Developers target Montgomery County construction fees, surpluses

The group representing Montgomery developers has accused the county of accumulating large cash surpluses through excessive fees for building permits and inspections necessary to complete construction projects.

The Maryland-National Capital Building Industry Association asked County Executive Isiah Leggett (D) to revise the fees established by the Department of Permitting Services. The department, which is responsible for processing and approving construction plans, is projected to collect $42.5 million in fees — $13 million more than its original estimate — for the fiscal year that ends June 30.

Robert Kaufman, the association’s vice president for government affairs, said in written testimony submitted to the County Council on the fiscal 2015 budget that the fee structure is raising construction costs at a time when Montgomery is seeking to improve its economic competitiveness.

“The permit fees paid come from the pockets of County homebuyers, businesses, property owners, tenants and our residents who make the conscious decision to relocate, expand or grow in Montgomery County,” Kaufman said.

The association’s protest is noteworthy, in part, because its membership includes some of the heaviest contributors to county political campaigns. Their pitch for lower fees comes two months before the June 24 Democratic primary.

Last year, after intense industry lobbying, Leggett agreed to lower two types of charges: fees for permits to build certain types of wood-frame apartment buildings and fees to support the department’s IT operations.

But Leggett said Tuesday that he wanted to see a detailed study of the county’s fee structure — scheduled to be conducted this year — before agreeing to further reductions.

“We need to look at this comprehensively and not just pull at the threads,” he said.

Unlike most county departments, Permitting Services depends entirely on user fees, and it receives no money from the tax-supported general fund. For several years — 2007 to 2011 — the agency operated in the red, a product of the economic slowdown and internal problems in collecting revenue.

In the past three years, however, the agency has been relatively flush, running up tens of millions in fund balances. The department’s director, Diane Jones, said that fees were not raised and that the revenue stream reflects the ups and downs of the construction market.

Kaufman also questioned the agency’s decision to earmark $20 million in surplus revenue to help finance a $73 million county office building planned for Wheaton. The project, considered a key element of an effort to revitalize Wheaton, will provide new headquarters for the Maryland-National Capital Park and Planning Commission and other agencies, including Permitting Services.

“Why in the world they would be building, a NEW building, when office space is so cheap right now is beyond me,” Kaufman said in an e-mail Tuesday.

Leggett and Jones said the office building was a prudent and legitimate use of the $20 million. The new building would consolidate park and planning operations and Permitting Services, creating more of a one-stop shop for builders, officials say, and it would advance the county’s interest in revitalizing the Wheaton area along Georgia Avenue north of Silver Spring.

“If the private sector has not stepped in to revitalize downtown Wheaton, then the government is stepping in to kick-start it,” Jones said.

Douglas M. Duncan, one of Leggett’s two challengers in the June Democratic primary, has called Permitting Services “broken” and promised to fix the agency. In a policy paper issued this month, Duncan said builders face an approval process that is “complicated and fragmented, redundant and expensive.”

Jones offered a rebuttal Tuesday, citing data points that she said highlighted the department’s improved productivity and responsiveness.

She said the agency performed more than 141,000 inspections in 2013, 5,800 more than in 2006 and with roughly the same number of employees. Waiting times have been shortened by the use of electronics to issue permits and approve plans. The department’s takeover of fire system inspections during construction has eliminated what typically had been four to six weeks of delay, Jones said.

“If you look at what we’re doing, I think we’re pretty darned effective,” Jones said.

Bill Turque, who covers Montgomery County government and politics, has spent more than thirty years as a reporter and editor for The Washington Post, Newsweek, the Dallas Times Herald and The Kansas City Star.
Comments
Show Comments
Most Read Local