City investigating increasing some permit fees, first hike in decades

By: Kristyne E. Demske | St. Clair Shores Sentinel | Published February 3, 2016

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ST. CLAIR SHORES — Asking for more clarification, City Council tabled a request from the Community Development and Inspection Department to increase rates paid for permits.

CDI Director Chris Rayes said the latest audit by Plante and Moran showed that the department was not being supported by the fees it was charging users. In reviewing the last five years of fees and revenues, it seemed that the Building Department’s permit prices were generating enough income, but the electrical, mechanical, plumbing and refrigeration permits were not.

Because of that, he explained to City Council in January, those permits were evaluated based upon their revenue and time spent, and an hourly rate was developed for each specialty. Figuring out the average number of hours spent on each permit led CDI to a new rate that accounted for one hour of service.

“The state uses a one-hour minimum as part of their operation,” Rayes said. “This is about as close as we can get in terms of a moving target.”

Mayor Kip Walby explained that the financial statements showed a deficit of $64,000, which is what they aim to fix with the higher fees.

But Councilman Peter Rubino said it looked like prices were raised without thought to how much time is actually spent on a permit for each item.

The permit for a humidifier was $15 and a furnace was $30, he said, and now both have been raised to $40. Rayes said, however, that the average hourly rate for mechanical permits was $53 and they were just trying “to get to a round number.”

“A couple years back, I had some major electrical work done. The inspector was there for all of seven minutes,” Rubino said. “In a lot of these cases, are we spending even 10 minutes on that inspection?”

The price includes the time spent driving to the home, time put in by other city staff and other overhead costs, Rayes said.

Some of the increases, however, are high: A permit for an exhaust fan was $10 and is now proposed to be $50, a permit for a prefabricated fireplace was $40 and is now proposed to be $100, most electrical permits would jump from around $20-$30 to $45, and a hose bibb is proposed to be increased from $5 to $100.

Rubino pointed out that if residents have their air conditioner and furnace replaced at the same time, “the fees are going to go up possibly over $300.”

“We are now possibly increasing the price of home improvement by 5-10 percent, depending on the work being done,” he said.

But Rayes said that much of the “sticker shock” may stem from the fact that no permit fees have been increased in the 19 years he’s been in the department. He proposed looking at costs more regularly so that there weren’t such big jumps in prices.

“This is the Catch-22 we get into,” said City Manager Mike Smith. “They’re saying, ‘You’re letting revenue get away that you can rightly charge.’ We can charge up to the cost of the entire operation ... but when you do that, there is always that risk that a resident looks (at the prices and says), ‘Forget the permit, I’ll just take my chances.’”

He pointed out that the advantage of getting a permit from the city is that a certified inspector checks up on a contractor’s work to make sure it is safe and done correctly.

“It prevents you (from) being taken advantage of by an unscrupulous contractor,” he said.

City Council decided to table the matter, directing Rayes to look at packaging some permits together in bundles, investigate where the largest price jumps are proposed and evaluate whether those hikes are appropriate, and bring City Council a salary breakdown justifying the costs passed on to residents.

“What we’re really going for is what Plante and Moran has uncovered ... not to make money, but to cover the costs that we’re incurring,” Walby said.