Report to/Rapport au :


Planning and Environment Committee

Comité de l'urbanisme et de l'environnement

and Council / et au Conseil


14 March 2010 / le 14 mars 2010


Submitted by/Soumis par : Nancy Schepers, Deputy City Manager/Directrice municipale adjointe, Infrastructure Services and Community Sustainability/Services d 'infrastructure et Viabilité des collectivités


Contact Person/Personne ressource : Arlene Grégoire, Director of Building Code Services and Chief Building Official/Directrice des services du code du bâtiment et chef

du service du bâtiment

Planning and Growth Management/Urbanisme et Gestion de la croissance

(613) 580-2424 x 41425,


City Wide/à l'échelle de la Ville

Ref N°: ACS2010-ICS-PGM-0062













That the Planning and Environment Committee recommend that Council approve the 2009 Annual Report on Building Code Fees.




Que le Comité de l'urbanisme et de l'environnement recommande au Conseil d'approuver le rapport annuel de 2009 sur les droits de permis de construction.





Pursuant to Section 7.(4) of the Building Code Act, the City is required to prepare a report every 12 months containing information on the building permit fees collected, as well as the costs of servicing building permits and enforcing the Building Code Act and Building Code.  Regulation Division C Part 1 ( further directs the municipality to distinguish between direct and indirect costs, as well as to include in the report the balance of the reserve(s) at year end, where such have been established.  Accordingly, the 2009 Annual Report on Building Code Fees is provided for the approval of Planning and Environment Committee and Council as follows:


The Cost of Servicing Building Permits

Actual 2009




Building Permit Revenues





Expenditures –

Direct Costs



Indirect Costs

(  4,471)



Transfer to Building Code Enforcement Reserves





Building Code Enforcement Reserve Funds






Revenue Stabilization $000



Capital Contribution


Closing Balances




    December 31, 2008








    December 31, 2009







The Cost of Servicing Building Permits


The Building Code Act directs municipalities to set building permits fees to fully recover the cost of servicing building permits and the cost of enforcing the Act and the Building Code.  These include both direct and indirect costs.  Direct costs include such costs as the compensation costs for the Building Officials, staff involved in the processing of applications, training and development costs, computers and peripherals, vehicles and mileage costs, to name a few.  The approach for allocating indirect costs within the City is closely aligned with the Ontario Municipal Benchmarking Initiative’s (OMBI) recommended methodology.  Indirect costs consist of expenditures by other Branches incurred in support of Building Code Services’ Code-related activities, including legal assistance and representation from Legal Services, budget preparation and tracking by the Finance Department, as well as accommodation expenses based on the actual square footage space that is occupied by the Branch. 


Of total costs in 2009, 74 per cent were direct costs while 26 per cent were indirect.  The direct and indirect costs, excluding the contribution to the reserve funds, were:


Direct Costs


Indirect Costs

$  4,471,062



2009 Totals



These figures are consistent with previous years.  In 2007 and 2008, direct costs represented 73 per cent and 74 per cent respectively.


Permit Fees and Activity


The Building Code Act stipulates that revenues must not exceed the anticipated reasonable costs required to administer and enforce the Act and the Building Code.  Anticipating the slowdown in construction activity in 2009 and 2010 and in view of the status of the Building Code reserves, Building Code Services Branch evaluated costs, construction activity, and revenue forecasts in an effort to confirm the anticipated revenues for 2009 and the following two years, with a possible fee rate reduction in mind.   


As a result of the review, the building permit fee rate was reduced from $13.25 per $1000 construction value to $12.50 per $1000 construction value for all buildings and structures in April 2009.  Similarly, the rate for farm buildings was reduced from $9.30 per $1000 in construction value to $8.75 per $1000 construction value. 


Despite an economic slowdown which commenced fall 2008 and into 2009, the Branch saw an increase in permit applications over 2008.  The busier than expected construction activity levels and associated permit application reviews and inspections is related to federal infrastructure spending and tax-relief program for homeowner renovations.  In fact, nearly 2800 permit applications were received for house additions and homeowner projects, representing a 17.8 per cent increase over last year.  Moreover, the construction value of projects involving complex buildings and large buildings increased 36.6 per cent and 18.3 per cent respectively compared to 2008.  The healthier than anticipated construction activity levels resulted in higher than expected revenues for 2009.  The surplus revenues were directed to the Building Code reserve.


Reserve Funds


The Building Code Act provides for the establishment of reserve funds to ensure municipalities are able to fulfill their legislative mandate despite downturns in construction activity, to cover capital investments (growth vehicles, computers and software development, etc.) and special costs/liabilities.  In 2006, the Branch established the following reserve accounts to which surplus building permit revenues are allocated at year-end: 1) a revenue stabilization fund, which safeguards the City’s ability to enforce the Building Code if there’s a decline in revenues; 2) an insurance fund, which covers costs associated with lawsuits; and, 3) a capital contribution fund, which covers capital expenditures in support of the activities related to servicing and enforcing building permits.


As of December 31, 2009, the following fund balances were as follows:


Building Code Enforcement Reserve Funds



Revenue Stabilization


Capital Contribution


Opening Balance January 1, 2009





2009 Mid-year Contribution






2009 Interest





2008 Interest Reversed





2009 Capital Program Contributions





2009 Year-end Contributions





Opening Balance January 1, 2010






The importance of these reserve funds have been highlighted recently by the experiences of other municipalities in Ontario during the economic downturn.  Many municipalities, such as Markham, Cambridge, Oakville and Hamilton, have drawn upon their reserves while permit application numbers dropped or fee revenues have been insufficient to offset costs.  Windsor has been particularly vulnerable as they were not able to fund a reserve prior to the downturn and, as a result, the municipality has had to direct tax generated funding to offset the costs of servicing building permits and enforcing the Building Code Act and the Building Code. 


Ottawa could see a decrease commencing fall 2010 as a result of government stimulus spending expiring and the implementation of the HST.  The reserves will offset any shortfall in revenues the Branch may experience.


2009 Highlights



In 2009, the Minister of Municipal Affairs and Housing approved the City’s building inspector internship program that provides for on-the-job training and development of new building official recruits. 


The program is designed to provide the training necessary to qualify interns in terms of the minimum qualifications standards set by the Province and more importantly, in terms of qualifying the interns for the entry-level positions of the Building Official 1 position of the City.  This program will significantly reduce the recruitment problems since amalgamation and address the challenges of succession planning.


·         Operational Accomplishments


All units of the Branch completed a wide range of activities in 2009, including, but certainly not limited to:

§  processing and reviewing 9960 building permit and pool permit applications;

§  completing 102,425 building and pool inspections;

§  establishing the Emergency Heritage Preservation Protocol;

§  launching new web-based (Ozone) information management tools for the Branch;

§  establishing the Program for Responding to Requests for Reimbursements of Development-related Fees;

§  assisting Environmental Services with residential flood follow-up initiatives; and,

§  receiving Council-approval for delegated authority for Sign Minor Variance to increase decision-making efficiency on these applications.



The Branch's performance in meeting legislated timeframes in 2009 continues to reflect the positive impact of the award-winning eFootprint Applications portal process and the overall reduction of Branch vacancies.  Also, the improved efficiencies in processing applications via the e-portal have enabled timelier processing of small, large and complex buildings.


The percentage of applications determined within legislative timeframes for 2009 by building type is as follows:



On the 2010 Workplan



Changes to the Building Code Act were introduced fall 2009 that will be phased commencing January 1, 2010 to January 1, 2012.  There is a need to review the Building By-law to determine required amendments, to review and update business processes to reflect the new administrative processes for applications and occupancy permits, among other things.  Prior to implementing any changes, the industry will be consulted to minimize the impact of the changes.



The adjustment to building permit fee rates is a complex process as there is no direct correlation between the rate and the revenues generated.  A direct correlation exists between the revenues from pool enclosure applications and the number of permits; however, this is not the case for building permits as revenues are predicated by the variety of construction activity.  If construction activity followed the same pattern year over year, forecasting operating costs and revenues would be straightforward.  However, the moment the mixture of construction activity changes, the impacts on costs and revenues are difficult to predict.  Hence, a cautious approach is adopted in setting fee rates.  For these reasons, the Branch is reviewing the methodology for calculating fees, from that based on value of construction to that based on category of construction and area (square metres) for 2010 and beyond.  Once the analysis is completed, the Branch will consult with the industry.



The Branch will be revising its risk management strategy in 2010.  First, the Branch will conduct a macro-level risk assessment of its Building Code functions.  This will be followed by a risk review to be conducted by the Frank Cowan Company, the City’s insurer.  The resulting action plans from these exercises will inform the risk management strategy going forward.



The new Business IT Solutions (BITS) unit was established late in 2009. The BITS unit is accountable for developing the longer-term strategic business technology framework of the Branch’s technology initiatives. The aim is to develop and deliver major business technology solutions resulting in increased productivity, transparency, and greater satisfaction to our clients. Initiatives for 2010 include a remote technology pilot project, which will enable building inspectors to complete inspection forms electronically on site, send inspection results to clients in real time, and reduce filing and storage of paper documentation.








The City is required to report annually on the status of building permit revenues, costs of servicing building permits and enforcing the Building Code Act and the Building Code and the reserve funds and to make the report available upon request.  Accordingly, consultation was not undertaken.








There are no legal/risk management impediments to implementing the recommendation of this report.
















The “Background” portion of this report outlines the legislative requirement for an Annual Report as per the Building Code Act.  This portion of the report will be published on the City’s website and distributed upon request