Housing Permit/Fees add $20,000-$60,000 to cost!

My name is Gary Schneider. I am a native Oregonian and have lived in Portland for over 50 years. For the last ten years I have been in the construction business. Over those ten years I have witness a steady increase in building permits and fees required by our civil governing authorities. Of course these fees are passed on to the consumer, but the cost of building a home has become prohibitive to many would-be homebuyers. Permits and fees have accumulated to approximately $20,000 of the purchase price of the home. When revealing this cost information to the homebuyer, many are astonished to the point that I have lost jobs as a result of this revelation. In truth, when one considers that most homebuyers finance their home over 30 years, the full impact of the permits and fees in reality is $50,000-60,000.

Another example: a mechanical permit to install a fan in a bathroom costs almost the same amount as the fan itself. What is wrong with this picture?

Another effect of the never-ending rise in permits and fees is the increasing difficulty to keep employees. These fees add to my overhead and it forces me to use sub-contractors and temporary employees. Now the Construction Contractors Board has added a new 8% surcharge on permit inspections, half of which is applied to defray state administrative costs.

Why doesn’t the CCB find a way of cutting overhead instead of forcing small business to cut theirs? In my observation, the CCB must cut their expense (read fat) in governing contractors. They want an additional 4% (half of the new 8%) to defray state administrative costs. Where is the accountability with what they are currently receiving? What is the accountability of where the money is going?

In my opinion, the CCB, instead of fixing their leaking bucket by plugging the hole they created, they simply want more money to see them through their financial turmoil. They are saying that money is the answer to their problems. I say no. Their decision and behavior is the source of their problems, just as it is true for everyone else — that is reality!

Oregon contractors please wake up and demand accountability from your civil government that exercises direction, regulation, control and restraint over your business. Is it your business? Think again.

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Posted by at 07:54 | Posted in Measure 37 | 9 Comments |Email This Post Email This Post |Print This Post Print This Post
  • A major problem with permits and fees is that they increase the cost of ALL housing in a market. The cost of new homes is like a tide that lifts all boats: if new home prices rise by $20,000, then existing homeowners who are selling will ask something close to $20,000 more for their homes.

    Since about one out of four homes sold is new, this means that a fee that is supposed to raise, say, $10 million per year ends up adding $40 million per year to the cost of housing. Such fees and other land-use restrictions added around $3 BILLION to the cost of housing in Oregon in 2005. See my report on this subject at https://americandreamcoalition.org/penalty.html.

  • Layne Barlow

    Mr. Schneider has an excellent point, but he didn’t take it far enough. Government has become predatory upon the people it’s meant to serve, protect and to provide peace, safety and happiness. And this is at every level, from the traffic cop giving you a bullshit ticket that costs you half a week’s pay for some trivial offense to the OR-OSHA “code enforcer” sending you a ticket with a fine in four figures for other trivial offenses on your job site.

    Regardless of how bad the economy is government continues to expand. The CCB is no different. Perhaps it should be abolished along with scaling back major portions of OR-OSHA and just about everything else its parent agency, the Division of Business and Consumer Services, does. If there was a state agency that could share the top of the list as a bunch of thugs clothed with color of state authority, they’re it … along with the Child Support Collection Machine (DCS), the Oregon Family Gestapo (CPS) and Hardy Myer’s private kingdom, the Department of INjustice (ODOJ).

    The bottom line, Mr. Schneider, is what are you wiling to do about it? The CCB is probably just doing what their statutory mandate instructs them to do. The cure is contacting your representatives in the legislature and changing — better, abolishing — them.

  • Dave A.

    Intereseting post. Though I am not a contractor, I am a recent home buyer looking to move to the Reno/Lake Tahoe area within the next 2-3 years. In the Reno area, permits are a fraction of what these government pirates are charging in the Portland metro area. I won’t even mention those social engineers at Mtero that have increases land costs at least 3-400% with their absurd growth boundries. Is it any wonder that Nevada with NO STATE INCOME TAX, low building permit fees, and a business-friendly climate is one of the top growth states in the nation?

  • Jerry Man

    Hasn’t anyone taken economics?

    The costs of safety (permits) and infrastructure such as water lines (fees) will be carried by someone. You’ve got a choice: have those costs hidden and spread across society (by higher health care costs, higher property taxes, etc.) or have those costs tied to the creator of those costs.

    And as far as fees spreading across the housing market, Randall’s off. The fees are most likely to cause new houses to be built slightly simpler, so they can compete with existing older houses. There’s no inherent reason that older houses that don’t have those fees would increase their prices, instead of newer houses decreasing their prices. Supply and demand will figure this out. Econ 101.

  • Hey Jerry Man

    Haven’t you tanke basic ecnomics? Markets are efficient and costs should be relatively similar for certain project relative to the inputs required. In a nutshell – sewer lines in Portland shouldn’t cost anymore than sewer lines in Gresham or Vancouver. Anyways, alot of the impact fees and permit costs in Portland aren’t going to this infrastructure but to the PDC’s budget.

    Houses also sell at the absolute most expensive price the market can bear. A home buyer isn’t going to see a signficant price difference between new and used (unless its a condo and then new will be way more expensive). Shopping the market new construction costs more than old construction unless its far flung from the central city. I know for a fact that an equivalent sized row-house sells for more than my 90 year old home that though it has no yard and limited parking.

  • Steven Plunk

    Historically infrastructure costs were paid through the current and expected revenues from services and/or taxes. This idea of paying a civic initiation fee upfront is a result of poor fiscal management. SDC’s are just a way to increase revenues without offending current taxpayers.

    It’s a stealth tax on our children who will pay it when they buy their first home. So not only are we saddling them with a huge national debt but we also make them pay to become home owning members of society. Our leaders do it just to grow government. It’s sick.

    So in Oregon we restrict available land then put development fees on top of those inflated prices. Smart. More handiwork from the boomer generation spoiling everything after they have gotten theirs.

  • *JK:* Don’t forget to ad a few tens of thousands for the artificial high price of land due to metro’s artificial shortage of buildable land.

    Thanks
    JK

  • patrick

    I’ve got a large development going in behind my property, and the amount of work required of the county to protect the interests of the adjacent property owners and the community in general is astounding. The hearings, reviews, checkoffs & studies required seem reasonable to me. I don’t see much waste.

    There are so many people affected by a development project, it’s expensive to make sure the new plats drain correctly, connect to sewers correctly, won’t cause waste down-the-road through poor planning, won’t pollute water, etc … all these considerations will have to be paid for. Making the developer pay for it seems like the right thing to do. I sympathyze with the high cost of government regulation getting in the way of profits, volume of sales, or creating a lengthy sales cycle. I also don’t think that those without a financial interest in the profits should be forced to share in the expense – which is what would happen if fees weren’t levied as heavily as they are.

  • the dude

    the same people who are pissing and moaning about the cost of housing and land sure sing a differnt tune as soon as they want to sell thier home after seeing a 25% or more appreciation rate on that investment.

    you also don’t get decent workers providing a professional service that takes safety and complex regulations into account if you pay minimum wage. people need to stop crying that services cost money. you want competant government workers, so pay them a wage that people who are intelligent would take. that increases the cost of the services they provide. as a contractor, i’m sure you make a pretty lucrative living. allow others to make a decent one at least.

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