# Permit fee retention



## mn joe (Feb 13, 2014)

We are having an internal discussion in our County as to whether any permit fee money remaining in our Zoning/Building department fund should transfer into the general fund at the end of the year.  The Zoning Administrator and I both contend that this money should carry over from year to year to cover ongoing administrative expenses and the normal ups and downs of the industry.  The County Board does not want to levy to fund our department, so we could soon be caught in a squeeze not of our making.

Does anyone have or know of any literature that suggests how this should be handled? I have an old "Handbook to the UBC" that has a quick reference to the use of fees to cover expenses.  I am looking for more detail.  I hope that the ICC or one of the old legacy codes has some direction on finances in a management manual or companion guide to the administrative section of the codes.

Thanks for any help, and I am interested to hear what other departments have done/are doing with this issue.

Joe


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## mjesse (Feb 13, 2014)

I have both of these books which detail some methods for handling budgets;

http://shop.iccsafe.org/a-budgeting-guide-for-local-government-2nd-edition.html

http://shop.iccsafe.org/building-department-administration-4th-edition.html

Our Department works directly from the general fund, so I can't speak to any alternatives.

mj


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## mtlogcabin (Feb 13, 2014)

Most states require a building departments fees not exceed the cost of running the department. I believe building departments should be run as enterprise funds and revenues in excess of expenditures are kept in a separate fund reserve for capital expenditures or when construction slows you have the funds to see the projects through to completions.

If the state does not set a maximum allowed reserve amount then a one year budget should be minimum with a two year budget the maximum.

Are you in Minnesota?


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## mn joe (Feb 13, 2014)

Yes, I am in Minnesota.  Thanks for the input.


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## mtlogcabin (Feb 13, 2014)

[h=1]Minnesota Administrative Rules[/h]

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About Minnesota Rules

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[h=2]Chapter 1300[/h]




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[h=2]Part 1300.0160[/h]




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[h=2]Topics[/h]




State Building Code







[h=1]1300.0160 FEES.[/h]§[h=2]Subpart 1.[/h] [h=2]Schedule of permit fees.[/h]The applicant for a permit for a building; structure; or electrical, gas, mechanical, or plumbing system or alterations requiring a permit shall pay the fee set forth by a fee schedule adopted by the municipality.

When submittal documents are required to be submitted by this chapter, a plan review fee shall be required. The plan review fee shall be established by the fee schedule adopted by the municipality.

*Exception:* The fee schedule adopted by the municipality may exempt minor work from plan review fees.



[h=2]Subp. 2.[/h] [h=2]Fees commensurate with service. [/h]Fees established by the municipality must be by legal means and must be fair, reasonable, and proportionate to the actual cost of the service for which the fee is imposed.







You might want to check with the state about excess funds. 2 or 3 percent over expenditures might be okay but higher numbers might draw attention from builders or others that you may not want.


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## mn joe (Feb 13, 2014)

Thanks MT.  I am very familiar with the Minnesota rules.  I was looking for more along the lines of your 1st reply, More a discussion of how the revenue should be managed and by whom. Your 1st post mentions an enterprise fund and a reserve fund for excess funds to cover capital costs and slow downs in construction.  I was hoping to find something in writing from any management manuals or explanatory handbooks that would bolster that line of reasoning.

Thanks again,

Joe


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## mtlogcabin (Feb 14, 2014)

http://edenprairieweblogs.org/scottneal/post/537/

The article does not give a percentage of additional collected fees in relation to the budget

I don't like the term "excessive fees" because it imply s you knew in advance you where going to have an increase in revenue because of a building boom

Talk with your attorney and get their advice on adopting a policy/ordinance addressing what to do with fees generated in excess of you expenditures. Search other states and see what they do with them. Seems your courts have given direction that funds could be used for training seminars for contractors. That would be one idea or perhaps a growing capital expenditure fund for your department for computers, software, vehicles, or any number of items that will improve the departments efficiency.

There are ways to transfer permit fees into the general fund, Our city charges every department "rent" for the office space used. We use to pay the FD for fire sprinkler and alarm reviews until the prevention department went away and we now do the reviews. Zoning will bill us for their time to review plans for zoning approvals. I pay half of the secretaries salary because she works part time for me. All departments pay a proportional amount for IT services.

Here is what the state of MT requires

http://www.mtrules.org/gateway/ruleno.asp?RN=24.301.203


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