Fee Hikes, Planning Staff Cuts Need Explanation, O.C. Supervisors Insist

Orange County supervisors on Friday demanded explanations for the Planning Department’s abrupt decision to lay off 20% of its staff and seek sharp hikes in permit fees, saying they were caught off guard by the crisis.

Planning Director Thomas B. Mathews said the emergency steps are needed to stem a growing deficit that he blamed on an unanticipated drop in building activity.

But a key element of his recovery plan, raising building permit fees by 58%, was already in trouble Friday.

A special master appointed by a Superior Court judge to review the county’s handling of building fees warned that the court may want a say in whether fees can be boosted. Robert P. Mosier of Costa Mesa said in a memo that he would ask a judge Monday for direction unless the board postpones a vote on the fee increase request.

Supervisors said they were unaware of the special master’s memo and expected to discuss it with Mathews and county Executive Officer Michael Schumacher. They also were dismayed by the $2.5-million deficit in a department they said should have kept better track of building activity and the economy.

The fee increase request is the second time in four months that the Planning Department has asked supervisors for help. In August, the board approved up to $8 million in emergency loans from the general fund after planning officials said their reserve fund was empty. The department’s budget chief and assistant in charge of tracking the fund were put on administrative leave while an audit was conducted.

Supervisor Chuck Smith said Friday that he wants answers from Mathews.

“Until I see some answers from his shop, I don’t have any confidence in what’s going on,” Smith said. “There are two people still out on administrative leave, and [department officials] haven’t given us any report. They have to give us some answers before I approve anything.”

Supervisor Tom Wilson said the board should consider postponing the fee increase until the judge deems it proper. The county needs to confront the drop in permit revenue and the fact that “planning got caught flat-footed,” he said.

“When [Mathews] came to us [in August] and said he needed $8 million, [the department was] confident it was temporary and that it would be paid back. It’s not coming together the way they said. I need a real thorough financial analysis for me to say yes again,” Wilson said.

Planning officials have blamed the deficit on a plunge in building permits in the past year. During boom years, the department oversaw the transformation of miles of lima bean fields and orange groves into master-planned communities. But development has slowed, with more raw land now incorporated into cities.

“There had never been that kind of a drop in five years,” county spokeswoman Diane Thomas said. The planning department’s status is “an economy-driven situation about which thoughtful business decisions are being made and the necessary steps are being taken.”

A 1999 lawsuit challenging how the county was charging for permits added to the budget woes.

Shortly after the suit was filed, a county audit determined that builders might have been overcharged as much as $10 million in fees. Supervisors voted then to reduce fees by nearly 30% and, in the process, to draw down a reserve fund that had grown as high as $18 million. The court hearing the lawsuit appointed the special master to monitor the fee issue.

The reserve fund had been drawn down to about $7 million by June 30, 2001. A year later, the fund should have contained about $2.5 million. A fiscal year-end audit discovered, however, that there was nothing left, prompting Mathews to ask supervisors for help.

Supervisors said they want to know what happened to the $18 million and why the department wasn’t streamlined, particularly with the threat that a court could order further cuts in fees if the county loses the lawsuit.

“I’m not voting on any fee increases until I know why the $18 million went into a deficit and how much it really costs to process these permits,” Smith said. “We can’t charge more than the cost of the service. If we do, that’s a hidden tax.”

Supervisor-elect Chris Norby, who will replace Coad next month, said he also wants to know what happened to the money. “If there was a question of overcharging for permits and the fees were reduced, we just can’t start overcharging again,” he said.