Name: Bellingham City Council - Budget and Finance Committee meeting, May 18, 2026
Start: 2026-05-18
End: 2026-05-18
Location: City of Bellingham

City Council - Budget and Finance Committee

Mon, May 18, 2026

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Meeting summaryAI-generated

City Council Budget and Finance Committee — May 18, 2025

This was a regular Budget and Finance Committee meeting chaired by Councilmember Lisa Anderson, with Councilmembers Hollie Huthman and Skip Williams substituting for excused members Lilliquist and Hammill. Three items were considered: two related to a major police grant and one discussion of long-overdue development fee updates.

Item 24941 — Interlocal Agreement with WA Criminal Justice Training Commission (Police Grant)

The Bellingham Police Department was awarded a $3,703,583 grant through the Local Law Enforcement Grant Program, created under Engrossed Substitute House Bill 2015. This grant is the second prong of a broader public safety funding effort — the first being the council's earlier action enacting a 0.1% public safety sales tax. Deputy Chief Ty Elmendorf presented the item, noting that very few agencies in the state qualified for this grant due to its high certification standards.

The grant runs through June 2028 and is intended to fund:

Unfreezing three frozen patrol officer positions

$688,000 to maintain the Alternative Response Team (ART), which had lost approximately $200,000 in prior funding — Elmendorf emphasized the department's commitment to keeping ART operational downtown

A new records personnel position to reopen the police lobby 8 a.m.–5 p.m., Monday through Friday (a goal since COVID)

A third warrant officer to allow more fieldwork, relieving pressure on patrol officers

Training with nationally recognized law enforcement risk-management trainer Gordon Graham (12 two-hour sessions)

An expanded drone-as-first-responder program, enabling unarmed, faster 911 response and reducing high-liability vehicle pursuits

Dashboard cameras for transparency and risk management

Grappler devices (front-mounted anti-pursuit tools) to prevent vehicle pursuits

Retention bonuses for senior officers — 22 current officers are currently retirement-eligible, and over 30% of the department has been hired in the past two years

$100,000 to Domestic Violence Sexual Assault Services (DVSA) of Bellingham, to fund co-response to domestic violence calls

Councilmember Huthman asked whether grant-funded positions would create ongoing cost obligations after 2028. Staff and Finance Director India Spencer responded that the three-year window provides planning time, that the potential Regional Fire Authority (RFA) proposal — if approved by voters — could provide long-term general fund capacity, and that the 0.1% public safety tax already provides some match funding. Council President Stone raised timing concerns about unfreezing officer positions before the RFA vote; Elmendorf noted natural attrition among retirement-eligible officers would help manage that transition.

Councilmember Williams disclosed that he serves on the DVSA Board of Directors and recused himself from the vote after confirming the $100,000 would go to that specific organization (not the countywide body).

Vote: Williams moved, Huthman seconded. Anderson and Huthman voted aye; Williams recused. Item passes 2-0 with one recusal, and will return to the full council for final action given Williams's recusal.

Item 24937 — Budget Amendment to Recognize Grant Revenues and Expenditures (Amendment 2)

This companion ordinance formally amends the 2026 city budget to authorize spending and FTE changes associated with the same CJTC grant. Finance Director Andy Asbjornson explained the ordinance adds $1,540,715 in expenditure authority and $1,490,504 in revenue, with the approximately $50,000 difference representing the city's 25% personnel match.

Council President Stone noted a discrepancy: the ordinance references three entry-level police officer positions but only adds two FTEs. Asbjornson clarified that the third position's FTE had already been authorized in the adopted budget but with funding frozen; this ordinance unfreezes the dollars. The two new FTEs correspond to the records clerk and additional warrant officer.

Williams again recused himself.

Vote: Huthman moved, Anderson seconded. Anderson and Huthman voted aye; Williams recused. Passes 2-0 with one recusal; will return to full council.

Item 24932 — Discussion of Land Use Application Fee Schedule

Planning Director Blake Lyon and Public Works Assistant Director Michael Wilson presented a long-overdue review of the city's land use application fee schedule, which has not been substantively updated since 2007 — nearly 20 years ago. This was a discussion item only; no vote was taken.

Lyon walked the committee through the range of city fee types (application fees, permit fees, impact fees, and system development charges), then focused on land use application fees specifically. A comparison with peer cities — including Kirkland, Yakima, Spokane, and local jurisdictions like Whatcom County and Ferndale — showed Bellingham is significantly below market rates on nearly every fee type. Some fees are roughly at the rate of cumulative inflation (30% below peers), while others are several hundred percent below comparable jurisdictions. Meanwhile, the development services fund is running an increasing structural deficit, illustrated by a chart showing expenditures outpacing revenues and reserves shrinking.

Staff also noted that roughly 258 permits worth approximately $6 million in revenue are currently completed but on hold because applicants haven't picked them up, likely for financing reasons — a complicating factor for fund projections.

Staff proposed four changes for committee consideration:

1. Adjust existing flat fees upward to account for ~20 years of inflation

2. Adopt annual CPI adjustments going forward to avoid falling behind again

3. Implement a hybrid cost recovery model — flat fees for routine applications, with a deposit-based billing system for complex, multi-round projects (similar to the existing public facilities contract model). Staff gave the example of a project that paid $13,000 in fees but consumed hundreds of hours of staff time over three years.

4. Establish a technology fee — a small percentage added to permit fees, dedicated to upgrading and maintaining the city's aging permitting and GIS systems

Councilmember Anderson expressed support, noting the community currently subsidizes development review costs and that Bellingham fees remain below peers even after inflation adjustment. She asked for future examples showing the practical cost difference between flat-fee and hybrid projects. Councilmember Lilliquist (arriving late) expressed support but emphasized the development community's strong preference for predictable, upfront costs — he asked staff to clearly delineate which application types would be subject to cost recovery. Lyon confirmed this would be spelled out explicitly in the resolution brought back to council. Lilliquist estimated cost-recovery-eligible applications would be a small minority of total application types.

Anderson also asked for more detail on the technology fee — specifically, what efficiency gains or cost savings it would generate — before final action.

Staff will return with a formal resolution and more detailed examples.

Vote: Discussion only; no vote taken.

Key Takeaways

A $3.7 million state police grant was approved for committee recommendation to full council, funding new officers, ART continuation, a new warrant officer, records staffing, training, drones, dashcams, pursuit-prevention tools, and officer retention bonuses through June 2028.

Councilmember Williams recused himself from both grant-related votes due to his board membership with DVSA, which will receive $100,000 of the grant funds; both items go to full council for final action.

Staffing funded by the grant carries long-term cost risk — council and staff acknowledged the Regional Fire Authority proposal and natural attrition as the primary strategies for sustaining those positions beyond 2028.

Land use fees haven't been updated since 2007 and are well below inflation and peer jurisdictions; staff is proposing a significant overhaul including inflation catch-up, annual CPI indexing, a hybrid cost-recovery model for complex projects, and a new technology fee — with a formal resolution to follow.

The development services fund faces a structural deficit, worsened by ~$6 million in completed-but-unpicked-up permits sitting on hold, underscoring the urgency of the fee schedule update.

AI-generated summary from voice-to-text transcript. Not the official record. Verify important details with the source documents linked above.

What happened at this meeting

Discussion of the Land Use Application Fee Schedule

# Summary: Land Use Application Fee Schedule Discussion

Staff, including Planning Director Blake Lyon, Public Works Assistant Director Michael Wilson, and Kurt Nabefeld, presented a comprehensive review of the Land Use Application Fee Schedule, which has remained largely unchanged since 2007 despite significant increases in employee costs, contract expenses, and operational expenditures. A comparative analysis revealed that Bellingham's per-hour charges and most application fees are substantially below peer jurisdictions in Washington, with some fees 30% below inflation-adjusted rates and others several hundred percent below market rates. Staff recommended a hybrid cost recovery model combining flat fees for routine administrative review projects with hourly billing for complex projects requiring extended staff time and environmental analysis, along with implementing a technology fee to support digital permitting systems and GIS services. Council members expressed support for fee increases, with Council Member Liljaquist advocating for maximizing flat fees to provide cost certainty to developers while requesting clarification on when the cost recovery component would apply and examples of how the technology fee would improve efficiency and system upgrades.

An ordinance amending the 2026 Budget to recognize revenues and expenditures associated with the Public Safety Funding Program award - Amendment 2

Staff presented an ordinance to amend the 2026 budget to implement expense and FTE authority for a $3,700,583 grant from the Washington State Criminal Justice Commission for the Local Law Enforcement grant program. The ordinance adds $1,540,715 in expense authority and $1,490,504 in revenue, with the difference representing a 25% city match for personnel costs to fund three entry-level police officer positions, a records position, and a warrant officer. Council President Stone raised a question about the FTE count discrepancy, noting that section two referenced three entry-level officers but section three only increased FTE by two, which staff clarified were previously frozen positions being funded. The motion to approve passed with Council President Stone recusing herself.

An interlocal agreement with Washington State Criminal Justice Training Commission for a Local Law Enforcement Grant award

# Summary

Deputy Chief Ty Elmendorf presented the Bellingham Police Department's $3,703,583 grant from the Washington State Criminal Justice Training Commission under House Bill 2015, which runs through June 2028 and will fund three additional patrol officers, the alternative response team, additional records personnel, a third warrant officer, training sessions with Gordon Graham on risk management and Lexipol policies, and enhanced drone capabilities. The grant also funds unarmed response capabilities, dashcams, anti-pursuit grappler equipment, retention bonuses for senior officers, and $100,000 for domestic violence and sexual assault services. Councilmember Huffman inquired about the grant's duration and covered expenses, while Councilmembers Hatman and Stone raised concerns about the sustainability of grant-funded ongoing expenses beyond 2028 and contingency planning if the proposed RFA fails. Councilmember Anderson recused herself from the vote due to her position on the DVSA Board of Directors, expressing concern that the $100,000 DVSA funding was directed to the local Bellingham organization rather than the countywide group. Councilmember Williams moved to authorize the mayor to enter into the interlocal agreement with the Criminal Justice Training Commission.

Agenda items (3)

Procedural (3)

24932ProceduralDiscussion of the Land Use Application Fee Schedule

The council will review and discuss the fees that residents and businesses pay when submitting applications for land use permits and approvals.

What happened

24937ProceduralAn ordinance amending the 2026 Budget to recognize revenues and expenditures associated with the Public Safety Funding Program award - Amendment 2

The city is updating its 2026 budget to account for money received from a Public Safety Funding Program award, which will pay for related police and public safety expenses.

What happened

24941ProceduralAn interlocal agreement with Washington State Criminal Justice Training Commission for a Local Law Enforcement Grant award

Bellingham will sign an agreement with the state Criminal Justice Training Commission to receive a local law enforcement grant that helps fund police training and operations.

What happened

Additional votes recorded in minutes

Authorize interlocal agreement with WA State Criminal Justice Training Commission for Local Law Enforcement Grant

absent 3 · aye 2 · recused 1

Daniel Hammillabsent

Edwin 'Skip' Williamsaye

Hollie Huthmanabsent

Jace Cottonaye

Lisa Andersonrecused

Michael Lilliquistabsent

Recommend approval of ordinance amending 2026 Budget for Public Safety Funding Program award - Amendment 2

absent 3 · aye 2 · recused 1

Daniel Hammillabsent

Edwin 'Skip' Williamsaye

Hollie Huthmanabsent

Jace Cottonaye

Lisa Andersonrecused

Michael Lilliquistabsent

Verbatim transcript available

180 transcript segments indexed

Okay, welcome back. So, we're going to move forward with committee meetings this afternoon. We will start with budget and finance. That committee is chaired by Councilmember Anderson. Um, and we may have some substitutions, but I'll turn it over to Council- Councilmember Anderson.

City of Bellingham Budget and Finance Committee minutes May 18, 2026, 1:10 PM Chair: Lisa Anderson Phone: 360-778-8200 Members: Daniel Hammill, Michael Lilliquist Email: ccmail@cob.org Web: cob.org/council City Council committee meetings Standing committee members receive reports and information, ask questions, and vote on a recommended action for consideration by the full Council at the regular meeting.

Um, good morning. We have three items before us today, and we do have some substitutions. Um, Councilmember Lilliquist and Hamel are excused from the meeting. So, joining me today will be Councilmember Huthman and Councilmember Williams.

There is no public comment period during committee sessions. Call to order and roll call Council President Stone called the meeting to order at 1:10 p.m. Present: Committee Chair Lisa Anderson, Fifth Ward Committee Member Jace Cotton, At-Large Board Member Hollie Huthman, Second Ward Committee Member Edwin H.

"Skip" Williams, Fourth Ward Excused: Committee Member Daniel Hammill, Third Ward Committee Member Michael Lilliquist, Sixth Ward Budget and Finance 24941 1. An interlocal agreement with Washington State Criminal Justice Training Commission for a Local Law Enforcement Grant award Summary: Ty Elmendorf, Deputy Chief of Police, Andy Asbjornsen, Finance Director, and Mayor Lund presented the interlocal agreement (ILA) with the Washington State Criminal Justice Training Commission, which awards $3,703,583 as a Public Safety Funding Program Award for operational support through June 2028.

So, our first item today is um, item 24941. Um, the Washington State Criminal Justice Training Commission awarded the Bellingham Police Department a $3,703,583 grant. Really wish sometimes these would be rounded up.

Um, through the local law enforcement grant program created by engrossed substitute House Bill 2015. The grant revenues will fund hiring officers, employee retention, training, and other public safety efforts.

Council Members discussed the ILA and asked questions. Action: Edwin H. "Skip" Williams moved to authorize the Mayor to enter into the interlocal agreement with Washington State Criminal Justice Training Commission for a $3,703,583 grant through the Local Law Enforcement Grant Program.

And joining today to uh, present the information is Deputy Chief um, Ty Elmendorf, and I will turn it over to you. And sorry, I always call you Deputy Chief Ty, and realize I've never said your last name.

Page 1 of 2 MOTION CARRIED 2-0. RECUSED: Lisa Anderson 24937 2. An ordinance amending the 2026 Budget to recognize revenues and expenditures associated with the Public Safety Funding Program award - Amendment 2 Summary: Andy Asbjornsen, Finance Director, and Ty Elmendorf, Deputy Chief of Police, presented the ordinance, which amends the 2026 budget to recognize revenues and expenditures associated with the Public Safety Funding Program Award.

So, if you want to get it correct, you could probably state it, cuz I think I mangled it. You're exactly right. Ty Elmendorf, Deputy Chief of Police for Bellingham. Thanks, Councilmember Anderson. Thank you, Council, for uh, entertaining me being here.

Council Members discussed the ordinance and asked questions. Action: Edwin H. "Skip" Williams moved to recommend approval of the ordinance. MOTION CARRIED 2-0. RECUSED: Lisa Anderson 24932 3. Discussion of the Land Use Application Fee Schedule Note: Council Member Lilliquist joined the committee for discussion on the third agenda item.

Normally, the Police Department comes before Finance and Budget uh, meeting heavy on the expenses. I acknowledge that. This is a uh, really a a unique time and a and a celebratory time for us to come before you uh, asking for um, approval on the revenue side of the house.

Summary: Blake Lyon, Planning and Community Development Director, and Mike Wilson, Public Works Assistant Director of Engineering, presented a draft update to the Land Use Application Fee Schedule for Council's input.

This is a um, long-term project that the department's worked on to be in a position to apply for a grant through CJTC. This is all part of the House Bill 2015 legislation. Um it was a kind of a two-part deal.

You took councilmanic action if you recall for 1/10 of 1% public safety tax earlier in the year. Um this is the other prong of that, which was our agency making application to CJTC for this this grant.

Very few agencies have been able to receive this grant money as it's a a very very high standard for certifications and to meet the qualifications that the Criminal Justice Training Commission has. Um Bellingham is is one of them and I was very very happy to receive this um from them um with the 3.7 million-dollar in change uh you know, award for the city of Bellingham and the police department.

So, I'm happy to answer questions about what we plan to do with the money. Um I have it all you know, well-versed in that and happy to answer all that for you. Council members, are there any questions?

Um Council member Huffman. Uh Thank you for Thank you for having me join your your committee. I wasn't I wasn't prepared with any questions. Um although very interested. Can you explain is this a this is a one-time grant for just this year?

Um and then what kind of expenses will this be used for? I'm assuming not ongoing expenses, but one-time expenses. If you is a one-time grant, um but feel free to explain. You bet. I'll give you a breakdown of everything and this grant is is through the end of June in um 2028.

So, it's a about a two-year in change grant. So, if you recall, this was originally this grant money was uh put out by Governor Ferguson as his campaign promise to increase hiring of police officers in the state of Washington.

So, that's what it was for and you know, really um the state wanted to acknowledge the importance of alternative response teams uh in policing as well. So, we will have this money in place until the end of June in 2028 and it's going to go for um unfreezing three patrol officers.

Uh 600 and $88,000 of it is going to be for maintaining our relationship with alternative response team. If you recall, they lost about $200,000 of funding and I'm really proud that the Bellingham Police Department recognizes the work that they do and are able to, you know, supplant their money right now to keep that program going as they're essential in our work that we're doing um on the alternative response team downtown.

Uh additionally, this is going to be to hire a an additional records personnel. So, we will have the lobby and the plan is to have the Bellingham Police Department lobby open 8:00 to 5:00 Monday through Friday, which has been a goal for ours since uh since the COVID era.

Also, we're going to have a another an additional warrant officer. The importance of the warrant officer position historically, the warrant officer has uh been out in the field to assist with transports of warrants, also help with sex offender registration.

Um since 2020, it's been that we have two positions and they've been more like a courtroom bailiff um for Judge Lev in the Municipal Court. Hiring a third warrant officer will be allow more field work, which will will help patrol officers um relieve some of the pressure for them to go to more pressing calls.

Additionally, uh have you to do with training. We're going to bring in Gordon Graham for uh I think 12 different sections for 2 hours. He's just a renowned trainer in law enforcement. He's in charge of uh kind of pushing out the Lexipol policies, which are the the standard that most law enforcement agencies use.

Early on in my career, I benefited from going to Gordon Graham's training and remember, you know, his just commitment to risk management in policing. If if it's predictable, it's preventable is something I remember from 1995 and hearing him speak and it'll be really good to have our young officers hear a lot about what he has to say with risk management in policing.

Uh we're going to we already have a um a a unarmed aerial surveillance for a drone program that we use for tactical situations. This will enhance that and actually be a a drone as first responder program.

What that does it is the it's the response to the call that we hear for the importance of the unarmed response, right? That we will be able to respond to 911 calls quicker, safer, unarmed and it will really prevent high liability traffic pursuits from happening in the city of Bellingham.

And then dashcams, it'll provide a space for dashcams which will give, you know, more transparency towards policing so you can see real-time what the officers on the calls, how their driving is. Again, it's looking at at that risk management.

How are we driving? And the dashcam will be able to show that. Additionally, it'll be able to purchase equipment called grapplers. They're they're an anti-pursuit policy device that we can put on the front of our patrol cars to prevent pursuits from even happening.

Again, all of this is just a really way to enhance public safety in the operations that we do. Um Also, there's a space in here for retention bonus for our senior officers. We um we're an aging fleet so to speak and I know that in the past few years you've heard about, you know, the amount of officers in Bellingham Police that are retirement age.

Currently, there's 22 that can retire right now and draw their pension, and we really want to we want to maintain them as employees while we look to train the over 30% of our department that's been hired in the past 2 years.

So, there's a space for that, as well as um a $100,000 to domestic violence sexual assault services. Uh a great partnership with them and just the work that they do, and and for our agency to give money to them to enhance our their um being out and responding to domestic violence with us.

Bringing in that agency as a partner with us will be uh great. So, there's a tremendous amount of excitement for this grant from uh from our officers, and hopefully from the community. Uh we're really excited to get some of this program going.

So, that's why we're here, and uh hopefully you guys will authorize the the mayor signing off on the interlocal agreement. Councilmember Williams. Yeah, thank you. Thank you, Ty. I've um I've been involved in a lot of discussions with the chief about this uh grant and the and the application as the as it's and now it's coming to fruition.

So, based on that and all of those uh discussions I've had, I moved to authorize the mayor to enter into the interlocal agreement with the Washington State Criminal Justice Training Commission. Thank you.

And I actually have a question now. Um in my mind, I was thinking the $100,000 to the domestic violence and sexual assault services in the community, I wasn't sure I think originally I was thinking that would be assisting the countywide organization, or is it helping directly DVSA that provides the front level service which is located in Bellingham?

Does anybody know which agency will receive the funding? And the reason I'm asking is cuz I'm on the DVSA Board of Directors for the the Bellingham folks. And so, if it is going directly to DVSA just down the road from us versus the county wide, I'll need to recuse myself from the vote.

>> [clears throat] >> Great question. And it is going to DVSA. Yeah, I was looking at the subrecipient grant agreement this morning. Okay, so I will have to recuse myself from the vote. Um I'll talk to you later if I need to not be in chambers tonight when it's discussed, so um I just thought it was going to be the county folks.

Okay, so knowing that I won't be able to vote, um I'll still call the question, but I see Council Member Hatman has a question. Thank you, Council Member Anderson. So, follow up um to my question. So, some of some of these the funding um will be going towards ongoing expenses, particularly staffing, that I would expect will will maintain beyond the 2028 date.

Um what considerations have we made for funding beyond this grant? Um are we expecting more grants, or what conversations have we had um fresh in my mind is COVID funding and knowing that we need to be quite cautious about uh funding ongoing expenses with one-time funds.

I would answer that question broadly by saying that was part of our public safety level of service analysis that we undertook last year that was comprehensive of both police and fire's needs. Our strategies we head into our regional fire authority planning work.

Is encompassing how it can create capacity across all city departments, but specifically you know, police and community safety needs. And so, if we're complete that process and move forward with an RFA proposal for voters, that would be a long-term source that would be able to fill in as there's money backfilled to the general fund that would support ongoing investments that this grant enables.

So, at a high level that's that's one response. Okay, and just in general appreciate that that that longer-term planning is part of the equation. Councilmember Stone. Yeah, my question was going to be along those same lines and it might overlap a little bit with the next agenda item.

I guess since they are related, but my reading of it was that new hires, right, otherwise would be paid 100% by the city of Bellingham. And in this case, there's a 25% right, coverage by the city or match and then 75% savings.

But as Councilmember Husmann mentioned, right, if those are ongoing, um I was just wondering with unfreezing those positions and the potential new hires, if it is sort of contingent upon um the RFA and what happens Is there any discussion about waiting?

I mean, I don't want to bring people in and then have Yeah, be having to to backtrack. Any discussion about the timing of when those, right, potential new hires Are there already people in the queue? Do those positions need to be open?

Just sort of the timing of when that would come on board, or if it would potentially be after that vote for the RFA. I'm happy to answer a little bit on the hiring front what's been going on. We're we're We need these positions where close to where we're allocated positions are right now and I think the long-term plan right now, Council President Stone is that, you know, there will of course be attrition over the next few years as well that we tried to plan for with just how long it takes to get an officer on board and through the academy and training.

Okay. Yes. >> Um just to add to that, India Spencer, Finance Director. The 3 years is kind of that window where we will consider adding operating costs. If it was a 1-year grant or something smaller, it we don't look to add operating costs in that nature.

This gives us more time to plan out for that year three as as as we know funding has run out with the CARES Act and the ARPA funds and have experienced those operating costs. So, this gives us time to plan and yes, the RFA will have a big impact in that planning process.

Yes, Marilyn. One other piece to inform that is while Council did take action which preceded the grant award opportunity was to enact the public safety, the 0.1% public safety tax. A lot of that has been consumed by just the cost of doing business for public safety, but not all of it.

So, we do have some allocations to those monies to support like that 25% match and so. And I was just going to comment that I assume with 22 people eligible to retire, I would imagine over the next few years perhaps a few of them will actually retire.

So, natural attrition will hopefully see what the RFP does or RFA. Um and if it's successful, great. If not, then we know how to pivot and not necessarily continue to fill positions, but the positions would be trained and hopefully on-boarded at that point.

So, it kind of gives us a jump start. Um if there's no further questions, I'm going to call the vote. All those in favor. Aye. Aye. And I recuse myself, so I'll bring that forward tonight. Um So, thank you very much.

Um excited to see some of this work coming forward. So, our next agenda item is 24937. Um an ordinance amending the 2026 budget to recognize revenues and expenditures associated with the public safety funding program award amendment two.

Um the Washington State Criminal Justice Commission awarded the Bellingham Police Department 3,700 3,583 um grant through the local law enforcement grant program created by engrossed substitute bill 2015.

The grant revenue will fund higher hiring officers, employee retention, training, and other public service efforts. And so, in case anything additional is to be added, um our finance director Andy Asbjornson is here to um provide any information or answer questions.

Yes, thank you, Council Member Anderson. Uh this is really the ordinance to just implement all the expense authority and FTE authority that that Ty just went over on the um on the grant. So, this would add um $1,540,715 in expense authority and add revenue of $1,490,504, and that difference is that 25% city match for the personnel.

Uh committee, any questions? This is a vote to approve. I'll move to approve it. Okay, we have a motion. Um no further questions or comments. Oh, council member Stone. Council President. Just had a question on the ordinance.

Um the different sub-section two reference three entry-level police officer positions and then section three full-time equivalent count is hereby increased by two FTE. And so I believe that um Deputy Elmendorf was speaking to also a records position and a warrant officer and if those are separate but if the other three entry-level police officer positions were also FTEs, the numbers didn't match for me.

So I was just wondering. Yeah, good question. The uh so in the budget that was approved, the FTE numbers were in there, but the dollars were not. And so that is This is adding the dollars back to those FTEs that were frozen.

And then the two additional ones here are adding to the number of FTE for the department. It was the frozen positions that I missed. So thank you. Okay, any further questions? If not, um all those uh approving?

I. >> I. I am recusing myself, so I'll bring that forward tonight um to the council for a vote. Thank you very much. Thank you, Council President. >> one more item ahead of us for the budget committee.

And that is item number 24932. A discussion of the land use application fee schedule. The city has not notably updated the land use application fee schedule since adoption in 2007. In an effort to bring the fee schedule into alignment with current costs and expenditures, city staff would like to discuss the potential update to the land use application fee schedule.

Included in this discussion for contextual purposes, staff will draw a distinction between the application fees, permit fees, impact fees, and system development charges. Additional consideration will be given to the implementation of a technology fee and the potential for cost recovery system.

So, joining us today is our planning um director, Blake Lyon, and then also our public works assistant director of engineering, Michael Wilson. So, I'll turn it over to Director Lyon. Thank you, and good afternoon, Council and Mayor.

Um also have with me, in addition to Mike Wilson, uh Kurt Nabefeld, who's our manager for development review services. So, this afternoon really is an opportunity to kind of introduce this topic to you, to answer any questions that you may have while we go through this process.

And so, I encourage you, please feel free to interject as we're going through some of this stuff. Happy to go back if we need to, but wanted to give that opportunity. Uh and then just to gather some input and thoughts that you might have with this.

So, I'm going to start relatively high-level. Uh we have a wide range of fee types uh throughout the city. Those that are illustrated here on the screen in green are are the fee types that are specific to the development services portion.

So, I'm not going to go through all the details of those, but I will hone in a little bit on the those that are illustrated in green and give you a little bit more specificity on those pieces. And then we're going to go in in particular into the land use fees in general.

So, the development review portion of this, and it's just to serve as a reminder that it's not just a planning function. This really is a multi-disciplinary effort that's taken on by the city, including those departments and teams that you see listed on the screen there.

So, it does uh cover a wider range of folks that are involved in that. Um what you will typically see is we have application fees. These are when our proponents of projects come in and they're asking for something.

They want it to be evaluated. Uh as an example, the first bullet there lists out a few of the different types of land use fees. By no means is that an all-inclusive list. It's a much much much broader list than that.

Um but just to give you an idea, these may be some that are familiar to you. But we also have special event uh permits and applications that come in. We have um public facilities uh construction agreements, PFCs as some more they're commonly known.

And so, these are all different application types that come in and are reviewed by those multidisciplinary staff members. Then we have when we get through and you have the entitlement or the permit that's uh being issued.

Now, you're going to get into more of the construction-related permit types, the building permits, uh what we refer to as MEPs, which is mechanical, electrical, plumbing, maybe some fire department, uh and again, some public works stuff.

So, these are typically based on the valuation of the job that is being proposed and they're a proportionate. And they're often set in the building industry um consistent across the state because we have a statewide building code in most cases.

Then you hear some discussion about impact fees. Uh it was just a couple meetings back that you all considered the multimodal transportation impact fee, uh and we actually reduced those. Um parks also has its uh impact fee, and the school district provides one as well.

Probably the most notable thing in regards to the impact fees is it's thinking about creating a nexus between what that proposed project is um creating in terms of impact to our existing system. Do we need more park lands?

Do we need additional school capacity? So, it's thinking about the impact that that project will have on our community looking forward. Impact fees are are not supposed to deal with existing deficiencies.

That's where you get user fees. That's where you get taxes that come into play, but impact fees are looking ahead at those that are created. And then system development charges and Mike Thurman they can go into this in a much greater depth than I can.

But, it's really looking at those utility services that we provide and the charges that are necessary to help grow that service, provide that service to that particular project. And you can see the range of different things.

This is an actual screenshot of a project and you can see the complexity of the various different components. The green being the the sewer, blue being water, and the kind of pinkish purple is the storm water.

And so, you can kind of see a range of different things that go into those particular projects. And it's also a way of looking at and you may have heard in the past kind of development pays for development.

So, as new projects come online, they're carrying those costs. We often talk about in our line of work, it's somebody's paying for it. Is it either the developer that's paying for it up front when the project is being anticipated and proposed and analyzed, or is it the community that's paying for it on the back end but but we all know that development is expensive and can be costly.

And so, we want to make sure we understand what those are and maintain our systems accordingly. All right. Now, I'm going to take a minute and hone a little bit in on on specifically the land use application fees.

As you heard in the introduction of this particular item and as in the staff report, resolution that adopted the current fee schedule It was done in 2007, so almost 20 years ago. There were a few amendments that have that I've got listed up there on the screen that uh were in the interim years.

Uh but most of those were just adding little bits and pieces of the the majority of that has not changed in that in the last 19 years. As it's laid out on our website and our fee structure, what you have is basically the application type in the far left column here.

Then you have the land use fee. There are certain multipliers that come into play on some of these. If there's a public hearing notice, we have an additional charge for that. If there's a um a per acre fee or a per lot fee, then you'll see some of those called out.

Um some application types uh require resubmittal and additional evaluation, and so we we can oftentimes collect a little bit there. And then uh several of our application types are required to go through the hearing examiner.

And if you recall, that's a third-party independent contract, so we pass through some of those costs, but much of that has not changed substantially in that same amount of time. So, while staff and employee costs as well as those contract costs have increased over the years, we have not captured a lot of those.

All right. I'm not going to spend a ton of time on this. You all know this intuitively, but inflation has been uh very intriguing over the last 20 so on years. I put a few little statistics there just to kind of remind us what life was like maybe back in 2007 when the median home price was 350 15,000.

Uh it's it's more than double that now. Uh so are gas prices and all the things that go along with that. But uh just by way of illustration, you can see over here on the far left. This is kind of where the waterfront has uh changed.

This is Costco that's in here, didn't exist in 2007 in its current location or King Mountain. So, a lot of things have evolved and changed and the need for different, uh, infrastructures associated with that.

I want to take a little bit of time and talk with you about kind of the current state of the development services fund. Uh, you all have been very involved and engaged in, um, the general fund discussion and we've seen those alligator graphs and a lot of the things that go along with that.

Um, but you may recall and and Forrest and Annie talked about this in the past that we've got 50 different funding sources, uh, throughout the city and, um, development services fund is just one of those.

So, thank you to the finance department. We've got This is basically our own version of the alligator graph when it comes to the development services fund. So, very much like that, uh, where you see the revenues are in the kind of the blue bolder colors, the darker color being that which was in the past, and the lighter blue is that that's being anticipated in the future.

The green columns are the fund reserve balance, and the kind of yellow and orange line is the current expenditures. And obviously as we're here, uh, and looking in real numbers at 2025, um, we start to see that gap grow.

Now, one of the things that's really, uh, something I want to hone in on is, um, even though we start looking at those expenditures and we're doing our part to try to make sure that those expenditures come into line meant with what we need, um, we have an interesting thing and you'll see it over here on the far right where it says hold ready to issue.

Um, this is a dynamic where we will do some work, we'll do some reviews. The permits are ready to be issued. We have them on hold and for one reason or another our applicant base is choosing not to come pick those permits up.

It may be for financing reasons, it may be for just general economic issues, but we have about and we updated thanks to uh Laura in our department and and Kurt gave us some real numbers as of this morning.

So, when I prepared this we were at about 273 permits that were waiting to be held and that's in about a $6.3 million range. As of today, it's about 258 permits and about $6 million of revenue that has not been realized.

So, that that kind of green bar dropping off towards the end can change very differently if people come in and actually pick up those permits and we see that work, but part of what we're trying to do is make sure that those two are not misaligned when we consider going forward.

So, the next portion of this presentation really is going to focus on trying to get as close to and and there's no such thing as kind of one-to-one comparison or apples-to-apples comparison, but just wanted to give you an overview of what it is.

So, we looked at a number of different cities that were kind of in the range of our population or maybe slightly larger than where we are. Uh we looked both at, you know, the western part of the state and the eastern part of the state.

We compared ourselves to our colleagues throughout the county. Um we also realized that land use fees can the categories or the names that different jurisdictions use very wildly. Um and so, what we tried to do is pick a few throughlines that were consistent across the jurisdictions.

And so, very common application types to get as close as we can to that kind of one-to-one correlation. The short list is the two cities that are the closest in size to us, which is Kirkland and Yakima.

And then the average comparison is looking at six of those jurisdictions across the state and kind of averaging that statewide. So, to walk you through, there's a lot of information there, but you can see in the map in the upper right is kind of the distribution of those different cities.

Those respond to those that you see in the columns that are listed here. What you'll see and what you'll note in all these, and I have an analytics slide that will come up here in a minute, but if you just look at like, for example, the per hour, that's the amount we're charging uh for the work that we're doing, you know, we're if not, we're the lowest, you It's hard to count for these last two out here, but we're certainly lower than the other four that are listed in here.

You start to look at some of these other application types, and but for the pre-application that Spokane provides, we're substantially below our our peers um in the in the industry. As we begin to think about how that looks when we compare ourselves to Whatcom County, again, Bellingham here in the second column, Whatcom County there, and Ferndale, by and large, almost in every situation, again, except for the pre-app, uh we're behind the curve when it comes to Whatcom County and Ferndale.

Lynden's a bit of an outlier uh in that they're uh very different than everybody else, but also much more simplistic style of development. They're mostly doing single-family uh homes in there. So, when you do some of the comparison, and again, the stuff that's shown here in the in the um kind of bold red line, what I did here is I tried to be conservative in the overall analytics of this and say, "Okay, where you have the short list, which is the two jurisdictions, Kirkland and Yakima, that are close to population size for Bellingham.

Or when you and in one of those instances, Kirkland has a $21,000 fee. So, it just skews the results very dramatically. So, in that instance, I went over here and I took the average of those six jurisdictions.

And that's the same thing as for the SEPA checklist. But, what you start to see when you do that comparative analysis is what is the percent difference between what the city of Bellingham is charging and what our comparative jurisdictions are charging.

And what What was amazing to me in doing this analysis is that several of those, like the shoreline or the short plat, were basically the rate of inflation. We have not adjusted for inflation over the last 20-some-odd years.

And so, you see these coming in in those kind of 30% ranges, which is consistent as if we had been adjusting for inflation the entire time. And then the balance of those were several hundred percent below what the market is, if you want to um say it in that in those terms.

So, it's an It's interesting to see how we can adjust or how we can bring forward some of that. So, one of the requests that we'd like for you to consider today is thinking about adjusting the land use fees to accommodate for that uh lack of increase in inflation.

And then thinking about the utilization, as we've done in others, where we do a CPI. And so, it's an annual update and we're not we're not falling behind uh the same way. The Department of Commerce, when we start thinking about this overall concept, has a bunch of guidance that is out there.

And so, we tried to align our thoughts with what that is. There's a few definitions out here about direct costs and indirect costs. That's capturing a lot of that labor force, and much of that has changed.

You may recall that we just did a budget amendment to adjust for some of the changes of those indirect costs that were there. Um and then there's a few and we're the ultimate goal is to kind of get down to this true cost recovery component.

And I'll touch on that a little bit here in a minute. Um but these are three different methodologies that exist. Right now, for the most part, we're doing flat fees. So, when somebody comes in, applies for an application, go through the process, we're just charging one consistent fee.

That works very well when it's smaller, it's more predictable, uh there's not a lot of extenuating circumstances, and we can capture a lot of those costs in there. To go directly with a hourly review where you're billing, there's a lot of administrative and overhead components associated with that.

So, we're mindful that not to go too heavy on that side because of the amount of effort involved in that. So, one of the things we've been contemplating is the idea of doing a hybrid, which allows us to take in a flat fee, and then if we have the need to issue what we call a request for information or an RFI, then we have the ability to say, "Okay, do we think that this particular project is going to require additional analysis, additional staff time?" And then we can bring in a deposit, bill our staff time against that deposit, and then refund any balance that's not used back to the applicant, um or if there's a need for a second deposit, we can go down that route.

By way of example, and I'll give you one that's local and one that's just from my past experience. A local one is we have I'll leave the project nameless, but we have a project that submitted. We took in about $13,000 of application fees.

That project's been ongoing for about 3 years. That $13,000 would have covered roughly hours of staff time. We've spent hundreds and hundreds of hours of staff time. So, right now we're covering the cost of that development application and that review.

When I worked in Northern California, I worked on a project for 3 years. The staff cost we had a cost recovery system in play over the course of the 3 years when we talked about hiring outside counsel, land use consultants, other things like that.

On that particular project, we spent almost $3 million over that 3-year period. That project never got built. Now, you can imagine if that's something that the city has to, you know, amortize in its cost, that can be pretty impactful for stuff that doesn't happen.

Uh and so, what we're just trying to suggest is that we're doing our part to capture some of those costs, especially in this day and time. Um So, again, initial flat fee, resubmittal, and then project cost accounting associated with Let me back up really quickly.

One of the things that we'll do as part of this, if you agree with this direction, is we'll go through and identify that true cost and look at billing rates for different level of staff. And so, that would be part of uh if we're to move forward with that type of uh fee structure and ordinance, we would publish those rates and be very clear.

Any of you all that have worked with consultants, you'll often see principal comes in at this point, a senior staff member, and there's different billable rates that come along with that. So, we would uh approach it from that perspective.

So, this last thing that we wanted to kind of touch on is this idea of a technology fee. This is something that would be specific and unique to development services. So, it would be a percentage component.

Based on the fee value that comes in and it gives us the ability to look at our systems and basically earmark some services. One of the things that we are dealing with right now is that our permitting system track it is um when we initiated that service, we did a lot with customizing the scripts, which is basically trying to do some automations and other things like that.

You can appreciate that when you do some of those customizations, if there are upgrades that happen to that system, they don't often work with those types of things. And so, the the adage there is to focus a bit more on what we call configuration.

So, if you have a an Apple iPhone, for example, um you can configure that, you can put your own uh back you know, drop on it, you can move your home screen around, put your different apps on it, all those kind of things that make it feel very personal to you.

That's configuration. You're not customizing any of those things. And so, when they push out an update, the update works hopefully seamlessly. Uh but, you know, much much more progressive in that regard.

So, we're trying to work through different examples like this where we can serve our customer base and take advantage of some of these advancements that we start to see in the industry, a more robust permitting system.

We're currently doing electronic plan review. Um we'd like to continue offering that service. There's a lot more requirements um and the desire to be transparent with our public in terms of putting out dashboards or reporting to the state, continuing to stay current on a lot of the GIS needs that are out there.

And then, there's a lot of things that are going a bit more digital in terms of the code availability and you know, just future considerations that were not really mainstream right now. We certainly want to be able to to stay current on those and be able to provide the services that that our customer base needs.

So, in summary, our request for your consideration is again to adjust the land use application fees to accommodate for the inflation that we have not captured in the last 20 years or so, adjust it moving forward in CPI, think about utilization of the hybrid cost recovery method, and again, more details I'll come back to you about the specifics of that, and then the institution of a technology fee.

And we feel like with the combination of those things, we can stay current and continue to provide the amount of uh services that we have to our to our general customers. So, I'm going to stop there. Again, we've got uh Michael here, Kurt's here.

Happy to answer any questions you might have. Okay, committee, um do you have any questions? Okay. I I actually have a question. Um or just uh request for the future. I'm I'm in support. I mean, 20 years we I mean, we do hear from developers to get rid of fees, it's too expensive, it's why they don't develop, but the reality is we externalize the cost onto everybody in the community who are not benefiting from directly financially from development.

So, I I do think the cost should be carried. Um the fact that we haven't updated a lot of these for 20 years, I think that that by some of the costs are getting a bargain cost at this point. Um even if we just adjust for inflation, it looks like we'll still come under based on some of these graphs of other municipalities.

So, I I guess I'll be curious, do we Do we phase it in? Um we just you know, raise it up. >> [snorts] >> Um I'm a little curious on um the true cost as far as doing the hybrid. Um your example of uh you know, a municipality losing millions because the plan never came forward.

I imagine those much more expensive ones are very large, complex developments versus you know, the smaller I don't want to say mom and pop, but your straightforward single family or the the one uh multi-story uh whether it's condo or apartment.

I'll be interested to see examples of where those costs would be and possibly how much that might be. So, if we look at like Sammamish Way, um one of the developments there, um would that have been applied or would it been like just the a straight fee because it wasn't overly complex?

And if it was applied, what would have the expected cost be for that developer compared to a cost? I don't know if you'll be able to use an actual example of like this is what this developer paid, but if we could have like a an idea of what that looks like versus um I imagine like you know, subdividing and platting out all of King Mountain, that would I imagine go to more towards the the true cost.

Um and then maybe that crystal ball is there the potential if we do get up to something that's millions versus it might have cost them 250,000, is there the possibility of eliminating that development?

Or are there options for people to phase in and that would become a money saver versus not cuz I think that communication is going to be really important that if they phase in over period of 10 years, they may actually save money because of the smaller less complex versus let's get it all done and put the money up forward because in the long run you save money.

So, I'll be curious on that type of outlook and I imagine developers will be too wanting to know what would be the best path forward for them. So, now that I threw that out any Yeah, and your your um thoughts on you know, different examples of cost recovery.

You're spot on in that it you know, as we get especially when we start instituting the new um state direction and code updates on this, we're going to see a lot more project types that are administrative really reviewed and anticipated to be very streamlined and and those in our mind and we'll we'll put some more uh clarity behind this, but those are the flat fee components where we felt like those are pretty routine, pretty consistent in our overall time approach and so we can do that with a flight fee flat fee.

The subdivisions, the things that you're talking about where there's and this is particularly notable because there's not a whole lot of easy properties left when you're talking about the larger scale developments and I should say that the Northern California example that I used was a 1,400 acre master plan.

I mean, very different scale than what we're talking about here, but just in the context of that thinking about those projects that often require two, three, four iterations of back and forth with city city staff and involve environmental analysis and public involvement and change.

That's the stuff where we're looking to capture some of those costs. So, so you're you're absolutely right and we'll give you more detail on that. Council member Liljaquist. Yeah, sorry I was late to the meeting.

So, for feedback, it makes a lot of sense to update the the fees, the flat fees that have been below the going rate, below genuine costs. And the hybrid model does make sense, too, but my feedback, my preference is to do as much as possible as flat fees.

For the sake of the development community, the one thing they want people to do is understand their costs and know them ahead of time. As much as possible to be flat fees. And so, then the question is, can you explain to me yet, maybe I just didn't quite understand it, when are there cases when you would roll over?

You gave kind of some examples colloquially, but is there a more clear example Will the development community also know when they're going to roll over and start be going to the hybrid model or stay within the flat fee system?

Yes, and when we go through and when we when we bring forward to you a resolution, it will have the different application types that are eligible for cost recovery. So, we'll call that out. So, all of them would have, for example, everything would be a flat fee, then certain projects would start with a flat fee and be eligible for the cost recovery if we get to that standpoint where we're requiring additional cross-reference information, additional And those would be And you can see examples in the in the staff report of the existing fee structure.

And we can bring other samples of different jurisdictions that have done it this way, but essentially, you know before you've even submitted your application whether you're subject to that cost recovery component.

You will also know um you know, what the different billable rates are for staff, so you can have a sense. Now, what we won't know entirely is how much time will be dedicated towards that, but there'll be clear indication about how we're doing that.

I should say that just by way of um acknowledgement and and Mike can go through this in greater detail. For the public facilities contract, we already are doing that level of cost recovery. So, when a when a applicant is coming in and specifically going through the PFC, we are charging against the deposit already.

So, we're just trying to build that same model uh for for other uh application types as well. That does sound like some good clarity. So, I'm sitting a table here with dozens and dozens of possible fees.

Um out of these dozens and dozens, what percentage might be the ones that have a little flag also subject to cost recovery? Like 5% of them or half of them? I don't I certainly don't think it We have to do that work still, so I I don't I can't give you an absolute.

It will not be half of them. It will be far fewer than half. I don't want to give a absolute percentage of the risk of of being wrong. I Whatever I tell you would be wrong. Um but absolutely, we view it as looking at the the most complex projects and the most and the largest scale of those.

And so, we just want to make sure that we don't find ourselves in a similar position where we're you know, a year, 2 years into reviewing a development application and we're not able to to amortize those costs.

So, on my end, um I'll be interested in knowing more about the the technology fee. I I do support it, but I'm also bringing a lens of working at a college and understanding how much technology costs an institution.

And but I also I'm hoping that this is a direction going and the information will be able to be provided is that I I know by I know technology software especially is extremely expensive but it also once it's purchased and utilized it creates a lot of efficiency and cost saving.

So in order for I'm assuming the city to be able to invest in better programs and keep things up to date and be able to go find the software that's going to create better efficiency and cost savings which then could be passed on to the rate payer or the developers.

Um I'd like to see maybe some examples of that how like what kind of what direction would we be taking this? And then the expectation of either better interface service efficiency or cost savings because I think um a lot of people might think technology should just be part of the whole package and why are people paying something separate because I I noticed there's just a couple of um locations that have implemented a technology fee and I would imagine over the next 10 20 years more will be doing that because of the the overall cost of it.

Um so I think kind of getting out ahead is smart cuz it's not going to get cheaper but I'd also like to see how that's going to be utilized and make sure that if we do implement it that there will be better efficiency and cost savings.

So if that kind of information comes back with it and I'm hoping I'm applying the thought of what the technology fee utilization would be for not just bringing the lens of the college forward. And the example that I gave earlier about our kind of permit tracking system.

Um We know that we are limping along a little bit with our existing system. Uh and that's okay uh because it's it's the system we know and we're working through that. But as we start changing the new updating the new codes, as we start to be wanting to be more responsive to our customer base, um wanting to be able to report more efficiently and effectively both to our general public as well as to the state, being able to build those queries, to build in the automation that you're talking about, to build in that level of transparency, we're a little bit handcuffed right now.

And so part of the goal in that is if you all agree and we bring forward that technology fee, that's a opportunity to do a small percentage of the fee base structure to to pull that money aside, give us the ability to do that uh implementation.

We're not We have to create that nest egg first, go out, uh go through the procurement process of identifying, bringing that in, training staff, training our our customer base, going through that process.

But you're absolutely right. Uh there are efficiencies that you can gain. There's conveniences that are also in that. Um one of the things that we've seen just in the industry as a whole is people's comfort level with um texting in requests as opposed to calling into an IVR system or things like that.

So there's just different ways people have in communicating. There's different ways to balance and manage workload and reassign different things. And instead of going in by hand, uh somebody calls an inspector calls in sick, instead of going in by hand and redoing all of where their inspections are, you know, it's a drag and drop.

And so you can have some efficiencies just in terms of how we manage our overall workload volumes and other things like that. So those are some of the examples. We'll bring you more and be a little bit more specific as we come back to you.

Okay. Any other comments or suggestions or insight? Seeing none. Wonderful. Thank you. I'm looking forward to that work coming forward. So, I will turn it back to Council President Hannah. Thank you very much.