Chief Building Official Terry Kuipers wants the town’s building fees to cover costs for enforcement.
Kuipers recently presented a comprehensive revamping of fees charged by the department. His main goal is to evaluate each permit type and apply a fair and equitable fee based on the cost to administer and enforce the Ontario Building Code for each permit type.
He said using that approach would mean fair cost recovery can be established for most permits, and certain projects will no longer subsidize others.
“Further, this review will enable the building department to operate in a manner that will not require subsidization of the department by the general tax levy for the enforcement of the Building Code Act and the Ontario Building Code. Basically, because of Bill 124, we have to look at the costs of operating the building department.”
Kuipers said there was a substantial deficit in 2009 so, he began the review. He said the report recommends increasing certain fees and decreasing others.
He provided a power point presentation to council that summed up the changes. Kuipers stated building permit fees have neither been reviewed nor amended since 2005.
“Since that time, numerous changes have taken place within the industry, including both legislative and economic changes.”
He explained those changes resulted in a higher work load for the department, and additional inspections. Further, officials can only inspect buildings they are trained to inspect.
“As such, an extensive review of the existing fee was justified.”
His intent is to have the cost of a building permit to cover the cost of inspection.
The building department is responsible for a variety of areas. Kuipers added that before Bill 124, municipalities were not mandated to have any inspections at all for building permits. “It was done to mitigate liability, but it was not an actual requirement.”
Now, he said, they have stated exactly which ones need to be done “and it is above and beyond what municipalities did before.”
There are time limits imposed for the review of building permits.
In 2009, direct operating costs were just under $105,000. Indirect costs came to roughly $50,000. As well, $5,000 was contributed to the reserve fund.
As a result, the costs are around $165,000.
“Revenue wasn’t so good.”
That amounted to $92,000.
He added the seven-year-average of revenues is about $117,000.
But Kuipers considers that revenue slightly inflated because it included his work for other municipalities, and the compensation to Minto for that work. That happened for four of those years.
As a result, he said the operating deficit for the department in 2009 was about $71,000. Using the seven year average, the department would have lost $46,000.
His proposal for new reserves would be to have an amount equal to one year’s operation, as well as equipment lifecycling costs.
“Ironically in 2005, some of the fees actually decreased … which did not help the situation,” he said.
Costs dropped by $400 per house, “which was odd.”
Kuipers reviewed costs incurred to check permit types, as compared to the costs of the permits. He also compared those fees to adjacent municipalities.
Currently Minto has one of the lowest permit fees for residential permits in the area.
But even with implementing fees that allow for additional reserves and accounting for lifecycling of equipment, the fees “would still be in the middle of the road,” Kuipers said.
He said residential accessory structures is one area the municipality lost a lot of money. Permit fees only covered about half the costs of inspections.
“Because there are quite a few going up, the effect kind of snowballed,” Kuipers said.
However, he also compared the break-even cost to what is being charged by other municipalities. Those fees were significantly less than what it would cost to enforce.
So, in that instance, Kuipers believes that jacking up the costs up for full cost recovery would create more trouble than it was worth.
Porches and decks were other areas where the department lost money. There had been a flat rate of $75, but the cost to inspect was over $300.
In that case as well, Kuipers chose to implement a system other areas were using – with fees based on the overall size. He noted one substantial decrease will be for liquid manure tanks.
Costs to inspect were about $460, while the permit fees were over $1,330. Therefore the costs are dropping to a linear foot rate, to bring the costs more in line for inspections.
Mayor David Anderson agreed it is a good approach to try to be revenue neutral.
Concerns were raised later by resident Lorne Underwood regarding the lack of public input allowed during the public meeting. As the bylaw came to council near the end of the meeting, Anderson said that normally public comments are not allowed at that point.
Underwood said there was no chance for the public to comment during the ‘public’ meeting. “It is supposed to be the chance for the public to respond to the presentation.”
While Anderson said it was a presentation to council, Kuipers clarified that it was, in fact, a public meeting.
Underwood said he understood the need for the proposed changes and he believes there was an opportunity to entice more building and more people to Minto.
“However, my concern is that two years ago I started a development.”
While $200 on the overall permit cost is not a big ticket item on an individual home, Underwood believes the impact is a big ticket item for the number of homes he has proposed. He wondered if there is a means for the old rates to apply there since it was already underway “and not have my project included in the new rate increase.”
Underwood realized there are issues, but he has already invested a substantial amount of money into his project.
“It’s not going to break the bank, but perhaps it is something council could consider.”
Anderson asked Kuipers about the implementation.
Kuipers said if the bylaw passed, the change would come into effect the following day.
In terms of Underwood’s concerns, he said council could always be approached to ask for a reduction. However, he said the process is such that the request can only be made after the initial fee is paid.
“One thing to keep in mind is that the new rates for residential construction were based on single family dwellings,” ” Kuipers said.
He said Underwood’s project involves additional inspections that single family dwellings do not have, such as firewall separations between units.
Councillor Rick Hembly said since Underwood was working on the project for two years, he wanted to be grandfathered under the old bylaw.
Kuipers said the amendment is not to the bylaw, so that did not apply.
Council later passed the amended fee structure.
