There are fees, and then there are fees
The Santa Fe City Council unanimously passed substantial increases to development fees at a recent meeting. Word on the street was permitting fees were getting jacked up, something that hasn’t happened since 2008, just prior to the housing crash.
But that’s not exactly what happened. Yes, new fees will be collected, and many existing fees will be raised, but the cost for a single-family home permit, and permits electricians and plumbers need to build that home, are not going up.
What is going up is a slew of nickel-and-dime fees the city has been eyeballing for years. Former Land Use Department staffer Katherine Mortimer was tasked with a fee analysis of neighboring states and New Mexico cities by former Director Lisa Martinez. Their conclusion was that the department was giving away the store, but the proposal never got political legs.
When former Mayor Javier Gonzales ended the requirement that 15 percent of all new apartments had to be rent-controlled for affordability and that property owners could pay a fee instead of building the units, a flood of applicants rushed into the Land Use Department’s office.
During the previous 10 years of the 15 percent requirement, virtually no market rate apartments were permitted or built. Thus, our current housing shortage.
With the end of the money-losing requirement, many local property owners, most of whom were neither developers nor had the wherewithal or experience to build apartments, managed to get their properties entitled to pay the fee-in-lieu. They knew that entitlement dramatically increased their property’s value, but they were playing out of their league and didn’t know what came next.
The savvy ones found out-of-town developers and builders with the experience and wherewithal to get stuff done. Unfortunately, those “pros” were as ignorant to the quirkiness of Santa Fe codes, rules and processes as the property owners selling them the land.
No problem. They just kept scheduling meetings — sometimes many meetings, sometimes incessant meetings — with Land Use Department staff until they got it figured out. After all, department employees had been told for years that they were in the customer service business first and their products just happened to be permits.
Meanwhile, the department staff shrunk, long-range planning was abandoned, there were technical reviews
handled by overworked people coming up to speed on areas outside their expertise and the issuance of routine home permits slowed.
The new fees are an attempt to collect on information provided for free to developers and property owners too lazy to find it on their own — or too cheap to pay one of the many competent development consultants whose industry keeps up on the minutiae.
The fiscal impact report suggests $500,000 a year could be collected. That’s a drop in the general fund bucket, where the new money will go, but would be a boon to a department needing to staff up.
Some councilors wondered why the Land Use Department couldn’t be an enterprise operation like the water department, which pays its own way and then some, but the Land Use Department never collects enough to pay its own way. Given the vagaries of construction booms and busts, it would be fiscally imprudent.
It’s possible the nuisance fees will chill time-wasting demands on staff, which could then devote more resources for timely homebuilding permits and other simple requests.
Unfortunately, the city is still in a budget crisis and there’s no guarantee what’s added to the general fund would go back to the Land Use Department. Most councilors expressed hope that it would, but none stepped up to champion those efforts. The department has long been the political stepchild, in part because politicians don’t want to be painted as tools of greedy developers.
That cowardice is shortsighted. Gross receipts taxes from booming construction are a fiscal bright spot, and affordable housing shortages have no end in sight.
Kim Shanahan is a longtime Santa Fe builder and former executive o∞cer of the Santa Fe Area Home Builders Association. He can be reached at shanafe@ aol.com.