Agenda - Council Work Session - 12/13/2011

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Subd. 4. Fees (a) A municipality may prescribe fees sufficient to defray the costs incurred by it in reviewing, investigating, and administering an application for an amendment to an official control established pursuant to sections 462.351 to 462.364 or an application for a permit or other approval required under an official control established pursuant to those sections. Except as provided in subdivision 4a, fees as prescribed must be by ordinance. Fees must be fair, reasonable, and proportionate and have a nexus to the actual cost of the service for which the fee is imposed. (b) A municipality must adopt management and accounting procedures to ensure that fees are maintained and used only for the purpose for which they are collected. Upon request, a municipality must explain the basis of its fees. Regarding building permit fees, Section 1300.0165 subp. 2 of the State Building Code reads: Subp. 2. Fees commensurate with service. Fees established by the municipality must be by ordinance and must be air reasonable, and proportionate to the actual cost of the service for which the fee is imposed. Finally, it is instructive to review the "purpose" section of the building code to see that the code is intended to accomplish a fairly broad set of goals. 1300.0030 Purpose and Application Subp. 1. Purpose. The purpose of the code is to provide minimum standards to safeguard life and limb, health, property, and public welfare, by regulating and controlling the design, construction, quality of materials, use and occupancy, location, and maintenance of all structures and equipment specifically covered by the code in a jurisdiction that adopts and enforces the code. Legal Challenges At least three cities have been sued challenging the amount of fees being collected by the cities. The two most recent suits brought against the cities of Shakopee and Elk River by the Builders Association of the Twin Cities and the Builders Association Minnesota, claim that the cities charged excessive fees. The following are excerpts from the complaints in the two suits. "To the extent that Elk Rivers[ /Shakopees] building permit fees have exceeded the cost of reviewing, investigating and administering applications for building permits, the City has charged an unreasonable and unauthorized charge on builders." "As such building permit fee applicants from 1998 to 2004 are entitled to a full refund of all building permit fees charged by the City that exceed the cost of reviewing, investigating and administering applications for building permit ..." 2