Okay.

Um, good evening, everyone.

We're going to start our Ben City Council work session.

Our first item is an update on our community development fee, and Councillor Norris needs to put something on the record.

Yes, I have to declare an actual conflict because of my employment with Hayden Homes and the community development fees that we're discussing right now on this work session item would most likely have an impact on Hayden Homes.

So I'm going to recuse myself and leave the room for this item.

Thank you, Councillor North.

All right.

Turn it over to Sharon Witter.

Yeah, so as Colin is trying to get into the meeting to share the slides.

So if you recall during budget deliberations back in May, um, we we had a lot of discussion on proposed fee increases for building planning and engineering.

We adopted the increases, you adopted the increases July one that were lower than we had projected in the budget.

And as part of that fee resolution adoption, Counselor Riley had asked that we come back with an update and kind of a forecast of what fee increases would be needed over the next couple of years in order for us to kind of meet our financial obligations and one of that work session in November.

So we're here today to follow up on that.

I can cover some of the background slides as they're getting logged in.

So can you move the bank over to you too?

First time anyone said that to me.

So a little bit of background when we're able to share slides.

The first background slide we have is for the most part an update from a slide we had during budget deliberations, kind of explaining how we got where we are and having this fee conversation.

You'll see in some of Colin's slides where over the last couple of years, we haven't had we've had pretty limited fee increases over the last five years.

There's only been a couple of years that even had any increases, and that was because we had enough cash on hand or reserves that we didn't we didn't have a solid, obviously, we didn't have a solid justification of doing significant fee increases at that time.

Well, fiscal year 23, the year that just ended in June was kind of this perfect storm of the revenues kind of leveling off, but then we were able to fill a lot of the vacant positions that we had in the department, which is great because that allowed an increase in turnaround times and permit review times, but that happened at a time that revenues were kind of leveling off, and our reserve levels and cash on hand to sustain those operations started declining.

And we are we're not covering our expenses with our annual revenues.

So wanted to take a look.

Um we've been working with a stakeholder group, um, and I'll just start talking through the first couple of slides.

We had an internal um staff team that was myself, Colin, Ben Hempson, um, the economic development manager, finance staff, and met with um Carta from the Central Oregon Builders Association, Katie Brooks from the Chamber, Gary North, who is with RH Construction, he's also on the Bend Economic Development Advisory Board or BDAB, um, Wes Price with a local CPA firm, Jim Sandburn with Hayden Homes, he's also an ex-oficio member of BDAB.

And then we had several meetings in which representatives from the state building code division participated.

So really working closely, we met five times from July through mid-October, um, really pouring through to kind of get everybody on the on the same page in terms of an understanding of this is this is a need, not a want.

Um, because we want to maintain those uh turnaround times and just have prudent financial management to ensure we're covering our costs with our revenues on an annual basis.

Um it's also bringing us in line with our financial policy.

So you all have fiscal policies that were most recently adopted or updated in June of this year for all of the community and economic development funds.

So building planning I'm putting it up there.

Oh I've got it.

Um building planning and engineering have a minimum reserve target of six months of operating reserves.

Um, so that means we want to have enough cash on hand to have to cover six months of our operating costs if if no other revenues were to come in.

The state building code has a recommended best practice of 12 to 18 months on the building side.

So that's just a little bit of framework and background to set it up as Colin will go into kind of more of the details and with some updated graphs that you've seen and some work sessions last spring and budget deliberations showing what those um kind of what that financial picture looks like with no infant fee increases and then what it would take going out until uh 2028 um to to make sure we're we're looking out over this five-year horizon to really have that strong financial planning, but also give the development community some idea so they can start planning and building this into our proformas.

Obviously, you're not we're not proposing any any fee increases right now.

We don't have any fee increases proposed until next July.

And you can't bind future councils, but similar as the way we handle our utility rate models, doing those long-term forecasts just to give you some idea um kind of what that's gonna look like.

So with that, I've kind of covered the first couple of slides.

Um, so then I'll turn it over to Colin.

Okay, thank you.

Sorry, my apologies for the technical difficulties.

But great lead-in, thank you, Sharon.

Um, so I'm gonna start the the three main funds within CEDD are the building, engineering, and planning funds, and I'm gonna go through them in that order.

Um, got quite a few slides and 30 minutes for this item, so I'm gonna go fairly quickly, but I am gonna spend a little bit more time on the building slides um just to explain how they work because the other two funds are are uh organized the same way.

So this is the building safety fund, and I call this slide the problem statement.

It goes back to the fiscal year 2019, where you could see things were looking pretty good.

The top line, which is brownish or maroon, is uh our reserves.

So there were 24 months of reserves back then.

That middle or that lower line, which is greenish, is our revenue, and and the blue bar is our expenditures.

So what you're seeing there in 2019 is where you like it to be.

So the the expenditures are below your revenues and you have healthy reserves.

But we had good pretty good reserves, and so moving forward, we didn't take some fee increases when um you know when we was it was possible, we just didn't because reserves were so healthy, and that worked for a few years until we get to really 2023 last year, and started really eating into those reserves to the extent that um it they are and and our and our expenses went up, so you can really see that we have not been covering our expenses um with our revenues, and we are our reserves are really going down.

So, what we did what where we are right now is in that 2024 bar, that second bar to the to the left, and we took a 12% increase for building, went into effect July 1.

But you can see revenues are still below expenditures, and we're still eating into reserves, even with what we've done so far.

So, what I was asked to do back in June when this the fee schedule that we're in was adopted was to come back tonight and explain our plan for moving forward.

So the the furthest bar on the right, actually, could you go back to the furthest bar on the right is the next year of our biennium, so that's that's fiscal year 2025.

Um, and that is showing what we are project or what we are recommending for the rest of this budget is to a 20% increase July 1, followed by a 10% increase in January 1.