Town and village community development officials will propose an alignment of their development fee schedules, a move they say would eliminate confusion and cost inequity for builders working in both communities, while potentially raising more money for the municipalities.
Town planner Darren Schibler told the trustees and selectboard on Monday night that creating parity between the two different fee schedules could ease the process on the public, with people now often showing up to the wrong office when seeking permits here.
“It may also allow us to capture a little more value for those permits for our municipal budgeting,” Schibler said.
He said development fees typically fall into three categories: administrative fees, like building permits and certificates for occupancy; fees for board or commission reviews; and impact fees assessed on new development to cover the cost of increased need for municipal services.
Currently, these fees differ greatly between the town and village, with the town calculating fees based on construction costs while the village does so based on square footage and the number of units.
For example, a building permit for a 1,800-square-foot single family house in the town costs $500, while the same house in the village only costs $200. Additionally, a 12,000-square-foot commercial building permit would cost $3,000 – more than double the village’s fee of $1,200.
Meantime, development fees in both the town and village are low in comparison to some other municipalities, with the average Chittenden County building permit for a residential home (1,800 square feet) costing $620, with a high of $1,000 in Williston and Charlotte. The same is true for commercial zoning permits, where the county’s average is $3,635 for a 12,000-square-foot building, with Westford and Underhill both charging a county-high of $6,000.
Dana Hanley, the town’s community development director, said in a memo to the boards that the current fee schedules can be read two ways: either the town and village are being “customer friendly” when it comes to economic development, or they are failing to capture important revenue streams.
The village’s fee schedule is slightly closer to the rest of the county thanks to a recent round of updates. But the town’s schedule hasn’t been updated since 2006, Schibler said.
“We’re a little behind the curve,” he said.
The second phase – examining impact fees – would be much more comprehensive. For both municipalities to implement a new impact fee protocol, which would span several different departments, staff would need to perform a study of the capital costs based on anticipated development and then determine an equitable distribution of those costs, according to Hanley’s memo.
Deputy town manager Greg Duggan said experience shows the process could take up to a year and cost tens of thousands of dollars.
Such work could be required if the two municipalities were to fully merge, though studies and fees could look different under the various governance structures up for consideration, Hanley said in her memo. That’s why planning officials recommended the boards postpone this second phase until the governance structures become clearer.
But selectboard chairwoman Elaine Haney wondered if it made sense to delay phase II until a potential merger vote occurs, given that the discussion could have a direct impact on the town and village capital budgets.
“When we go through the consolidation process and we go out to the community and the first thing everyone’s going to ask us is how much is this going to cost me,” Haney said. “If we don’t know whether we’re going to put impact fees in the village but maybe not in the town — if we don’t know that answer, it impacts the cost of capital, it impacts the cost we collect.”
The joint boards authorized staff on Monday to create a proposal that would cover the phase I fees, while officials planned to further discuss timing for the second phase.
That discussion will likely need to answer the question of whether it even makes sense to raise the fees. Trustee George Tyler noted the boards had heard a report earlier in the meeting from housing advocates that showed both the town and village are in desperate need of more affordable options, and pointed to efforts to encourage development through cutting costs for builders, such as tax stabilization agreements.
“It’s almost like we’re contradicting ourselves,” he said of raising fees.
Village community development director Robin Pierce said the village has historically opted to avoid development fees.
But he pointed to the village center’s Neighborhood Area Designation, which allows developers to avoid the Act 250 process if they include a certain number of affordable housing units, and said if builders are saving money on that end, “maybe there’s an opportunity for a municipality to collect some more money at the other end.”
Either way, Tyler said, these fees represent a relatively small dollar amount, based on data from the work to explore consolidating the planning departments several years ago. “I don’t think we’re looking at serious money here from either side,” he said.
Schibler confirmed that developers have said local fees represent “drops in the bucket” compared to what they see in financing and Act 250 costs and noted how previous impact fees have helped the town perform costly repair projects.
“We can look at impact fees as money on the developer, which gets passed on to the homeowner or the renter,” Schibler said. “But the other way to look at it is we’re trying to control our capital costs for the community and trying to do that in a responsible way, so that we’re not paying more in property taxes because we didn’t collect impact fees.”