DBI outlines fee-study roadmap and warns of near-term revenue shortfall; final proposals due by April

The Department of Building Inspection told the commission on Jan. 18 that it has hired the consultant NBS to conduct a comprehensive fee study intended to align permit and service fees with the department’s actual cost of operations. Deputy Director for Administration Alex Koskinen said DBI is self-supported by fees and the study’s steps include identifying cost centers, allocating direct and indirect costs, estimating utilization and developing fee-recovery options.

Koskinen said the project kicked off in December and that staff are currently completing milestones that include data collection, cost-center definition and peer-fee comparisons. He told commissioners that the consultant will likely present preliminary fee scenarios in March, a final report in April and that any fee changes would be timed with the mayor’s budget process and likely take effect in July of the next fiscal year.

A key goal of the study is to add flexibility language to the building code so DBI can adjust fees between multi‑year fee studies and to develop a reserve program designed to smooth revenue swings, Koskinen said. He described working with the controller’s office to develop reserve options and cited illustrative scenarios for maximum reserve sizes and drawdown rules.

On finances, Koskinen presented a monthly update showing year-to-date revenue lagging and an initial projection to miss revenue budget by about 6 percent; the presentation included a projected operating shortfall of roughly $3.5–4.0 million that staff said would be offset by expenditure savings so the department can end close to the originally budgeted position. Koskinen noted that certain revenues have not yet posted and that high-value projects in the pipeline affect valuations.

Public commenters pressed for stronger reserves and argued fee increases are preferable to service cuts. Jerry Drantler said the department’s prior schedules suggested a much larger operating loss and asked what happens if reserves are exhausted; tenant advocates urged setting aside more in good years to avoid cutting critical services that protect vulnerable residents.

Commissioners asked for a more detailed milestone schedule and draft reviews before the final report; Koskinen said he would provide interim dates, aim to show preliminary scenarios in March and return with language for fee flexibility and reserve options.

Next steps: DBI will continue data collection, work with the consultant on cost centers and peer comparisons, and return with draft fee scenarios and proposed reserve policy language ahead of the April final report.