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

2. 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

4. 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

5. 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

6. Overview of Budget and Actual Revenues and Expenditures

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

8. 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.

9. Construction Activity and The Need for Stabilization Reserves

10. 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

11. Existing Fee Structure

12. 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

13. Fee Recommendations

14. 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

15. 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.

16. 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

17. 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

18. 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.

19. 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

20. Fee Benchmarking

21. Residential New Construction

22. Retail Non-Residential Construction

23. Industrial Construction

24. Residential New Construction Building Permit Fees and DCs