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Merced council adopts updated development fees to recover city costs, rejects broad exemptions
Summary
After a lengthy public hearing, the Merced City Council unanimously adopted updates to building, planning and engineering fees to recover more of the city's costs of service (estimated $1.15M annual uplift), with targeted subsidies retained for small residential-related reviews and appeals.
The Merced City Council adopted an updated schedule of user and regulatory fees for development services April 6, approving a fee package the city said would recover a greater share of permit processing, plan review and inspection costs.
City Engineer Daryl Jordan and consultant Terry Madson presented a comprehensive fee study recommending changes intended to align charges with the city’s cost of service. Madson told council that the proposed changes would produce roughly $1.15 million in additional annual cost recovery, and that most proposed fees target full cost recovery for regulation‑driven services.
Council members pressed staff on methodology and potential effects on small infill projects. Resident Robert Delina warned that higher fees can act as a disincentive: “any fee on any activity acts as a disincentive,” he said, urging the council to protect infill incentives. Staff and the consultant said the study identified a handful of lower cost‑recovery categories (small sign reviews, minor residential planning reviews, appeals and driveway encroachments) deliberately left subsidized to avoid discouraging small, by‑right projects.
On appeals, Madson explained the proposed fees are below full cost recovery so council isn’t discouraging legitimate appeals; he noted many agencies refund appeal fees when the appellant prevails. Council and staff also discussed regional comparisons; staff said Merced’s proposed fees sit in a mid‑range relative to peers and that service levels and turnaround time matter to developers as much as fees.
Council Member Harris moved adoption of Resolution 2026‑10 updating the fee schedule, Council Member Smith seconded, and the motion passed unanimously. The fees are set to take effect July 1, 2026. Staff said implementation will include public notice, updates to the city website, and follow‑up reporting on service level expectations tied to increased cost recovery.
Why it matters: Increasing cost recovery can free general fund dollars for other services, but council members said they want to ensure the planning and building departments use additional revenue to improve turnaround times and staff capacity rather than simply offset general fund needs.
