Sponsored by Oregon Business

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

Party Like It’s 1999

Contributed Blogs
Wednesday, February 25, 2015
pets-com-sock-puppetBY JASON NORRIS, CFA | OB GUEST BLOGGER

Pets.com, GeoCities, eToys, and WorldCom … blasts-from-the-past that all signify the late 1990s Internet bubble. Yet we believe the dynamics of the market, specifically in technology stocks, are much different today than it was during the late 1990s.


Read more...

Cache and Curry

March 2015
Monday, February 23, 2015
BY JACOB PALMER | OB DIGITAL NEWS EDITOR

Power Lunch at Swagat in Hillsboro.


Read more...

Downtime with the president of NAI Norris, Beggs & Simpson

March 2015
Monday, February 23, 2015
BY JESSICA RIDGWAY | OB CONTRIBUTOR

Live, Work, Play: Catching up with Chris Johnson.


Read more...

4 highlights of the MLS labor deal

The Latest
Wednesday, March 04, 2015
timbersthumbBY JACOB PALMER | OB DIGITAL NEWS EDITOR

On Wednesday night, a couple days ahead of the 2015 season kickoff, Major League Soccer and the Players Union reached an agreement.


Read more...

Opening soon: 3 of the coolest new breweries in Oregon

The Latest
Thursday, March 19, 2015
brewthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

There are 278 companies licensed to operate as brewery, according to the Oregon Liquor Control Commission. Here are three new beer-making hubs slated to open soon.


Read more...

10 Twitter highlights from #OR100Best

The Latest
Friday, February 27, 2015
100bestBY OB STAFF

Oregon Business held its  22nd annual 100 Best Companies to Work For in Oregon celebration Thursday night in the Oregon Convention Center.


Read more...

Car Talk

April 2015
Thursday, March 26, 2015
BY LINDA BAKER

Everyone knows cell phones and driving are a lethal combination. The risk is especially high for teenage drivers, whose delusions of immortality pose such a threat to us all. Enforcement alas, remains feeble; more promising are pedagogical approaches aimed at getting people to focus on the road, not their devices.


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