Real Estate & Construction  December 3, 2010

NoCo construction fee structure under review

Small changes set to go, others under review and one dramatic turnaround are what builders can expect from construction fees in Northern Colorado cities and counties in 2011.

Greeley and Larimer County are looking at small changes to their existing construction fees, while Fort Collins and Weld County are in the preliminary stages of reviewing their fee structures. And Evans tossed its July 2009 fee incentive program out the window last summer, after the permits coming in resulted in a decrease in revenue.

Here’s what’s coming up:

Greeley

Greeley City Council is still hammering away at proposed changes in fees for storm drainage, transportation and trails projects. In November, the council decided to continue the issue to the December meeting. An increase or decrease in fees probably won’t be seen until January.

Greeley’s Development Fee Incentive Review Committee, which includes engineering professionals, bankers and economic development professionals, has been hashing out the issue since March, working from a 2007 study by Red Oak Consulting.

The fee review is part of the normal course of things, according to Bruce Biggi, economic development manager. “Every five years we come back to the topic of development fees,” he said.

The topic has been a difficult one recently. Proposed changes were turned down by the city council in 2007 and again in October because, given the economy, the council wasn’t willing to institute any fee increases.

Loveland

In Loveland, look for a change in capital expansion fees and a few small changes in impact fees. In July 2009, capital expansion fees for multifamily units, excluding the fees for streets, were lowered by 61 percent, but Loveland isn’t planning on extending the reduction beyond December.

Since the capital expansion fee reduction, “a couple of large multifamily projects and a few small ones went through,´ said Alan Krcmarik, executive fiscal advisor. At the beginning of the reduction, “there was the suggestion that many would benefit because of it, but it didn’t happen.”

Some impact fees for new construction will change in 2011, according to Jim Lees, utilities account manager. The plant investment fee for electric utilities will increase by 2.2 percent. System impact fees for water will decline 2.6 percent, while wastewater system impact fees will decline 1.5 percent.

And the cost to install an electric utility – services from the transformer to the meter box – will change from $485 to $535. The cost to install a new water tap will increase from $235 to $260.

Fort Collins

Fort Collins’ current review of development and construction fees, which could lead to increases, is a long time in coming. CD-RW drives and media were just being introduced the last time development fees and building permit fees were increased in Fort Collins in 1997. Only one other construction-related fee change has been successfully implemented in the 13 years since, in 2006, when Fort Collins instituted a transportation review fee.

A seven-member staff team is working on changes to the development and construction fee structure, but city council won’t be looking at their recommendations until the summer.

Ann Turnquist, policy and project manager, said that the city’s plan is to get back to the 80 percent cost recovery policy – recovering 80 percent of the cost of issuing permits.

“Currently, we’re recovering 50 percent,” she said. “Most of that was due to the reduced number of permits issued.”

She said that during the review process, builder and developer input is welcomed.

Larimer County

Big changes coming to Larimer County’s construction fees? Probably not.

Linda Hoffman, director of the county’s planning division said, “In a word, ‘no.’ We’re not looking at any in 2011 and we haven’t had any conversations about it. While we have concerns about the sluggish economy, we don’t have some sort of building quota.”

In 2008, Larimer County commissioners approved a 10 percent increase in building permits fees and also approved a measure to allow the county’s building chief to adjust the fees to the annual consumer price index, without having to bring the issue before commissioners. In the last two years, staff for the permit department shrank from 22 to eight due to slow demand. 

One construction-related fee, landfill charges, will increase in 2011, but how much is still a matter of debate. In November, a 5 percent increase in landfill charges was pulled off the table. Steve Gillette, director of the Larimer County solid waste department, said that a tiered pricing structure is now under consideration. Mark Glorioso, general manager for Gallegos Sanitation Inc., suggested tiered pricing in November, and commissioners are waiting for more information and possibly a new proposal.

It’s certain that landfill prices will go up sometime in 2011 because state surcharges are going up in April. How landfill users are charged, by weight with the landfill’s new scales, or cubic yards, is also under consideration.

Weld County

Weld County hasn’t made changes in its construction permit fees in over 10 years, and like Fort Collins, a review that may include recommendations is taking place. 

The need for a review is clear, according to Building Official Ken Swanson. The cost in the books for a demolition permit is $21. Swanson and Building Director Trevor Jiricek are studying potential changes, but are in the preliminary stages. Oil and gas permits aren’t included in the present review and likely will not change.

While in the last two years the permit department cut 11 staff, the department has seen an 18 percent increase in the number of permits issued, from 595 in 2009 to 700 year-to-date. Swanson said that a fee hike proposed two years ago did not take place.

At Greeley city council’s November meeting the Weld County Stimulus Committee, armed with a report from John Green, a regional economist whose quarterly Index of Economic Indicators appears in the Northern Colorado Business Report, requested development fees waivers for homes priced up to $300,000. The committee is made of individuals from the building industry.

So far, Greeley’s Development Fee Incentive Review Committee does not support development fees waivers as a viable or effective economic stimulus tool for the residential development community. Council decided to continue the matter to its December meeting as well.

Evans

Reducing permit and plan fees by half in July 2009 didn’t work out as planned, according to Sheryl Trent, community and economic development manager for the town of Evans. When a year later it was clear that this gesture of support toward businesses had turned into decreased revenues, Evans’ town council pulled the plug.

“We realized that the permits that were coming in would have come in anyway,” Trent said. “The permits coming in resulted in a decrease in revenue, damaging the general operation of city, things like police services, fire and water.”

The good news is that with the removal of the 50 percent reduction in all residential fees, “we haven’t seen a decrease in building permits,” she said.

In Evans, a few impact fees changes, all below 5 percent increases, for building permits are set for 2011.

Berthoud

While Berthoud’s open-ended incentive plan passed in February 2009 hasn’t brought in an avalanche of permit seekers, it “certainly hasn’t hurt,´ said Planner Tim Katers. Last year Berthoud counted 12 permits. Year to date, there are 11.

“On average it is $7,000 cheaper to put up a house in town,” he added.

With the incentives, builders don’t pay most of the fees until the certificate of occupancy is issued – a savings of 18.6 percent. The incentives are for both residential and commercial developers. The collateral requirement for public improvements was restructured to 25 percent of the value of improvements.

No changes are planned in Berthoud’s open-ended incentives, Katers said.

Small changes set to go, others under review and one dramatic turnaround are what builders can expect from construction fees in Northern Colorado cities and counties in 2011.

Greeley and Larimer County are looking at small changes to their existing construction fees, while Fort Collins and Weld County are in the preliminary stages of reviewing their fee structures. And Evans tossed its July 2009 fee incentive program out the window last summer, after the permits coming in resulted in a decrease in revenue.

Here’s what’s coming up:

Greeley

Greeley City Council is still hammering away at proposed changes in fees for storm…

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