Late bills irk permit applicants

When the city moved from flat fees to hourly charges for some planning department work, it told permit applicants they would benefit by knowing what the planners were doing.

It hasn’t worked out as planned.

Bills have arrived late – as much as 18 months late. Errors have been frequent – on recipient says he has been billed for work on projects that are not his. And the bills have been so vague that there is no accountability at all.

“They don’t give you any detail,” said developer Doug Nelson, who said he was billed over $100,000 last year. “When you ask, they give you the name of the planner and the project name.

“I think the planners have to account for 40 hours each week, so they estimate.”

The amounts involved are significant. city Finance Director Ralph Eells said total hourly-fee bills for 2001 amounted to some $700,000.

The theory behind hourly charges, Administrator Lynn Nordby said, was to reward those who submitted easy-to-process applications by charging them less than those who submitted complex plans.

But developer Kelly Samson questions whether it has worked that way in practice.

“On one project, I was charged for more hours to review a storm drainage plan than my engineer spent drawing it,” he said.

And Nelson questions the fairness of charging applicants for staff work done to resolve challenges by neighbors.

“I paid over $44,000 for work done on Woodland Village because of the citizen protests,” he said.

Their unhappiness over the charges has been compounded by the lateness of the bills.

“At the first of last year, I was getting bills for work that was done 15 to 18 months earlier,” Nelson said. “They started charging for work after the application was done.”

Nordby agreed that late bills have been a problem.

“When the council said it wanted to do hourly billings, there was no system is place,” he said. “People had never kept billing records, and didn’t know how to do it.”

It took a year for the first bills to go out, and the lag between the work and the bill is now down to three months. The problem, officials say, is the lack of automation.

“It’s a manual system,” Nordby said. “The delay is in the time it takes to do the hand-work to take the time from the billing records and compile the bills.”

Eells agreed with much of the criticism.

“We got our bills out for the first quarter at the end of May,” he said. “The last batch of bills for last year went out in late April, so it’s improving.”

Eells blamed two problems – incomplete or erroneous time records, and software devised for other purposes that didn’t handle billing well.

Those problems are not related to the difficulties that have prompted the state auditor’s office to sharply criticize the city, Eells said.

The bills have caused a number of complaints, he said, most of them involving the amounts. Some applicants have questioned why they should have to pay charges on a project that was finished before they got the bills, but so far no one has flatly refused to pay.

A simple solution, many agreed, might be simply to go back to a flat rate, paid in advance. The issue is currently being considered by an ad-hoc citizen committee charged with examining the building and planning fee structure.

While that group has held some informational meetings, its real work has been put on hold pending the report from a city consultant, who has been asked to examine what city expenses are properly chargeable to permit applicants.

“Until we knew how much things actually cost, it didn’t make much sense for us to go forward,” committee member Liz Murray said.

The report should be submitted within the next two weeks.

The problem with a flat fee, Eells said, is the equity argument that prompted institution of the hourly-fee system.

“If the flat fee is low, then taxpayers are bearing a larger share of the burden of those costs,” he said. “And if the fee is high enough to recover the proportion of costs our lawmakers have determined is appropriate, then some applicants would be overcharged by a significant amount. We haven’t come up with a structure yet to avoid those problems, and I don’t know of any other city that has either.”

Nelson said that a flat rate would generate less ill-will than the present system.

“I’m really upset about it,” he said. “It takes them over a year to get their bills out. And then to top it off, they raise the rates $20 per hour.”

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