Staff at Vernon City Hall are preparing a report that may recommend an overhaul of the building permit process. As reported in the Vernon Daily Courier in November, a review was launched after a 28-unit condominium development received an undervalued building permit from the city. “What we’re doing right now is a revision of the bylaw governing how fees are charged,” said planning, development and engineering manager Jeremy Kinch.
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Kinch said that the goal of the review is to ensure that developers are charged equally. One of the recommendations staff are considering is a provision to go back and charge an additional fee if the permit value turns out to be too low.“We don’t currently have an explicit back charge,” he said. “We’re looking at equitable distribution of charges to people using the service.” A development of a project on Centennial Drive was given a building permit based on a $2.8 million construction value, but with the developer estimating a market value of $100,000 per unit some councillors felt that developers were getting away with too much of a bargain. The units were later sold at prices starting from $239,000 per condo. “If it’s being undervalued we have to look at why that’s happening,” said Coun. Juliette Cunningham in November.
Coun. Pat Cochrane raised the issue at a council meeting in December. Staff said they were seeking a legal opinion and would report back to council in the new year. While it is relatively easy to determine the building permit value for a single family dwelling, Kinch said it is much more complicated with multi-family projects. Building permit fees are assessed based on a percentage of the estimated construction cost of a project and not on its market value. “If a particular contractor owns his own equipment than conceivably he may actually build the building much cheaper than the competition might,” he said. “They would have a lower building permit.” With the construction boom in Vernon, permit fees have become an important revenue source for the city. In 2005 the city expected to rake in $550,000 in permit fees but wound up with $1.1 million. This past year fee revenue eclipsed the $1.4 million mark.
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EDITORIAL FEB 15/07 – Managing editor David Wylie http://www.dailycourier.ca/ HINDSIGHT IS GOOD FOR US
Don’t get us wrong: we like development. We’re happy that housing starts are on the rise. We’re thankful that developers are taking an interest in our beautiful community. We like the jobs being created by a hot housing market. But we’re not so happy about it that we’d turn a blind eye when developers undervalue their projects, resulting in a break on the fees charged by City Hall for said development. So we applaud the planning, development and engineering department at the city for undertaking a review that would give staff the power to revisit the price of the building permit if it seems the developer lowballed City Hall.
The issue of undervaluing a project came to light in November, when we reported that a developer was given a building permit under the assumption the project was worth $2.8 million – placing a value of $100,000 on each condo. The units were later sold at $239,000 or higher, meaning the city charged far less for the building permit than what it was worth. Some city councillors said the developer was given too big a bargain. We agree. Permit fees are an important revenue source for the city. As Vernon grows, so too do the costs for things such as policing, fire protection, sewers, water, garbage removal, etc., and those costs fall on us, the taxpayers. Fees collected from developers are a way to offset those costs, so when the city loses out on money from permits because the project was undervalued, it will cost you more money in the long run. If the city can come up with a fair way to back charge where need be, taxpayers will be the beneficiaries of keeping developers honest.
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