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Step 4 <br />Arrive at an overall annualized cost to support the building codes administration activities. This <br />will be the total of the direct cost identified in Step 1, plus the allocation of the general city <br />overhead identified in Step 2, plus the allocation of a percentage of other departments' time <br />identified in Step 3. <br />Step 5 <br />Since building permit fees must be based on valuation, you then have to make an estimate of <br />potential valuation and set your fees accordingly, to generate sufficient revenue to cover all or a <br />portion of the costs calculated in Step 4. <br />Paul Merwin 2005 <br />4 <br />