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Building departments try to strike a delicate balance

Warmer weather has brought on an influx of building permits in Woolwich and Wellesley Townships, and with it, more fee revenue. [Whitney Neilson / The Observer]

Building departments in the townships – the ones who issue permits and arrange inspections for new construction – are supposed to carry their own weight: they can only charge fees on a cost-recovery basis, and the money they collect ideally covers all their costs.

Warmer weather has brought on an influx of building permits in Woolwich and Wellesley Townships, and with it, more fee revenue.[Whitney Neilson / The Observer]
Warmer weather has brought on an influx of building permits in Woolwich and Wellesley Townships, and with it, more fee revenue. [Whitney Neilson / The Observer]
In Woolwich, the volume of permits had the department in a deficit through the first half of the year, but things are starting to pick up. Wellesley has seen its numbers hold steady over the last few years, though there was a nice increase in June.
New home construction is often the largest driver of municipal permit fees. Market demand and available development play a key role. Other projects are subject to the vagaries of the weather: the wet conditions we’ve seen through much of the spring and summer can have an impact on renovations, for instance.
Policy changes that began with a new building code in 2006 (Bill 124) sometimes leave the townships with some juggling to do. Woolwich, for instance, has had to draw on reserves at times to cover shortfalls when permits and fees didn’t cover its fixed costs.
After some boom years in which building permits contributed to township coffers, the new act changed all that: rather than going to operating accounts, excess money must be allocated to a reserve fund, eventually balanced out to keep fees in line with costs.
“The gist of Bill 124 is you’re supposed to recover your costs,” said Peter VanderBeek, Woolwich’s chief building official. “Whatever it costs to run the building department, that’s all paid for so it’s not on the taxpayers. We’re taking money from the reserves so we increased the fees last year. To run our department it comes to $446,131.50.”
Examples of the fees included $60 for a swimming pool, $60 for a fireplace/wood stove/chimney, and $0.25 per square foot for an attached garage. The minimum building permit fee was $60.
In his annual report last year, a statutory requirement, he presented the increases for 2014. A swimming pool or hot tub permit now costs $100; the same goes for a fireplace/wood stove/chimney. An attached garage was jacked up to $0.58 per square foot. Additional building permits were added for elevators and underground fire reservoirs.
Solar panels for agricultural and residential properties require a $250 building permit, while commercial, industrial, and institutional ones will set you back $400. If you’re planning to install a new septic system, the permit will be $450.
“The taypayer’s not supposed to pay anything for the cost of running a building department, so you have to set your fees so whatever your costs are, the money you take in goes out,” VanderBeek said.
He says they set their fees at the midpoint of those charged by other municipalities in the region. Their building fees had previously been the lowest in Waterloo Region. He said the reserve funds have $330,000 now, which he considers as being in good shape.
“What they do in Bill 124, is they address what they call indirect costs,” VanderBeek said. So they take 40 per cent of our actual costs and attribute that to indirect costs, which are basically your heat, hydro, computers and everything else.”
That varies in the region anywhere from 27 per cent 40 per cent. Last year the building department took in $482,858.92, so they took $141,725.18 out of the reserve funds and put it into the general revenues.
The bill also sets timeframes so if someone makes an application for a permit, it can’t be sitting around. It varies anywhere from 10 days to 30 days and they’re obligated to send that permit out once it’s paid.
“Everyone tells us it’s a pleasure to build here.”
Rik Louwagie, chief building official for Wellesley Township, said the number of permits for the township didn’t increase early in the spring, but the second quarter numbers saw a huge increase over the first quarter. He attributes this to a harsh winter.
“This increase was expected because historically building permit applicants don’t proceed until the winter weather subsides and warmer temperatures prevail.”
That was a late occurrence this year.
Kitchener recently reported building permits are at a three-year high, but Louwagie says he isn’t aware of this affecting housing prices in the region.
“Building permits have been fairly consistent in Wellesley for the past three years,” Louwagie said. “No spike in total permits this year over the previous two.”
He said Wellesley issued 33 permits in June both this year and last and the types of builds they’re seeing are a consistent mix of residential, agricultural and industrial/commercial.
With some better weather, some projects already on the books, Elmira’s Lunor subdivision for instance, might boost the numbers in the townships.

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