REAL ESTATE : Builders Grumble as Cities’ Permit Fees Continually Increase

The fees that Orange County cities charge home builders took their largest leap in 10 years last year, says a home builders’ trade association.

Builders grumble constantly about these fees, especially since Proposition 13 switched a lot of the burden for funding local government from property taxes to fees such as these.

But this year, says the local Building Industry Assn., it’s serious. The reason: Some cities have switched from flat fees to hourly charges for processing permit applications, and it has meant a quadrupling of charges in some cases.

Under state law the amounts for fees are supposed to be linked to what it costs the city to perform the service it’s charging a fee for. The builders say they have a nagging suspicion they’re being overcharged.

“Many cities traditionally look upon building permit fees as a kind of gravy they can use to fund other areas of city operations,” says Philip Bettencourt of the consulting firm Preview Real Estate Services, which did the study for the Building Industry Assn.

It cost an average $12,100 to get each house through the approval process in Orange County’s cities last year, the survey found, up from $9,000 in 1988.

The cities with the highest fees last year, according to the survey, were San Clemente, San Juan Capistrano, Newport Beach, Costa Mesa, Irvine, Anaheim, Fountain Valley, Placentia, Cypress and the county’s unincorporated areas.

But the builders don’t like to use the list to make comparisons, Bettencourt says. First, some cities may charge higher hourly fees but process permits faster than cities with ostensibly lower fees.

Some cities charge fees on behalf of other government entities, such as school districts, over which they have no control. And finally, the builders’ old purpose in putting out the statistics didn’t work: “We thought it would be a ‘Hall of Shame’ and bring the more expensive cities into line with the less expensive ones,” Bettencourt says.

“No one lowered their fees. The cities at the bottom of the list just used it to justify raising theirs.”