Derby Commercial Fees

Derby’s update to its commercial building permit fees would still see it charging a lower total fee than a number of nearby communities.

Tied to a new agreement for fire plan inspection services, the city of Derby reviewed an update to its fee resolution at the Feb. 9 city council meeting.

While new filing fees and facility fees through the Derby Recreation Commission were officially added to the resolution, the most notable change dealt with fees for commercial building permits.

Having lost the fire inspection services of former Deputy Fire Chief Bill Pater, the city turned to Sedgwick County Fire District No. 1 to take over those services (though in-house options may be explored again in the future) – officially approving an agreement on Feb. 9.

As part of that new agreement, Sedgwick County would receive 25 percent of the plan review fee from Derby – which is 65 percent of the commercial building permit fee – for inspections.

Staff reported $17,000 was captured in 2020 based on commercial plans. With the new agreement outsourcing plan review services and taking away some revenue, Assistant City Manager Kiel Mangus noted Derby would look to offset that by proposing an increase in commercial building permit fees.

The proposal brought before the city council on Feb. 9 would bring commercial building permit fees up to match those of Sedgwick County and the city of Wichita. It was reported the increase would also make Derby’s fees consistent with nearby communities like Goddard, Haysville, Maize, Mulvane, Park City, Rose Hill and Valley Center.

Currently, the cost of a commercial building permit fee on a $1 million building is $4,601 in Derby. Under the proposed update, that fee would increase to $6,328 – keeping Derby in the middle of the pack in terms of total commercial building permit costs.

Depending on the size of the project, Director of Finance Jean Epperson noted the commercial building permit fee would increase 30 to 35 percent in some cases (having not been updated since 2007). That is something with which not all council members were on board.

“I’m not going to be able to support this, number one, for the reason that I didn’t hear anything from city staff that said that we needed to raise these rates other than we want to be in the middle of the pack,” Tom Keil said.

While Keil could see the need to raise filing fees – to recoup the actual cost charged by the Sedgwick County Register of Deeds – he could not see the rationale behind raising commercial building permit fees.

Council member Rocky Cornejo also questioned the sewer connection fee rate and if there was a need for it to be so high. While staff noted adjustments aren’t made for one building necessarily, eventually there comes a level of development when that changes – and the commercial building permit fees help prepare for that.

“As we grow, there are physical costs at our [wastewater] plant associated with that growth to build the capacity into the plant,” said Director of Planning and Engineering Dan Squires. “These fees that we charge, specifically with sewer, go to help offset those future costs of the growth that we’re experiencing.”

Having not been changed since 2007, council member Andrew Swindle questioned if residential fees would also be updated. However, Epperson noted staff felt those are where they need to be and required no changes.

While there were some concerns among council members of “double dipping” in regards to fees and property taxes, City Manager Kathy Sexton said to look at the situation as diversifying revenues. If property taxes are the only revenue source relied upon, she noted that would put the city in a bad situation.

Keil also questioned why more financial burden would be placed on one specific type of development. Sexton noted it was not done with an intent to “pick on” anyone. Rather, developers have noted the ease of working with city staff and the relatively low fees, with Sexton stating an increase is unlikely to scare them off.

“The few increases you’re doing now are for the bigger companies from out of town who are used to paying those kind of numbers and they know that communities want to cover their development costs. It’s not going to make a difference in their building model for whether they come to Derby,” Sexton said. “I really believe this is good proposal.”

Additionally, Sexton noted the increase in commercial building permit fees is likely to impact new development only – with the city council approving a 50 percent reduction of fees for redevelopment of pre-1996 construction last year.

While concerns about the sizable hike in fees were heard, council members also suggested not waiting another 14 years before reviewing such fees, with the updates to the fee resolution approved as presented on a 7-1 vote (with Keil opposing).