Construction industry balks;  'gut-wrenching period of laying off staff'

SANTA ROSA – The Sonoma County Board of Supervisors on Tuesday is set to take a second look at a proposal to increase real estate development, engineering and construction fees that could raise an estimated $1.5 million more for the Permit & Resource Management Department, or PRMD, and forestall more staff layoffs.

A second hearing is set for 10:30 a.m. at the board's Tuesday meeting to review more specific information being compiled on what PRMD services would be cut if the board opts for a fee freeze or reduction. Construction industry concerns about the impact of the increases prompted a 2-2 vote on the proposal last week. Supervisor Paul Kelley was absent.

The industry doesn't need more costs, considering that more than one-third of the construction work force in the county is unemployed, per state figures, with even more "underemployed," according to Craig Lawson, president of Pinnacle Homes and part of a local trade group called the Construction Coalition.

"We've gone through a gut-wrenching period of laying off staff who have been with us for years," he said. "It's the toughest thing for companies to do to stay alive. We don't see the same decisions being made in the public sector."

Construction-related companies have had to cope with their workload with major reductions in staff, Mr. Lawson noted.

PRMD Director Pete Parkinson said permit activity in the unincorporated areas of the county has decreased only 30 percent from the high point in 2007, compared with decreases of half to almost three-quarters in Santa Rosa and Petaluma, respectively.

A number of local jurisdictions also have been significantly reducing planning and building departments. Petaluma last year significantly pruned its planning department, and the County of Napa recently approved the merging of its planning and building functions with its economic development team.

Yet from mid-2007, PRMD revenue from permit activity dropped 36 percent to $4.2 million, and support from the county General Fund fell more than 40 percent, or by $2 million.

"The important thing to understand is that these fee increases are not related to a drop in revenue," Mr. Parkinson said.

Rather, it's about being able to process the current number of applications, he said. PRMD now is about 25 percent smaller from the peak at 139 positions. But the staff size would be cut by 15.5 full-time-equivalent positions in the new fiscal year starting in July. Three of the proposed positions to cut are vacant and not budgeted but have been reserved on paper for any sudden uptick in permits.

Two-thirds of PRMD’s recommended fees – for all building permits and most well and septic permits – would increase by a 1.4 percent inflation index, and hourly billable staff hours would also increase by that amount. However, engineering fees would increase 30 percent on average, project review fees 23 percent, and those major projects would be moved to a billable-cost basis.

What has some construction industry representatives upset are the hourly billing rates used in calculating the proposed fees for aspects of significant projects, including some that would be billed at cost. For example, clerical time is $79 an hour now, including benefits, and would be $80 in the new budget, while county counsel involvement is $205 an hour now and would be $208.

"I don't think there is a construction company out there that wouldn't love to bill clerical at $80 an hour," said John Bly, executive vice president of the Engineering Contractors Association of Northern California, another member of the Construction Coalition.

Taken together, the proposed increases would add $1,350, or 9 percent, to current fees for a 2,000-square-foot house on a septic system and nearly $900, or 9 percent, to those for such a home connected to a sewer, according to PRMD estimates. A sample 5,000-cubic-yard grading project would have a 23 percent, or $468, increase.

PRMD also is proposing new fees for resale inspections for code violations, plan check and inspection related to the new green building ordinance, review of alternative methods and materials such as septic systems, accessibility review on commercial projects, solar panel system plan check and inspection, traffic mitigation fee calculation, plan check under the new water-saving landscaping ordinance, review of greywater systems, annual operating permits for sewage systems and review of complex consultant reports.

Along with the proposed department fee increases are a number of suggested remedies:

* Project managers will follow permit applications to keep processing timeframes on track and to be a single point of contact for applicants.

* Starting July 1, owner-builders will be able to submit online applications for water heater, roof, repair and other basic building permits. Since the online permit system started, only licensed contractors were allowed to apply that way.

* Deferral of traffic, park and affordable-housing impact fees to the time of building occupancy is being recommended for consideration during final county budget hearings this year. PRMD also is revisiting the nexus fee between commercial development and affordable housing, with a report due later this spring.

* Allow property owners to correct code violations, even their own, without penalties, similar to a program adopted recently in Mendocino County. This would expand the existing program allowed for property buyers.