Title
Consider and take action on a resolution amending the Planning and Building Department fee schedules to better align fee revenues with Development Services costs (Director of Planning)
Background:
City Council action is required to amend the City’s fee schedule. The proposed updates are intended to improve cost recovery for development-related services while maintaining competitiveness with peer cities. The Building Department fee schedule update also includes certain fees that are being removed from Chapter 22 of the Code of Ordinances and placed in the City’s fee schedule through a companion ordinance on the same agenda.
July 12, 2016 - Adoption of the last comprehensive Planning fee schedule update.
June 11, 2019 - Adoption of the last comprehensive Building Department fee schedule update.
January 23, 2024 - Building Department fees increased by approximately 5%.
March 26, 2024 - Planning fees increased by approximately 4.5%.
Project Summary:
The City is proposing updates to Planning and Building Department fees to better align revenues with the actual cost of providing development-related services. Development Services, including Planning, Building, and Engineering, are evaluated holistically, with the goal of improving the overall cost-of-service recovery ratio across all development related activities. The proposed adjustments bring League City closer in line with comparable cities without placing the City at a competitive disadvantage for development activity. The last comprehensive fee schedule update for Planning occurred in 2016, and for the Building Department in 2019, highlighting the need for a more current and comprehensive review of these fees.
The proposed fee updates reflect a targeted adjustment to better align revenues with the cost of service. Planning application fees are proposed to increase significantly, representing an update to better reflect the level of staff review and processing required. In contrast, Building Department fees are more moderately adjusted, with refinements to calculation methods and select increases to better align fees with actual inspection and review effort.
The fee structure has also been intentionally designed to place a greater share of the increase on larger-scale development activity rather than individual residents. This is accomplished by emphasizing per-lot and per-acre fee components instead of significantly increasing base application fees. As a result, projects with greater scale and impact contribute proportionally more toward the cost of service. At the same time, minor plats have been deliberately kept at a lower rate, particularly for one- and two-lot applications, to minimize impacts on individual property owners. Overall, the updates improve cost recovery across Development Services while remaining competitive with peer cities and sensitive to smaller-scale users.
As part of the review process, the proposed fee updates were presented to the Strategic Planning Advisory Committee for feedback. The comments received reflected a range of perspectives. Some feedback expressed general support for updating fees to better respond to growth and service demands, while also raising concerns regarding the magnitude and pace of the proposed increases. Concerns included the potential impact of fees that would double or triple, the extent to which the analysis demonstrates that current development service fees are not recovering costs, the anticipated connection between increased fees and improved review times or staffing capacity, and the possibility that certain proposed fees would place League City at the higher end when compared to peer cities. A phased implementation approach was suggested and supported to provide the development community time to adjust.
Additional comments noted appreciation for the proposed phased implementation, while also encouraging recognition that technology improvements should produce more cost-effective efficiencies in the development review process.
In response to stakeholder feedback, particularly concerns about the scale and immediacy of the increases, the City is proposing a tiered implementation approach. In recognition of the significance of these adjustments, staff is proposing a two-step implementation to ease the transition while still advancing toward improved cost recovery:
• Phase 1: Effective August 1, 2026, the updated Planning fees will be implemented at fifty percent (50%) of the proposed full fee rate.
• Phase 2: Effective January 1, 2027, the updated Planning fees will be implemented at the proposed full fee rate.
This phased approach is intended to give applicants and the development community advance notice and time to plan for the change, while allowing the City to begin moving Development Services toward a cost-recovery model.
Overall, the update is intended to make the City a better steward of taxpayer dollars by shifting more of the cost burden to those utilizing development services, while maintaining a balanced and competitive environment for continued growth and investment.
Attachments:
1. Proposed Resolution
2. Exhibit A - Planning Fee Update
3. Exhibit B - Building Fee Update
CONTRACT ORIGINATION:
Planning Department
FUNDING
{X} NOT APPLICABLE
STRATEGIC PLANNING
{X} Addresses Strategic Planning Critical Success Factor #2: Financially Sustainable