Palm Coast Building Dept Fee Reduction will Spur Construction
Plan review and inspection fees will drop by 90% until Jan 1 2012 to help reduce the $6 million surplus in the department.
Palm Coast, Florida – June 16, 2009 – The Palm Coast City Council approved a resolution today that will reduce the city’s building department fees for plan review and inspection by 90% until January 1, 2012. The fee reduction is part of the city’s need to reduce the current $6 million surplus that resulted from excessive fees assessed during the 2004-2006 new construction boom.
The surplus was first revealed by then mayor Canfield at a 2006 city council budget workshop. The surplus at that time was more than $6 million. The city’s dilemma was created by Florida statute which requires that building department fees be used solely to offset business department expenses. This prohibited moving the surplus into general funds. However, the process of returning excess fees to those who paid them was problematic. The city worked with the Flagler Home Builders Association (FHBA) to hammer out a compromise.
The resulting resolution provides for a set aside of a $2 million reserve to be used for emergency use in the event of a local disaster. For instance, rebuilding after a major storm or fire would require temporarily hiring several inspectors. Absent a disaster, the statute also allows the city to use the set aside funds to pay for any portion of a new city hall which would be used and occupied by the building department.
The balance of the $6 million will be reduced during the 2 1/2 years reduced fee period.
The resolution represents the results of several negotiating sessions between the city and FHBA. The city and FHBA both tout the economic development component of the resolution. Both new construction and remodeling work will be substantially less expensive under the fee rollback. For instance, fees for a typical new home will drop from $1,178 to $117. Building addition or alteration fees will drop from $277 to $27, a swimming pool from $220 to $22.
Fees for large commercial building show large reductions also. Fees for a 55,000 square foot hotel are reduced from $54,087 to $5,408. For a 97,000 square foot retail store, the reduction is from $25,460 to $2,546.
Certainly the reduced fees will spur some developers who are sitting on the fence to move forward now. An immediate increase in residential construction starts is expected since home builders, expecting the resolution, have held off on obtaining permits.
While not exactly kicking and screaming, the city was not initially a willing participant in the compromise. The city’s own 2008 annual report glossed over and understated the surplus. After all, the surplus problem was the city’s own creation. But in the end, they did the right thing thanks to some not so gentle prodding from the FHBA and others. Read the following related stories:
Nice Try..
While I think it’s wonderful that the builders/investors will not be paying the exhorbitant fees of the past, just what about the past? What about all the builders/contractors/homeowners/investors that made up the illegal surplus? They get nothing back, no credit, nothing. I have a tenant that one week before they rolled back the impact fees (they never told him it was on the table) paid over $60K in fees. When he found out there were no fees any longer they would NOT reimburse him the money.
That’s just not right in my book.
Like I said, good for the people from now until 2012, but they really should have done something to compensate the people who already paid.
Tell it like it is!
The comment by Cyd Weeks is exactly correct.
Real justice, instead of this convenient solution to resolve a city created problem, would be to make a sincere effort to refund the money to those who were illegally charged the fees in the first place, WITH INTEREST!
My God! Even the IRS will do that!
FEE REDUCTION
IS NOT FAIR WHY NOT RETURN THE MONEY
impact fee
How does this affect the Impact Fee ??
facts
As someone who was laid off recently from another county, let me state that collecting a surplus is not illegal. Using the money for something other than building services IS. It doesn’t sound like Palm Coast spent the money anywhere they weren’t supposed to. The $$ is still there.
To my knowledge, subcontracted services were used an no one blinked that they were profiting millions… but when the city gained control with a city operated building department, reduced operating costs by half, they are being blasted for it…… I think the direction the city is going right now is the right thing to do…. the city’s building fees are not high (other fees might be), the service is better than most…..
And from an accounting standpoint, can you imagine how difficult it would be to try to reimburse thousands of people? A big fat chunk of the money woudl be paying for administrative costs just to get the checks out….
Think reasonably….
What
Sue are you kidding? Put yourself in this position, would you want your money back? Of course you would. The city should absorb the cost of the labor associated with processing the refunds. Now, I like the idea of reinvesting it in the community and considering that permit fees are passed on to the owner it has little direct benefit to the builder. Other that hoping it will encourage people to build. Being in the industry and having delt with the inspectors in Palm Coast dailey I always marveled at all of those brand new Ford F150’s with the laptops installed in them. Makes you wonder if that was a way to spend some of that cash?
Reply to eve
The fees for submitting, plan review, and inspection have nothin to do with impact fees. Impact fees are another way of taxing. This resolution does not change impact fees.