Senate Labor Committee Considers Bill That Would Alter Building Permit Fee Methodology

February 3, 2025

The bill continues conversations had in previous legislative sessions to move to a cost-per-square-foot methodology.  

On Jan. 30, the Senate Labor Committee considered SF 560 (Sen. Eric Lucero, R-Saint Michael), which would require the commissioner of the Department of Labor and Industry to establish a cost-per-square-foot valuation of residential buildings for the purposes of municipal building permit fees.

As introduced, the bill would create a uniform valuation system based on cost per square foot for new construction and additions to one- and two-family buildings, townhouses, and accessory buildings.

Although the bill’s language reflects discussions from a Department of Labor and Industry Technical Advisory Group, in which the League participated, the League ultimately raised concerns about the proposal. During the committee meeting, testimony on behalf of the League highlighted issues with both the underlying bill and an amendment that was brought up for discussion but not adopted. The committee passed the bill without recommendation, and sent it to the Senate Housing and Homelessness Prevention Committee for further consideration.

Comments on bill as introduced

The League, alongside Brian Hoffman, City of St. Louis Park building and energy director, provided testimony on SF 560. The League maintains that the current valuation-based methodology for building permit fees does not need to be changed. However, the League acknowledges if changes were to be considered, they should:

  • Ensure regional cost-per-square-foot valuations apply only to new one- and two-family buildings.
  • Allow complexity as a factor in valuation.
  • Preserve cities’ authority to set their own fee schedules.
  • Exclude additions, accessory buildings, or remodels from the proposed valuation method.

Concerns with the proposed amendment

The League also addressed an amendment that was presented for discussion but not adopted. The amendment proposed replacing the bill’s language with a trip fee methodology, which the League deemed problematic for both cities and builders. Concerns included:  

  • Increased uncertainty: A trip charge model could replace upfront inspection and review fees with post-work trip charges, potentially increasing costs for certain projects that need re-inspections.
  • Administrative burdens: Cities would need to create entirely new systems to track trips, collect fees, and manage payments for potentially thousands of permits, adding complexity and cost.
  • Delayed certificates and occupancy: A post-service fee collection could delay occupancy certificates until payments are received, creating more uncertainty for permit applicants.

Ongoing legislative engagement

Housing First Minnesota testified in support of the bill, and contended that more certainty and standardization is needed regarding building permit fees.

The League will continue to work with the bill’s author and relevant committee members.

Your next steps

Cities are encouraged to engage with their legislators, especially those on the Senate Housing and Homelessness Prevention Committee, Senate Labor Committee, and the Senate State and Local Government Committee about their concerns with the proposal.

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