Archive for Friday, June 11, 2004

Builders’ suit claims city misuses fees

June 11, 2004


Lawrence builders filed suit Thursday against City Hall, saying building fees are being used illegally to fund "social programs."

"Defendant unlawfully uses building permit fee revenue ... to fund the activities of rental inspectors, environmental inspectors for existing buildings and other initiatives that have no relationship to the regulation of building activity," attorney Terrence Campbell said in the suit, filed in Douglas County District Court.

City officials generally declined comment Thursday. Earlier in the week, however, Assistant City Manager Dave Corliss discussed the possibility of the lawsuit with the Journal-World.

He said the city believed permit fees could legally be used to support ongoing inspections even after construction was completed.

"Our belief is ... the community's responsibility for a building doesn't end when the home builder sells the house," Corliss said Wednesday.

The Lawrence Home Builders Assn. filed the suit with Apple Tree Homes Inc., Edmondson Construction Co. and Salb Construction Inc., all Lawrence companies. The suit said additional plaintiffs could be added as part of a class action suit against the city.

The fees in question took effect in 2002 -- before the present "smart growth" majority took control of the Lawrence City Commission -- after City Hall approved the licensing and inspection program for rental homes in single family districts.

The fees are charged on a sliding scale, according to the cost of construction. For a $100,000 house, for example, the fee would be $613.92, plus an additional $3.30 for each additional $1,000 in construction costs.

City officials say they collected $845,135 in building fees in 2003. They estimate that the cost of "building regulation activities" will total nearly $1.3 million in 2004, and they said that expenses would exceed revenues even if the rental and environmental inspection activities weren't included in that accounting.

The collected fees have gone into the city's "general fund," which is used to pay building inspectors and other unrelated activities.

In March, Campbell sent a letter to City Hall demanding that a separate account be established so that a clear link could be established between the fee collections and the costs of building inspections. The Lawrence City Commission agreed to that demand Wednesday but grumbled about the threat of the lawsuit.

But the builders went ahead and filed suit Thursday, out of the belief that the city's accounting of "building regulation activities" includes work -- rental and ongoing environmental inspections to ensure a building is still in safe condition -- that in some cases take place years or decades after construction.

"To be lawful, a fee must bear a rational relationship to the rightful regulation of the activity for which the fee is charged," Campbell said in the suit. " Fees in excess of the amount which is reasonably necessary for rightful regulation constitute an illegal tax."

In his March letter, Campbell said the excess fees collected since 2002 "appear to be well in excess of $300,000."

Bobbie Flory, director of the home builders' association, referred questions to Campbell. Mayor Mike Rundle said the city's building fees are not out of line.

"I'm confident that our fees are in line with the market," he said.

No hearing has been scheduled in the case.

-- Staff writer Joel Mathis can be reached at 832-7126.

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