Business leaders say they understand why the City of Tucson needed a recently enacted increase in fees for building permits and related reviews.
But they expect to see results for their money, as the city continues to work to improve its permitting system and shorten review times that stretched into months in the wake of the COVID-19 pandemic.
The cityโs fees for development reviews โ including building permits and development plan approvals โ generally went up 3.5% effective July 1 and will rise another 3.5% next fiscal year, under a plan approved June 18 by the City Council.
On top of the fee increases, the city will update valuation tables used to assess some permit fees to meet international standards in phases over three years, resulting in an additional increase of some 35% by 2027.
Planning and Development Services Department Director Kristina Swallow said the fee increases are needed to help boost staff and improve service to permittees, as recommended in a 2022 cost-of-service report commissioned by the city.
โThe goal is to work with mayor and council and make sure that we have staffing increases to align with revenue increases, and also that, as weโre increasing revenue that we continue to deliver increased performance and better service to our customers in the coming years,โ Swallow said.
Based on a study of peer cities, Tucsonโs permitting fees are somewhat lower than average but will be on the high end by the time all of the increases take effect in fiscal year 2027, she said.
Key stakeholders that have worked closely with the city on the permitting issues, the Tucson Metro Chamber of Commerce and the Southern Arizona Home Builders Association, said they support the higher fees so long as they result in better service.
Seeking service
Chamber President and CEO Michael Guymon said the city kept stakeholders well informed about its intent to raise fees as part of an effort to improve service.
โItโs been a while since theyโve updated the fees and thatโs not necessarily an excuse to do it,โ Guymon said. โWe understand the rationale, but it needs to come with increased services. Because while things have improved, there still needs to be some additional improvements made especially from a from a turnaround perspective. So the fees should have a direct correlation to increased services and shorter turnaround times.โ
In a letter to the council ahead of its fee vote, the Chamber asked that the council consider holding off on the second year of the fee increase if the increase in the first year โdoes not produce meaningful increases in staffing and efficiency.โ
SAHBA, whose membership includes some 40 homebuilders big and small, made a similar request and urged continued close consultation with stakeholders.
โWeโre optimistic that itโs going to continue to get better with the additional staff,โ said SAHBA President David Godlewski. โBut we certainly want to make sure that theyโre actively working with organizations like ours, and all of their customer segments to make sure that theyโre doing things or taking steps that are going to have like long term lasting (effects).โ
During the June 18 meeting, when the fees were approved on a 6-0 vote, City Council Member Nikki Lee expressed concern that the increases could worsen local housing affordability, since developers will be forced to pass those costs on to homebuyers.
Lee, Council Member Karen Ulich and Mayor Regina Romero urged continued review to assess the impact of the higher fees on service.
SAHBAโs Godlewski said the issue of housing affordability canโt be ignored.
โWe take that seriously, but there is a recognition that the easier it is, and the faster that you can go through the process, then those efficiencies also result in money savings, not having to spend as much to go through the process,โ he said. โWe want to make sure that the dollars are spent directly in ways that are going to result in processing things a lot faster because the time value of money is real.
Digging out
Overwhelmed by record-high construction activity and severe staffing challenges in the wake of the COVID-19 pandemic, the city, as recently as 2022, was taking weeks to approve some simple permits and 90 days or more to review some building permits and plans.
In October 2022, the city launched its new online permitting systems, Tucson Development Center Online, and by mid-2023, the city said it was clearing most simple permits within 20 days.
After getting some bugs out, city administrators have been working on adding online tools and refining its various permitting processes.
In September 2023, the department introduced permit-review โlanes,โ adjusting target review times according to the scale of the project and streamlining the turnaround time for smaller projects โ as little as two days for simple permits and up to 30 days for complex projects.
The city also added an online Permits Dashboard, where visitors can see current turnaround times for different kinds of permits in process and the percentage of time the city met its goals โ recently, around 90%.
The city also recently added the TDC Online Navigator, a panel on the planning home page that helps applicants narrow down the permits they need with a series of buttons by topic to get them to the right department.
Staffing remains a major challenge for the city, but the new revenue will help, said Swallow, who took the planning helm in May 2023.
Based on a recommendation in the 2022 cost study by the consulting firm BerryDunn, the city council authorized the planning department to hire 14 people in the last fiscal year ended June 30, she said.
But the council didnโt appropriate funding for the new hires, so the fee increases were then needed to provide revenue for them, she said.
As it was, the BerryDunn report found that the services Planning and Development Services provided cost an estimated $8.8 million while estimated permitting revenues topped $11 million.
But the consultant noted that expenses were lower because of the departmentโs large number of staff vacancies, and indirect costs of other city departments were not included.
Upping valuations
The changes to the valuation are needed to catch up with tables used by the International Code Council after the city stopped updating its tables to match in 2020 due to the pandemic, Swallow said.
โThe increase in valuation, weโre hoping that will allow us to hire further team members beyond those (14 authorized), to continue to lean in and continue to deliver better and more improvements moving forward,โ she said, adding that the council has already approved an additional five staffers this year.
As of last week, the Planning and Development had 79 full-time equivalent employees, with 18 vacancies.
More funding wonโt allow the planning department to offer higher salaries to attract inspectors and other workers, since the agency must follow general city salary guidelines, Swallow said.
And while hiring still may be challenging, by having a bigger authorized and funded staff, the department will better be able to handle staff turnover of about 10%, she said.
The fee increases apply to anything that requires review by the Planning and Development Services Department, including staff review and building permits for new development; site review, including floodplain and grading permits; signs; historic review, special district review, rezonings and special code exceptions.
Also affected are fees for review by the cityโs Department of Transportation and Mobility, which handles city right-of-way permitting, utility, wireless and related permits; and Tucson Fire construction permit fees, including reviews of fire-alarm and automatic extinguishing systems, storage tanks, special event operational permits, and fire code appeals.
Development impact fees โ one-time fees assessed to cover infrastructure serving new developments โ were not included in the increase.
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