San Jose building department sees revenue decline during pandemic

One of San Jose’s most powerful city departments is just beginning to recover from a pandemic-driven decline in revenues—but some operations still lag behind.

When Santa Clara County’s shelter-in-place order went into effect last year, leaders in the city’s Planning, Building and Code Enforcement Department described a chaotic situation.

“Once they shut down, everybody went home… Nobody had any equipment,” said Acting Director Chu Chang. “We’ve got hundreds of paper plans… It was all stuck in City Hall.”

Chang said department supervisors met in a nearby parking lot, sorted papers and called employees to pick up documents.

The department’s staff faced a steep learning curve at the start of the pandemic as well as a steep drop in demand when the county shut down all construction on March 16.

Less than two months later, the county permitted construction to resume and the department began conducting inspections at nearly the same rate as before. Prior to the pandemic, the building division processed 500 “counts”—individual visits by city inspectors to various project sites—each day. That dropped to an average of 400 counts per day during the pandemic, and now exceeds 450 per day.

Part of the department’s difficulty is that fees fund a good portion of operations.

City documents show the department’s budget decreased from $62 million to about $16 million between the 2019 and 2020 fiscal years, though city officials said that’s because certain development fees were moved out of the general fund.

Spokesperson Cheryl Wessling said permit fees pay for all building division activities.

With the halt in construction and a slowing of permit applications at the start of the pandemic, building division revenue decreased by 14%, or $5 million.

Compare that to the planning division, which splits duties between reviewing projects and updating the city’s General Plan, the city’s ruling land use document. Wessling said the planning budget only decreased 6% during the pandemic. Code enforcement, which responds to calls ranging from building code violations to abandoned cars, has a distinct operational model. The division’s budget is mostly drawn from the general fund, and partly from fees for their annual inspections of apartment buildings.

The building division is finally catching up, just in time for a rise in demand. Chang said the department launched a virtual appointment system for building permits in early March that allows residents and developers to pick a time to submit plans and consult with staff on how to obtain the permits needed for their particular projects.

While people are able to book appointments through the system, Chang said the current wait time is long. The next available appointment may be six weeks out.

“We just don’t have enough people to handle the workflow,” Chang said. “Customers are frustrated right now.”

Richard Truempler, senior vice president at real estate developer The Core Companies, said people in every business sector have struggled with the reduced ability to coordinate and collaborate, and that obtaining permits is slower in every city. Core Companies is helping with a transit-oriented housing development near Tamien Station located off Highway 87.

“Everyone is doing their best during this difficult time, and certainly now is not the time to start any finger-pointing,” Truempler said. “The fact that we have been able to get a project entitled during the pandemic with numerous virtual community meetings speaks to all of our ability to adapt and persevere.”

Chang said the technology used to speed up applications, inspections and meetings will remain when the pandemic ends, with in-person services available for people who need them.

“A lot of these programs accelerate the timeline of the process,” Chang said. “That’s not going to go back.”

Contact Sonya Herrera at [email protected] or follow @SMHsoftware on Twitter.