City staff propose one-time planning fee recalibration after audit finds underpriced permits

Colin Stevens, the City of Bend’s community development director, and Roger Straud Jr., a senior management analyst, told BDAB on June 4 that an in-house fee study found planning fees lag current workloads and costs and that a targeted one-time fee recalibration is needed to restore fund solvency.

The analysis reviewed the division’s highest-volume permits and found that roughly 70% of permit volume generated only 25–30% of revenues. Staff said six of the top ten high-volume planning permits are underpriced and that those six alone created fiscal-year-to-date deficits of about $300,000–$400,000. Staff proposed a one-time, targeted fee adjustment for fiscal year 2026 on July 1 in the range of roughly 8%–14% (8% is the minimum needed to cover personnel and expenditure increases; 14% is a worst-case to correct underpricing). Staff said they expect to land near a 10% one-time increase and move to an annual single increase tied to cost escalation thereafter.

Staff laid out permit-timeline metrics used to manage workloads: a managerial goal of 35 days for first residential permit review (current year average about 36 days), a 45-day target for first commercial engineering review (being met), and a 60-day goal for Type 2 planning reviews (met for the last 12 months). Stevens said the building and private-development engineering funds are in reasonable shape; planning had been on track to run into a structural deficit but recent moderation in revenue and redirected staffing improved the short-term outlook.

Staff described a historical policy shift that contributed to planning’s instability. They said a 2014 Bend City Council ordinance created general-fund support for some planning services (pre-application meetings, code updates, front-counter services), and that a 2019 decision to remove that general-fund support left planning to draw down reserves. The staff presentation said planning has operated with shortfalls since that 2019 change and has burned through roughly 10 months of reserves in about four years.

To stabilize funding, staff proposed a policy or ordinance that would commit the general fund to subsidize the planning fund if planning reserves fall below a six-month threshold; conversely, staff proposed returning operating surpluses to the general fund when planning reserves exceed eight months. Staff said the fee study and a proposed fee schedule will go to City Council on June 4, and they plan to complete the full internal review by May 26 for council consideration.

Why it matters: Planning fees support most of the Community Development Department’s enterprise funds. Staff said targeted, data-driven fee adjustments could reduce the multi-year risk of deficits while preserving services such as pre-application meetings and counter support that the council has previously directed to be subsidized.

Board members asked for clarity on which permits were underpriced, whether inefficiencies accounted for extra workload, and how much of the shortfall is structural vs. temporary. Staff said the current work is preliminary and that their in-house process will allow yearly rebalancing and better alignment of staffing and fees. No formal board vote was taken on fees during the meeting; staff will return to council with a proposed schedule.