Palm Desert will gradually increase its development and construction service fees over three years to reduce taxpayer subsidies of private development, following the city council's adoption of a comprehensive fee study on Oct. 23.
The city will phase in the new fees across three fiscal years, starting this year and continuing through 2027-28, with the goal of reaching 82% cost recovery by the third year. The city currently recovers only 61% of its costs for planning, building and engineering services.
The phased approach is designed to ease the impact on developers and builders while moving toward full cost recovery. By the third year of implementation, the additional revenue is projected to total $971,000, reducing the existing general fund subsidy from $1.76 million to $794,000 annually.
Palm Desert's current fees are on the low end compared to other cities in the region, according to a comparison based on the Desert Valleys Builders Association fee study. Under the proposed schedule, the city's fees will fall in the middle or upper-middle range depending on the category.
The fee increases, which can be viewed here, will affect building, planning and engineering services.
Building fees have been restructured to better align with project complexity and introduce fixed, consolidated fees for common minor permits to improve predictability. Planning fees will increase for projects that require lengthy, resource-intensive review over months or years. Engineering fees related to right-of-way work, improvement plans and construction inspections will also target full cost recovery.
California law requires cities to periodically evaluate fees to ensure they reflect the true cost of providing services and prohibits cities from charging more than the reasonable cost of service. The fees must demonstrate a fair relationship between the payer and benefit received and cannot function as a tax.
Most of the city's development fees have not been comprehensively reviewed in more than a decade. The current fee structure forces the general fund to subsidize private development activity, which primarily benefits private property owners through increased property values and entitlement rights.
The city will update fee schedules and billing systems, track time spent on projects, review fees annually and conduct a full study every three to five years. The new fees took effect Oct. 27.