St. Albert does not have a policy in place to ensure fees charged by the planning and development department recover the costs borne by the city.
“It was never locked into any sort of policy, it was never locked into any sort of a long-term sustainable plan,” said Mayor Nolan Crouse of the concept of cost recovery.
The topic of cost recovery from planning and development fees – which covers everything from area structure plan applications to portable sign permits – came up when the latter was discussed during September’s standing committee on finance meeting.
At the time, Carol Bergum, director of planning and development for the city, said in cases such as building inspections the fees often come close to covering the city’s costs, but many of the other fees, the cost to the applicant doesn’t nearly cover the resources the city puts in.
Bergum noted that a review was done a few years ago and found the estimated cost recovery averaged around 50 per cent.
“Fifty per cent probably in some cases would probably be generous even,” she said.
According to that cost recovery review – which was completed by Corvus Business Advisors in 2008 for the city – a sign application costs the city $211.52 to process. At the time, the fee was less than $100.
When the Gazette asked for a full copy of the Corvus report, Bergum said it was confidential.
Bergum said in a follow-up interview that when it comes to setting fees, staff takes into account both the magnitude of work and the regional prices when setting the cost to the applicant.
“It’s usually kind of a percentage increase each year,” Bergum said.
If cost recovery was a factor, the price would need to take into account all the steps that have to be taken and staff time.
That can include people checking it over for completeness, cashing cheques, reviewing it against the land use bylaw and monitoring renewal periods for some of the more straightforward tasks.
For a large project, such as an area structure plan application, there’s time spent in pre-application meetings with the developer, looking over studies and more, Bergum said.
She said current planning and development department revenues generally, on average, tend to cover about two-thirds of their expenses.
The mayor said he’ll probably bring the issue of cost recovery and fees back up during post-budget deliberations.
Crouse gave the 2008 report to the city manager and the city’s chief financial officer to review.
Asked if he believes the numbers in the report, he said Corvus is a reputable firm and probably did its homework.
“Whether we like it or whether we don’t like it, it’s an independent review,” Crouse said.
Mel McMillan, a professor emeritus in economics at the University of Alberta, said economists like him generally favour municipal user fees.
As for permit and other development fees, he said they’ve become more popular and common in the past 20 years.
“They’re supposed to reflect the cost of providing sewage services, and drainage services and streets and all that kind of thing,” he said, so new developments pay their own way.
In general when it comes to municipal fees, McMillan said if costs aren’t being recovered, the question should be why.
There could be good reasons to do so, he said – such as public transit users sometimes are lower income – but the reasons should be considered.
“If you undercharge on this, you have to recover the funds to meet your costs somewhere else,” he said, adding cost recovery is “something that should be open for public discussion.”
