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Home My WebLink AboutMemo - Mail Packet - 4/5/2022 - Memorandum From Caryn Champine And Monica Martinez Re: Transmittal Of Cumulative Costs Of Fees And Codes Report Community Development & Neighborhood Services 281 North College Avenue P.O. Box 580 Fort Collins, CO 80522.0580 970.416.2740 970.224.6134- fax fcgov.com Planning, Development & Transportation Services MEMORANDUM DATE: March 30, 2022 TO: Mayor and City Council THRU: Kelly DiMartino, Interim City Manager Kyle Stannert, Deputy City Manager FROM: Caryn Champine, Director of Planning, Development and Transportation Monica Martinez, PDT Finance Manager RE: Transmittal of Cumulative Costs of Fees and Codes Report Attached to this memo is a report prepared by City Staff on the cumulative costs of fees and code updates in recent history. The purpose of preparing this report is to respond to recent questions from Councilmembers as they consider proposed changes to fees and code requirements. Summary This included convening several departments with subject matter expertise in financial analysis, utilities services, building code services, and energy code services. This effort required bringing together three different cost frameworks to assess a complete picture of the customer experience (fees, overall construction costs, and cost of compliance). Example Projects: factors such as building size, number of units, or the land use. Therefore, the most effective method to convey total costs is to use project examples. This report provides two examples for context and comparison: a single unit dwelling and a multi-unit building. With these examples we were able to calculate an estimate of fees, the cost of compliance, and include the cost of construction. Fees: The fee analysis included in this report covers development review fees, utility connection/service fees, inspection fees, and capital expansion fees. This captures all fees incurred by a customer from pre-development to occupancy. Attachment 1 contains the full inventory of our fees going back to 2014, where applicable. In some because of changes in our fee structure over time. Overall Construction Costs: The International Code Council (ICC) provides Building Valuation Data which is what informed this analysis. The amounts provided estimate costs by square foot and by building specifics. Community Development & Neighborhood Services 281 North College Avenue P.O. Box 580 Fort Collins, CO 80522.0580 970.416.2740 970.224.6134- fax fcgov.com Planning, Development & Transportation Services Cost of Compliance: The cost of compliance analysis is specific to Building Code amendments implemented in 2015 and 2018; and includes the estimate associated with the proposed 2021/2022 amendments. We were able to apply International Code Council (ICC) research to inform this portion of the analysis. The ICC leads development of the International Building Codes, and a cost analysis is included in their research and development every code cycle. Key Findings When applying the two project examples to these three cost components, City Staff surfaced these findings: Trends: Since 2015 fees have increased less than 2% on average, during years that did not include the implementation of large fee study updates. During years that did include significant updates, the average increase across both examples was 15%. Incremental cost increases driven by Building Code updates indicate a 1-3% increase at each three-year code cycle. Meanwhile, the baseline costs of construction increased an average of 3% annually. Current State: The building code and most fees are updated on a regular schedule that aims to provide incremental increases and predictability to the development community. Certain fees implemented at the beginning of 2022 included large increases that reflect our current context such as unprecedented inflation (TCEF) and water scarcity (Water Supply Requirements). General Findings/Affordability: While City fees and incremental code updates do contribute to the growing costs of construction, they are a small portion of the costs and are increasing at a more controlled rate when compared to construction costs such as materials and labor. As referenced in the Housing Strategic Plan (specifically Greatest Challenge #5), it is also worth noting other costs such as land purchase and infrastructure are significant factors in development costs. In other words, the greatest determinates of costs are market driven and are outside the control of the City. Community Development & Neighborhood Services 281 North College Avenue P.O. Box 580 Fort Collins, CO 80522.0580 970.416.2740 970.224.6134- fax fcgov.com Planning, Development & Transportation Services Next Steps Ongoing Analysis: This report aims to establish a baseline that will be updated to reflect cost increments, as new code and fee updates are proposed and adopted. Additionally, possibilities to expand this analysis to incorporate other contextual factors will be explored. To ensure holistic evaluation, City Staff is considering ways to operationalize this evaluation to include a more complete picture of social costs, economic costs, and environmental costs for decision makers. Council Follow-Up: City Staff is available to continue this dialogue and answer any questions from Councilmembers. We are open to individual briefings or a more formal setting using a Council Regular Meeting or Work Session. Fee Changes for Examples: the tables below represent the etimated change in fees that each type of residence would have experienced froom 2014 - 2022. These amounts were calculated using the assumptions from the examples. Due to the fact that some fee updates were changes in methodology, like the Capital Expansion Fee update of 2016, the cumulative impact of updates over the past nine years varies according to project specific factors such as square footage and the proportion of Type 2014 2015 2016 2017 2018 2019 2020 2021 2022 Capital Expansion Fees 4,343$ 4,472$ 4,515$ 4,650$ 6,038$ 7,630$ 8,591$ 8,824$ 8,992$ Transportation Capital Expansion Fee 3,072$ 3,072$ 3,072$ 3,112$ 5,150$ 6,543$ 6,586$ 6,623$ 7,115$ Dev Review, Building, Infrastrucutre Fees 2,532$ 2,532$ 2,532$ 2,532$ 2,532$ 2,532$ 2,532$ 3,314$ 2,792$ Utility Fees 15,919$ 15,941$ 16,498$ 16,498$ 21,907$ 22,321$ 25,517$ 26,353$ 35,992$ Combined Fees 25,866$ 26,017$ 26,617$ 26,792$ 35,627$ 39,026$ 43,226$ 45,114$ 54,891$ Percentage Change Baseline 0.58% 2.31% 0.66% 32.98% 9.54% 10.76% 4.37% 21.67% City Charged Fees: One or Two-Unit Residence Example Type 2014 2015 2016 2017 2018 2019 2020 2021 2022 Capital Expansion Fees 358,165$ 359,990$ 364,964$ 371,749$ 459,292$ 540,765$ 591,035$ 607,493$ 621,281$ Transportation Capital Expansion Fee 107,190$ 107,190$ 107,190$ 108,583$ 125,525$ 159,479$ 160,512$ 161,403$ 173,366$ Dev Review, Building, Infrastrucutre Fees 67,695$ 67,695$ 67,695$ 67,695$ 67,695$ 67,695$ 67,695$ 67,846$ 58,850$ Utility Fees 341,829$ 342,686$ 352,549$ 352,549$ 436,428$ 443,207$ 502,044$ 520,177$ 563,907$ Combined Fees 874,879$ 877,561$ 892,398$ 900,576$ 1,088,940$ 1,211,146$ 1,321,286$ 1,356,919$ 1,417,404$ Percentage Change Baseline 0.3% 1.7% 0.9% 20.9% 11.2% 9.1% 2.7% 4.5% City Charged Fees: Multi-Unit Residence Example Water Utility Example Fee Changes: the tables below detail the fees summarized in the line labeled "Utility Fees" in the previous two tables. This detail shows the significant growth and impact of the "Water Supply Requirement" fee. Type 2014 2015 2016 2017 2018 2019 2020 2021 2022 Water Plant Investment Fee 3,472$ 3,472$ 3,558$ 3,558$ 3,558$ 3,826$ 4,084$ 4,192$ 4,393$ Water Supply Requirement 5,203$ 5,203$ 5,203$ 5,203$ 11,160$ 11,160$ 13,869$ 14,285$ 22,813$ Wastewater Plant Investment Fee 3,090$ 3,090$ 3,500$ 3,500$ 3,500$ 3,537$ 3,590$ 3,698$ 3,824$ Stormwater Plant Investment Fee 926$ 926$ 973$ 973$ 973$ 1,083$ 1,119$ 1,153$ 1,197$ Electric Capacity Fee 3,228$ 3,250$ 3,263$ 3,263$ 2,715$ 2,715$ 2,855$ 3,025$ 3,764$ Combined Fees 15,919$ 15,941$ 16,497$ 16,497$ 21,906$ 22,321$ 25,517$ 26,353$ 35,991$ Percentage Change Baseline 0.1% 3.5% 0.0% 32.8% 1.9% 14.3% 3.3% 36.6% City Charged Fees: One or Two-Unit Residence Example Type 2014 2015 2016 2017 2018 2019 2020 2021 2022 Water Plant Investment Fee 53,310$ 53,310$ 54,630$ 54,630$ 54,630$ 58,745$ 62,707$ 64,365$ 71,102$ Water Supply Requirement 91,913$ 91,913$ 91,913$ 91,913$ 197,143$ 197,143$ 245,004$ 252,354$ 194,668$ Wastewater Plant Investment Fee 53,783$ 53,783$ 60,919$ 60,919$ 60,919$ 61,563$ 62,485$ 64,365$ 154,110$ Stormwater Plant Investment Fee 17,078$ 17,078$ 17,952$ 17,952$ 17,952$ 19,972$ 20,639$ 21,257$ 22,055$ Electric Capacity Fee 125,745$ 126,602$ 127,135$ 127,135$ 105,784$ 105,784$ 111,209$ 117,836$ 121,972$ Combined Fees 341,829$ 342,686$ 352,549$ 352,549$ 436,428$ 443,207$ 502,044$ 520,177$ 563,907$ Percentage Change Baseline 0.3% 2.9% 0.0% 23.8% 1.6% 13.3% 3.6% 8.4% City Charged Fees: Multi-Unit Residence Example