Pitkin County building fees coming up short?
October 16, 2012
ASPEN – Pitkin County is taking a close look at its building fees, but the real focus is what it costs to build something.
It has long been the county’s philosophy that development should pay for itself, and fees charged by the Community Development Department for plan reviews, building inspections and environmental-health services are set to recoup the staff costs associated with those endeavors. A projected $1.6 million in fees will be collected this year.
Building fees are based on the estimated cost of construction. But those estimates, provided by contractors, might be falling well short of what is actually spent, according to John Redmond, county finance director.
While building fees are paid upfront, when the county issues a building permit for new construction or remodeling work, the actual cost of a construction project is tallied once the work is finished, when the county’s use tax is calculated. The tax, a 0.005 percent sales tax (that’s one-half of 1 percent) on all construction materials purchased outside the county, is based on actual receipts presented to the finance office.
Use tax collections so far this year total about $500,000; the county funnels the money to transportation-related efforts.
In some cases, the initial estimate versus the actual cost of a project might be “substantially different,” Redmond told county commissioners last week.
Recommended Stories For You
An effort is now under way to examine a sampling of projects and compare the estimated cost of construction at the outset with the actual cost when the use tax was tallied. A new home with an estimated construction cost of $1.5 million, for example, would be charged about $17,000 solely in building fees. What that home actually cost to build, based on the use tax payment, is the missing piece.
In some counties, building fees still owed at the end of a project are collected before a certificate of occupancy for the structure is issued, according to Brian Pawl, chief building official for the county. Pawl said he would rather adjust the county’s fees, or the basic values for various types of construction that the county uses in its fee calculation, rather than try to recoup a shortfall in building fees at the close of construction.
And if there is regularly a shortfall in collected fees, there will likely be debate about what expenses the building fees should pay for – the actual labor costs associated with inspections or more.
“That’s what we have to get into,” Pawl said. “Where do we draw that line in what costs construction is supposed to cover?”
If the building fees are to solely cover building inspections, they might be adequate already. In the past five years, building fees have covered associated labor costs, while planning fees have not, Pawl said. Building fees were last adjusted in 2008, while planning and zoning rates were last modified in 2009.
With this year’s uptick in construction activity, planning revenues have already hit what was budgeted for the year, while building-fee revenues are within 5 percent of hitting their target for 2012, Redmond told commissioners.
Revenues don’t, however, cover all the costs that the Community Development Department absorbs, Pawl said. The department is charged, for example, for work done by the county attorney’s office on its behalf.
“People are always bouncing around the idea that growth pays for itself, but what does that really mean?” Redmond mused. “There are a whole lot of variables here.”