Santa Rosa staff revisit development fee changes after community concerns, propose targeted fixes

Santa Rosa's Planning and Economic Development Department and the city attorney told the City Council on Feb. 4 that they are reassessing the development-related cost-of-service fee changes adopted in March 2024 after six months of real-world application and community feedback.

Planning Director Gabe Osborne said the study adopted in 2024 (prepared by MGT Consulting) moved many plan-review and inspection fees closer to full cost recovery and added surcharges for technology and advanced planning. Osborne said the move toward cost recovery was intended to close the gap between permitting expenditures and fee revenue; the department's historical citywide cost-recovery rate for development services was about 44% and the director said a healthier range is closer to 60—75%, with him noting personally that he felt comfortable near 80%.

City Attorney Theresa Stricker told the council that the city has historically not included city-attorney review time in permit fees; as legal reviews for large discretionary projects grow more complex, she recommended the council allow staff to explore options that shift attorney-review costs to the developer for projects that would require substantial legal work. "When there is a complex development project that will require substantial legal review," Stricker said, "we be given the discretion to then, put that cost on the developer."

Why it matters: Changes to permit fees affect homeowners who do minor repairs, small businesses that rely on high-volume trade permits, and major development accounting for large fees. Council members said they want to avoid unpermitted work ("avoidance") while balancing the city's budget needs and housing production goals.

Community feedback and staff response: Staff reported concentrated concerns about increased fees for landmark alteration permits in preservation districts, tree-removal permits and certain minor discretionary uses. Osborne said staff have already taken steps on short-term rental renewals (streamlining the renewal process and reducing the fee for operators with no code history) and recommended targeted follow-ups: hold a particular driveway/encroachment rate under review; create a lower, predictable fee for condominium conversions; examine staff-hour assumptions for lot-line adjustments and certificates of compliance; and consider fee reductions or subsidies for homeowner and small-business-initiated projects to avoid unpermitted work.

Operational tweaks and surcharges: Staff noted the fee schedule added a technology surcharge (~5.69%) and an advanced-planning surcharge (~12.65%) applied to many permits to cover subscription software and planning initiatives. Osborne proposed examining caps on those surcharges for very large projects so the fee does not scale disproportionately for multihousing developments that do not impose additional technology burdens.

Legal-cost recovery option: Stricker and staff recommended exploring a model used by some regional cities where developers pay for extensive city-attorney review time on complex discretionary projects, similar to how consultant costs are passed through to developers. She cited regional examples where cities recover legal review costs for complex projects.

Council direction and next steps: Council members pressed staff for better outreach and asked staff to return with narrower, targeted adjustments after more community feedback. Osborne reiterated the value of the six-month reassessment window to detect unanticipated impacts and said staff would return in short order with modifications, including potential homeowner-oriented fee tiers and process improvements that preserve city standards while reducing avoidance. No formal action was taken; the item was treated as a study session and subsequent modifications will return to council.