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Old January 20th, 2005, 06:41 PM   #1
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City easing building fee rise

City easing building fee rise
New ordinance allowed up to 1% of construction cost

By Thomas A. Corfman and Gary Washburn
Tribune staff reporters
Published January 20, 2005

The Daley administration is backpedaling from the eye-popping increases in building permit fees included in the City of Chicago's 2005 budget.

A new fee ordinance, set to take effect Feb. 1 and applying only to new construction, calls for permit fees of up to 1 percent of costs, replacing a formula based on building size.

As a result, the new ordinance could increase the cost of a building permit for a 2,000-square-foot home to at least $1,800, compared with $264 under the old schedule. Donald Trump's permits for his 90-story skyscraper could cost at least $2.6 million, compared with about $350,000 under the old system.

But the city is preparing a specific schedule of fees, based on building type, that could soften those increases. However, the Department of Construction and Permits still does not know who will be charged how much.

Department spokeswoman Sabrina Miller noted Wednesday that the ordinance calls for a maximum fee of 1 percent of construction costs but a minimum charge of $85.

The higher permit fees were part of the $5.1 billion budget plan approved by the City Council last month after spirited bargaining between the administration and aldermen over a wide assortment of tax and fee increases needed to close a $220 million deficit.

The permit controversy is an embarrassment for the administration, which was criticized by some community advocates and a few aldermen for not providing adequate information about the budget.

"There's no process," said Peter Skosey, vice president with the Metropolitan Planning Council. "It's Mayor Daley's budget people getting together in a room, trying to figure out where there's an upward trend and how the city can make money on it."

The permit fee hikes come on top of a new residential-development tax, called an impact fee, that ranges from $250 to $625 per unit, depending on its size.

"I think they'll live to regret some of these decisions, if indeed it gets to the point where it starts to reverse that upward trend," Skosey said.

Before the budget was passed, the permit fee increases gained little attention, even from developers and construction contractors.

"We knew it was in the budget, and it was one of the many things--we didn't get specific on that one--when I testified about what we felt was death by a thousand taxes," said Gerald Roper, president of the Chicagoland Chamber of Commerce.

Roper said developer Steven Fifield brought the new fees to the attention of business leaders, using Trump's 2.5 million-square-foot project as an example.

Fifield, president of Chicago-based Fifield Cos., could not be reached for comment.

Before the Chamber of Commerce and the Chicago Development Council, a local real estate group, could lobby City Hall for changes, Planning Commissioner Denise Casalino had stepped into the controversy, Roper said.

Casalino "said it was a mistake in their calculations, and they were fixing that," Roper said.

Casalino, a former first deputy director in the permit department, said the change was intended to increase the annual total of permit fees by $1 million, Roper added.

Through mid-November, 2004 building permit fees brought in more than $30 million.

Casalino "wants to make sure these fees don't inhibit new construction," said her spokesman.

Miller, the permit department spokeswoman, denied the fee increase was a mistake, but added, "I don't think anybody could even come up with a clear, definitive number of how much additional money the change would generate."

The increases are part of a change in the way permit fees are calculated that was intended to bring the city in line with modern building codes. Under the old ordinance, fees were calculated based on a rate of $12 per 1,000 cubic feet of building space.

Under the new ordinance, the maximum 1 percent would be determined by either a project's actual budget or a table of typical costs for various types of projects set by the International Code Council, a construction industry group that proposes model building codes.

San Francisco, Detroit, Boston and Houston charge more than 1 percent, the permit department says. Chicago charges 1 percent for renovation projects.

In Chicago, construction costs typically are higher than the council's cost table, especially for high-rise buildings. For example, the table estimates the cost of residential development at $106.23 a square foot. In Chicago, a building such as the proposed Trump International Hotel & Tower Chicago easily could cost twice that much, industry experts say.

The Tribune estimated permit fees under the new ordinance using the council's cost table.

While developers of high-priced condominiums and townhouses are scrambling to pass the fee increase on to home buyers, the new fees and taxes could halt other developments, said Chicago zoning attorney H. James Fox, a partner in law firm Quarles & Brady LLP.

"New, affordable and moderately priced housing? You're not going to have any more of that," he said.


how do you think thats going to play on future buildings? 2.6 million construction fee for the trump tower... geez. that might detour builders from building high rises.
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Old January 20th, 2005, 09:51 PM   #2
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yeah... this dosent seem like good news...
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