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SDCI proposes 18% fee increase and an AI permit‑screening purchase; staff warn construction fund will still draw down reserves
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Summary
Council central staff told the Select Budget Committee that the Seattle Department of Construction and Inspections (SDCI) proposes an approximately 18% fee increase for construction and land‑use permits expected to generate about $8.2 million in 2026, but staff said the construction and inspections fund would still see a drawdown of its core staf
Seattle Department of Construction and Inspections (SDCI) staff and council central staff identified an 18% proposed fee increase, a proposed $500,000 purchase and $250,000 annual subscription for AI‑enabled permit completeness screening, and general‑fund additions for several sustainability initiatives in the department’s 2026 proposed budget.
Keto Freeman, Council Central staff, told the Select Budget Committee that the proposed fee change—applied to construction and land‑use permits—would generate about $8.2 million in 2026 and is aimed at maintaining staffing levels and a core staffing reserve used to keep experienced permit reviewers through industry cycles. Even with the fee increase, staff said the core reserve would be drawn down in 2026 without further adjustments.
AI permitting tool: the executive has proposed a $750,000 general‑fund appropriation for a permanent, AI‑based permit application screening tool (roughly $500,000 one‑time purchase plus $250,000 annual licensing and integration). Staff noted the construction and inspections fund contains a technology/process improvement pocket that could cover the purchase, and presented council with options to (1) fund the purchase from the construction and inspections fund, (2) defer the purchase until the fund is healthier, or (3) keep the mayor’s general‑fund proposal.
Other items: staff identified general‑fund ads for a green‑hotel sustainable development standard (~$280,000) and a $100,000 conservation easement program for tree preservation. SDCI also reported that its staffing level shows a small decline in 2026 related to prior council actions that abrogated about 10 positions with short extensions.
Comparisons and permitting cost context: staff compared Seattle permit valuation fees to nearby jurisdictions and reported Seattle’s current construction valuation component sits on the low end: a typical $1 million construction valuation produced a roughly $7,000 valuation fee in Seattle, versus about $7,200 in Bellevue, $9,000 in King County and $12,000 in Tacoma (these numbers exclude impact fees, MFTE/MHA or other program charges).
Options and committee concerns: staff offered alternatives including lowering the immediate fee increase, directing quarterly reporting on permit volume and fund balance, or making no change. Councilmembers also asked about the role of a permit expediter and the risks of increasing permit fees on housing construction costs. Committee members raised broader questions about AI adoption, labor impacts and energy demand; several members noted the city’s Responsible AI work and asked for follow‑up with Seattle IT and other departments on governance and energy implications.
Ending: Staff asked council to weigh whether to authorize fee ordinance changes, to determine the funding source for the AI tool, and whether to require additional reporting on permit volumes, fund balance and staffing to inform future fee adjustments.
