Plano staff propose phased fee increases for building, planning and engineering; council signals general support

Plano City Council members on Monday heard a detailed update on a citywide cost-recovery effort for building inspections, planning and engineering and indicated general alignment for staff to proceed toward a formal fee ordinance.

Deputy City Manager Shelley Seemer told the council the intent of the cost-recovery framework is to “recoup costs for programs and services that do charge fees” and to place each fee on a continuum from wholly tax-supported to fully fee-supported. Seemer said the city used a consulting firm, MGT, and benchmarking to develop proposed “year 1” targets that staff plans to phase in over three years, with a follow-up formal ordinance expected this November and an effective date being proposed for Jan. 1 (date to be finalized in the ordinance).

The proposal presented several department-level figures: overall cost recovery today for the three development services departments is about 58.7%; building inspections currently recovers about 84.4% of its costs, engineering about 22.8% and planning about 20.4%. Staff’s combined year-1 proposal would increase overall recovery to roughly 73.5%, with Building Inspections moving to about 88.6%, Engineering increasing toward roughly 56% (varies by fee), and Planning rising to about 46.7% under the year‑1 targets.

Why it matters: City staff said the phased approach is intended to reduce general‑fund pressure while keeping the city competitive with benchmark communities. Seemer said the program will follow a recurring review schedule; departments will return with detailed, line‑by‑line fee changes for council review in November and then an ordinance would be filed to set specifics.

Department-level examples and rationale

Celso Matta, chief building official, said building fees already approach the city’s 80% target and that proposed year‑1 adjustments are relatively modest, raising building’s recovery from about 84.4% to about 88.6%. Matta described typical fee categories (certificate of occupancy, simple trades, reinspection, after‑hours) and told council the building division had completed a full recovery study in 2020 and has updated fees subsequently.

Caleb Thornhill, director of engineering, said engineering fees are more complex to benchmark because the state’s 2023 legislative changes removed the longstanding practice of basing some inspection fees on a percentage of estimated public‑improvement cost. Thornhill said staff has proposed new square‑foot inspection rates, added an engineering plan‑review fee that the city has not previously charged, and noted that limited comparable data exists among benchmark cities for some engineering fees. He said the engineering year‑1 package would roughly double current recovery for the division and produce about a 33% increase in engineering revenue from fee changes in year 1.

Christina Day, director of planning, described the planning targets as spread across all tiers (from community benefit services to individual benefit services). Day said planning would propose several new fees where the city currently charges nothing, citing an example: a subdivision‑ordinance variance costs the city an estimated $185 to process and staff would propose a $150 fee. Day said planning’s year‑1 package would increase planning cost recovery from about 20% to about 46.7%, a projected net revenue of roughly $566,000 to the city’s budget.

Council concerns and staff responses

Several council members expressed concern about impacts on smaller developers and on residents. Council member Horn asked whether the increases were intended only to cover direct professional and material costs; Seemer replied the targets would not produce 100% recovery immediately and that the three‑year phasing is intended to retain a public‑benefit share carried by the general fund. Horn asked about differential effects on small developers; staff replied that the city’s unit costs do not vary much by project size, though some fees will be scaled (for example, per‑acre charges) to help align costs with project scale.

Council members pressed on reinspection fees. Matta said reinspection fees are intended to discourage repeated failed inspections: reinspection fees apply when an inspection fails and the contractor requests a subsequent inspection without having corrected the listed items. He said inspectors have discretion and that staff does not routinely charge reinspection fees for repeat, cooperative contractors, but that the city’s reinspection amounts had not been adjusted in many years and staff proposed increases to better match peer cities. Council members asked that higher penalties for repeated failures be considered and that a clear appeal or grievance process be available for contractors.

Council members also questioned heritage‑designation fees proposed by planning. Day said a proposed $350 fee for heritage‑resource designation would still be substantially below many benchmarks and that the designation can qualify property owners for tax benefits; she said staff is open to council direction on that figure.

Next steps and staff direction

Seemer told council the detailed fee schedule will be returned to the council on Nov. 10 for specific line‑item consideration. Staff recommended a three‑year phase‑in to reach a long‑term target (the presentation used a 40%/60%/80% phasing target example), with a full study cycle repeating every four years. Multiple council members indicated the high‑level targets and approach “seem acceptable,” giving staff direction to bring back the detailed fee ordinance in November.

Discussion vs. action: Council provided general alignment for staff to proceed; no ordinance or final fee adoption occurred at the Oct. 13 meeting. Staff will return with a formal ordinance in November and the proposed effective date discussed by staff is Jan. 1 (subject to council action).

Ending: Staff emphasized the intent to create a recurring review schedule and to use market benchmarks. Officials said the phased approach aims to reduce general‑fund subsidy of development services while remaining competitive with peer cities.