City of Cornwall Building Permit Fee Review Presented by BMA Management Consulting Inc.

Introduction Last comprehensive review was undertaken in 2012/2013 Since 2014, there have been no building permit fee increases As processes and complexity of applications have changed since 2012 and a new building code in 2014, it is an appropriate time to undertake a comprehensive analysis of the building permit fees

Guiding Principles Fairness and Equity Equitably distribute costs between the various types of applications Cornwall will not set building fees beyond 100% of the full cost Transparency Pricing structure will be transparent Predictability Knowledge and certainty of fees allows applicants to make more informed decisions

Building Permit Fees Review Process Review background materials Process Mapping Estimate Productive Hours Identify Direct and Indirect Costs Fee Calculation Fee Comparison Bottom Up Approach

Overview of Budget and Actual Revenues and Expenditures

Analysis of Cost of Service As illustrated, above average building permit revenues only recover 58% of the costs

Revenue Trend Over the last 5 years, taxpayers have contributed approximately $500,000 annually toward the cost of service Building permit fees account for a small portion of the overall cost of construction that is not proven to be a significant location sensitive factor.  

Construction Activity and The Need for Stabilization Reserves

Building Permit Stabilization Reserve Benefits Spreads the impact of market fluctuations across an economic cycle Avoids fluctuations in fees Available to fund one-time capital requirements. Municipalities have established a target range for the reserve of 100%- 200% of operating costs – currently the City’s reserve balance represents less than 10% of operating costs   Recommendation Set reserve target of 100% of operating costs

Existing Fee Structure

Building Permit Fees – Current Fees New and Alterations Construction Value of $0-$1 million - $12.50/$1,000 of construction Construction Value of $1 million and over $12,500 + $9.45/$1,000 construction Separate Plumbing fee Other fees to be discussed

Fee Recommendations

Residential Fees - Observations Residential - Residential fee structure is based on a cost per $1,000 of construction There are basic resources required to process an application that are not being recovered from fees under the current fee structure This approach requires the City to monitor and update construction costs Construction costs have not been updated since 2005 Residential – Plans review and inspection costs are more closely aligned to square footage rather than construction value Over 88% of the municipalities surveyed in Ontario use a per sq.ft. approach or a base plus a cost per sq.ft. approach

Residential Recommendations and Rationale Charge a base fee and a cost per square foot for New Residential Construction as opposed to construction value: Rationale: Fairness and Equity — a base fee plus a cost per square foot fee for above the average dwelling size is more reflective of the actual cost of the building inspection and application processing services. Objectivity and Consistency - Size of the building is available, objective and easily validated Predictability & Transparency— Easier for applicant and municipality to determine fees.

Plumbing Fees There is currently a different fee for single, semi-detached, multi family (apartment), multi-family (row) and condos Underlying cost of service does not vary by type of structure Recommendation Establish one base fee for all types of residential construction with an additional charge for each plumbing fixture

Non-Residential Rates - Observations City currently charges non-residential fees based on a cost per $1,000 construction and a 25% discount for applications over $1 million The tiered rate structure in Cornwall reflects an assumption that as the construction cost increases beyond $1 million, the cost of service decreases Construction costs are more readily available in the non-residential sector and is a good proxy for building permit fees in commercial, industrial and institutional projects Recommendations Continue to charge based on cost of construction at $/$1,000 construction Eliminate the tiered rate for commercial and institutional applications Increase the City’s threshold for industrial properties to $3 million

Occupancy Permit The City has an obligation to ensure the health and safety of the general public An Occupancy Permit or Partial Occupancy Permit indicates compliance with the Ontario Building Code. Recommendation Charge a fee for formal occupancy prior to final inspection. A fee would not be required if an occupancy permit was provided in conjunction with a final inspection.

Refundable Inspection Fee Consistent with the experience in other Ontario municipalities, Cornwall has a large number of open building permits without a final inspection Another issue identified by the City which increases workloads and/or the cost of service is when an applicant books an inspection prematurely or when the inspector arrives at the site and the construction was not ready or substantially not ready for that stage of inspection Recommendation Leading practice is to establish a refundable deposit

Fee Benchmarking

Residential New Construction

Retail Non-Residential Construction

Industrial Construction

Residential New Construction Building Permit Fees and DCs