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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Chris Saunders, Interim Director of Planning and Community
Development
Chris Kukulski, City Manager
SUBJECT: Department 2nd Quarter FY10 (October 1, 2009 to December 31, 2009) Budget
Update
MEETING DATE: February 8, 2010
AGENDA ITEM TYPE: Action
RECOMMENDATION: Accept the 2nd Quarter Report. Consider adjustments to
Planning Department finances, including charging City Departments for Planning
Applications, requesting Tax Increment Financing Districts assist with personnel costs for
0.5 FTE, and changing Planning Fee Schedule for increased operating costs and changes in
application type since 2008.
BACKGROUND: Because of the anticipated difficulty estimating Planning Fee revenues and
workloads (planning applications) in FY09, we committed to make quarterly decisions regarding
staffing levels and operating costs in the department.
The Planning Department is funded by a blend of general fund, dedicated planning mil levy, and
application review fees. The concluding section on page 6 describes the philosophy behind the
development of the structure of fees for processing of applications.
1. Monthly Planning Fee Revenues of $14,000 minimum. The FY10 Budget was
balanced with the assumption that application fees, not including conservation &
entryway study fees, would provide a monthly average of $14,000 in revenue. This
estimate is a continuation of the base minimum average used for the last three quarters of
FY09, and has been carried forward into FY10. This revenue stream was for the staffing
levels as they existed at that time.
Second Quarter FY10 Planning Fee Revenues were as follows, details of application
numbers and types are in Section 2.
Actual Revenues 2nd Quarter FY10
October 2009 $ 6,212.00
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November 2009 15,565.10
December 2009 10,265.00
2nd Quarter Total Fee
Revenues
$32,042.10
Average Per Month $10,680.00
The Second Quarter FY10 monthly average of $10,680 is below the $14,000 target for
average monthly revenues. For the quarter as a whole, this means that permit revenues of
$32,042 were $9,958, or 24% short of the $42,000 target.
For the first two quarters combined, Planning Revenues total $55,200. This is $28,800
below the monthly average (34% below) that the budget was based on.
Additional Revenue Sources for your consideration:
Application Fees: The Department did not collect application fees for two City projects
this quarter, and two additional projects in the previous quarter. These fees amounted to
$5,626 and could be charged to the projects in question, to assist the department in
meeting its financial goals. In addition waiving fees, Departmental staff was responsible
for completing and recording the final plat for the Story Mansion minor subdivision. An
itemized accounting of these savings can be provided upon request.
Departmental Project Amount of Fee Waiver
Q2: Story Mansion Subdivision Final
Plat
$ 650.00
2nd Quarter FY10 total fee
waivers
$650.00
Q1: Lower Yards Final Site Plan &
Prelim Plat
$2,956.00
Q1: Story Mansion Pre-Application
& Prelim Plat
$1,595.00
Q1: Downtown Parking COA $425.00
1st Quarter FY10 fee waivers $4,976.00
TOTAL FY10 fee waivers $5,626.00
Tax Increment Finance Districts: The Department’s contribution to staffing the North
Seventh and Northeast Urban Renewal District Board now amounts to approximately ½
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FTE. Examples of the work being done include the preparation of professional service
agreements for Depot Park as approved by the Commission on February 1st. This
relatively new, and certainly expanding, role is not funding by any district dollars. We
could consider asking the urban renewal district, through their TIF funds, to help pay for
this level of staffing through the Department of Planning and Community Development.
For the remaining half of the fiscal year, the cost would be approximately $25,000.
3. Budgeted Expenditures: The Department’s FY10 budget is approved at an average of
$64,814 in expenditures per month ($777,768 for the year). Actual spending through
December 2009 averaged $64,907 / month, or almost exactly on- budget. This includes
costs associated with Director Epple's retirement.
Given the established recruiting and selection process, we anticipate that a new Planning
Director would be on staff by mid-May, at the earliest. The net vacancy savings from the
Director position are expected to total $36,250.
2. Applications Received: The following table lists the planning applications that were
received each month of this quarter. In the 2nd Quarter of FY10, the department averaged
over 25 project applications / month (plus a total of 89 sign permit applications). In the
previous three months (1st Quarter FY10), the department averaged 36 project
applications per month (plus a total of 91 sign permit applications).
The type of applications submitted for review varies by month. As demonstrated in the
annual report provided this week, there has been a shift in the application load away from
large subdivisions to smaller scale projects. Individual home related items such as a
Certificate of Appropriateness for a remodel or addition now make up a larger percentage
of the overall project review workload.
When the City Commission adopted the current fee structure , there was a deliberate
choice to collect a greater percentage of the cost of review from large commercial and
subdivision projects and a lesser percentage of cost from small scale projects. This
represented a commitment of greater general fund support for the ‘mom and pop’ projects
that did not generate revenue to their owners. As the work load has shifted by project
type this has manifested with lower application fee revenues to a greater degree than is
explained solely by a change in the number of applications submitted.
Application Type Oct -
09
Nov - 09 Dec - 09 2nd QUARTER TOTAL
Pre-Application 0
Prelim. Plat 0
Final Plat 1 1
Sub. Exempt. 1 2 3
Flood Plain 0
BOA 0
Admin. Appeals 0
Master Plan Amend 0
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UDO Amend 1 1
CUP 1 2 3
ZMA 1 1
Conservation Update 0
Entryway Update 0
PUD 0
PUD Final 0
Re-use 2 2
Annexation 1 1
Prel. Site Plan 1 1
Master Site Plan 0
Final Site Plan 1 2 1 4
Mods to FSP 3 1 3 7
Informal 2 1 3
STUP 0
COA 11 18 7 36
Improvements Agree 5 2 7
Conversions 1 2 2 5
Variance
Code Enforcement 1 1
Monthly Totals 20 35 21 76
Signs 37 19 33 89
Past and Proposed Responses to Revenue Changes
A. Reduce FTE’s: Reductions in force occurred early in FY09. Reduced positions were 1
Planner Tech, 0.5 Admin Assistant, and 1 Workforce Housing Coordinator These
positions are not proposed to be filled in FY10. Positions for a Planner III and an
additional .5 FTE administrative position, both of which became vacant in FY09, are not
planned to be filled in FY10. This results in a 4 FTE reduction in overall staffing levels
since FY09.
The Planning Director position became vacant through retirement at the conclusion of the
quarter. No vacancy savings were realized in the 2nd quarter of the fiscal year but are
expected in the 3rd quarter and 4th quarter.
B. Increase Planning fee levels based on audit findings, to more accurately cover the
costs associated with processing applications. A revised fee schedule went into effect
on August 28, 2008. They had a positive effect on revenues throughout FY09 and
continue to do so in FY10. However, the fee structure does not reflect nearly two years of
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wage and operational cost increases. Therefore, cash revenues have not been consistent
with the amount of support intended to be provided by application fees.
In addition, the fees charged for the processing of sign permits are presently solely based
on building code fee tables, not the Department's adopted fee schedule. Most signs are
inexpensive compared to other construction and the present fee structure does not recover
reasonable costs for the time and effort involved in processing the applications. When
many large projects were being submitted with associated revenues this was not as
readily apparent as it is now. Recent changes to procedures adopted by the Commission
last year will generate some additional revenue from COAs for signs in Entryway
Corridors. The amount of additional revenue is unknown at this time.
It is suggested that the City Commission give direction for Staff to bring back a revised
fee resolution to adjust for changes in actual costs for application processing and to
incorporate a more proportional cost recovery for processing sign applications. This
would preserve the balance between general fund support and application revenues
executed by earlier Commission action.
Workload for next quarter: While the national credit and finance problems are expected to
continue to have a negative effect on subdivision and building activity in the City, the overall
financial climate appears to be stabilizing. Staff is receiving an increased volume of inquiries
about the development process. Several significant reuses of vacant commercial spaces, such as
REI, are positive indicators. Several subdividers have approached the Planning Department to
discuss applications they wish to submit. Overall, much more careful due diligence appears to be
the practice so staff is spending more time consulting with potential applicants before any items
are submitted.
A number of items will affect workloads in the department in the remainder of the fiscal year.
The retirement of the Planning Director has temporarily reduced staffing by one FTE.
Duties are being covered by the Assistant Planning Director. Adjustment of work has
been necessary.
Construction on the new American Legion Building has commenced. Staff anticipates
more time spent in FY10 reviewing and processing re-development applications with
property owners affected by the blast. A formal submittal for the reconstruction of the
Rockin R has been received.
Preparation and processing of text amendments as directed by the City Commission
will be undertaken in this quarter.
The Planning Department is now fully engaged in staffing of two Tax Increment
Finance Boards. Upcoming construction projects and program preparation are
significant work elements.
Census 2010 – the Planning Department has been designated to be the City’s primary
liaison with the Census Bureau. Public outreach and other support actions will require
material staffing effort.
A large number of major subdivisions in various stages of preliminary and final plat
approval continue to require a great deal of staff time to process requests for
extensions, improvements agreements, re-phasing, re-platting, and, in some cases,
working out details of financial guarantees taken over by banks. These subdivisions
include: Baxter Meadows; Meadow Creek; Legends II; Flanders Creek; West Winds;
Laurel Glen; and the Village Downtown, to name a few. Staff will especially be
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dealing with the issue of remaining improvements to be completed in many of these
subdivisions throughout FY10. A text amendment in coordination with the City
Attorney’s office is a precursor to addressing some of the outstanding items.
Spring is typically a busy season for applications for Certificates of Appropriateness
as home owners prepare for summer remodeling projects.
Staff is presently working with two interns to create a digital summary of the historic
structures inventory. This project will position the City to more efficiently pursue an
update to the inventory as well as making the information more available to the
public. A grant for funding assistance in the inventory update is being prepared and
will be submitted in February.
Long Range planning activities continue to occupy a significant amount of
Department time and resources in FY10. The Bozeman Community Plan, Bozeman
Economic Development Plan and the Downtown Neighborhood Improvement Plan
were recently completed. Implementation such as UDO text amendments, grants, and
other actions will require considerable staff time and resources.
Fee schedule philosophy and background: These concepts were originally documented and
accepted by the City Commission in March 2006. They were first implemented in Commission
Resolution 3904 and have guided fee updates since that initial adoption. These are applicable to
determining fees for processing applications.
The City hired the accounting firm of Anderson/ZurMuehlen to review the time commitment for
processing various forms of applications. The work was done in 2008. This study formed the
basis for the most recent fee schedule update, also completed in 2008.
1. Recover general operational costs attributable to development review for
Planning Dept.
2. Recognize that costs affect behavior and the City wishes to encourage some
behaviors and discourage others.
A. Desired behaviors are: Annexation, Property improvements and removal
of non-conformities, compliance with generally applicable standards, and timely
completion of work.
B. Undesired behaviors are: Violations of standards, seeking of special
exceptions without compelling reason, and appeals of administrative decisions.
3. Relieve general taxpayer from costs originated by specific requests.
4. Comply with legal requirements affecting fee amounts.
5. Allocate costs throughout the development process so that expenses are
distributed to multiple points and reflect, to a degree, the ability of the applicant to
recover the costs through value added.
6. Special projects such as neighborhood plans, city-wide long range planning,
regulatory development, and code enforcement are to be considered independently
and mostly funded by the general tax base.
FISCAL EFFECTS: With FY10 permit fee revenues at 66% of budget through the end of the
2nd quarter, and total expenditures on-budget, the Department is facing financial challenges.
The anticipated net vacancy savings from the Planning Director position of $36,250 could off-set
the decline in 1st & 2nd quarter revenues of $28,800. But, further declines in the third or fourth
quarter need to be addressed with reduced expenditures or increase revenue from fees or other
sources.
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Revenue could be derived from charging City Department’s for their specific applications,
raising $5,626 from the Parking Fund, the Story Mansion Construction Fund, and the Lower
Yards Construction Fund.
We could ask the Urban Renewal Boards to assist with funding the Planning Department staff
assistance they receive, and could consider making adjustments to the current fee schedule.
(As an FYI, revenues for the January 2010 (first month of 3rd Quarter) were approximately $500
above minimum budgeted levels, owing in large part to the F&H Building project.)
ALTERNATIVES: As suggested by the City Commission.
Report Compiled: February 3, 2010