Fee Dispute Settled As Builders and City Reach Consensus on Building Permit Services and Accounting

10/04/2006 – The City of Shakopee and the Builders Association of the Twin Cities and the Builders Association of Minnesota have reached a settlement in their legal dispute regarding the City's building permit fees. In the settlement, the City and the two Associations agreed to a method of identifying the costs associated with the City's building permit services. The City and the two Associations also agreed that the City would use the information regarding the costs of its building permit services in setting, accounting for, and reporting its building permit fees. The City is not paying any money to the Associations to settle the lawsuit.

Following the commencement of the lawsuit, the City independently commissioned a detailed Cost of Services Study to determine the cost of certain city services, including building permit services. The Study found that some of the City's fees were too high relative to costs, and some of its fees were too low. Effective January 1, 2007, the City will adjust its fees in response to the Study so that the fees better reflect the cost of providing the services. As part of the settlement with the Associations, the City agreed to expedite the adoption of a new fee schedule for the building permit fees charged for new construction. The new fee scheduled reduced residential building permit fees issued on or after August 1, 2006, with some reductions up to 91 percent. In the settlement, both the builders associations and the City have agreed to measures that will improve communication between builders and the City. The City's goal is to approve building permits within 14 days and provide inspections within two business days of request.

Mark McNeill, Shakopee City Administrator, stated that "the City will continue to comply with all state laws and regulations regarding building permit fees. As a result of the settlement, the City will utilize internal financial reporting requirements specific to building permit fees to more clearly explain to the Associations that the amount and use of its building permit fees fully comply with all legal requirements."

Curt Swanson, Swanson Homes, President of the Builders Association of the Twin Cities, stated the following on behalf of the two builders associations that brought the lawsuit — the Builders Association of the Twin Cities and the Builders Association of Minnesota: "Shakopee is a desirable place to build homes. The resolution of this dispute will ensure that there will be quality and timely inspection services provided to the public at a fair rate. Home builders are pleased with the improved method of analyzing costs to administer city services and believe that the Shakopee model is an excellent way for cities to determine fees as opposed to fees based solely on the value of the improvement. The industry is confident that there is now in place the system to set the building permit fees equal to the cost of providing the service and the transparency needed to show that the building permit fees are being used for the purposes for which they were collected."

The city of Shakopee has a population of approximately 35,000 residents and is located in the Southwest metro area. Cliff Greene, John Baker and Robin Wolpert of the Green Espel law firm, Minneapolis represented the City of Shakopee in the lawsuit.

The Builders Association of the Twin Cities, with more than 1,800 member firms and the Builders Association of Minnesota, with more than 4,000 member firms, represent the interests of those involved in all phases of the home-building and remodeling industries. Joseph Springer and Robert Shainess of the Fredrikson & Byron law firm, Minneapolis, represented the Builders Association of the Twin Cities and the Builders Association of Minnesota in the lawsuit.

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