Staff recommends Council review proposed fees and provide feedback prior to the resolution being presented for approval at the February 23rd Council Meeting. 

This resolution will repeal and replace Resolution 11-19068, which was the last time fees were adjusted. 
Building permit fees for both commercial and residential building projects are a function of the project valuation. Due to the significant increase in construction costs over the last few years, the revenues collected from permit fees have outpaced the Building Division's operating costs. Therefore, we are generally reducing the building permit and plan review fees that are based on valuations. Some flat fees have a nominal increase due to the increase of hourly costs to the division, and we have eliminated fees for revisions and deferred submittals. 

Building permit fees for both commercial and residential building projects are a function of the project valuation. The project valuations are determined either by the cost provided by the applicant or calculated by the plans examiner based on estimated building costs published semi-annually by the International Code Council, which takes into account the type of construction and use of the building. Due to the significant increase in construction costs over the last few years, the revenues collected from permit and plan review fees have outpaced the Building Division's operating costs. While several of these projects are multi-year projects where the fees are collected up front, based on the continued projected construction growth, the fees need to be adjusted so that the revenues do not continue to significantly outpace the division's expenses.

MCA 50-60-106 requires that Building Divisions do not hold more than 36 months' operating expenses in reserves. Currently, we are estimated to have about 22 months' operating expenses in reserves. The state allows up to 36 months primarily for smaller jurisdictions that may have inconsistent revenues, yet need to provide services for multi-year projects. All fees are collected up front before construction starts, so it is critical to budget those fees for the lifespan of the project. With the proposed fee reductions, we have taken into account the operating funds needed for the lifetime of projects currently in review and under construction. Our intent is to draw down reserves over the next couple of years and may need to come back to council with a new resolution to stabilize fees once reserves have been adequately reduced. Our goal is to have no more than a 10-12 month reserve, while taking into account continual operating expenses needed for projects under review or construction.

We expect the fee changes to reduce our FY27 revenues by around $750,000 - $1,000,000. Due to the uncertainties around construction project planning, we cannot estimate a more exact amount. Overall, our customers will see a reduction in permit fees of 23-31%.

Alternatives include:
- Keeping the resolution as-is with current fees
- Reducing fees by a different amount than proposed