Home Back Issues February 2009 Dropoff in building fees squeezes city budgets

Dropoff in building fees squeezes city budgets

| Print |  Email
Archives - February 2009
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

Gone Fishing

October 2014
Thursday, September 25, 2014
BY LORI TOBIAS

Business has been good to Laura Anderson, leading some to suggest she must be awfully lucky to find such success in a business notorious for failure. But luck’s had little to do with it.


Read more...

Molecular Movies

September 2014
Wednesday, August 27, 2014
BY LINDA BAKER

Dr. Chong Fang isn’t God. But the assistant professor of chemistry at Oregon State University is getting closer to figuring out how he put everything together. 


Read more...

Powerlist: Law Firms

October 2014
Thursday, September 25, 2014
BY KIM MOORE

A conversation with leading partners at law firms in Portland and eastern Oregon, followed by October's powerlist.


Read more...

Private liberal arts education: superior outcomes, competitive price

Contributed Blogs
Tuesday, August 26, 2014
0826 thumb collegemoneyBY DEBRA RINGOLD | OP-ED CONTRIBUTOR

Why has six years become an acceptable investment in public undergraduate education that over-promises and underperforms?


Read more...

Constant Contact

October 2014
Thursday, September 25, 2014
BY AMY MILSHTEIN

To prevent burnout, companies are banning email and after-hours communications. But is the 24-hour workday here to stay?


Read more...

Buyer's Remorse

September 2014
Tuesday, August 26, 2014

Parents and students paying for college today are like homeowners who bought a house just before the housing bubble burst.


Read more...

What I'm Reading

October 2014
Thursday, September 25, 2014

Nick Herinckx, CEO of Obility, and Jake Weatherly, CEO of SheerID, share what they've been reading.


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