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Update your Building Revenues without changing your Building Fees

Building & Safety fees for new construction have historically been charged based on the construction value of the work being done.  This is a longstanding practice that comes from the fee tables published by the International Conference of Building Officials (ICBO), now the International Code Council (ICC), to help local agencies set their fees.  Unfortunately, the fees in this table didn’t necessarily reflect the cost of a local agency to provide the service.  So, some agencies that just adopted these fees had legal issues, and the ICBO itself was sued.  Which is why they no longer publish these fee tables.  But that is an article for another day.

 

But who determines the value of the construction that is used in these fee tables?  Most agencies will give the applicant the chance to provide a reasonable estimate of the costs.  But some applicants take advantage of this and lowball their construction estimate so that they can pay lower fees.

 

So, the ICC developed a Building Valuation Data table that identifies the cost per square foot for various construction types, which also includes regional modifiers to reflect the various construction costs in different parts of the country.  This table is a good objective measure of construction costs. But if your agency uses it and does not update it annually, the costs become outdated.  Which means that the construction costs are too low, and therefore, the resulting fees are too low.

 

So, it is important to update this table annually to keep up with the steady increase in construction costs.  It is also a way to have smaller increases to the fee table itself.  Because if the construction costs are a little bit higher, they are paying a little bit higher fee without having to make a change to your fee schedule.  And since the valuation data table is not part of the fee schedule, you should be able to adjust it for inflation without having to take it back to your Council or Board.  But run this by your attorney.

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