The City of Sammamish is currently owed $272,000 in overdue development permit fees, Financial Services Director Lyman Howard told the city council at a study session on Monday night.

Two of the properties on which fees are outstanding are in foreclosure, still owing the city more than $10,000.

On Dec. 31, 2008, the outstanding amount was $212,000, but increased by $60,000 in the period to June 10, an indication that unpaid permit fees would become more of a problem if the city didn’t make the necessary administrative changes.

They are seeking to do just that, spurred on by the fact that the city is currently out of compliance with a state law that prohibits city’s from extending credit to developers.

By allowing developers to have site reviews and development permits first and pay later, the city is essentially extending a line of credit.

On Monday night, the Sammamish council heard Howard’s proposal to move toward a system of predetermined fees, in which developers would know in advance what fees would be charged throughout the development process, and would pay those fees in sections, prior to the provision of each service by the city, whether it be a site visit or a filing charge.

The benefit of this system would be the certainty it provided for developers, who would have a clear idea of what the process would cost them from the outset.

On the downside however, and it is a downside that caused much concern among councilors, the system would require planning and financial services staff to charge based on a predicted average cost, one that would perhaps overcharge a simpler project and undercharge a more complex project for the sake of finding a middle ground.

Councilwoman Nancy Whitten was particularly vocal in her opposition to the plan as it currently stood.

“My gut reaction isn’t real supportive of this,” she said. “I can see that problem projects would get, not a free ride, but a ride at someone else’s expense. When you start using averages, someone gets the good side and someone gets the bad side of that.”

Whitten suggested that the city look at a deposit system, whereby developers pay an amount covering fees up front.

The money is held by the city in a professional trust account, and any ‘change’ is returned to the applicant on completion of the project.

City Manager Ben Yazici and Howard both said that while that was a good option, the city was not equipped right now to make that work.

“We really need to make this change for compliance issues,” Howard said.

“With 10 years experience under our belts, we are much better placed to propose new ways to do this,” Yazici said. “I like the suggestion that we go to the deposit system, but there are some technical and administrative things to be added.”

At this Whitten interjected, saying “it’s not that hard. It’s just a second set of books.”

“In the meantime, the current system is not workable,” Yazici continued. “We need to make changes, and this would be workable on an interim basis.”

Yazici said that the next step for those outstanding fees was to turn them over to the debt collection agencies.

Councilors Kathy Huckabay and Lee Fellinge both expressed their concern that the system of averages would be too blunt a tool in estimating charges.

“I can really see the appeal of the predictability,” Fellinge said. “With our 10 years of experience, how confident are we that the averages charged will be close to the actual cost of providing the services?”

Huckabay and Whitten both said that their concerns about lumping the wide range of projects into a few broad fee categories would be assuaged if more classifications were built in to the list of fee groupings.

“Maybe the number of lots is the main thing, but also maybe sensitive slopes, wetlands and creeks as well,” Whitten said, referring to increased time and resources needed in reviewing and approving projects of ecological complexity. “This is as opposed to lumping everyone together as if they had no problems on their property. It seems to me that people with problem child properties should pay more for that.”

Following their discussion, the council heard from Terry Fowler, who said that in the past eight years of attempting to subdivide and sell his parcel of land near Beaver Lake he had suffered great expense due to the city’s inefficient fee system.

“What we thought was going to be the cost, was thousands and thousands and tens of thousands of dollars different,” he said.

Fowler said that once he started itemizing what he was being billed for by the city, he found a number of errors, including charges for services that had not been performed, and charges that were billed twice.

He estimates that he was over-billed about $2,500 by the city.

In subdividing two of his six acre lots, Fowler said he had paid $22,000 to the city.

“Predictability is a good plus,” he said. “But it’s only a plus if it’s in the ballpark of what it is actually going to cost.”

The council was set to further consider the matter at its regular meeting on Tuesday, June 16.

However at the request of Councilwoman Nancy Whitten a resolution on the matter was removed from the agenda, to allow for further study.