Building Fee System May Be Overhauled

The Orange County Board of Supervisors today will consider radically changing the way the county charges developers and individuals for building houses and businesses.

Instead of collecting a flat fee for building inspections and reviewing development plans, the county would charge for the time a county employee spends on each job, plus an assessment for overhead.

Some minor permits and safety inspections would stay at a low, set price, however. For example, the county fee for a water heater inspection would remain at $21.50. Although the county’s actual cost may be more, increasing those fees might discourage people from having inspections, officials said.

If approved, the new system would be a first in O.C.

In response to legal challenges, Riverside County and several small cities in Southern California have eliminated flat development fees in recent years, and now charge for the time an inspector spends and materials used. But that change has not been widely followed.

“There was no way to ensure that users were being charged equitably for the services they were provided,” Auditor-Controller David E. Sundstrom said of the county’s existing system, which also is being challenged in court as unfair.

The new system would allow the county to better manage how inspectors are deployed and “in some cases the use of their time,” said Bryan Speegle, assistant planning director.

The proposed changes were prompted by financial troubles at the county’s Planning and Development Services Department, and a 1999 lawsuit alleging that the county overcharged builders. Planning officials also were accused of misspending the surplus funds.

Retired developer Dick McCarthy of Palm Springs, who sued the county over the existing rates, said he’s delighted supervisors may move to what’s called the time-and-materials system.

But McCarthy questioned one aspect of the proposed system: a 212% overhead rate the county would add to the fees. Overhead costs are based on expenses such as an inspector’s vacation time, health benefits, sick time and pension accrual. McCarthy said the overhead rate is far too high and isn’t limited to costs arising from a single job.

The new system would affect the county’s unincorporated areas. Developers would pay a deposit equal to the existing fee for the first several months. The deposit would be adjusted after planning officials determine the average time required for each inspection. Any surplus at the end of the job would be refunded.