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0 <br />EAGUE OF <br />\4INNESOTA <br />CITIES <br />CONNECTING & INNOVATING <br />SINCE 1913 <br />RISK MANAGEMENT INFORMATION <br />ESTABLISHING BUILDING AND DEVELOPMENT FEES <br />Introduction <br />Over the past few years, there have been several legislative, administrative, and legal <br />developments that have put the spotlight on municipal building and development fees. Builders <br />have claimed that city fees are excessive and they have undertaken several initiatives to make <br />municipal officials more accountable. <br />In light of those initiatives and challenges, we thought it important to review the relevant statutes, <br />rules and legal filings, and make some recommendations about what cities can do to minimize <br />their exposure to lawsuits. <br />Statutes and Rules <br />The first statute worth reviewing is Minn Stat. 16B.685 that reads as follows: <br />16B.685 Annual Report <br />Beginning with the first report filed on June 30, 2003, each municipality shall annually report by <br />June 30 to the department, in a format prescribed by the department, all construction and <br />development -related fees collected by the municipality from developers, builders, and <br />subcontractors, if the cumulative fees collected exceeded $5, 000 in the reporting year. The report <br />must include: <br />(1) <br />(2) <br />(3) <br />The number and valuation of units for which fees were paid; <br />The amount of building permit fees, plan review fees, administrative fees, engineering fees, <br />infrastructure fees, and other construction and development -related fees; and <br />The expenses associated with the municipal activities for which fees were collected. <br />This statute requires cities to annually report fee revenue, but more importantly, it requires cities to <br />identify "the expenses associated with municipal activities for which fees were collected." <br />Because other statutes and regulations discussed below require that fees be "fair, reasonable and <br />proportionate" to the cost associated with the service provided, it is imperative that cities give <br />careful thought to filling out the reporting form and do a good job of identifying "all" related <br />expenses. Cities with fee revenue well in excess of reported expenditures could be susceptible to <br />challenge. <br />The next two laws relate to the requirement that fees be "fair, reasonable, and proportionate ..." <br />Specifically, with regard to development fees, Minn. Stat. 462.353 subd. 4(a) and (b) reads: <br />This material is provided as general information and is not a substitute for legal advice. <br />Consult your attorney for advice concerning specific situations. <br />LEAGUE OF MINNESOTA CITIES <br />INSURANCE TRUST <br />145 UNIVERSITY AVE. WEST PHONE: (651) 281-1200 FAX: (651) 281-1298 <br />ST. PAUL. MN 55103-2044 TOLL FREE: (800) 925-1122 WEB: WWWLMC.ORG <br />