City manager's fiscal 2013 budget would raise building permit fees

Tuesday, September 11, 2012 | 4:51 p.m. CDT; updated 8:29 a.m. CDT, Wednesday, September 12, 2012
If you have a new home in Columbia, chances are city inspectors made several trips to your property while it was being built. They checked to see whether it was built to code and safely constructed, among other things. To pay for most of that work, the city charges builders a fee when they receive a permit to construct a building.

The way that fee is calculated hasn’t changed since 1994, but it would be updated as part of the proposed city budget for Columbia. That budget, which covers all city departments and services, likely will be voted on by the City Council on Monday. With this change, the cost of a building permit would rise roughly 2.5 times for most new buildings. In some areas, especially residential construction, the increase would be even greater than that. But, even if the city’s fee was higher, it would still be much lower than what other cities charge.

COLUMBIA — Before construction began on the Cheddar's Casual Cafe on Business Loop 70, the developer paid a $947 building permit fee, 0.25 percent of the project's valuation of $385,000.

If that valuation seems low, it's because it was based on data from 1991, when a gallon of gas cost $1.10 and Columbia had almost 40,000 fewer residents than it does today. If the fee had been based on current data, the developer would have paid a $3,310 fee on a valuation of $981,816.


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City Manager Mike Matthes' fiscal 2013 budget, which the Columbia City Council is scheduled to vote on Monday, would raise commercial and residential building permit fees for the first time since 1996. The budget would base fees on current data instead of on data published by the International Code Council in 1991. That would raise the average fee by 250 percent and generate more than $500,000 in new revenue for the city.

"I hate taxes. But, you know, we have a government to fund,"Mayor Bob McDavid said in support of the increase at the Sept. 4 council meeting.

The budget would change residential fees more drastically than commercial fees. Today, residential building permit fees are based on square footage, but under the budget they would be calculated as a percentage of valuation, like commercial fees. The fee for a 2,000-square-foot house with a 480-square-foot garage would increase to $685 from $302, according to Matthes' budget presentation.

At recent council meetings, several council members have voiced support of the fee increases.

"The 1991 valuation has been a giveaway since 1992," Second Ward Councilman Michael Trapp said at the Aug. 20 council meeting.

"We're shifting more of the cost to the buyer or the user of the building from the general public who may or may not be using the building," First Ward Councilman Fred Schmidt said.

At the Sept. 4 council meeting, McDavid pointed out that the building permit fee was only 0.34 percent of the cost of construction, and that it is consistent with fees charged by similar cities.

"It is not an unreasonable fee," McDavid said.

Third Ward Councilman Gary Kespohl worries that such a large one-time increase could be detrimental to development and cause builders to begin development just outside the city. That, he said, could strain infrastructure and services.

"I think a 252 percent increase in residential building permits is a little excessive in one increase," Kespohl said in a phone interview. "The higher we raise the fees, the more we possibly force people out of the community."

At the council's Sept. 4 meeting, Kespohl proposed an amendment to the budget that would have cut the increase in half. The amendment was rejected, with only Kespohl and Fourth Ward Councilman Daryl Dudley voting in support.

The increases are part of an effort by the city to recoup 75 percent of the costs it incurs from its services. The building permit fees would help pay for the safety inspections the city conducts on new developments. The city performs an average of 10 inspections on a building under construction, Matthes said at the council's budget work session on Aug. 18.

The city also charges water fees, sewer utility fees, stormwater fees, and other development fees for construction projects. The developer of the Cheddar's Casual Cafe paid $11,029 in total fees, according to Matthes' budget presentation.

Matthes' budget would also raise sewer, water and electricity fees to cover a larger part of the costs of the city's utility services.

The fee increases would help Matthes' effort to reduce the city's $2.3 million budget deficit. The fiscal 2013 spending plan he proposed in July would cut $1 million from the deficit.

Supervising editor is Scott Swafford.

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Corey Parks September 12, 2012 | 7:29 a.m.

What is wrong with Columbia and Missouri in general. Currently the building tax is 302 and they want to more then double it and move us to a higher cost then Springfield Missouri the fastest growing city in Missouri. What is wrong with just making it on par with Booneville and Ashland. (Personally I would lower it).
Missouri is trying to do the same thing with tobacco tax. Currently the lowest in the country yet instead of increasing 15 cents to still be the lowest in the country they want to make it right up there with the most expensive in the area. (I do not smoke)
I guess bill makes have never heard the expression. Everything in Moderation.

(Report Comment)
Richard Saunders September 12, 2012 | 10:43 a.m.

This tax will not hurt development, per se, because we don't NEED more development.

There are currently thousands upon thousands of square feet of every type of real estate vacant around Columbia at this very instant. Likely all of it could be obtained for a cost lower than a new building.

Now this isn't to say that I approve of the fee increase (as no good or service should be provided at the barrel of a gun, but rather amongst individuals freely contracting with each other), but it isn't going to do any harm to Columbia, as the age of debt-fueled "growth" has reached its upper limit. Until all of this excessive debt is unwound, there is no capacity for true growth, as there is no true savings to rely upon to fund it sustainably.

As always, the blame here lies at the feet of the "Not Federal, Not Reserve" System, which has systematically destroyed the value of the dollar over the last century. Until this evil (the unproductive Wall St. banksters legally stealing from the productive) is overcome by reestablishing trustworthy money (i.e., something NOT merely someone else's promise to pay) there can be no solutions to the overwhelming fiscal problems facing nearly everyone on the planet (thanks to third-party government debt/spending).

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