Staff recommends the City Council hold a public hearing and approve the proposed fee increases for FY23 and FY24.

The Planning Division is presenting an updated fee schedule and associated resolution to the City Council for Fiscal Years 2023 and 2024. The attached resolution and exhibit reflects increases in many existing fees in an effort to cover the costs of providing services to the community. These are proposed changes to fees within the City Limits only. Any changes to fees charged by the Planning Division in the County will be subject to approval by the Yellowstone County Board of County Commissioners (BOCC). The Planning Division will likely approach the BOCC in Fiscal Year 24 as the BOCC has already approved a 3-year increase schedule of which FY23 is part of.

The Planning Division is proposing an increase in most of its fees and has proposed a new fee for short term rental licenses. 

In summary, there are a variety of ways in which we are trying to accommodate bringing costs for all applications and permits in line with services provided:

• All planning subdivision applications are proposed to increase by 3% in FY 23 and 3% in FY 24. Engineering fees are incorporated into the subdivision fees and have been increased at a different rate other than 3%.
• Zoning fees are proposed to increase based on the actual cost of service in FY 23 and will then increase by 3% in FY24. 
• Postage fees are proposed for zoning applications – 40 cents per mailing based on postcard postage.
• Sign deposits for zoning and annexation applications are no longer required.
• Some fees are now the same regardless of whether the application or permit is residential or commercial.

The Division proposes fee increases every two years to reduce the impact of larger increases on the community and to better keep up with increases in the costs of providing these services. These increases are specifically to offset increasing personnel and operating costs and reflect the true cost of review and processing applications. Collectively, the Divisions estimate about $40,000 in new revenues as a result of the proposed fee increases over the course of two fiscal years. 

The Engineering Division charges fees for services as a part of the overall fee for each application and review it conducts. The fees as presented in the resolution are reflective of an increase in the existing Engineering fee to be closer to the actual cost of providing the services.  

The proposed fee increases have been shared with the Home Builders Association. Additionally, the information was provided in an information notify me email received by the development community. Further, this hearing at the City Council Meeting was advertised two times beginning June 10, 2022.

The Planning Division continues to strive to provide the best customer and application review services in a cost-effective and timely manner. At the direction of the City Council, the Division is proposing fee increases every two years to reduce the impact of larger increases on the community and to better keep up with increases in the costs of providing these services.

The fee increase proposed by the Planning Division for FY23 and FY24 is in response to the ongoing and increasing costs to provide services to the development community and the community at large. The increase in Planning Division fees for the next two years will specifically help offset increases in personal services and operations and maintenance.  The Division is careful to focus its fee increases on the costs for specific application and permit services completed by its staff and follows several guidelines:

• Fees should only cover permit and application processing
• Staff performs other duties funded from the County-Wide Planning Levy and the Federal Transportation Planning Program
• Many staff work on fee-based permits and applications, and transportation and community planning projects that are funded through the County-Wide Planning Levy and the Federal Transportation Planning Program, and this is a factor when estimating fee increases for the Division

Not all the Division's fees increase under this proposal. Sign permit fees and exempt plat processing fees will remain the same. Sign permit fees are calculated on a square foot basis per sign size and generally cover review costs. Exempt plat fees are set by State Law at $200 and can only be changed by the Legislature.
 
The Planning Division, in considering its fee proposal for FY23 and FY24, reviewed other jurisdictions in Montana to see how fees in Billings align with fees in places like Bozeman, Missoula, Kalispell and Great Falls. While fee structures are not all the same, and exact comparisons are not always possible even with the same types of applications, Billings fees are competitive - coming in lower than some communities in zoning fees and the same, or slightly higher, in some subdivision fees. A city fee comparison will be provided as part of the presentation for this agenda item to provide a basic look at the differences.

The City Council may approve of these fee increases and adjustments, and continue to enable the Planning and Engineering Divisions to recover costs of providing these development services to the community.

If the City Council does not approve of these fee increases and adjustments, the Planning and Engineering Divisions will be forced to look at other revenue sources to recover costs of providing these development services to the community, essentially subsidizing specific development projects with funding that should be allocated to community-wide planning efforts that benefit everyone.

The proposed fees will help cover the costs to the Planning and Engineering Divisions to provide services, resulting in additional revenues for the Divisions when services are delivered to customers for certain application types. The Divisions estimate about $40,000 in new revenues in FY23 under the new fee schedule based on the collected and estimated FY22 level of zoning, subdivision, and annexation applications, and general permit and compliance review activity.