Permit revenue source expected to shift to commercial

Permit revenue source expected to shift to commercial

Written by Kara Vaught Wednesday, 07 November 2007

As Cedar Park approaches build out, fewer new homes will be constructed each year, resulting in less residential permit fee money in the city budget. In addition to property taxes and sales tax, permit fees are a large source of city revenue.

Estimates of residential build out in Cedar Park range from 2012 to 2016.

“[Permits] will decrease, but will never abate,” said Mark Lewis, director of building inspections. “There will always be stuff going on, but not at the level we have been seeing in the last couple of years.”

Decrease there, increase here

With an eye on the future, city leaders have examined ways to maintain stability despite a decrease in residential permitting revenue.

“The city council has worked for many years to reduce the city’s reliance on one-time revenues such as building permit fees,” said Melanie Kliebert, communications director. “They have done this not only in anticipation for the future build out of Cedar Park, but also to provide a safeguard against a downturn in the real estate market that could reduce these revenues.”

In fiscal year 2007-2008, Cedar Park expects to collect 20 percent more in sales tax than last fiscal year due to the growth of the city’s commercial base, which includes 1890 Ranch.

The city also anticipates a trend of retail expansion.

“We expect as residential [activity] is coming to an end, that commercial [activity] will start growing,” said Mayor Bob Lemon. “Residential will taper off, but we are building up our new commercial growth every year.”

The next fiscal year is also projected to bring a 12 percent increase to city revenue in property taxes due to increased valuations and new properties.

Behind sales tax and permits, franchise fees are the city’s next largest contributor to revenue. Service companies such as electricity providers are assessed these amounts for the use of city materials and streets.

“We have much more revenue coming in [from other sources] that makes the amount of money coming in from [permits] such a small amount of money in our total budget,” Lemon said.

Permit fee schedule

As to whether permit fees will increase as the amount of permits issued decrease, Lewis said the question cannot be answered until the city is faced with that situation.

However, the fee schedule has not changed since 2003, and Cedar Park updates its fees about every four years. In the process of considering a rate change, Lemon said the city will compare itself to other municipalities.

The current fee schedule in Cedar Park is cheaper than in Leander. For example, a homeowner installing a pool in Cedar Park would pay a $25 building fee, a $25 plumbing fee if the pool had a gas heater, a $25 electrical fee and $25 for a plan review for a total of $100.

In Leander, the same pool would need a $160 building permit, a $40 fee for gas heat and a $20 plan review totaling $220, according to Leanders permit fee schedule.

Permits for home additions, garages and workshops in Cedar Park are $0.10 per sq. ft. or a minimum of $25, while the same structures in Leander are $0.15 per sq. ft. or a minimum of $40.

Leander last updated its permit fee schedule in 2005.

Money makers

New, single-family construction historically generates the most permit fee revenue for Cedar Park, Lewis said.

With roughly 5,000 lots left for single-family development and a history of about 1,000 new homes a year, Lemon said the city has at least a five-year supply of space for residential developers.

Cedar Park and Leander permit history
Year	City	Number of permits issued	Amount of fees collected	Percentage of total city revenue
2003	Leander	1,152	$1,284,459	6%
	Cedar Park	6,371	$1,627,928	11%
2004	Leander	980	$967,403	3.2%
	Cedar Park	6,166	$1,448,224	9.8%
2005	Leander	1,040	$1,099,855	2.9%
	Cedar Park	7,779	$1,807,322	8.9%
2006	Leander	1,062	$1,470,857	4%
	Cedar Park	9,192	$2,108,892	10.5%
2007	Leander	1,338	$1,671,251	3.5%
	Cedar Park	6,876	$1,607,392	8% (est.)
Source: Cedar Park and Leander permit departments

 

Cost of common residential permits for Cedar Park and Leander
	Cedar Park	Leander
Additions	$0.10 per sq. ft. of total floor area including porches and patios; minimum $25	$0.15 per sq. ft. of total floor area; minimum $40; $50 plan review
Remodeling	$50(Electrical and plumbing permits may be required)	$40; $50 plan review. (Electrical and plumbing permits may be required)
Electrical remodel	$50	$40
Deck, patio or carport	$0.10 per sq. ft.; minimum $35; $25 plan review	$0.15 per sq. ft.; minimum $40; $20 plan review
Plumbing remodel	$50	$40
Garage	$0.10 per sq. ft.; minimum $35; $25 plan review	$0.15 per sq. ft.; minimum $40; $20 plan review
Gazebo/pavilion	$0.10 per sq. ft.; minimum $35; $25 plan review	$0.15 per sq. ft.; minimum $40; $20 plan review
Sprinkler system	$25	$50
Storage shed/workshop	$0.10 per sq. ft.; minimum $35; $25 plan review	$0.15 per sq. ft.; minimum $40; $20 plan review
Swimming pools (above and in ground)	$25 building; $25 plumbing if gas heated; $25 electrical; $25 plan review	$160 building; $40 plumbing if gas heated; $20 plan review
Water heater installation or change out	$25	$40
Water softener installation	$25	$40
Source: Cedar Park and Leander permit departments

 

Commercial vs. residential permits in Leander and Cedar Park
Year	City	Residential permits issued	Revenue from residential permits	Commercial permits issued	Revenue from commercial permits
2003	Leander	1,136	$1,100,194	2	$184,265
	Cedar Park	964	$1,186,431	108	$594,292
2004	Leander	901	*	*	*
	Cedar Park	1,011	$1,203,284	125	$453,079
2005	Leander	869	$890,210	11	$209,645
	Cedar Park	1,075	$1,320,746	133	$416,974
2006	Leander	576	$773,342	29	$697,515
	Cedar Park	1,363	$1,719,801	145	$590,544
2007	Leander	791	$1,117,461	46	$553,790
	Cedar Park	1,074	$1,230,899	196	$664,957
*No information was available due to a change in the city’s software.