council to fund an additional 50 employees to increase his department’s efficiency in dealing with a multitude of permits, reviews and inspections. Council killed the plan by postponing it.

However, this year Gonzales proposed adding 50 new full-time positions as part of a $63.6 million operating budget. Last week when the budget was done, he had that and more, with 52 new positions to fill and an operating budget of $63.8 million.

Department spokesperson Sylvia Arzola explained that the department had proposed adding two employees to help with the residential permitting. Council decided to add two more people to help with permits for small businesses, she said.

After failing to get the money last year, development services staff did a cost of service study and arrived at the conclusion that numerous fees should be increased. But they also found that other fees should be lowered. All the new fees will go into effect on October 1.

For example, someone who wants to do an interior remodel and garage conversion of less than 1000 square feet will pay $841 on October 1 or after as opposed to the current fee of $1,055, a savings of $214. The price of a permit for a swimming pool will drop from $1,425 to just $717.

On the other hand, a regular 1000-square-foot addition will cost about $188 more starting on October 1, jumping from the current price of $1568 to $1,756 and the price of a deck will jump from $885 to $1,261, according to data that Gonzales presented to Council on August 29.

The price of permitting for a small retail or office space remodel is currently $1,059 and that will jump to $1,285 on October 1 with a one-business-day quick turnaround, according to Gonzales.

Gonzales explained to Council how he would use the funding to make the department an enterprise department, as opposed to being part of the city’s general fund.

Once it is self-supporting, Gonzales explained, the department can establish a fund balance reserve to mitigate against future downturns in the economy. In addition, he said the department will be able to separate the accounting of revenues and expenses. Both of these actions were part of recommendations from the Zucker report.

Between 2013 and 2017, the city has seen a very large increase in the number of building inspections and residential applications. There has been an increase in the size and complexity of commercial building applications even though the number of such applications has gone down, Gonzales said.

Although the apartment occupancy rate was down slightly in 2017 as compared to 2016, that rate is forecasted to increase to 92.7 percent in 2019 and 95 percent in 2022. Austin will need an additional 114,076 apartments by 2030 to meet demand, Gonzales said. By comparison, he said, San Antonio’s metro area is forecasted to need 53,890 apartments by 2030. In response to questions, Gonzales said although San Antonio is growing, it is simply not growing as fast as Austin. Austin’s population is forecasted to grow from 2 to 3 percent per year for the next several years. Gonzales said during the 12 months ending in June, the Austin metro area added 37,000 jobs and that growth is expected to continue.

In addition to residential and commercial projects, the Development Services Department must permit and inspect all the projects approved in the Austin Independent School District’ s 2017 bond program, as well as the city’s 2016 mobility bond program and any bonds that are approved in November. In addition, he mentioned a number of large commercial projects requiring numerous inspections.

Gonzales has met with representatives of the development industry, including members of the Real Estate Council of Austin, the Austin Board of Realtors, and the Austin Homebuilders Association. The department gets generally high marks from people like Geoffrey Tahuahua of RECA.

Speaking to Council during a budget session on August 30, Tahuahua explained that Gonzales had worked with the development community to come up with 64 recommendations for improvements in the department, ranging from residential plan review to improvements to the computer system.

“Overall,” he said, “we believe that DSD continues to make great strides and effort in improving the development process, and we feel that these recommendations will bring more efficiencies for everyone. That is why we stand in support of Rodney’s entire request for additional staff.”

However, Tahuahua added that while DSD was making great strides in improving the process, “we cannot say the same for the other 12 departments that have review or inspection authority in the development process. … When all is said and done, the development review process includes a total of 13 city departments with more than 400 employees. How can anything move forward efficiently when there are this many eyes and hands on it?”

Although Development Services has made significant progress in efficiency, Tahuahua said, it really doesn’t do the developers any good if the project is stuck for three months because Austin Energy can’t do a poll relocation, for example. Tahuahua said that he receives complaints from his members weekly, if not daily, about Austin Energy, Austin Water and the Austin Transportation Department.

He said he hopes that the departments can look at how Development Services has improved its processes and emulate them.

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Photo by National Institute for Occupational Safety and Health (NIOSH) from USA (LeBlanc Construction Photos 2012) [Public domain], via Wikimedia Commons.

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