On December 14, 2018, the Finance and City Wide Projects Committee (FCWPC) discussed an item pertaining to developer fees associated with Land Use Boards. The Committee recommended that the City Commission amend Appendix A (fees) to impose a temporary cap on the per square foot fee associated with Land Use Board applications. The Committee recommended an initial cap of $40,000.00 and asked the Administration to study the figure further.
On January 16, 2019 the City Commission discussed a proposed amendment to Appendix A (fees) and directed the city administration to bring back an ordinance amending Appendix A (fees) to create a cap on the per square foot fees for certain land use boards for first reading on February 13, 2019. Additionally, the City Commission directed the city manager to allow for a temporary hold on per square foot fees for Design Review and Historic Preservation Board applications that exceed $40,000, until an amendment to appendix A is adopted at second reading. On March 13th, 2019, the Commission approved the $40,000 cap on the square foot fee on second reading which is now fully implemented.
On February 13, 2019, at the request of Commissioner John Elizabeth Aleman, the City Commission referred the item to the Land Use and Development Committee (item R5Q). The subject referral pertains to the following comprehensive development fee adjustments:
Application of the per-square-foot fee to all types of development applications.
Reduction in the per-square-foot fee.
A fee adjustment for Conditional Use and Neighborhood Impact Establishment applications.
Revisions to the resubmittal and excessive review fees.
Increasing the variance fee.
On April 3, 2019 the Land Use and Development Committee reviewed the attached modifications to Appendix A and recommended approval.
In 2014 a review of the city’s adopted development review fee schedule was conducted to determine if the fees were still at the appropriate rates 10 years after the prior review. With variations in economic conditions and increased rates for external costs, the fee schedule did not accurately represent the costs to the city, following multiple presentations and favorable recommendations from, Finance and Citywide Projects Committee, Land Use Development Committee, Planning Board and four hearings at City Commission, the fees were adjusted in October of 2015, with the intent to recover costs associated with development , In consideration of ongoing projects, the new fees were not implemented until May if 2016. Additionally, prior fees were honored for projects which had applied for board approval or building permit.
On April 26, 2017, the City Commission referred an item to the Finance and Citywide Projects Committee to discuss the fees charged to developers to appear before the city’s land use boards, City staff conducted internal reviews and engaged the firm of Keith & Schnars to expand on the city’s review, compare City of Miami Beach fees and processes to other cities as well as provide recommendations
The fee review and analysis process included comparing the fee schedule in the City of Miami Beach with the fee schedules in the following municipalities: City of Delray Beach, City of Fort Lauderdale, City of Hollywood, Miami-Dade County, City of Miami, City of Coral Gables, and City of Key West. Meetings were held with city staff and stakeholders to gather background information and data on recent projects and some history on why the fees are not covering enough of the expenses that they are intended to cover. Stakeholder groups included the Miami Dade Preservation League and those who are in the development community, as members of the Chamber of Commerce.
In comparison with other municipal fee schedules, several fees had major variations (higher and lower), whereas others were approximately the same. However, the comparison is not straightforward. Each of those municipalities has different expenses that are intended to be covered by the fees, plus costs vary over time and it may depend on when their fee schedules were adopted. Most of the development review processes in other cities are subsidized by their general fund. Prior to CMB adjusting and updating the fee schedule in 2015, departments like Planning were being subsidized by the general fund by 72%. As such the fee structure that existed at the time was only capturing 28% of the costs associated with the review of projects seeking approval from a land use board as well as the department’s review of plans submitted for permit. After adoption in 2015 and implementation in May of 2016, the fee structure is designed to capture sufficient revenue to offset expense.
Another factor is the Consumer Price Index (CPI-U), which has increased annually in all but one of the past 10 years. A $20,000 project in 2007 would cost $23,633 today and a $100,000 project in 2007 would cost $118,165 today. CPI-U and other fee increases were not adjusted in the City’s fee schedule until 2015 when the fees were analyzed, revised and a new fee schedule adopted.
FINANCE AND BUDGET ANALYSIS
Upon an extensive review of the City’s projected revenues, the administration does have some concerns with the impact that a uniform cap on the per square foot fee for certain Land Use Board applications will have on revenues. As such, in order to minimize the impact of modifications to the fee structure on revenues, the administration is recommending that the per-square-foot fee also be applied to all types of development equally (with some exceptions), and that the fee be reduced from the current 0.50 per-square-foot fee to 0.30 per-square-foot.
The impact is estimated to be a reduction to the general fund revenues of between $125,000 and $200,000 annually. This estimate takes into consideration the recently adopted $40,000 cap on the square foot fee and assumes the approval of the new and restructured fee schedule proposed above. However, the impact could rise to approximately $350,000 if the square foot fee is not applied to additions and remodels or other changes identified above adopted.
The subject ordinance and amendment to Appendix A was approved at first reading on April 10, 2019, with no changes.