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ESCANABA -- A change made to the fees for building permits in the city of Escanaba could be more equitable, but one Escanaba City Council member is concerned the new fee formula could hinder development.
Prior to Thursday's council meeting, building permit fees were tied to the size of a lot, not the size of the building being placed on the property. This meant that a small building being constructed on a large lot cost more in fees that the same building on a smaller lot, despite there being no real change in the amount of work necessary for the city.
"We thought some of it made perfect sense at the time. It has worked pretty well for many applications, but some applications have come in that highlighted some deficiencies in the new fee schedule," said City Manager Jim McNeil.
To address the issue, Escanaba Planning and Zoning Administrator Tyler Anthony looked at what other communities were doing. He discovered that most communities were using a formula where the gross floor area is multiplied by the square foot construction cost, a metric compiled biannually by the International Code Council. The resulting number then would be multiplied by a permit fee multiplier, calculated by the city annually.
The permit fee multiplier is found by multiplying the planning and zoning department's budget by a set percentage of the budget the department intends to cover through permits for the year and dividing the result by the total annual construction value for the prior calendar year.
For 2023, the planning and zoning department has a budget of $117,775 and intends to cover 15% of that through permits. Last year, there was $16,981,380 worth of new construction in the city, putting the permit fee multiplier at 0.0010.
The new formula will not only level the playing field between developers on different size lots, but it led the city to eliminate or cap related fees at significantly lower rates than were previously being charged. There will no longer be a sketch plan review fee, which could have been up to $250 based on lot size, and the site plan review fees and special land use permit fees will now be capped at $200, when either fee could have been as high as $2,000 under the old system.
The minimum fee that could be charged for a zoning permit under the new plan is only $50 -- but there's a catch.
"What happens to this multiplier when we hit a recession and there are very few people building?" Council Member Ron Beauchamp asked Thursday.
The lower the dollar amount for new construction, the higher the permit fee multiplier will be the following year, using the formula approved Thursday. Beauchamp raised concerns that the fee could jump significantly if construction in the city dropped, ultimately disincentivizing people from changing that trajectory and simultaneously reducing permit revenue for the city.
"A drastic change in the economy would swing that number quite a bit," he said.
McNeil reminded the council that the fee schedule adoption takes place early in the city's budgeting process. He said if a recession were to drastically affect the permit fee schedule, there would be time to make adjustments before any new fees took effect.
In other business the council:
– Approved hiring EPS Engineering to provide engineering and design services and provide relay panels for upgrades at the Westside Substation. EPS Engineering was also hired to provide equipment, software and programming services for upgrades to the city's SCADA system used to monitor and control substations remotely.
The substation upgrade services from EPS Engineering is not to exceed a cost of $644,700 and is part of the $1,685,000 upgrade project for the substation, which was built in 1980. The SCADA upgrades are not to exceed $230,090 and will bring remote access to two substations that currently must be accessed on site.
Both services from EPS Engineering are included in the current fiscal year budget.
– Approved naming McNeil as the designated street administrator. The designation makes him the signatory for street projects that receive grant funding.
Recognized Players de Noc as a nonprofit for the purpose of the theater group obtaining a charitable gaming license from the state.
– Approved changes to the city's agreement for IT services from DSTech. The changes are expected to save the city about $5,600 annually.
– Set two public hearings related to the transfer of Industrial Facility Exemption Certificates from Bell's Brewery to New Belgium Brewing Company, Inc. for Sept. 21. The transfers are necessary as Bell's has been purchased by New Belgium.
– Approved the use of Ludington Street for the Escanaba High School homecoming parade on Sept. 29, from 5 to 6 p.m.