Council Holds Off On Exact Amount Of Building Permit Fee Hikes

OCEAN CITY – City officials held off approving an increase in permit fees this week until a specific price is reached. In the meantime, the city is looking toward a more user-friendly online permitting process.

During the fiscal year 2016 budget discussion, the Mayor and City Council requested a review of the permit fee structure in the Building Department, resulting in Chief Building Official Kevin Brown coming before the legislative body on Tuesday afternoon requesting an increase in permit fees.

Currently, the stand alone permit fee for electrical and mechanical permits is $30. According to Brown, to support administrative costs, based on staff time needed to process and issue permits, the fee should be increased to a minimum of $45 if not more.

Brown explained a $6 fee was implemented in 2004 for electrical permits. This rate was raised to $6.30 in 2009 and $30 in 2010.

“The Building Department generally charges fees for permits and services, and such fees are intended to defray the cost of operating the department. Ideally the fees charged should equal operating costs … the fees currently charged for the electrical and mechanical permits clearly is not enough to offset the entire staff involved in this process,” Brown said.

From staff review of the application to verification of the contractor, entering the application in the system, Zoning Department reviews, plan review and notes, field inspections, entering inspection results and having the file scanned and stored, staff is spending almost two hours issuing a permit. The average hourly rate of combined staff hours is $25.75 totaling the actual staff cost to $47.12.

“My request is the fee be raised to a minimum of $45. I think $50 per permit would be more realistic,” Brown said.

For comparison, the City of Salisbury charges $40 for a mechanical permit, the town of Easton charges a minimum of $50, and the City of Annapolis charges a minimum of $90.

In regards to electrical permits, the City of Annapolis, Anne Arundel County and Virginia Beach charge $80 for 200 amp and up, Wicomico and Worcester counties both charge $25 and the City of Baltimore varies from $25 to $100.

Councilman Matthew James questioned the significant increase being recommended.

“To be honest, I have always thought the expenses were low, and I think the thought behind it was if we kept the cost low then perhaps the quantity of permits would increase,” Brown responded. “There were 84 electrical permits in 2014 and 215 mechanical permits but back in 2004 when we first started charging $6 for a permit we had 34 permits, so permits have almost tripled. Again, I think it is time that we work within our means because we have been working in the negative for some time now.”

In speaking with many contractors, Councilman Wayne Hartman brought a few recommendations to the table. First he pointed out the majority of electrical inspections are completed by a third party hired by the contractor saving city staff that time. Brown rebutted that a third party may inspect electric but not flood requirements, which led to Hartman’s second recommendation.

With the new Flood Insurance Rate Maps being recently approved in Ocean City, contractors recommended the town publish a map of what air conditioning and heating stand heights would be required in certain sections of the town ultimately eliminating a step from the permit process.

Also, the issuance of an electrical permit should be eliminated for the replacement of an air conditioning/heating unit because the wiring is not being replaced, just the equipment. Hartman pointed out Worcester County does not require an electrical permit for replacing a unit.

“We are talking about three different things that you’re lumping all together,” Hartman said. “I recommend the $30 electrical fee stay the same as our inspector doesn’t need to go out on that, waive the $30 for a replacement, and if you want to charge for a new install that takes a new design and inspections, sure $50 to $60 is certainly in mind.”

However, Hartman’s colleagues did not agree. Council President Lloyd Martin was the first to point out when replacing an older unit the equipment and wiring needs to be lifted to meet today’s flood requirements.

“I don’t believe that we can give a book or put it on the Internet and tell them the elevation the stand has to be when we can’t even get them to go online to file a permit,” Councilman Doug Cymek, who owns a construction company, said. “Ultimately, I would hope the software would be set up in such a fashion that a couple of these first steps can be eliminated, such as checking credentials … where is the fairness in making the taxpayers subsidize the cost of the inspections for a small group of people that require them? I just think they should pay their fair share. I am in favor of the increase to compensate our efforts.”

Brown interjected he is planning on meeting with Information Technology Manager Nancy Bloxom in October to review an updated version of the town’s online permitting software that is said to be much more user-friendly.

Hartman made a motion to postpone the discussion until October after the new updated software is implemented and staff has a better idea of how much manual time is being spent issuing permits. James seconded the motion but the majority of the council voted in opposition.

“I recall during budget discussions that the building department expense exceeds their income by quite a bit for the last 4 to 5 years at least, and I believe it should pay for itself. Why should the general public be supporting a service required by a small group of people?,” Councilman Dennis Dare said. “It should make money, not lose money. Historically we have tried to keep the fees so they do balance out but the expenses have gone up and the revenues haven’t. It is a good first step … it is just as easy to address the issue today and when it does happen we can revisit it. If it needs to be reduced, then it’s reduced. We should be doing that constantly with everything anyways.”

The majority of the council was in consensus the electrical and mechanical permit fees are in need of an increase but were not prepared to settle on a number. The council voted to have staff takes a closer look and return to the Mayor and City Council with further recommendation. The discussion will be postponed until the first work session in August on Tuesday, Aug. 11.

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