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Legislative History Regulating Fees...03/2003
Poll Taxes on Citizen Involvement
User Fees Versus Mission Independence
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Legislative History Regulating Fees...12/2006
For the Record, or Not
Land Use Compatibility....

 

Perils of An Applicant-Driven User Fee Funded Planning Office

Perils of An Applicant
by 
Land Use Committee
Hugo Neighborhood Association & Historical Society
&
Goal One Coalition
 
November 28, 2006
 
Introduction.  The long term financial health of the Josephine County Planning Department is a great concern of the Josephine County Board of County Commissioners (BCC). 
 
Communities can decide whether the cost for servicing permits is charged directly to the permit applicant through user fees, or shared among all residents through taxes, or some other mix.  Land use user fees for servicing permits are different than impact fees or system development charges.  Land use user fees pay for the administrative servicing of applicants applying for land use permits.
 
The BCC  raised user fees for the services provided by the Planning Department three times since 2004.  It violated the Josephine County Charter each time by establishing user fees through a process which bypassed the required approval of the public (Section 29.5 Charter Amendment: Fees).
 
July 26, 2006                 (Order No. 2006-125)
June 1, 2005             (Resolution No. 2005-041)
June 30, 2004                 (Resolution No. 2004-045)
 
First and foremost, we strongly request adequate funding from the BCC for the Planning Department out of the general fund.  The Planning Department performs critical land use service missions that are important to the strength of our county’s economy and quality of life which, for reasons we will provide, should be independent of funding sources.
 
1. Administration,
2. Current planning (servicing land use application permits)
3. Advance planning, and
4. Enforcement.
 
Applicable Fee Laws:  
 
ORS 215.416(1) When required or authorized by the ordinances, rules and regulations of a county, an owner of land may apply in writing to such persons as the governing body designates, for a permit, in the manner prescribed by the governing body. The governing body shall establish fees charged for processing permits at an amount no more than the actual or average cost of providing that service. [Emphasis added]
 
ORS 215.422(1)(c)  The governing body may prescribe, by ordinance or regulation, fees to defray the costs incurred in acting upon an appeal from a hearings officer, planning commission or other designated person. The amount of the fee shall be reasonable and shall be no more than the average cost of such appeals or the actual cost of the appeal, excluding the cost of preparation of a written transcript. The governing body may establish a fee for the preparation of a written transcript. The fee shall be reasonable and shall not exceed the actual cost of preparing the transcript up to $500. In lieu of a transcript prepared by the governing body and the fee therefor[e], the governing body shall allow any party to an appeal proceeding held on the record to prepare a transcript of relevant portions of the proceedings conducted at a lower level at the party’s own expense. If an appellant prevails at a hearing or on appeal, the transcript fee shall be refunded. [Emphasis added]
 
Current Planning by Planning Department:Processing of development requests through the different applications requirements.  May involve preparing a staff report, presenting it at a public hearing, preparing findings, processing appeals, administering flood hazard and water quality requirements, and any request for a land development or division.   Planning Department web page:  http://www.co.josephine.or.us/SectionIndex.asp?SectionID=127.
 
Advanced Planning by Planning Office:  Conduct the Periodic Review required by the State of Oregon. Maintain and update the Comprehensive Plan including the Rural Land Development Code, urban land use and land division ordinances, the goals and policies document, and the database to comply with all state and federal laws and rules.” Other special projects requested by the BCC. Planning Department  web page:  http://www.co.josephine.or.us/SectionIndex.asp?SectionID=127.
 
For the following seven reasons we believe that land use user fees for “current planning” permits should not be used to fund the Planning Department’s current planning function, but rather that the department’s funding should be out of general appropriations for all four of the Planning Department’s service functions.
 
1.    User Fees Approved By Voters
2.    User Fees Are Unstable Funding Source
3.    User Fees versus State Mandated Planning
4.    User Fees versus Permissive Appeal Fees
5.    User Fees Are Dedicated To User Services
6.    User Fees and Planning Customers
7.    User Fees versus Corruption and Favoritism
 
1.  User Fees Approved By Voters.  The BCC should follow state law ORS 215.416(1) through the Josephine County Charter, “Section 29.5 Charter Amendment: Fees” as ORS 215.416(1) does not require a certain minimum fee structure.  ORS 215.416(1) requires establishing fees charged for processing permits at an amount no more than the actual or average cost of providing that service.  Through a vote citizens could have retained the fee structure in place in FY 2002 - 2003 and been in compliance with ORS 215.416(1).  They could also have voted to increase it to the maximum (i.e., actual or average cost of providing that service), or established a fee structure some place in between.
 
“Section 29.5 CHARTER AMENDMENT: FEES. Voter approval shall be required before any use fee, license fee, or any other fee may be established by the county. In no way shall this act interfere with any existing fee or license programs nor with any policy or procedures related thereto nor shall it interfere with judicial mandate or state or national law. (Definitions: FEE -- A charge fixed by law for the services of public officers or for the use of a privilege or of property under control or ownership of the county. LICENSE -- A permit or warrant issued by the county or agents thereof empowering the grantee to do some act including those made unlawful by ordinance, statute or order including that authorizing or requiring such license.) [Amended November, 1986]”
 
The BCC violated the Josephine County Charter by establishing use fees through processes which bypassed the approval of the public in establishing these fees.
 
2.  User Fees Are Unstable Funding Source.  Historically, the BCC had determined that the county needed a county planning system and had contributed to maintaining that system for the benefits of all citizens.  Today the BCC appears to support user fees to cover revenue shortfalls based, in part, on the myth that user fees would provide stable and predictable funding.
 
Funding through land use user application fees does not create a stable level of funding because funding levels would rise and fall with the number of land use applications.   If the market declines and/or interest rates go up, the number of land use applications would decline in the future, and the Planning Department would face inadequate funding, i.e., Planning Department would have adequate staff without enough work and not enough budget to support salaries.  Conversely, if the market were up and interest rates were low, we would probably find a large increase in applications, i.e., there would not be enough staff to perform adequate services for the unplanned workload.  A change to user fees should not be undertaken unless a marketing study and business plan are prepared to address the stable funding issue.
 
We believe user fees will be a "financial disaster" for Josephine County.   The reason is that when revenue from user fees decreases for any reason (typically, a soft economy), the county will have to make up the shortfall.  The result will be an increase in operating expenses at a time when the county would be least able to afford it.  Do we adopt an unstable business model that links planning services to the health of the economy, where we alternate between ruthless cost-cutting that eliminates capable, experienced planning personnel, and frantic hiring and training of fresh-faced newcomers to cope with another brief period of sunny skies for the housing industry?
 
3.  User Fees versus State Mandated Planning.  In instances where State or other regulations limit the level of fees charged for county planning services, user fees will not apply.  The level of user fee cost recovery should consider the community-wide versus special service nature of the service provided.  The use of general-purpose revenues is appropriate for community-wide services.  There is also the idea of the service recipient versus the service driver.  For example, it could be argued that a land use applicant is not the beneficiary of the county’s current planning service efforts; the community is the primary beneficiary.
 
Land use planning should be conducted by and for the people of Oregon. Citizens should have ample access to be involved in land use decision-making and planning processes, which should be conducted in a fully transparent manner.  Oregon Statewide Goal One - Citizen Involvement (CI), the backbone of Oregon’s statewide planning goals, is part of the “Oregon System” in which citizens should have a say in the governance of their state and their local communities.   Citizen involvement in land use planning is more important than ever, which is exemplified by its being given top priority by our state, and labeled as such - Goal One.  We need to get back to the basics:  land use planning is for the citizens of Oregon, not just permit applicants or local governments.  If Goal One fails, the entire system fails.
 
The present BCC policy is for the Planning Department  to ultimately be 100 % self-supporting through applicant-driven user fees.   However, the applicant-driven land use user fees can not be regarded as "user fees" that fund all the services provided by the Planning Office.  Many of the Planning Office’s services have no relationship whatsoever to the resources devoted to servicing a particular land use application (i.e,. administration, advance planning, and enforcement).  By the very nature of current planning services being restricted to the “No More than the Actual or Average Cost of Providing That Service”, user fees would exacerbate an already critical problem of almost no funding for advance planning and enforcement services.
 
By Oregon law (ORS 215.416(1); ORS 215.422(1)(c)) user fees are restricted to “No More than the Actual or Average Cost of Providing That Service.”  Restricted user fees could not fund advance planning and enforcement services and, therefore, the county would be violating its state mandate under ORS 197 and ORS 215.  Even more to the point, long-range planning services and enforcement are functions clearly intended to serve the broader county community.
 
4.  Use Fees versus Permissive Appeal Fees.   The BCC raised land use appeal fees three times since FY 2003 - 2004 from a long-time standard of $250 to a high of $1,550.  
 
July 26, 2006                 (Order No. 2006-125)
June 1, 2005                  (Resolution No. 2005-041)
June 30, 2004                 (Resolution No. 2004-045)
 
This was a 520% percent increase in land use appeal fees in three years ($1,550-$250/$250 = 5.2).
 
Fiscal Year                   Appeal Fees                   Annual Percent
                                    Without A Hearing          Increase
 
FY 2002 - 2003           $250                                    -
FY 2003 - 2004           $250                                     0%
FY 2004 - 2005           $750                                 200%
FY 2005 - 2006           $1,250                                 67%
FY 2006 - 2007           $1,550                                 24%
 
By Oregon law (ORS 215.416(1); ORS 215.422(1)(c)) user fees are restricted to “No More than the Actual or Average Cost of Providing That Service.”
 
The July 26, 2006 Order No. 2006-125 justified the 24 percent increase over the proceeding FY with the following conclusory statement:
 
(2) The cost of the proposed fees is calculated to cover the actual or average actual cost of providing the services and administration of the programs directly related to the proposed fees.
 
The June 1, 2005 Resolution No. 2005-041 justified the 67 percent increase over the proceeding FY year with the following conclusory statement:
 
4) The cost of the proposed fees shall be calculated to cover the cost of providing the products, services and administration of any program directly related to such fees.
 
The June 30, 2004 Resolution No. 2004-045 justified the 200 percent increase over the proceeding FY year with the following conclusory statements:
 
WHEREAS, the County is mandated by Oregon Revised Statute 215.416(1), to adopt fees for the processing of permits up to the actual or average cost of providing such services by the Josephine County Planning Office: and
 
WHEREAS, the amounts shown on the attached schedule of fees represent charges at or below the actual or average cost for the processing of various permit activities and services; now therefore,
 
It is interesting that the 2006 Order No. 2006-125 stated “The cost of the proposed fees is calculated . . .” rather than the cost “was” calculated to cover the actual or average cost.  The 2005 Resolution No. 2005-041 was truthful with the statement “The cost of the proposed fees shall be calculated . . .” in admitting that there was no analysis supporting the proposed fees, but that they “shall be” calculated.  The 2004 Resolution No. 2004-045 made the conclusory statement that the fees represented charges at or below the actual or average cost without any supporting analysis.
 
This issue addresses fees to defray local government land use appeal costs (ORS 215.422(1)(c) versus fees for processing land use application permits (ORS 215.416(1)).   The Oregon Legislature recognized the difference between user fees for permit applicants with a personal and/or economic interest in the outcome and an engaged public with a sense of civic commitment, shared beliefs that value public ends, and a sense of stewardship for each other and the places citizens call home.  The engaged public has a commitment to a greater common good - a visionary belief that values public ends and civic responsibility.
 
The BCC’s focus on making the Planning Department independent of being “subsidized” from general revenues is on ORS 215.416(1), while ignoring ORS 215.422(1)(c).   The BCC’s assumption appears to be that State law requires establishing user fees and it has the authority to establish them independently of the people’s will.
 
“The governing body shall establish fees charged for processing permits at an amount no more than the actual or average cost of providing that service.” [Emphasis added].”
 
The BCC  is accurate in quoting ORS 215.416(1).  However, the emphasis should not be on establishing fees, but the limit on the amount of fees.
 
“The governing body shall establish fees charged for processing permits at an amount no more than the actual or average cost of providing that service.” [Emphasis added].
 
The BCC does not acknowledge ORS 215.422(1)(c) where the permissive “may” is used when a local government can consider defraying fees for local appeals.
 
“The governing body may prescribe, by ordinance or regulation, fees to defray the costs incurred in acting upon an appeal from a hearings officer, planning commission or other designated person. The amount of the fee shall be reasonable and shall be no more than the average cost of such appeals or the actual cost of the appeal, excluding the cost of preparation of a written transcript.” [Emphasis added]
 
For example, through a vote (Section 29.5 of Josephine County Charter Amendment: Fees) citizens can permissively retain the long-term appeal fee structure that was in place in FY 2002 - 2003 and be in compliance with ORS 215.416(1) and ORS 215.422(1)(c).   The voters could have eliminated local appeal fees or increased them to the maximum (i.e., actual or average cost of providing that service), or established some defraying fee amount some place in between the maximum and some lower minimum.
 
We recommend very low cost recovery levels for appeal fees because there is no intended relationship between the amount paid, even at an amount no more than the actual or average cost of providing that service, and the larger benefit received to the community from an engaged and watchful citizenry. 
 
5.  User Fees Are Dedicated To User Services.  One definition of user fees is from the United States government (Budget of the United States Government Fiscal Year 2001, Analytical Perspectives, includes a definition of "user fee" (page 93)).  This U.S. definition is very close to Oregon law (ORS 215.416(1); ORS 215.422(1)(c)) on the amount of user fees being restricted to “No More than the Actual or Average Cost of Providing That Service.”
 
“The term "user fee" as defined here is fees, charges and assessments levied on a class directly benefitting from, or subject to, regulation by a government program or activity, and to be utilized solely to support the program or activity.  In addition, the payers of the fee must be limited to those benefitting from, or subject to regulation by, the general public or a broad segment of the public. The user fee must be authorized for use only to fund the specified programs or activities for which it is charged, including directly associated agency functions, not for unrelated programs or activities and not for the broad purposes of the government or an agency. (emphasis added).”
 
User fees dedicated to the user through the county’s current planning function are required to be no more than the actual or average cost of providing that service.  A change to user fees should not be undertaken until some effort has been made to develop a real assessment study designed to address the legal issue of actual or average costs. 
 
Fee surveys of other adjacent counties does not satisfy the law, nor are they reliable as there are many factors that affect how and why other communities have set their fees at “their” levels.  For example, many communities have established their own policies that some services are a benefit to the entire community rather than to special interests:  public safety emergency response services such as police patrol services and fire suppression; maintaining and developing public facilities on a uniform, community-wide basis such as streets, parks, and general-purpose buildings; and providing social service programs, economic development activities, and planning services because they are clearly intended to serve the broader community.  Where other counties have made these policies their associated services have very low cost recovery goals.
 
An explicit county policy of having user fees cover the cost of applicant-driven services could also include most of the scheduled appeal fees covered within the application fee schedule.  The approach to appeal fees within this overall concept would be to consider the local process - including local appeals - as a package and include all but a low recovery appeal fee in the cost of the initial application fee assessed on the applicant.  This approach would recognized the difference between user fees for permit applicants with a personal and/or economic interest in the outcome and an engaged public with a sense of civic commitment, shared beliefs that value public ends, and a sense of stewardship for each other and the places citizens call home.  The contingency appeal fee portion of the land use application fee would be returned to the applicant if there was no appeal.  An extra benefit of this approach would be more thorough and complete land use applications that effectively address the planning standards and criteria.   These well designed land use applications would have fewer public concerns and, therefore, fewer appeals from neighbors.
 
6.  User Fees and Planning Customers.  Funding the Planning Department  through user fees can create perverse incentives.  It is widely recognized that for the “years” when the market is up, and land use applications are much higher than planned for, the Planning Department would have more work than was planned for and should turn away some of this work to provide the same level of service, but would probably have no incentive to do so because it would adversely affect the increased revenues it was receiving.  Conversely, in the down “years”, market revenues from the applicant-driven land use user fees would not be enough to pay for the planned work program and levels of staff.  In this case there would be no choice but to lay off trained staff or appropriate revenue from other vital county programs.
 
An independent Planning Department will want to avoid the appearance of being “in bed” with its land use applicants and/or big business (i.e., developers).  In order to be above reproach, staff at the Planning Department should have an open mind on the issues, and show no bias toward any applicants or opponents.  Likewise, land use applicants should not have the appearance of "quietly shaping our world" and "determining” what neighborhoods or communities look like in the near future.
 
However, when customers (i.e., applicants and developers) provide 100 percent of the funding for the Planning Department, there is a natural tendency toward bonding between long-term service providers and funding sources.  This then could become a disservice to the people of Josephine County, as the county’s planning decisions could become partial to its funding sources.
In a worst case scenario, the culture of the Planning Department could develop a systemic bias in favor of ill designed, applicant-driven land use proposals that keep its employees busy and accommodate powerful developers.  Conflicts of interest, or the appearance thereof, could challenge the overall ability for the Planning Department to conduct honest and accurate analyses of land use applications.  Widespread perceptions of bias by the public of the Planning Department would be destructive to moral and the planning mission.  The public could perceive the BCC’s aggressive efforts to change the funding source of the Planning Department as an eagerness to please big business and corporate customers creating an atmosphere where objectivity in its analyses was placed in jeopardy.
 
7.  User Fees versus Corruption and Favoritism.  The problems of corruption and favoritism must be addressed in any normative account of planning.  Their potential is enhanced in an atmosphere of an applicant-driven user fee Planning Department where the serviced customers are the funding sources for the planning program.  Ultimately there can be a real disconnect from the people of the county as the real customers.
 
To some extent, these are problems associated with government generally, and especially local government.  If local government does tend toward corruption, it may appear sensible at first glance to strip local government of the planning power (and any other powers it can do without), especially if an alternative regulatory scheme can accomplish the same ends with a lower risk of corruption.  When corruption and favoritism crop up periodically in other areas of local government, the problem usually brings about a call for prosecution of the individual offenders, institutional reforms, and more effective policing, but not abolition of the police department, the judiciary, the building code, or whatever institution may have committed the offense.   Is planning somehow different in an applicant-driven user fee-funded Planning Department?  Critics might suggest corruption is so prevalent in planning that the institution simply cannot be salvaged.  Further, they might contend that such large financial interests are at stake in planning decisions that corruption is particularly tempting.  In a minimum damage scenario, faith in the local planning system is weakened and CI is further injured.
 
We submit that planning, while a particularly important power of local government, is not so different from other powers and institutions of local government. We should be concerned about corruption, or even the appearance of corruption, and work to eradicate it. The response to corruption in other areas, in the form of swift and tough prosecution of offenders, more effective policing, institutional safeguards, and requirements of openness in transactions, should apply here as well.  Planning may also require special policing, for example, through a special state agency with broad investigatory powers, established solely to monitor and investigate planning corruption cases.  The ultimate failure might be for the State to take over the Planning Department.
 
Ultimately, as with other avenues of government transparency, policy, and responsibilities, what matters most is effective policing from the bottom up through effective participatory democracy, ergo, Goal One.  A tradition of neighborhood and community participation minimizes graft and influence-peddling in the planning process.  Through the increased transparency and engagement engendered by CI, graft becomes impossible (or at least ineffective, and therefore not worthwhile for the developer) under the watchful eyes of the citizenry.
Centralization resulted in removing citizens from active involvement in the day-to-day workings of their government, resulting in distancing public officials from the watchful eyes of the citizenry.  This has increased the potential for organized financial interests to influence decisions, not the least of all through assimilation.  An infusion of confidence is needed in the planning process, and perhaps in other aspects of government as well.  To accomplish this, we suggest, increasing citizen participation and, including opportunities to be watchful by implementing an affordable local land use appeals process that has equal “ownership” by all, one that is funded in a manner that reflects such, and one that is structured around a Planning Department powered for long-term stability through a non-fluctuating funding system.
 
Summary.   Alternate funding sources for the Planning Department should not be a political strategy of how to raise revenue without raising taxes.  We believe the Planning Department  performs critical land use service missions that are important to the strength of our community’s economy and quality of life.  We hope the BCC will reconsider its decision to make the Planning Department’s budget 100 percent dependent on applicant-driven user fees.
 
We believe our Planning Department should be completely independent of funding sources that are subject to economic market fluctuations.  Planning services should be equitably provided to citizens of Josephine County, who represent a wide range of financial income.  The funding source should provide for voter approval of a system which leaves no doubt that planning is for the people of Josephine County, and that planning is not just servicing permits, but also includes long range-planning and enforcement.
 
Most important the BCC should recognized the difference between user fees for permit applicants with a personal and/or economic interest in the outcome, contrasted with appeal fees paid by an engaged public having a sense of civic commitment, shared beliefs that value public ends, and a sense of stewardship for each other and the places citizens call home.  Appeals fees should not have a chilling effect on CI, but rather they should be commensurate with CI and its goals.
 
Moreover, a user fee system would limit BCC oversight, effectively removing the BCC from its role as the Planning Department’s governors.  A user fee system for any function of the Planning Department will be harmful to the entire community.
 
Hugo Land Use Committee
Hugo Neighborhood Association & Historical Society
 
Hal B. Anthony, Outreach Chair
Hugo Neighborhood Association & Historical Society
3995 Russell Road
Grants Pass, Oregon 97526
541-476-4156
Email:  threepines@jeffnet.org
Web Page: http://jeffnet.org/~hugo/
 
Wayne McKy, Chair
Hugo Neighborhood Association & Historical Society
6497 Hugo Road
Grants Pass, Oregon 97526
541-476-4006
Web Page:  http://jeffnet.org/~hugo/
 
Mike Walker, Education Chair
Hugo Neighborhood Association & Historical Society
3388B Merlin Rd #195
Grants Pass, Oregon 97526
541-471-8271
Email: hugo@jeffnet.org
Web Page:  http://jeffnet.org/~hugo/
 
Goal One Coalition
 
Holger T. Sommer, Director
Goal One Coalition
2000 Hugo Rd.
Merlin, OR 97532
541-476-5744
Email:  HolgerTSo@aol.com
Web Page:  www.goal1.org
 
Mike Walker, Director
Goal One Coalition
3388B Merlin Rd #195
Grants Pass, Oregon 97526
541-471-8271
Email: hugo@jeffnet.org
Web Page:  www.goal1.org

 

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2012 Hugo Neighborhood Association & Historical Society