Every year (at least in California) around this time, as we get closer to Cities’ end of their fiscal year, the next fiscal year’s budgets are proposed and adopted by their respective City Councils. One important piece of those budgets for the real estate development world are the corresponding updates to the Cities’ Fee Schedules, and as you might imagine, those updates rarely result in decreases.

For many Cities, and in many years, fee increases will follow a generally inflationary pattern. In most (non-pandemic) years it’s 3-4%, or in years like this one a bit higher: San Jose’s building permit fees, for example, are increasing around 6.5% in the new fiscal year.  In some cities, however, the new budget also presents an opportunity to “re-assess” their fees, which can result in dramatic increases. The proposed fees in Burbank for FY23-24 in some cases are increasing by over 1000% (grading permits)! Building permit fees will also increase by up to 200% depending on the project’s size, occupancy, and construction type.

These increases are not just limited to Entitlements and Building Permit fees either, utilities can behave similarly – like in Burbank, where sewer facilities charges will increase by 250% across the board (they were last increased in 2001, to be fair).  The same is true for development impact fees, and in some cases NEW impact fees are adopted in the next fiscal year as well. For large projects that can be millions of dollars in additional fees that didn’t exist Monday, but did on Tuesday morning.

What is the lesson here?  If your project is scheduled to clear permits during the summer (in CA at least), you may want to check the proposed budgets and fee schedule for the next fiscal year to see what lies ahead – the proposed budgets/fees are usually made public in the spring.  If you have the available finances, in most cases you should also be able to pay fees early – even if you’re still not that close to approvals and pulling permits. If you are close to pulling permits, make sure you don’t wait a day too long to pay those fees, or it may cost you hundreds, thousands, or even millions of dollars.