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Builders and developers urge council to pause steep Development Services fee increases
Summary
Homebuilders, engineers and advocates told council proposed Development Services fee hikes would sharply raise costs for ADUs and small infill projects, citing examples of hundreds-percent increases on review fees and a DSD enterprise fund deficit; staff said many fees were adjusted after cost-of-service analysis and proposed pilots to speed reviews.
Hundreds of builders, engineers and housing advocates told the Austin City Council during public comment on July 29 that proposed Development Services (DSD) fee increases in the FY2026 budget risk pricing small projects and accessory dwelling units out of the market.
Bridal Wallace, a home builder and Austin Infill Coalition board member, pointed to examples in the budget backup where erosion hazard zone review jumped from $332 to $813 (a 144% increase) and tree preplan review rose dramatically; she and others asked council to delay implementation until staff explain what has changed and provide a total cost estimate for typical single-family and small-multiplex builds. Cody Carr, who builds ADUs, estimated an all-in ADU cost of about $75,000 and said DSD fee changes and other infrastructure requirements push small projects toward infeasibility.
DSD interim director Keith Marrs told council the department conducted outreach to a broad range of stakeholders after the City Manager's budget release and that the fee package reflects a cost-of-service model: roughly 60% of fees would increase and 40% would decrease. Marrs said DSD reduced expenses and rightsized staffing to lower costs (reducing positions and reallocating staff to other departments) and plans an expedited site-plan pilot for housing projects to shorten average site-plan times from 18 months to 12-14 months with a pilot target of six months for eligible projects.
Council and industry speakers also questioned the enterprise-fund model for DSD. Builders urged pausing some increases, capping certain fees, or reviewing pathways that would limit the impact on small developers and homeowners. Budget staff told the dais that DSD ran a $21 million operating deficit in FY24 and an estimated $10.6 million deficit in FY25, a combined $31.7 million draw on reserves that leaves no estimated reserves at the end of FY25.
Council members asked staff for apples-to-apples fee comparisons (pre/post proposals) for common project types (single-family, 1-3 unit infill, and 5-16 unit site-plan light projects) and for peer-city comparisons with Texas jurisdictions. Marrs said the infill ordinance and process changes helped reduce some fees (for example, 5-16 unit site-plan costs declined from roughly $20,700 to $15,600 after policy changes), but council members pressed for more detail on the total cost impacts to homeowners.
The council did not vote on fee changes during the session; staff said amendments are due August 4 as part of the budget schedule and committed to providing detailed comparisons and a recent look-back showing which projects and apparatus would be affected by the timing of fee changes.
