BY BRIDGET FLYNN bflynn@saukvalley.com 800-798-4085, ext. 521

Morrison decision puts fees into spotlight

Local building permit fees vary widely, depending on formula

MORRISON – The city of Morrison could have used the more than $37,000 that Resthave Nursing and Retirement Home was assessed in building permit fees for its new expansion.

Council member Sarah Thorndike says streets need to be repaired and the sewer system needs work.

But the council voted 6-2 last month to waive the $37,535 fee for nonprofit Resthave’s $7.5 million expansion. That fee includes a $35 basic charge, plus $5 per $1,000 of project value.

Council members Thorndike and Guy Hayenga voted against the waiver.

Many area cities charge building permit fees to companies in a different way from Morrison. In some cities, the fee for Resthave’s project would have been only $1,000.

What do local city governments base their permit fees on: square footage or project cost?

Like Morrison, Amboy and Fulton charge fees that are based on project costs.

But Oregon, Rock Falls and Sterling base their fees on the square footage of the construction, regardless of cost.

Dixon charges a percentage of the project cost on a sliding scale; the more square feet of the construction, the smaller the percentage charged.

Byron charges a flat fee of $1,000, which includes inspections of heating and air conditioning systems, and a free plumbing inspection by the state plumbing inspector. The city adds on for electrical inspections and plan review fees as needed, as those are farmed out.

Amboy is the only city surveyed in this area where the fee would have been higher for Resthave, at $52,500. Other cities surveyed would have charged fees from $1,000 (in Fulton) to $23,533.79 (Rock Falls).

Does square footage or project cost create work for city officials?

Several building officials in area cities have said that the amount of work they have is affected by the size of the construction project and not at all affected by the company’s project cost. Bigger buildings sometimes require more inspections and more plan review time.

Amanda Schmidt, building and zoning superintendent for Sterling, argued that the cost of a project “has no effect” on work her office must do.

Clarence Kettler, zoning officer for the city of Fulton, agreed.

“It doesn’t seem like it would be more work,” he said.

Fulton makes two inspections for each project, regardless of the project cost: one at the beginning of the project and another at the end, he said.

Larry Hewitt, city administrator and development director for Byron, said the work his office must do increases with the square footage of the project.

But it’s more complicated, he said, because square footage doesn’t account for high ceilings, which also can create more space, and more work. Cubic footage can be a better indicator of the amount of time and effort the city will have to put into a new building, he said.

“We assess each building on its own merit as to how much time we’re going to spend in there,” Hewitt said.

The Byron city government ran into too many arguments when it charged fees based on square footage, he said, so a couple of years ago it changed the way it determines building permit fees. The city gets estimates for the electrical inspection and plan review fees before it issues the permits so it can pass the costs on to the building owner, Hewitt said.

Morrison might change its fee system

Morrison City Administrator Jim Wise said he has asked the executive director of Morrison Area Development Corp. to work with him to develop a more “applicable code that would be acceptable.”

Such a code would “use a hybrid of those ordinances on the books between Sterling, Rock Falls and Dixon,” he said.

“We’d base fees on materials, square footage and other aspects of ordinances that the Tri Cities have on their books,” he said.

He said he hopes to “initiate the effort” this month and get it to the council by April.

Which cities will waive building permit fees, and why?

City councils usually decide whether a building permit fee gets waived, and waivers are fairly rare.

Sterling and Oregon never waive building permit fees. Amboy and Byron might waive a fee for a nonprofit organization, according to their building inspectors. Fulton might waive a fee for a nonprofit, Building Inspector Clarence Kettler said, but he could not recall the city waiving a fee in the 10 years he’s had his position.

Dixon and Byron waive building fees for other governmental agencies. Rock Falls doesn’t inspect buildings for other governmental agencies, and so the city does not grant permits to them and doesn’t charge fees, Building Inspector Mark Searing said.

Dixon Building Official Paul Shiaras said the city has waived a few permit fees for businesses that were creating jobs. He recalls the city doing so about four or five times in the 16 years he has worked for the city.

Morrison Alderwoman Marti Wood said one reason she voted to waive Rest-have’s fee was the retirement home’s claim that it will create 30 full-time jobs after the expansion.

“They’re going to provide more jobs in our city,” she said. “That’s going to be beneficial to the city.”

Thorndike said the city could have used the $37,000 to fix streets or work on the sewer system.

“It’s much less expensive to keep it in repair than fix it once it breaks,” she said. “I think we need building permit fees.”

Wise advised against the waiver. Morrison has no building inspector on staff. If the city council had not waived the fee, Wise said, the city could have used the money to educate and train a current employee to become a building inspector.

The city will designate money in the budget this coming year to offer that training to an employee, he said.

Permit fee waivers have to be determined on a case-by-case basis, Hewitt said, because cities have to balance the benefit of receiving the fee against the benefit of having a company create jobs in the city.

“You need to find ways of helping the developer without bankrupting yourself,” Hewitt said. “You have to look at what you’re giving up and what you’re getting in return.

“You can’t walk away and say, ‘We have nothing to offer you, I’ll call your bluff.’ Be careful when you do call that bluff. You don’t want to give away the farm, but you don’t want to cause them to go somewhere else.”

How local cities determine building permit fees

Here's a closer look at what area cities charge businesses for building permit fees and what Resthave would have paid for its expansion in those cities. The Resthave addition of 40,600 square feet is costing the retirement home $7.5 million.

Amboy

Amboy charges $7 for every $1,000 of the project cost.

Resthave would have been charged $52,500.

Byron

Byron charges businesses a flat fee of $1,000, which includes inspections of heating and air conditioning systems, structural work, and the foundation work. The city gets free plumbing inspections from the state plumbing inspector. The city adds on for electrical inspections and plan review fees as needed.

Resthave would have been charged $1,000 plus an unknown additional amount.

Dixon

Dixon has three multipliers for commercial construction, depending on the size of the structure:

If a building is 5,000 square feet or less, the fee would be .0035 percent of the project cost.

If a building is 5,000 to 10,000 square feet, the fee is .0025 of the total project cost.

If a building is more than 10,000 sq feet, the fee is .0015 percent of project cost.

Resthave would have been charged $11,250.

Fulton

Fulton charges businesses building permit fees on a sliding scale based on the cost of the project. The city's fees are:

$25 for any project less than $1,000

$40 for projects of $1,000 to $5,000

$55 for $5,000 to $25,000

$100 for $25,000 to $50,000

$250 for $50,000 to $100,000

$500 for $100,000 to $250,000

$750 for $250,000 to $500,000

$1,000 for every project more than $500,000.

Resthave would have been charged $1,000

Morrison

Morrison charges a basic fee of $35 and an additional $5 per $1,000 of the project cost.

Morrison waived a fee of $37,535.

Oregon

Oregon charges businesses based on the square footage of an addition, usually 25 cents a square foot.

Resthave would have been charged $10,150

Rock Falls

Rock Falls uses the International Construction Code. Fees vary by square foot of the building and by the materials used for the building and the type of frame.

A brick retirement home with a steel frame would be charged $115.93 a square foot, multiplied by .005.

Resthave would have been charged $23,533.79.

Sterling

Sterling's fees vary based on the type of construction.

For projects less than 10,000 square feet, the city charges $112.01 per square foot multiplied by .0025.

For projects more than 10,000 square feet, the city charges $112 .01 per square foot multiplied by .0015.

Resthave would have been charged $6,821.41.

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