D.C. Mayor Marion Barry yesterday ordered city officials to immediately start strict enforcement of building permit rules in an effort to end a 20-year practice in which architects and builders managed to escape paying millions of dollars in building renovation permit fees by undervaluing their projects.
The mayor said the builders and architects will be required to pay permit fees based on the total construction cost and attest to those costs in affidavits filed with the city.
In addition, the mayor said, city permit examiners no longer will have the authority to reduce construction costs submitted by applicants -- a practice that a city study showed was routine. Only the administrator of the city's Building and Zoning Regulation Administration will have the power to approve cost revisions, Barry said.
Barry said that the loss of the permit fees to the financially strapped city government has been serious, but he said city investigators have not yet determined the full extent of the losses.He said city officials who investigated 27 permits granted over the last three years estimated that project. costs have been undervalued by 30 percent to 50 percent.
A confidential staff study said the city lost at least $680,000 last year, and some city officials have estimated that it could have been higher.
The mayor said the city is considering the possibility of trying to recover additional permit fees from builders and developers who received undervalued permits. "We'll try to get every penny we can," Barry declared.
The new policy is almost certain to force the $15-million-a-year renovation industry to pay substantially higher permit fees.
A city study showed the industry had benefited financially from inadequate city administrative controls over the permit review process. But, Barry emphasized, architects, builders and developers also contributed to the problem by regularly submitting undervalued project costs that werer rarely challenged by city permit examiners.
"They [applicants] did it to save money," the mayor said. The construction project costs are the basis for the fees paid to the city, which assesses $38 for each $1,000 of rennovation work.
City officials also found that the D.C. government is losing money in permits for new structures and additions to existing buildings. Permit fees for new buildings and additions are based on their size, which applicants understated in some instances, according to city officials.
Speaking at a District Building news conference called to disclose the results of a city investigation into the permit process, Barry declared that his administration was moving "swiftly and forthrightly" to correct problems in the permit process that have been in existence for perhaps 20 years.
He said city officials already have begun to develop clearly written procedures -- which the city investigation found were nonexistent -- to guide permit examiners and applicants in determining fees.
The mayor also announced the establishment of a special five-member task force headed by Deputy D.C. Housing Director James Clay to implement and monitor the changes Barry ordered. "I have made it unequivocally clear to all agencies involved that the full weight of my office will be behind this task force," Barry said.
The D.C. Department of Licenses, Investigations and Inspections, which formally issues the permits, will tighten its controls over permits to insure that only authorized personnel handle them and to prevent any tampering, Barry said.
The results of the investigation have been turned over to the city Inspector General's office, which is studying the permit process further and will probe any possible improper conduct on the part of city employees.
Barry said that the investigation confirmed a report earlier this month in The Washington Post that a permit examiner lowered fees after receiving personal payments from applicants.
The Post reported that the examiner, Warner B. Jenkins, 47, three times lowered permit fees after receiving personal payments, according to canceled checks, documents and those who said they paid them. Barry said two people who said they made payments to Jenkins confirmed it to city investigators, but the third person could not be reached.
Jenkins, who earns $24,527-a-year in his city job, said at the time that he had done nothing wrong and that any money he might have accepted would have been for interior design work he did that was unrelated to the applications.
Jenkins and his immediate boss, W. Monroe Stewart, the acting head of the stuctural engineering branch, temporarily have been reassigned within the housing agency, pending the out-come of an investigation by the U.s. Attorney's office and the FBI.
A Post review of city records and numerous interviews with architects and builders found frequent instances where projects were either undervalued or estimated costs were lowered, resulting in lower fees paid to the city. In all but the three instances, there was no evidence that personal payments were made to examiners.
Barry said the city's investigation revealed that there was "not a wide-spread practice of kickbacks and payoffs."
However, Barry and city housing director Robert L. Moore disclosed that city investigators had received allegations that another unidentified employe might have accepted money from permit applicants.
Barry said the inspector general's probe also will focus on whether permit examiners who worked in their off hours for architects and contractors may have violated the city's conflict-of-interest rules for employes.
City investigators also found that city officials often allowed fees to be reduced based on an unwritten tradition that allowed certain construction costs, such as those for plumbing, mechanical and electrical work, to be excluded from the overall project costs. Permit officials told reporters they had excluded such costs to avoid what they felt would be double-billing because the city requires additional fees for spearate permits for electrical, plumbing and mechanical work.
However, in expanding on Barry's statement that the total construction costs will be used in computing the fee, Moore said: "We're not backing out [excluding] any costs." He said Lacy Streeter, the acting administrator of the Building and Zoning Regulation Administration would approve such reductions "only in very unusual circumstances."