Orange County's Planning Department staff will be cut 20% because of an unexpected loss of millions of dollars in revenue from building-permit fees. An estimated 35 to 40 people will lose their jobs, but no final decisions have been made on which positions will be eliminated, department spokesman Brian Murphy said.
An emergency plan is being crafted to try to keep in place all core Planning Department services, such as building and construction site inspections.
Planning and Development Services Director Thomas Mathews informed his stunned staff of the upcoming layoffs in a letter e-mailed to them late Thursday afternoon.
"In my 28 years of service to the county of Orange, this is by far the most difficult task that I have ever undertaken," wrote Mathews, according to a copy of the e-mail read to The Times. "Those directly affected will receive their notices within the next few days."
Said Murphy: "As you can imagine, the level of stress is very high."
The Board of Supervisors will vote Tuesday on whether to enact an emergency increase of nearly 60% in permit fees to help staunch the red ink. The fees had been cut by more than a third since 1999, in the wake of a lawsuit by a national homebuilder arguing that the Planning Department had improperly stockpiled a high reserve in its inspection fund, which at one point reached $18 million. Refunds were also made to several developers after the department determined that it had overcharged them.
Just three years later, the fund is empty, and inspection services are being performed on an $8-million line of credit issued by supervisors in August.
"Basically there is a shortfall in revenue because last year permit activity was significantly down, more than expected," Murphy said, referring to builder fees. Projected appropriations for the fiscal year ended June 30 were about $30.5 million, most of it anticipated permit fees.
In August, a $2-million-plus shortfall was discovered in the department's fund used to pay for building inspections, which are funded by permit fees. Two employees remain on paid administrative leave as part of an investigation into the shortfall, but there are no allegations of theft or fraud, Murphy said.
County Executive Michael Schumacher's office is overseeing an investigation into the department's finances, Murphy said.
Supervisors were warned by county staff last month in a closed-door meeting that layoffs were possible, Supervisor Tom Wilson said late Thursday. He said the department has an $8-million shortfall.
"We were told that ... they were [also] working to get some people reassigned," he said.
Budget forecasters predicted a spike in building permit applications in the second and fourth quarters of last year. Instead, Murphy said, all four quarters saw less activity than any quarter in the previous five years.
There is no sign that the picture will improve anytime soon.
In his e-mail, Mathews noted that with so little unincorporated land left in the county, there is just not that much work remaining for planning staff.
"Even though a few major landholdings such as Rancho Mission Viejo still have years of work ahead, none of these will provide enough work in the short term to justify the current size and expense of our department."
He also noted that it may be years before zoning is approved for Bolsa Chica, Saddleback Meadows and Tonner Hills -- three fiercely contested projects stalled by lawsuits and other challenges.
Without such approvals, construction cannot begin, and permit fees -- the lifeblood of the department's budget -- won't be paid.