Development Preemption Bills Advance in Senate

March 16, 2020

The League continues to oppose legislation that would preempt city authority over zoning and building inspection.

Two bills that make changes to building permit fees and inspections were heard and passed by Senate committees last week.

Limitations on building permit fees

On March 9, the Senate Jobs and Economic Growth Finance and Policy Committee passed SF 3816 (Sen. Mark Koran, R-North Branch), a bill that would change the basis for building permit fees from construction value (the estimated cost of labor and materials) to cost per square foot.

The League and Metro Cities testified against the bill, explaining that basing permitting and inspection fees on cost per square foot oversimplifies the review and inspection process and treats residential homes the same regardless of their complexity.

Additionally, the proposed change to base inspection fees on cost per square foot does not account for remodeling, where it would not be possible to apply square footage in certain projects. The bill also neglects to take into account that many cities often have fixed fees, such as with roofing and interior remodeling.

The House companion, HF 4019 (Rep. Zack Stephenson, DFL-Coon Rapids), was supposed to be heard in the House Labor Committee on March 11, but it wasn’t.

While the bill was not heard, it may be heard in a future hearing. Before the hearing, the city affiliate organizations sent a joint opposition letter.

Modification of annual reporting requirements

On March 10, the Senate Local Government Committee passed SF 3795 (Sen. Rich Draheim, R-Madison Lake). The bill would change the annual reporting requirements for construction and development-related fees sent to the Department of Labor and Industry (DLI).

Under the bill, cities that collect $7,000 or less per year in permit fees would simply have to check a box indicating that on the form and submit that to DLI. They would not have to complete the full report.

Two amendments were added to the bill. The first makes the bill effective on Jan. 1, 2021 meaning changes to the form would begin impacting cities starting with reporting for 2020. The second amendment requires the DLI reporting form to include a summary of the penalties that may result if a city doesn’t comply with the form requirements.

The League and Metro Cities have been working with Sen. Draheim and DLI to ensure that updates to the reporting form make it easier for cities to report what construction and development fees are collected as well as the costs associated with conducting inspections. The League is asking cities for feedback on proposed changes (see related article).

The bill was referred to the Senate State Government Finance and Policy Committee.

For more background information about this legislation, read a previous article.