On Wednesday, Nick Erickson, director of regulatory affairs and research at Housing First Minnesota, testified on behalf of HF4271, a bill that would direct the commissioner of the Department of Labor and Industry to establish a cost per square foot valuation of properties for the purpose of setting residential building permit fees.
“Today, building permit fees must be established based on valuation, as set by the building official. Interestingly, this valuation reference point is partially based on square footage,” stated Erickson. “Yet, even with this table and valuation submissions from builders that, in many cases are updated weekly to reflect their actual construction costs, we see no consistency in the accepted valuation.”
Erickson continued, “This valuation is for what we call in the industry the stick, bricks, and labor, meaning that is only the home itself. This valuation is not to include the lot or land value, in-development improvements, or fees paid to the municipality. In 2022, so far, they reported an average increase of roughly 25%. Additionally, we’ve seen the average accepted in some communities rise to nearly $150,000 higher than the actual construction costs. HF 4271 removes the guess work and inconsistent valuation practice.”
After discussion by the Local Government Division in the House, the bill was sent to the State Government Finance and Elections Committee with a 9-0 bipartisan vote.