BL2025-1063 - NDOT Fee Increase

This discussion topic was requested by Council Member Courtney Johnston regarding NDOT fee increases in Ordinance No. BL2025-1063.

From CM Johnston:

Colleagues,

I wanted to share with you some of the work I’ve been doing and research I’ve done around the fee increases proposed by NDOT.  My concerns are related to lack of engagement with our service providers and development community as well as potentially setting metro up for yet another lawsuit.

First, I’ll say the work that’s been done around the Event related fees and sidewalk cafés has been productive and I think we’re in good shape there.  

My concerns are with, specifically, Excavation permits, Sidewalk Right of Way Obstruction permits and Temporary Street closure permits – 6 in total when you account for the high and non-high impact categories of the three.

Second, we must know and understand that all fees are passed on to the consumer.  In the case of utilities, it’s the rate payers.  We all should also know that we cannot charge more in a fee than the expenses related to that fee – it must be revenue neutral and not a revenue stream.  Metro has been on the losing side of multiple lawsuits related to that in recent past – let’s not repeat it. 

That said, the goal of these fee increases, as told to us, is “cost recovery”.  So, I scratch my head at the work done to see what other cities are doing.  If we are trying to recover OUR costs, why does it matter what any other city is charging?  It doesn’t.

In the Budget and Finance Committee meeting on November 3, 2025, I asked Director Alarcon if current outside contractor fees were used to calculate the “Total Cost” that we are attempting to recover.  We were told no – that the “Total Cost” was calculated assuming all inspections were brought in house.  This is false. 

If you look at the fee study on pages 51-53, “Outside Consulting Inspectors” under “External Costs” are used in the calculations of the six fees I mentioned before.  Those contractor fee rates account for $7,984,025 according to their rates multiplied by the number of each permit pulled per annum which is also stated in each analysis.  That’s quite a bit of money since it’s listed as $95.04 per hour with multiple hours associated with each permit applied to a whopping 38,325 permits if you combine each of the three types.  Pulling this service in house is obviously a good idea from a fiscal responsibility perspective and I support it.  However, we must be careful.

If you refer to the FY2026 Budget Modification spreadsheet, page 55 of 73, you’ll see where NDOT requests 10 FTE for “Right of Way Inspection”.  The purpose stated is for “Additional personnel to monitor the increased demand for permits driven by growth in development, construction and telecommunications installation currently handled by contractors. Utilizing in-house staff would significantly reduce expenses while maintaining A consistent level of service.”  The fiscal note attached is $1,238,900 for the 10 employees.  That cost - $1,238,900 for in house inspectors – is significantly lower than the $7,984,025 for contracted inspectors.  That’s great!  Except two things:  1) not all these permits are associated with projects that are actually being inspected.  So, that nearly $8M price tag is less.  Additionally, we are basing these fee increases on the inflated cost with outside consulting rates built in which are supposed to be greatly reduced – down to $1,238,900.  So, we will quickly begin to bring in more revenue with these fees than the actual costs associated with the permits.  And that’s when we’ll get sued.  Again.  And we’ll lose.  Again.

My other concern around these fee increases is for essential utilities – water, electric and gas.  An increase in fee is an increase in cost which will more assuredly be passed on the ratepayers.  All of them.  This is not something I think we want to see when we’re constantly talking about affordability.   Additionally, I’m told, most of these types of permits pulled by our essential utilities are not inspected at all.  So, I’m wondering if there is a way to create a permit category within each type that has an inspection required (or not) designation with a difference in cost so that they aren’t paying for something they aren’t getting.  That would help bring those costs down.  That’s a question for legal I’ve asked.

My last concern, now, is around lack of engagement.  This process started off months ago with a letter to the council listing multiple stakeholders that had been engaged with and were supportive.  This was false, called out, and the administration withdrew.  It hasn’t gotten much better since then.  Many conversations have been had but lots of questions and data remain unanswered and not provided.  Worse, just earlier this week, I reached out to Piedmont Gas as well as AT&T.  Neither of these major service providers to our county were aware, at all, of this legislation.  They reached out to others in their space – same thing.  No one had a clue.

I received several calls that the administration let them know that they were going to defer this legislation to the January meeting.  I have an amendment that pulls out the six permits listed above and would allow the others around Events and sidewalk cafés, etc. to move forward since those seem to be good.  NDOT and the Mayor’s office can decide how best they want to proceed – either deferring the whole thing or bifurcating to allow the uncontested fee increases to move forward.  But quite a bit of work needs to be done on the six fees to make sure all stakeholders are engaged meaningfully to make sure there are not unintended consequences and to make sure the fee calculations are precise so that we don’t hurl ourselves into a lawsuit.