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Q. Calculating the estimated value for permits

SCBO1

SCBO1

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In all the years that I have been an inspector the estimated value listed on a permit for a permit fee has been all over the place and typically listed as low figure by the applicants.

I'm now seeing for an example: A 1200 sq ft house with a $120,000.00 estimated cost of construction, then seeing the finished product listed for an asking price of $320,000.00.

Land is not part of the $120,000.00 estimated figure but is part of the final asking price, this $120,000.00 figure was used 25 years ago.

Example #1:
1200 sq. ft. house x 60 cents a square foot = $720.00

Example #2:
ICC Appendix AL permit fee calc
1200 sq. ft. house
$120,000.00 = $1,027
+ $140
$1,167

Example #3:
ICC BVD
Never used this

Q. Is there other ways to make the applicant provide more accurate estimated construction cost that can be applied in a fair calculation for a permit fee?
 
Tell them you have a lot and ask them to build you that exact house on your lot for that price. ;)
The cost of construction and the sale price can be vastly different depending in the market you are in.
We have asked for signed contracts or verification of the construction loan amount.
 
Doing commercial finishout … bank branch … in southern maryland, one of the documents required with the permit appplication is a copy of the Gc proposal.
 
People really seem to struggle with this. To me, it seems like such a no brainer, but people really push back. We have been using a spreadsheet that's based off of the ICC BVD as a minimum calculation so that we're fair and consistent. As long as the number they give us is over that amount, we accept it. If it's below we reject and tell them to give us a realistic number. We cite this:

[A] 109.3 Permit valuations. The applicant for a permit shall
provide an estimated permit value at time of application.
Permit valuations shall reflect the total value of work, including
materials and labor, for which the permit is being issued,
such as electrical, gas, mechanical, plumbing equipment and
permanent systems. If, in the opinion of the building official,
the valuation is underestimated on the application, the permit
shall be denied, unless the applicant can show detailed estimates
to meet the approval of the building official. Final
building permit valuation shall be set by the building official.
 
SCBO1 said:
In all the years that I have been an inspector the estimated value listed on a permit for a permit fee has been all over the place and typically listed as low figure by the applicants.

I'm now seeing for an example: A 1200 sq ft house with a $120,000.00 estimated cost of construction, then seeing the finished product listed for an asking price of $320,000.00.
Click to expand...

I don't think you can build a complete house for $100/s.f. anywhere in the United States.

SCBO1 said:
Q. Is there other ways to make the applicant provide more accurate estimated construction cost that can be applied in a fair calculation for a permit fee?
Click to expand...

The ICC 2021 IRC offers this:

R108.3 Building permit valuations. Building permit valuation
shall include total value of the work for which a permit is
being issued, such as electrical, gas, mechanical, plumbing
equipment and other permanent systems, including materials
and labor.
Click to expand...

Not as long as the section Joe B. cited for California, so I guess California added verbiage. But the ICC Commentary for section 108.3 adds this:

Most jurisdictions develop a fee schedule based on the
projected construction cost of the work to be done.
Two methods are used to determine this cost valuation:
a “per-square-foot” factor based on the use or
occupancy of the building and the type of construction
involved, or the “bid cost” factor based on the total
accepted bid price for doing the work. The valuation is
determined by including the value of the construction
process, including both materials and labor. It is
important that a realistic valuation be determined for
every project so that permit fees are applied fairly and
accurately. If the building official believes that the
value provided by the applicant is underestimated, the
permit should be denied unless the applicant can substantiate
the value by providing detailed estimates of
the work to the satisfaction of the building official.
Click to expand...
 
We charge $ 1300.00 per dwelling unit except for apartment complexes, includes up to 7 building inspections, plumbing, gas, and electric are $75.00 each, houses go for 600k to 800k.

Easy-peasy-lemon-squeeze
 
Yankee Chronicler said:
I don't think you can build a complete house for $100/s.f. anywhere in the United States.
Click to expand...
The ICC BVD is not even an option for me. All foundations on the island are deep piers with cages (35'-40'), grade-beams, thick slabs, all CMU with concrete tie beams, etc. We accept valuations in the $375-$425 square foot range, based on the design. I just had one finish with a per square foot cost of $1000+. We also require a G701 form at the end signed by the architect, contractor and owner. I had a home with a permit valuation of $4M but at the end, it was $17M direct cost. It was then valued at $42 at the tax assessor's office.
 
Where I'm at it's very rare to see new construction for sale, most available land has been developed. We do see new SFR construction, but it's either custom built for (or by) the owner, or it's intended as rental property. Lately I hear contractors are bidding $350-450 per sq. ft. for new residential construction, but the minimum we accept (for the purpose of valuation) is $172 per. One recent example (issued Oct. '23, but still not complete) is a permit for "new sfr and attached adu 2,900 sqft" and they gave us $850,000 as the valuation. That works out to $293 per sq. ft. By the looks of the place, I'm sure it will end up being well over $400 per. If they were going to sell it I'm sure they'd list at $1.4M ish. Not sure if the market would support it, but it is a block away from the university, so it might. Their total permitting fees were about $35k, only about $12k were building permit fees though...
 
At my old job, the department calculated a construction value for single value homes, based on a table that had been developed by the department and blessed by the town's finance board. I started there in 2005, and somewhere around 2006 (or so) I was assigned to update it. We used R.S. Means as the source, because it was available and because it has regional modifiers. Our tabulation included s.f. or unit costs for basements, first floor, second floor, bonus room, finished basement, deck, covered porch, fireplace (separate numbers for masonry and for metal), masonry veneer, and a few other items. It was more complete and better broken-down than the similar schedule used in the town where I now work.

Not too long after we adopted the revised schedule, a builder came in and argued for over an hour with the Building Official, trying to convince him that our new numbers were unrealistic, that you can't rely on R.S. Means, that we were going to cause his wife and kids to be living on the street -- it was a real song and dance. The boss remained unimpressed and told him the schedule had been approved by the finance board, and that was the end of the discussion.

At which point the guy smiled and said, "Well, at least I tried. To be honest, the number you came up with is exactly what I figure it's going to cost me to build it."
 
I would recommend you develop a reasonable cost per square foot value for non-commercial construction.

The issue I see is that we don't want to penalize people for being honest and certainly don't want to reward people for lying.

Also, why should someone using premium materials/processes/etc. in their building pay more than the person using code minimum. Presumably, you are providing the exact same service to each (arguably, the code-minimum person will take more of your time as they are so close to code that sometimes the fall on the wrong side of that line).
 
We use sq. ft. for new homes and a percent of the construction cost for alterations, additions, decks and pools. Sometimes the charge for an alteration comes out to more than if the house was new.
 
Another issue that we run into is the basement will be listed as unfinished but could be finished at a later date, so that square footage is usually not added to the total square footage of living space when permitting.

I have seen 60¢ per sq ft for house and 40¢ for additions. At least this calculation can be calculated with plans that have measurements provided.
 
SCBO1 said:
Another issue that we run into is the basement will be listed as unfinished but could be finished at a later date, so that square footage is usually not added to the total square footage of living space when permitting.

I have seen 60¢ per sq ft for house and 40¢ for additions. At least this calculation can be calculated with plans that have measurements provided.
Click to expand...

60 CENTS per square foot?

Houses around here are probably costing around $200 per s.f. to build.

At 60 cents per square foot, a 2,000 s.f house would cost $1,200 to build. You can't build a bathroom for $1,200.
 
Mine was about double that when I was still in a building department.

We always evaluated it as fully finished. I have to do the same number of inspections whether it's finished or not.

A lot of places in Canada have moved to a service index fee. Basically, the fee is based on the area of the building and the building classification.

My former one: https://www.quispamsis.ca/media/ezjlobki/055-bylaw-building-schedule-a-fees.pdf
 
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