Consideration and Adoption of Resolution No. 2017-21: A resolution of the City Council of the City of Flagstaff, Arizona, adopting a revised methodology for calculating building permit fees, increasing fees for building permits, and establishing an effective date.

Staff is proposing a new method of calculating building permit fees based on the current International Code Council (ICC) guide. (See attached International Code Council Building Valuation Data, February 2017). The new method allows the City to create a permit fee multiplier based on the building safety program budget, desired recovery rate and annual construction valuation. The building permit fee is then calculated from the square footage of the project, multiplied by the per square foot valuation determined by the occupancy and construction type, multiplied by the permit fee multiplier. The plan review fee is 65% of the building permit fee.

Building permit fees have a direct impact on the cost of a construction project and thus the property owner. In general, smaller projects have a smaller fee since it is largely based on the square footage of the building. Occupancy and construction type are also variables as they relate to the number of inspections required. Fees on the smallest home will go down with the ICC multiplier method. This is primarily because the 2017 valuations include mechanical, plumbing and electrical costs, whereas the current method requires those fees be calculated separately. Fees increase for all other sample projects.

The Fiscal Year 2018 budget included expenditures that rely an increase in building permit fees.  Should the Council decide to not to adopt new building permit fees or at a different level of recovery, the City Manager may need to reconsider those expenditures.

Staff has provided a table that provides a comparison of the current fees adopted in 2007, the proposed new fees based on the ICC fee multiplier with 100% recovery, ICC fees with 90% recovery and ICC fees with 80% recovery. The table includes three sample single family homes, a 100 room hotel, 9 unit apartment and 7,240 square foot restaurant.

Economic Development - Grow and strengthen a more equitable and resilient economy. Affordable Housing - Support development and increase the inventory of public and private affordable housing for renters and home-owners throughout the community.

Building permit fees were last adopted in 2007.  Staff presented information at the February 17, 2017 budget retreat on adopting the current International Code Council methodology and building material valuations for calculating building permit fees.

Staff has provided sample permit fees with a recovery range from 100% to 80%. The permit fee multiplier allows the city to determine the percentage of the building safety program budget expected to be provided by the building permit revenue.

Staff is presenting proposed changes to building permit fees which cover plan review and building inspection. Building permit fees were last updated in 2007; they have not changed in 10 years. Building permit fees are calculated by identifying a per square foot value for a project based on the type of construction and occupancy. Under the current fee structure the project valuation is then used to identify a range, which provides a base fee plus fees based on $1,000 increments. (See "Building Permit Fee Calculation, effective 2 July 2007" table). Once a permit fee is calculated, the plan review fee is 65% of the permit fee. The proposed new methodology identified on the International Code Council attachment allows fees to be determined based on the programs budget and desired recovery to operate the program.

Staff conducted community outreach to present the International Code Council methodology and construction valuations.  Two open houses were held at City Hall.  A long list of consulting engineers, architects, contractors, real estate professionals, the Chamber of Commerce and other members of the development community were invited to attend.  In addition, staff presented the information to the Northern Arizona Builders Association (NABA).