Home Archives February 2009 Dropoff in building fees squeezes city budgets

Dropoff in building fees squeezes city budgets

| Print |  Email
Sunday, February 01, 2009

piggy.jpgDropoff in building fees squeezes city budgets


STATEWIDE Oregon cities big and small are grappling with a steep decline in all revenues, but none more alarming than dwindling building fees. When lending shriveled up over a year ago the building bubble burst, binding the hands of developers and stopping many new proposals dead in their tracks. The corresponding loss of fees is creating widening budget gaps for municipal governments already struggling to provide services.

The city of Ashland saw revenues through permit fees decrease from $4.1 million in fiscal year 2004-2005 to $2.1 million in fiscal year 2007-2008. Another 50% drop is expected for the current fiscal year, according to Ashland Permit Center manager Adam Hanks. As a result, one building inspector and two building and development department employees were laid off. What’s keeping Ashland afloat, Hanks says, is a $42 million school bond to update facilities.

In Portland, the slide arrived later. The total valuation of permits issued from July 1, 2008, through Dec. 31, 2008, dropped 26% from the year before. Portland’s building revenues had actually increased from $39.85 million in fiscal year 2006-2007 to $41.4 million in fiscal year 2007-2008, but that party ended abruptly. “We expect this year to be less than $41 million,” says Elshad Hajiyev, budget and finance section manager for Portland’s Bureau of Development Services. “It won’t even be enough to extend our expenditures.” As a result, 38 positions in the bureau have been left vacant, overtime has been eliminated and cost-saving measures are being studied.

In Baker City, permit activity is down 11% from last year, says planning director Don Chance. New housing development is slow, he says, but he’s still seeing some healthy business in remodels and additions. Baker City isn’t as fee-based as some, making it less vulnerable. And it actually runs a surplus, which it holds onto for such situations as this, says Chance.

Bend isn’t so lucky. Last year, as fee revenue trickled in slower and much less than planned, the city was forced to make budget cuts — three rounds of them to be precise. “But now we should be on track,” says Bend’s communications manager, Justin Finestone. “We cut deep early on.” A total of 44 workers were laid off in 2008, with another 55 positions left unfilled and a hiring freeze enacted.

Building fees have become increasingly vital to city governments since property taxes were limited in 1997 under Measure 50. Now that they are dwindling, municipalities are scrambling to find another cash cow to milk.   

“The long-term projections for cities are pretty bleak,” says former Hillsboro mayor Tom Hughes, past president of the League of Oregon Cities. “The amount the average city collects on the average home doesn’t pay for the costs of supplying services to that home. So we are all required to fall back on other revenues. Unfortunately, those other revenues aren’t holding up.”   

CHRIS MILLER


Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

More Articles

Shifting Ground

November/December 2014
Wednesday, October 22, 2014
BY JOE ROJAS-BURKE

Bans on genetically modified crops create uncertainty for farmers.


Read more...

The clean fuels opportunity

News
Monday, November 10, 2014
111014-dirtyfuel-thumbBY KIM MOORE | OB RESEARCH EDITOR

A market for low-carbon transportation fuels has a chance to flourish in Oregon if regulators adopt the second phase of the state’s Clean Fuels Program.


Read more...

The Diaspora

October 2014
Thursday, September 25, 2014
BY LEE VAN DER VOO

Former newspaper reporters move into brand journalism.


Read more...

Grape Expectations

October 2014
Thursday, September 25, 2014
BY HANNAH WALLACE

Well-financed outsiders from France and California are buying up vineyards and wineries in the Willamette Valley.


Read more...

Gone Girl

News
Monday, September 29, 2014
roundup-logo-thumb-14BY LINDA BAKER | OB EDITOR

Wehby disappears, Kitzhaber fails to disclose and Seattle gets bike share before Portland.


Read more...

Political Clout

November/December 2014
Wednesday, October 22, 2014
BY KIM MOORE

Businesses spend billions of dollars each year trying to influence political decision makers by piling money into campaigns.


Read more...

Shuffling the Deck

November/December 2014
Wednesday, October 22, 2014
BY JON BELL

Oregon tribes still bet on casinos.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS