Building Enterprise Model Procedure

Purpose statement

In accordance with Provincial legislation, this procedure defines the building enterprise cost recovery model and reserve fund for building permit issuance and building inspections.

Scope

This procedure applies to the Building Services department.

Procedure

1. Cost recovery by use of enterprise model

The Building Code Act 1992, as amended (BCA) stipulates that the total amount of fees paid for building permit applications and issuance, must not exceed the reasonably anticipated costs of administering and enforcing the Act.  By extension, all permit fees collected under the authority of the Act must be used to administer and enforce said Act.

In accordance with the BCA, the total cost of processing permit applications, issuing building permits and inspecting the construction authorized by those permits will be supported fully from the revenues generated by building permit fees.  Permit fees will be set to cover all costs, which include both the direct and indirect costs of administering and enforcing the BCA.  Direct costs include the review of applications for permits and the inspection of buildings, and indirect costs include all support and overhead costs.  Capital improvement costs, including floor space, furniture and equipment requirements are also included as indirect costs.

The financial documentation of these costs and revenues are shown in monthly variance reports and budget documentation prepared for the Building Services Department by the Finance Department.

2. Permit application volume forecast and setting of permit fees

As part of the annual budget process, Building Services will integrate a three year activity forecast, together with a five year history to demonstrate the context of the forecast.  The forecast permit activity will be used to predict anticipated revenues and together with the reasonably anticipated cost of providing services, will be used to confirm the appropriate level of permit fees.  The legislation recognizes that it is inappropriate to raise and lower fees every year, so forecast revenues are based upon a 5 year average of forecast activity to reduce oscillating fee levels. The BCA provides for municipalities to establish a reserve fund to manage yearly fluctuations in the volume of permit activity.

3. Building Enterprise Reserve Fund

Operating surplus revenues from a given budget year will be placed in a Building Enterprise Reserve and will be used if needed to fund operating deficits in any subsequent budget year.

At the end of each financial year, the net operating surplus will be determined after the deferred permit revenue has been calculated.  Deferred revenue is calculated based on outstanding permit applications and construction inspections which are not yet complete. The time required to complete all outstanding work will be calculated and funds set aside as deferred revenue to cover the expenses for this time period.

The net operating surplus will then be transferred to the Building Enterprise Reserve.  If the amount in the Reserve should exceed one and a half times the total cost of administering and enforcing the Building Code Act for the preceding financial year, Council will be advised and direction will be sought for a terms of reference to review, among other things, the appropriate fee structure and appropriate level of service, in the context of forecast construction activity.

Responsibilities

The Chief Building Official shall be responsible for the administration of and ensuring compliance with this procedure.