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City wants to raise permit fees, hire staff to relieve bottleneck

Monday, June 11, 2012 by Charles Boisseau

Developers, business owners and home builders would all pay sharply higher fees under a proposal City Council will consider on Thursday to lessen a backlog of building permits awaiting approval from overburdened city staff.


Along with the fee increases, staff is asking Council for the OK to spend $252,185 as soon as possible to hire 14 employees – including site plan reviewers and building inspectors – to try to catch up with a sharp increase in building activity citywide.


Behind the scenes, businesspeople have been clamoring for weeks for the city to take action to relieve the bottlenecks that have stalled projects, saying the longer waits mean higher costs and higher rents passed on to consumers. Most distressing, said many observers, are delays in permitting new multi-family residential projects because the tight rental market has dramatically pushed up rents.


Steve Beuerlein president of Burlington Ventures, said last week he submitted a site plan for a nine-unit apartment building in the Brentwood neighborhood about 120 days ago. After receiving a second round of comments from city reviewers ”we’re still waiting” for approval, Beuerlein said. He said his project includes two units deemed “affordable” under city guidelines, which supposedly would give the project an expedited review.


“Instead of 60 to 90 days (promised by the city), now we’re looking at something like 8 to 9 months” to get the project approved to start construction, Beurelein said. After the site plan is approved, the project would still need to go through the building permit approval process. “Citywide, you’re going to end up with higher rents if you don’t put more housing on the ground,” he said.


The slowdown for approval of permits has caught the attention of City Council. On May 24, Council approved a resolution asking City Manager Marc Ott to figure out what is causing bottlenecks in the permit review process and come up with solutions.


Mayor Pro Tem Sheryl Cole and her staff have been fielding calls from developers, the chamber of commerce, construction firms and architects concerned about the logjam, an aide said. Cole said she was concerned about rising rents.


“We are working hard to promote affordable housing through a predictable process,” Cole said an email.


Specifically, staff is asking Council for an emergency amendment to increase the Planning & Development Review (PDR) Department’s 2011-2012 budget by $187,091 so it can hire 11 employees, mostly building inspectors and site plan reviewers. The request would also increase the Fire Department’s budget by $65,104 to allow the hiring of three employees to conduct fire safety reviews of projects.


Greg Guernsey, director of PDR, agreed that the city has not been able to keep up with the demand for permits as new projects have flooded the system. More seem to be announced every day, such as the ambitious plans approved in recent weeks to build two mixed-use developments downtown: at the site of the decommissioned Seaholm Power Plant and on land that once was the Green Water Treatment Plant. He also cited the recent announcements for a $350 million Fairmont convention hotel downtown and Apple’s plans to greatly expand its North Austin operations and create 3,600 jobs.


Numbers tell part of the story of the permit bottleneck: Previously, 80 percent of commercial site plan reviews were completed in 21 days, which is the department’s goal. When most recently measured, just 30 percent to 35 percent of these projects were being approved in that time frame, Guernsey said.


This is because of a sharp rise in permit applications. Applications for multi-family building permits have shot up 80 percent year-to-date through April compared with the same period a year earlier, while applications for commercial projects have jumped 40 percent over the same time frame, he said. New residential and remodel projects also have risen dramatically.


A new fee schedule attached to Thursday’s Council meeting agenda shows the city wants to raise dozens of permitting fees up to 25 percent. Here is a random sampling of some of the changes: increase to $550 from $440 the cost for a review of a building, parking and other site plans; increase to $1,803 from $1,442 the fee for approval of a one-acre site plan; increase the charge for a building permit for an 8,000-square-foot building to $719 from $610.


Guernsey said 90 percent of the PDR’s fees haven’t increased since 1993.


“Things are more expensive and our fees really haven’t changed. That plays really big into it,” said Guernsey, who noted the fee increases would begin in July if approved. The city then would come back in October 2013 for another increase of up to 25 percent on various fees, he said. He said the permitting fees are designed to offset his department’s more than $21 million annual budget.


Guernsey backed the fee increase by citing a survey conducted by a consulting firm hired by the city that determined Austin’s permitting fees lagged over comparable U.S. cities and nearby Texas cities.


The February study by PFM Group found Austin charges less for building and trade fees for new construction projects than all the other 11 surveyed cities, including Round Rock, Cedar Park and San Antonio. “Austin places as the lowest amount in nearly every new construction category that was analyzed,” the consulting firm said.


Officials with Austin’s construction and design community, contacted before details of the city proposals were posted in the Council agenda on Friday, said they want to work with the city to speed up the process.


“The bottom line is that what we have now isn’t working, and we’re looking forward to working with the city on fixing the problem,” said Michael Wilt, director of government relations with the Real Estate Council of Austin.


Richard Weiss, president of the Austin chapter of the American Institute of Architects, said members of his organization support “a reasonable increase in fees to support additional revenues for the city.”


Weiss and others stressed that they can’t fault the city too much because the turnaround in the real estate market has happened suddenly as financing loosened up and more new and dormant projects entered the pipeline. “They are actively reaching out to the public and that’s always a good sign,” Weiss said.

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