City presents 2026 budget recap and proposed fee schedule; council debates development‑fee waivers for housing partners

Finance staff presented a high‑level recap of the proposed 2026 budget and a recommended fees schedule at the Sept. 23 study session, and council discussed staff’s draft policy to waive development fees for certain public and quasi‑public partners.

Budget highlights and reserve strategy Budget staff said the proposed 2026 budget totals about $165.7 million across all funds, with a $66.1 million General Fund. In response to softer sales tax collections in 2024, the city proposed a temporary use of fund balance to bridge revenue uncertainty while preserving service levels. Staff said the General Fund would remain within the city’s financial policy target (about 25% of operating expenses) in 2026, but warned a structural imbalance would require future adjustments if revenues did not recover.

Utility rates and fee schedule The proposed budget includes a recommended temporary 5% increase to wastewater and stormwater fees pending a full rate study scheduled for completion in late 2026; staff said those studies will inform fee proposals for the 2027 budget.

Annual fee‑schedule changes and corrections Staff recommended modest administrative updates to the fee schedule: adjusted open‑records rates (raising the second hour to $40), an increase to the police records fee to align with the open‑records change, fixes to grading permit fee tables, and inclusion of some previously omitted library copy/print fees. Community Development proposed several small fee decreases intended to encourage compliance in targeted cases.

Policy for waiving development fees Council discussed a draft policy that would waive development‑review and permitting fees for certain government partners and for projects that create deed‑restricted affordable housing. Staff noted this practice had been used in the past for some partners (for example, the city has previously waived fees related to the Montview Flats project) and that the largest recurring request has been from South Metro Housing (identified in discussion as a long‑standing housing partner). Staff asked for council direction about which partners should be eligible. Councilmembers generally supported waivers for government and taxing partners such as the Downtown Development Authority, South Suburban Parks and South Metro Fire, with more caution about extending waivers to a broad nonprofit category and a request to review the total fee exposure for large projects.

Next steps Staff will incorporate council feedback and bring the budget ordinance, fee schedule and a refined fee‑waiver policy back for council consideration in October. The utility rate study results are expected in late 2026 and will inform rates effective in 2027.

Quotes from the meeting Kevin Orton, Budget Manager: “This is a planned and temporary use of reserves; it gives us a bridge to keep services steady until those revenues are clear.”

Laurie (Finance Director): “We recommend a 5% increase for wastewater and stormwater in the 2026 budget while we complete a full rate study for implementation in 2027.”

Ending Council gave staff direction to refine the fee waiver policy and asked staff to report total waived‑fee estimates for large affordable‑housing projects before adopting a standing waiver approach. The budget ordinance and master fee schedule will return for formal readings in October.