GILROY
– By this summer, the city will be charging developers by the
hour for certain services Gilroy staffers provide now for a set
fee.
And if the experiment is successful, dozens more services will
switch from a set fee to an hourly rate, too.
Proponents of the charge-by-the-hour system say it will recoup
staff costs and is a fairer version than what exists now.
GILROY – By this summer, the city will be charging developers by the hour for certain services Gilroy staffers provide now for a set fee.
And if the experiment is successful, dozens more services will switch from a set fee to an hourly rate, too.
Proponents of the charge-by-the-hour system say it will recoup staff costs and is a fairer version than what exists now.
“They’re trying to charge for actual costs incurred,” said James Suner, a small project developer in Gilroy. “I’d say that’s a smart thing, it’s an
excellent idea.”
In theory, the new system will charge more to larger and more complicated projects, since they typically take more time to process.
“Take for example Wal-Mart. It was not your average architecture and site review,” said Community Development Director Wendie Rooney. “We lost money
on that project because it’s a big project and we spent more time on it.”
The changes come at a time when the city annually revises – and typically increases – the fees it charges for services as high-profile as special event permits and as routine as inspections.
By its own ordinance, the city is required to charge fees for most services at a rate that will cover 100 percent of the cost.
To determine most of the fee rates, the city adds up the staff costs associated with one year’s worth of services. It then divides that cost by the number of times the services were requested. That sum becomes the fee for everyone, regardless the size of their project.
Under the hourly system, applicants will be asked for a deposit based on typical costs for a service. If staff time adds up to be less than the deposit, the city will refund the difference. If staff time adds up to be more than the deposit, the applicant continues to pay for their service.
The new fee system does not apply to impact fees – charges levied on developers of new projects which increase growth.
Mayor Al Pinheiro can recall his own frustration with the set-fee system. When he remodeled the garage in back of his First Street insurance firm, he was charged a demolition fee comparable to someone tearing down an entire building.
“That didn’t make any sense. What makes a lot more sense to me is that if I come in with a small project, my fee should reflect the amount of time staff is spending on it,” Pinheiro said.
Other Council members voiced support for the new system and the annual rate hikes at a recent meeting regarding the fees issue.
”The new system allows the city to charge for all of its services,” Councilman Roland Velasco said. ”Right now it does cost more, the city just isn’t charging for it.”
Inflation and increases in salaries and benefits triggered the recent rate hikes. But ironically, part of the reason for the fee increases can be blamed on City Council.
When elected officials scrutinize projects, it leads to more staff time on research and analysis.
City Administrator Jay Baksa said the extra scrutiny by elected officials and the citizenry at large is a trend on the rise the past five or so years.
”There is nothing wrong with that,” Baksa said. ”In fact there’s a lot of good to it, but it slows things down.”
Baksa said about half the time delays are requested or required by city officials. In the remaining cases, the applicants themselves want something put on hold.
With a system that charges by the hour, the city runs a political risk. Elected officials will have not only voting power over projects, but by delaying projects they will be able to make projects more costly, too.
Baksa said he’s not worried.
“You have to have faith that the systems they’re going through aren’t delaying things just for the sake of delay,” Baksa said. “I’ve never seen that happen.”
Rooney told Council, “It’s not a perfect system, but it gets you closer than where you are now.”
