A carefully studied proposal to increase building permit fees and other construction-related charges by 30 percent overall has made its way to the Metro Council where it will be heard on second reading this week.
The plan’s arrival, in the form of an ordinance, comes after yearlong analysis performed by an outside consulting firm that determined Metro had not been collecting a sufficient level of dollars through fees administered to acquire building, plumbing, electrical, mechanical and other permits.
“When you have an economic downturn, you have less construction, you have fewer permits, and you have less revenues,” said Terrence Cobb, director of the codes department. “That was driving the revenue line down, and drove it down at a faster rate than the decline in expenditures.”
The altered fee structure, which would be the first of its kind since 2004, accounts for a lower number of permit requests, while aligning Nashville’s fee rates closer to those applied in similar sized cities such as Birmingham, Ala. and Charlotte, N.C.
Under the proposal, the average building permit fee to construct a single-family residence in Nashville would jump 15 percent from $915 to 1,056; the mechanical fee, $178 to $273; the electrical fee, $197 to $267.40; and the plumbing fee, $172 to $265.
According to Cobb, builders currently pay around $1,500 worth of fees when constructing a new house. With the changes, they would pay approximately $2,000.
In total, changes would generate a projected $2.48 million in additional revenues to the codes department, dollars that are delivered to Metro’s general fund.
Metro’s fee structure is constantly monitored, Cobb said, to ensure dollars are collected in an equitable fashion. Though Metro currently finds itself with a fee shortage, he said the department was over-collected just four years ago.
“Construction-related services that are provided by the government are recovered through charging user fees,” Cobb said. “What you desire to achieve as a government is that the fees offset the costs. You don’t want to be collecting in surplus nor do you want to be under-collecting.”