Agenda - Planning Commission - 06/02/2011 - Special Jt Mtg w CC

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"Elk Rivers[/Shakopees] collection, retention and use of building permit fee revenue that exceeds its costs of reviewing, investigating and administering applications for building permits constitutes a taking of private property under the Fifth and Fourteenth Amendment of the United States Constitution and Article 1, Section 13 of the Minnesota Constitution." Recommendations In light of these legal requirements we suggest that the cities adopt the following practices: 1) Cities should review, evaluate, and adopt their fees on an annual basis in order to make sure the fees are "fair, reasonable, and proportionate to the actual cost of the service for which the fee is imposed." 2) Prior to filing the city's annual report with the Department of Administration, the city should consult with its finance department and possibly its auditor, to make sure that all expenses reasonably associated with building code administration and enforcement, and development activity are adequately captured on the reporting form. (See, Methodology below) 3) In adopting building and development fees, cities should not blindly rely on boilerplate fee schedules that may have been established without closely reviewing the costs associated with the services provided. Methodology for establishing defensible fees Step 1 Identify all direct cost associated with the building code administration activities. These would include: • most, if not all, of the salary and benefits associated with staff involved directly in the building code administration function; • the annualized cost of supplies, equipment and materials associated with the building code administration function. Step 2 Identify city's general overhead charges such as building costs, insurance, heating, sewer, water, fleet costs, IT costs, administration, finance and city council, and then allocate to the building codes administration function, a proportionate share of these costs. Step 3 Interview the other city departments to determine what percentage of those departments' time is reasonably related to supporting building codes administration activities. Once that "time spent" evaluation is completed, allocate a percentage of the cost of those department budgets to the building codes administration function. The following departments are likely to devote at least some time to support the code administration function: • Planning, zoning and development • Engineering and Public works • Public safety (police and fire) • Park and recreation 3