Building Permit Fees May Rise Significantly In A Bid To Cover Cost Of Inspections

HARWICH – The town is considering a change in the way building fees are calculated to better cover its expenses, and it could spell a fee hike of nearly 600 percent for medium-sized building projects.

 For a typical building permit application, there can be more than 80 “touchpoints,” or points of communication between the building department, the applicant and all of the other town departments that need to sign off. That review is labor-intensive and costly and isn’t fully offset by current building fees, which are based on the project’s square footage. A new system being pondered is based on a percentage of the project cost, Building Commissioner Eleanor MacKay told the select board last week.

 For a small building project, the town currently charges 55 cents per square foot, or around $138. Assuming that the project cost is $50,000, the cost for a permit under the new system would be $600, based on $12 per thousand dollars of project cost. That would represent a 334 percent fee increase. For a medium-sized project costing $200,000, the fee would increase from $345 to $2,400, a 595 percent hike. The fees would also apply to new construction, which could be even more expensive.

 Acting Town Administrator Tony Schiavi said he’s examining town operations and looking for areas for potential improvement, and found that building fees don’t cover the cost of inspections and project review.

 “We’re seeing a movement across the towns to restructure how they do their building fees as the requirements for review of many of these projects, particularly in coastal communities, and how the code has changed and the amount of time and effort it takes,” he said. “I think this is something we definitely need to do.”

 Presenting to the select board Nov. 10, MacKay motioned to two chairs behind her. One held two codebooks, representing the standards that projects had to meet a short time ago. The other chair held a tall stack of books covering various new standards that are now required. 

 “So it takes more time, more involvement,” she said. Following an initial staff review, permit applications undergo a review of the plans for code compliance, FEMA flood zone regulations, mechanical and structural code compliance and zoning requirements. Five inspections are then carried out by the building department for footings, foundations, frame and insulation, along with a final inspection. Each requires a separate visit, with time also needed to schedule the visit and record the inspector’s findings.

 At the same time, separate permits are sought from the plumbing and electrical inspectors. After the final review, the project is re-reviewed by the health, planning, conservation, fire, water and building departments, and only when all requirements are met is a certificate of occupancy issued.

 Given that the building department reviewed 4,271 permits last year, “we have an enormous amount of information that changes hands,” MacKay said.

 Changing from a size-based to a cost-based fee aims to be more equitable, she added. 

 “This increase is designed to be just a small jump on many permits, and not a large bump on any single type of applicant or discipline,” she said.

 In addition to an application fee of $70 or $75, most communities on the Cape still assess building permit fees based on square footage. In Harwich, the current rate is 55 cents, compared to 75 cents in Orleans and $1 per square foot in Chatham. Brewster intends to propose a system that would charge 85 cents per square foot plus a fixed fee for a certain number of inspections, according to MacKay’s analysis. But larger communities off-Cape are adopting a fee based on project cost, and some in Barnstable County have already done so. The town of Barnstable charges $5.10 per thousand dollars of construction cost, and Falmouth charges $8 per $1,000. Provincetown charges $15.30, and Harwich is proposing $12.

 The new structure “better reflects the town’s ability to at least recapture more of the costs of providing that service,” Schiavi said. The figure is low enough to prevent the town from making a profit on building fees, which is not allowed.

 “Will those costs inhibit any construction?” select board member Mark Kelleher asked. “Because we have a housing crunch.”

 In the communities where she worked previously, the use of cost-based building fees did not curtail development, MacKay replied. 

 “It’s still a small number” when one considers the amount of work that goes into a permit application, Schiavi added.

 Board member Pete Piekarski said he had concerns about housing affordability, but noted that there are very few starter homes currently being built. In terms of helping the town cover its costs, “I think this puts us on the right track,” he said.

Board member Jeffrey Handler asked whether exceptions to the fees could be made for affordable housing projects. “I would love for that to be part of our conversation,” he said.

MacKay said that the town has the ability to waive fees, and Schiavi said the process is already used for nonprofits on a case-by-case basis at the select board’s discretion.

The proposed fee increase will next be the subject of a public hearing, to be scheduled by the board.