The Independence City Council unanimously voted to increase the city’s building permit fees at the city council meeting on May 1. This will be the first time the city has increased its fees since 2015.
The council completed a first reading of the policy change in April. Kentucky statute prevents cities from making profits on building permits, so rates are set to match costs.
Michael Carpenter, Independence building inspector, produced the new rates by comparing costs and rate increases from other cities in the region. At the April meeting, he said that even with the rate adjustments, Independence’s permit fee schedule is, on average, about 20% lower than other cities in the area.
Despite the unanimous vote from the council, the change was not universally welcomed. Brian Miller, the executive vice president of the Building Industry Association of Northern Kentucky, spoke to the council in an effort to dissuade them from raising their rates.
Miller had written a letter to Mayor Chris Reinersman in mid April in which he cited a 2022 data study from the Economics and Housing Policy Department of the National Association of Home Builders, the analytical arm of one of the largest trade associations in the country. The letter reads: “The study states that for every $1,000 increased cost of a home there are 2,187 households who are unable to invest in the commonwealth of Kentucky.”
Miller’s letter cited another study from the same group, this one from 2021, about the cost of regulations on new house constructions. One line from the study, which Miller repeats in his letter, states, “On a dollar basis, applied to the current average price ($394,300) of a new home, regulation accounts for $93,870 of the final house price.”
Miller characterized the costs generated from excessive regulations as “death by a thousand cuts.”
“It may be $100 here or $500 there,” Miller said, “but it all adds up.”
“We are really experiencing a nationwide housing crisis,” Miller said at the beginning of his statement.
He said that about a third of the regulation costs of housing came from local regulations, like the ones that the council had control over.
“For every $1,000 in increase in the price of somebody’s home, or their potential home, over 1,100 families are impacted, are priced out,” Miller said.
He said that rising housing costs had led to a situation where only wealthy buyers could afford to build new homes, and disincentivized the construction of new rental property. This forced lower-income earners to look for used properties, of which there is inevitably a limited supply, raising housing prices even more as the demand overtook the supply, according to Miller.
Thus, he argued that raising building permit fees would harm housing affordability and access in Independence.
Council members invited Carpenter to respond, and he reasserted that the costs associated with the new fees would be minimal. He also commented on the lean state of the building inspection department of Independence, of which he is the sole member.
“We’re being subsidized by the tax payer,” Carpenter said, “last year up to $50,000.”
“It’s only me,” Carpenter added. “I don’t have a receptionist. I do the permitting and the inspections.”
Finally, he concluded that the department ran at about a 52% deficit in 2022.
Mayor Reinersman, who also serves as the chair of Kenton County’s Planning and Development Services Management Board, agreed, although he was sympathetic to home builders’ problems.
“I sort of appreciate the building industry’s challenges,” Reinersman said, “between rising building costs, the workforce problems while facing as well as the rising interest rates are also a factor.”
Still, he said, “We run a very lean operation here.”
Furthermore, Carpenter said, “We’re one of the very cheapest in our region,” based on the research he’d completed before revising the rates.
As a response, Miller made a comparison to Duke Energy.
“There’s a reason they don’t charge connection fees,” Miller said. “The reason being is they see new customers coming online.” As such, they’re able to expand their “economic footprint” and provide more services for more people.
The council cast their votes in favor of the rate increases after some discussion.
The next Independence City Council meeting will take place on June 5 at 7 p.m. at the Independence City Building on Madison Pike.