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Staff propose 20-year update to Bellingham's land-use fees; recommend CPI indexing, hybrid cost-recovery, and technology fee
Summary
Planning staff told the Budget & Finance Committee that many land-use application fees have not been updated since 2007 and proposed adjusting fees for inflation, adopting annual CPI indexing, using a hybrid flat-fee-plus-cost-recovery model for complex projects, and introducing a technology fee to fund permitting system upgrades.
Planning staff presented a broad proposal to update Bellingham's land-use application fee schedule, noting most fees have not been substantially changed since adoption in 2007 and that staff found the city charges below peer jurisdictions on many common application types.
Blake Lyon, Planning Director, joined by Public Works Assistant Director of Engineering Michael Wilson and Development Review Manager Kurt Nabefeld, walked the committee through fee categories (application, permit, impact fees and system development charges), comparative benchmarking with similar-size Washington cities, and the development services fund outlook. Lyon said certain fees appear roughly in step with inflation while others remain hundreds of percent below peer averages, and he recommended three primary actions: adjust current land-use fees to capture unaddressed inflation, adopt annual CPI indexing to prevent future drift, and adopt a hybrid cost-recovery approach that keeps routine applications on predictable flat fees while billing complex, protracted projects against deposits and staff time. Lyon also proposed a small technology fee (a percentage of application fees) earmarked for permitting-system improvements, electronic plan review and improved public reporting.
Staff flagged a practical funding dynamic: a set of permits are "hold ready to issue" because applicants have not picked them up, representing roughly 258 permits and about $6.0 million in unrecognized revenue—an important factor in development-services fund planning. Councilmembers pressed for examples of how the hybrid model would apply to contrasting projects and whether fee increases should be phased in. Several members said they preferred maximizing flat fees where possible so developers can predict costs, while reserving cost-recovery for the largest and most complex proposals. Staff said they will return with a resolution/ordinance that specifies which application types would be cost-recovery eligible, publishes billable rates by staff level, and offers side-by-side examples comparing typical flat-fee projects and complex projects subject to cost recovery.
Committee members expressed general support for moving forward with the analysis and requested additional detail on phasing, the expected effects on smaller developers, and concrete examples of technology-fee-funded efficiencies. Staff agreed to return with a clear ordinance and fee schedule for council consideration.
