Audit Report on Building Fees (Draft) Released

In the last legislative session a law (SB 5120) was passed requiring the State Auditor to conduct a performance audit of building permit and inspection fees. The auditor has released his draft report.

The bill also required that permit fees not exceed the direct and indirect costs associated with reviewing permit applications, conducting inspections, and preparing specific environmental documents.

The auditor reviewed 8 counties for their permit fees and the reasonableness of those fees. The audit finds:

“Among the eight counties surveyed, there were varying approaches to the determination of building permit fees. Most of these approaches focused on setting the rates at a reasonable level in relation to an established benchmark. These new restrictions will require the counties to set permit fees at a level sufficient to recover only the costs of administering the program. Achieving this objective will require counties adopt a cost recovery methodology to fee setting.”

The report also notes some aspects of the bill, and implementation, which are difficult:

• Many counties do not have systems in place to track the indirect costs of building permit programs; the bill requires fees to be tied to costs, but provides incomplete guidance on how costs are to be determined.
• The bill does not address the need for a surplus to be built during good times to get departments through lean times. For instance, because permit revenue is down in the last year most departments would be eliminating staff or radically adjusting their fees to meet the basic permit needs.

As noted, this is a draft report. The final report should be issued in January. The draft gives the oversight committee a chance to review it and make comments prior to its final issuance. They are not seeking public comment on the draft.

Please review the report here and share any comments you may have.