Asked on Feb 14, 2012

Permit Fee?

Yamini LEED AP at UrbanmotifsKevin M. Veler, Law Office ofGlkirk Builders Inc.
+9

Answered

I have a question and I am quite puzzled at how the Permit fee was calculated at the permit office. The homeowner will be doing the work himself. He just wanted me to do permit dwgs to get a permit and work on the basement as and when he gets time. Since he was doing the work himself he averaged a total of $12,000 material costs to complete the basement. The SF is 1390. The city did not take that cost into consideration but told him that as per standards it costs $40/SF so to complete his basement it will cost him $55,000 irrespective of the fact if he did the work or not. They charged him $900 for Permit. Is this correct? What if the owner had an estimate from a GC who quoted 25,000 to complete the basement, Will he still end up paying $40/SF industry standard to calculate Permit fee?
The homeowner feels why should I pay so much permit fee since I can finish my very basic basement in less than $12,000.
12 answers
  • Paul M
    on Feb 14, 2012

    I agree completely. The government is supposed to be working for us not against us. However these days it is clear that there is an adversarial atmosphere between any government entity and the people at every juncture. it is a sad stated that we have degraded into as a society and only through reasonable unity can that ever be undone, and it should be undone. There was a time when a persons home was truly theirs but with the environment being what it is today it seems that the government owns everything and we are merely servants of government.

  • The fees are typically standard no matter what you are actually spending, and in this case the $40/sqft is their standard. Even if you somehow had all the materials and labor for free it would cost the same for the permit. It's similar to a garage mechanic. Their book says it will take X amount of time to fix problem Y, therefor they charge Z amount, even if the mechanic was able to fix it in half the time (unless you have a really nice mechanic of course).

  • They all have their formulas for figuring out the permit costs. Even if you can do the job for half, they still need to inspect it and that cost does not change. So they figure by using a sq ft costing method they know how long they need to take to do the plan review and the inspections. Typically the home owner work takes more time and effort to inspect as the township will spend more time to assure proper compliance with codes. So in effect your getting more bang for your buck then the general contractor who provides signed plans and has done this same type of job within the township dozens of times before. Now you understand why so many people and some contractors do not follow the law. They do not want to pay these stupid fee costs that only amounts to just about nothing once all is said and done.

  • 3po3
    on Feb 15, 2012

    I have to offer a little bit of defense of civic inspection fees. If you have ever seen the footage of devastation after natural disasters in developing countries without functional governments, it is clear why we need codes and inspections. As Woodbridge said, these costs do pay for real work on the part of the municipality, and it's not something the taxpayers should all pay for through regular taxes. Having said all that, $40 per square foot does seem steep. Stepping off soapbox now.

  • This sounds more like a tax than a fee. Things do vary from one state to another, but in my meager experience, there is a legal distinction, and a 'fee' must be based in some rational way to the costs of the enforcing/inspecting department. In my area, a permit fee is a certain basic amount plus ( think, IIRC) ten cent a sq ft for unfinished space and twenty cents per sq ft for finished living area. There have been successful lawsuits challenging fees that act more like taxes or assessments. Not that it is really worth fighting over a smallish amt, but my advice would be to read and study the applicable local ordinances and regulations. They must be consistently and equally enforced also.

  • Just to reiterate what others have said..it depends on the municipality. We have permit fees and the like just to administer the permit/inspection system..... but that office is tied into the Commisioner of Revenue office (i.e.: property taxes) as well. We also pay a set price for new "DFUs" (Drain Fixture Units) that is a set fee that goes toward the city water and sewage system. Whether anyone thinks it is fair or not, the homeowner is improving on and therefore increasing the value of the property. It is up to the local jurisdiction as to whether that increase is taxed with a one-time "lump payment" or increase the appraised value of the house on which it is taxed each year. I would see if the city permit office has a website that explains the process...if not, make the phonecall....

  • If he had an actual sign bid from a contractor and the contractor pulled the permit, it would be based on the value of the contract. Here, he's doing it himself and gets stuck with a flat rate tax. The county is trying to avoid the homeowner who gets the $55,000 basement job but pulls the permit himself to save money...and cheating the tax. Governments are all hurting for dollars right now. Tell your guy not to worry though....by permitting the work, he has guaranteed himself an increase in real estate taxes based on the new value of his home with a finished basement...CONGRATS!

  • KMS Woodworks
    on Feb 15, 2012

    In my area the permit is "based" on Value...and they use pre-defined formulas to keep the playing field level...this eliminates any bias form one job to another. It is supposed to be "fair" this way. Personally I feel that big brother is a bit invasive on may issues, permitting being one of them. As an IRC certified contractor I always build to code and provide a "safe" project. For the average homeowner this may not be obvious and big brother steps in to ensure Joe Public's safety. This tug of war with government is one reason why many folks will not pull permits as they do not want to be invaded by bureaucrats. Down the road this may or may not be a problem. As Handy mentioned above...this is the first step to higher taxes....big brother always wants his cut too.

  • Glkirk Builders Inc.
    on Feb 15, 2012

    Yamini, 900 sounds quite high for a building permit fee. Here in Virginia (As Tim Hewitt stated) we have some high extra rates when plumbing is involved. But the basic permit fees are usually some set amounts and also some fees based on sq. ft and also dollar value. I am sure the homeowner could get a breakdown on all the entities.

  • I just spoke to the city again and they said this is final and will not do any refunds. I wish the home owner has brought with him some bids, so he'd have substantial proof on him much the interior renovation would cost him.

  • Yamini, I did talk to Jean Vallee today and she should be calling you with information/background. Kevin, now in Georgia at the time of sale if you have unpermitted work down it may need to be disclosed to a potential buyer (my advice is if not required it should be). The failure of a licensed contractor to obtain required inspections could result in sanctions. Although this is a homeowner, the mere possibility of an inspector raising an issue often keeps subs and others to err on the side of caution. But I have also heard rumor that appraisal standards may be revised on a national basis to require appraisors to check permitting on a home and to revise the appraisal (obviously downward) if work was not permitted and inspected.

  • Kevin, I spoke to Jean a while ago and she gave me some information. I feel better now after reading all the posts and after talking to Jean. Thanks everybody for the responses.

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