Where does building permit money go? By Lynda Jensen Editor Whether it’s tagged for parks, lawyers, or utility costs, fees for new housing can be divided up many different ways for local cities. Although cities vary, many have the same theme of trying to cover costs for different things, especially when it comes to new developments. Some charges are passed directly to developers, such as park fees and utility related trunk fees. All six cities in the area – Howard Lake, Winsted, Waverly, Lester Prairie, Montrose, and New Germany – charge park fees, and anyone interested in building a new house in the area must pay for water and sewer access for new homes. Trunk fees are sometimes added on top of this, although developers are generally the ones who pay for this type of fee. These fees are usually paid upon signing a developer’s agreement with the city. In Waverly, the average permit cost is $1,273 for a house valued at $175,000, said Clerk Debbie Ryks. This includes the general permit fees, plan check fees, state surcharge fees, mechanical, and plumbing fees. The general fees are determined by the state of Minnesota fee schedule. Cities usually retain a portion of the general fees for the general fund, and the balance is paid to the building inspection company, and the state of Minnesota. “All engineering fees and planning fees are billed directly to the developer,” Ryks said. This arrangement is accounted for through the development agreement for each subdivision. The average cost for a simple building permit is $1,004 in Winsted for a home valued at $175,000, said Winsted Administrator Brent Mareck. Part of this goes to the building inspector for his services, with the rest going into the general fund, Mareck said. Lester Prairie and New Germany charge building permit fees of $1,037 and $1,270, respectively, for a house valued at $175,000. Miscellaneous fees may also be added, such as a water meter fee that goes toward the water fund, as done in Lester Prairie, which is dependent on how many and what size meters are obtained. Waverly also adds a water meter fee which is $275. This increases by $25 each year to keep up with the rising costs of water meters. The funds received are used to pay for electronic water meters, Ryks said. Montrose adds an administrative fee equivalent to 1 percent of the construction costs, or $1,750 for a $175,000 house, that goes toward the general fund, to cover staff time and costs to the city. Another 1 percent of the construction costs is also charged for the city’s legal fees in Montrose. “Winsted’s fees are pass throughs, meaning if the engineer charges $100 for a plan review, the developer is responsible,” said Winsted Administrator Brent Mareck. “The same goes for attorneys and planners.” There is also a subdivision application of $125, which goes into the general fund, Mareck said. Most cities pass along a plan check fee as well, which is performed by the building inspector, checking to see if the plans and permits are up to code. This fee ranges from $402 in Waverly (which is included in the $1,273 average building permit fee) to $56 in Lester Prairie. Park dedication fees The formula for park dedication fees is very similar in local towns; with a minimum of 10 percent land dedicated toward parks, cash equivalent, or something in between. Lester Prairie charges a flat $750 fee for parks. Park fees are specifically tagged for city park funds: • Park fees for Howard Lake go to the city park fund for park and trail improvements. • Montrose park fees go toward the park capital projects fund. • Waverly park fees go toward parks for development costs in the specific development it was collected from. These funds are designated for each development park. The current fee is $1,200 and is collected with building permit fees based upon an agreement with the developer. • Lester Prairie and New Germany park fees go to city park funds. “Park dedication is 10 percent of the gross area of the property or cash in lieu – $250 for single family, $150 for multi-family, which goes to the general fund and specifically the capital improvement fund/parks (in Winsted),” Mareck said. Utility hook-up fees New utility hook ups, commonly referred to as “sack and wack” or SAC and WAC (sewer access charges/water access charges) cover a wide range of dollar figures. This is due to a variance in each city’s utility operations and maintenance costs. In Waverly, the access charges for new residents are analyzed by the payment of assessments and costs by current residents that new residents pay through the access charges. In New Germany, water hook-ups are $3,500, and sewer $4,000. Howard Lake fees are $1,144 for water, and $3,850 for sewer. Montrose water hook-up fees are $1,550, and sewer $3,500. Winsted new water hook-ups are $1,860, and sewer $2,140. Lester Prairie utility fees are $2,000 each for sewer and water. Waverly’s fees are $2,627 for water hook-ups, and $4,100 for sewer. The water charge is based upon revenues needed to pay for bond debt, which increases by a percentage annually. Sewer is based upon $3,100 being paid per hook up for the Montrose wastewater treatment plant. Waverly retains $1,000 of the sewer hook up fee for its own system, Ryks said.. These fees go toward the water and sewer system, and bond payments respectively, Ryks said. Some cities also require trunk area fees, which are generally associated with developments, to help pay for utility projects. Montrose trunk area fees are made based on a per acre charge, $1,850 for sewer, $700 for water, and $600 for storm water. Howard Lake also asks for trunk area fees on an acreage basis, $859 for water main fees, $1,750 for sanitary sewer trunk fees, and $500 for storm sewer. Similarly, Waverly requires trunk area fees on an acreage basis, $700 for water main, $2,500 for sanitary sewer trunk fees, and $500 for storm sewer. The fees were established for payment by developers due to utility expansion needs because of developments. Waverly designates trunk fees also for capital improvement project debt service payments, such as the water tower construction.	Back to: >Guides Menu >herald-journal.com Herald Journal Publishing PO Box 129 Winsted, MN 55395 Local/Metro (320) 485-2535 hj@hjpub.com www.herald-journal.com
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