The Seattle Department of Construction & Inspections told the City Council Budget Committee on Sept. 30 that it needs to phase in permit fee increases and preserve trained staff so it can process permits reliably and prepare for major infrastructure projects.

Interim Director Kaylee Lee said the department proposes an 18% increase to most construction and master-use permit fees for 2026 (noting a full 35% increase would be needed to fully cover current costs). The department also proposes $500,000 one-time and $250,000 ongoing for AI permitting software and $100,000 to design a program to incentivize private-property tree preservation.

Why it matters: SDCI is funded primarily by permit fees; state law limits how those fees can be used. The department said revenues have fallen because permit activity has shifted away from a smaller number of very large, high-value projects toward more numerous small and mid-sized projects, which lowers overall fee receipts even if staff workload remains steady. Council members pressed staff about whether fee increases would chill development and about the department27s core staffing reserve.

Fee proposal and rationale. SDCI explained it is taking a phased approach to fee increases to avoid a sudden burden on applicants. The department provided example impacts: a 500-square-foot accessory dwelling unit would see an average permit increase of about $543; a four-unit townhouse about $560 per unit; and a 230-unit apartment project about $219 per unit (presenters said the department values projects at lower-than-market rates in its tables). Staff said fee increases are driven by a drop in revenues from fewer large projects and by state and local policy changes that reduced review requirements for some project types.

Staffing, reserves and large projects. The department noted it reviews more than 55,000 permits, conducts nearly a quarter-million inspections and responds to about 40,000 compliance contacts annually. It said reserves exist to retain trained staff during economic downturns so reviewers are available when permit volumes rebound; the presentation showed core staffing reserves declining under current projections. The department emphasized the need to keep experienced staff onboard to avoid lengthy delays when activity increases, especially with nearly 600 permits expected for the West Seattle-Ballard Link project.

Technology and process modernization. SDCI proposed AI permitting tools intended to help applicants submit more complete applications, reduce back-and-forth and shorten review cycles. Staff said pilots are underway and initial results are promising, but they stressed a human-in-the-loop approach.

Council questions and follow-ups. Council members asked about the effect of fee increases on housing development, comparisons to other jurisdictions and the department27s contingency authority to hire when volume spikes. Staff said fee increases are a relatively small component of total project cost and are unlikely by themselves to stop projects, but agreed larger projects could see meaningful aggregate increases. The department agreed to provide follow-up material on the cross-department graffiti funding (requested by several members), the fee tables and the assumptions behind project valuations.

Ending: The interim director thanked committee members and said staff will follow up with written details requested by councilmembers; the committee acknowledged the tension of maintaining services while facing revenue volatility.