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SHOCK: Island County rejects another fee hike

Vandergrift Construction’s Hank Vandergrift and framer Nathanael Kirkpatrick, subcontractors for Oak Harbor-based Cascade Custom Homes and Design, work on a North Whidbey home. Many in the building industry are breathing a sigh of relief this week after a proposal to raise the price of county permit fees was rejected.  - Justin Burnett/Whidbey News-Times
Vandergrift Construction’s Hank Vandergrift and framer Nathanael Kirkpatrick, subcontractors for Oak Harbor-based Cascade Custom Homes and Design, work on a North Whidbey home. Many in the building industry are breathing a sigh of relief this week after a proposal to raise the price of county permit fees was rejected.
— image credit: Justin Burnett/Whidbey News-Times

In a surprise move, the Island County Commissioners rejected a proposal Monday to increase development fees for the third time in less than two years.

Following a Dec. 27 public hearing in Coupeville, the Island County Board of Commissioners shot down by unanimous vote the recommendation of planning officials to increase the amount the department of Planning and Community Development charges for land use and building permits.

Representatives from the building industry protested the proposal with a strong and unified voice but many admitted after the meeting that they expected their concerns to fall on deaf ears.

“I was surprised,” said Jon Roberts, of Oak Harbor-based Cascade Custom Homes and Design. “I didn’t think that was the answer we’d get.”

“I pretty much expected them to go forward with the proposal,” echoed Ted Clifton, of Coupeville-based Clifton View Homes.

Island County Commissioner elect Kelly Emerson, who is also an electrician, attended the hearing and expressed similar surprise.

“I’m stunned,” Emerson said.

While the decision is akin to “kicking the can,” as it may only defer county budget problems until later, Emerson said it was the right decision to make and applauded the commissioners’ for sparing the building industry from additional financial obstacles.

The proposal would have increased what the county charges for land-use fees. Planning components of the existing fee schedule would have gone up 3 percent and public works elements by 2 percent. Some special permits, such as those concerning critical areas, were slated for a 25 percent hike.

Also proposed was increasing the cost of building permits. They were set to go up by a flat rate of 3 percent.

Planning and Community Development Director Bob Pederson said two previous fee changes in 2009 were the department’s attempt to meet the cost of reviewing and issuing permits. They were also meant to address inflation and to buy permit tracking software that would increase efficiency.

Many in the development industry, from representatives of building associations to private contractors, appeared at the numerous public hearings held in 2009 to protest the increases.

This latest round of fee schedule hikes was proposed largely for the same reason. While single family and commercial development did increase slightly in 2010, the planning department is still not recovering 100 percent of its costs for permit review and issuance, Pederson said.

Unlike most county departments, the planning department’s budget does not rely solely on the general fund. Rather, the bulk of its budget comes from permit revenue, which makes its bottom line sensitive to the overall health of growth and development.

The building industry has been hit particularly hard by the recession. The number of permits, for example, has fallen from 2,529 issued in 2006 to 1,180 issued in 2010. That equates to a drop in revenue from $2.69 million to $1.28 million this year. And things do not look like they are set to improve by next year.

“We’re anticipating a flat year in 2011,” Pederson said.

Even with the 2009 fee increases, the department needs another hike to cover the gap, he said. However, for varying reasons the commissioners were unwilling to support another round of hikes.

Apparently swayed by yet another roomful of concerned builders, Island County Commissioner John Dean said he agreed that the fee hikes may further hamper the recovery of a wallowing development industry. He supported waiting until the county has more information and knows for sure whether the fee increases are justified.

Dean’s political reality also affected his decision. A commissioner’s job is to “look out for Island County” and not private industry, he said. But because he won’t be here to deal with the financial repercussions of the decision, Dean said he was more willing to side with builders on the issue.

“If I was going to have to stay here next year, I’d probably vote the other way,” said Dean, who lost to Emerson and leaves office in January.

Island County Commissioner Helen Price Johnston voiced different reasons but also supported waiting until next year to increase fees. She said she was willing to “hold the line” for now but that she fully intends to revisit the issue after the permit tracking system is launched and produces more in-depth data.

Commissioner Angie Homola appeared to support the proposal. She said builders in Island County have long enjoyed perks, such as no building impact fees and generally lower rates, and that the proposed increases are needed now to keep the planning department solvent. She also questioned whether the rejection of fee increases fits with the county’s overall objectives.

“Is our goal to try and go out and build as many houses as possible when we have 48 months of houses sitting on the market?” Homola asked.

The proposed fee increases are too small to truly have an impact on the building industry and making a decision based on how the public may perceive the hikes is not fiscally responsible, she said.

Upon Homola’s request, Island County Budget Director Elaine Marlow did confirm that rejecting the fee increases could have a financial impact, from supplanting the planning department’s budget with general fund money to a layoff. Homola also asked Pederson to address the impact but he said only that, “We’ll do the best we can.”

Homola, who worked as an architect before entering politics, also said she would rather have a smaller incremental fee now than be faced with a sudden and larger hike in a year or two.

“We’re talking about somewhere around $75 a house,” Homola said. “It’s not going to make or break the house; it’s perceptions were making decisions on.”

Despite her concerns, Homola voted with Dean and Price Johnson to reject the fee proposals.

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