and Council / et au Conseil
Services d 'infrastructure et Viabilité des collectivités
Planning and Growth Management/Urbanisme et Gestion de la Croissance
(613) 580-2424 x 41425, Arlene.Gregoire@ottawa.ca
That the Planning and Environment Committee recommend that Council approve, effective May 1, 2010:
1. A reduction in the building permit fee rate from $12.50 to $12.00 per $1,000 in construction value for all construction except farm buildings;
2. A reduction in the building permit fee rate for farm buildings from $8.75 to $8.40 per $1,000 in construction value, and
3. That the Building By-law 2005-303 be amended accordingly.
Que le Comité de l’urbanisme et de l’environnement recommande au Conseil d’approuver, à partir du 1er mai 2010 :
1. une réduction du taux des droits relatifs aux permis de construction de 12,50 $ à 12,00 $ par tranche de 1 000 $ de la valeur de construction de toutes les constructions, à l’exception des bâtiments agricoles;
2. une réduction du taux des droits relatifs aux permis de construction pour les bâtiments agricoles de 8,75 $ à 8,40 $ par tranche de 1 000 $ de la valeur de construction; et,
3. la modification en conséquence du Règlement 2005-303 en matière de bâtiments.
The Building Code Act directs municipalities to set building permit 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, and levies for the Building Code reserves. Direct costs include such costs as the compensation costs for the Chief Building Official, Building Officials, administrative staff involved in the processing of applications, as well as training and development costs, 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 Initiatives (OMBI) recommended methodology. Indirect costs consist of expenditures by other departments and branches incurred in support of the Building Code branch’s code-related activities, including legal assistance and representation from Legal Services, budgeting preparation by Financial Services, as well as accommodation expenses based on the actual square footage space that is occupied by the branch.
In determining the proposed fee rate reduction, an evaluation of the economic forecast for Ottawa for the next two to three years and in particular, forecasted construction activity subject to building permits was undertaken to ensure the recommended reduction will provide sufficient revenues at year end to fully cover the cost of servicing building permits and the cost of enforcing the Act and the Building Code.
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 fees for pool enclosure applications and the number of pool enclosure 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 impact on costs and revenues is difficult to predict. Hence, a cautious approach is adopted in setting fee rates. In 2008, the fee rate was adjusted downwards to $13.25 per $1,000 in construction value, in view of the continuing higher volumes of permit applications and revenues. As a result, management was able to build up the reserve fund by end of 2008. Accordingly, the fee rate was reduced April 2009 to $12.50 per $1,000 in construction value for non-agricultural construction and for farm buildings, the rate was reduced to $8.75 per $1,000 in construction value.
The approach and considerations were detailed in a report entitled “Building Permit Fees” (ACS2009-ICS-BLD-0011) presented to Committee and Council in April 2009.
With regards to the fee rate for 2010, there are a number of factors that must be considered in setting the rate for building permit applications, and these are:
Based on the analysis, a fee rate reduction from $12.50 per $1,000 in construction value for non-agricultural buildings to $12.00 per $1,000 in construction value is recommended for 2010. The reduction in fee rate represents a four per cent reduction from the current fee rate and a 9.4 per cent drop since 2008.
It is noted that the building permit fee rate for farm buildings is pegged at 70 per cent of the above fee rate in recognition that such projects typically result in lower servicing costs, and thus a downward adjustment will result in the fee rate for farm buildings of $8.40 per $1,000 in construction value.
A reduction in the building permit fee rate will also represent a reduction of the rate levied for farm buildings. The new fee rate for farm buildings will be reduced to $8.40 per $1,000 in construction value.
Discussions were undertaken with the Greater Ottawa Homebuilder’s Association and members of the Building Liaison Group representing all categories of local builders. The regulations made under the Building Code Act require a minimum of 21 days prior notice of the public meeting to discuss the proposed change in fees, as well as 21 days prior notice to any person or organization that requested notice within five years before the date of the public meeting. Notice of the Planning and Environment Committee at which the proposed changes will be discussed will be provided on April 9, 2010 to comply with this requirement.
There are no legal/risk management impediments to implementing the recommendations of this report. Subsection 7(2) of the Building Code Act provides that the total amount of the fees must not exceed the anticipated reasonable costs of the authority that administers and enforces the Act.
The proposed fee rate reductions, the anticipated slowdown in construction, and the increased Building Code Services-Ontario Building Code costs approved in the 2010 budget, should bring revenues in line with expenses. There is no planned contribution to the Building Code Reserve in 2010.
The Building Code Services Branch of the Planning and Growth Management Department will provide notification of the change to the fee rate and implement the new rate following Council approval of the amendment to the Building By-law 2005-303.
Legal Services will prepare the amendments to the Building By-law 2005-303.