Financial Issues: Why does the Building Department lose money?
To fully understand what's going on with our building department, we need to step back and see what that department does, who works in it, and what's changed.
Building Department Functions
Essentially, the building department is where anyone who would need a building permit, an inspection, or a review of plans would go. The details are outlined on our own Village website here. Note that all construction in the village requires a permit and that permit has a cost structure outlined in our village code.
Who Works in our Building Department
Well -- the front desk person also takes in the permit requests and the checks for said permits. It was a side job for our utilities clerk (until she left the village) to process the payments. But that's just the paper processing side of the department. We do not currently employ a building inspector ourselves. We hire that work out to a company called HR Green. Prior to HR Green getting the contract in October of 2019, the city of Woodstock did the inspection work for us on a contract basis. Woodstock charged us $70/hr regardless of the kind of inspection and our lowest permit fee is $72, so we are looking at a barely breakeven model. (But I don't think building departments should be cash cows.)
So, there are no fully dedicated employees in the building department. The Village Staff that support the department do so as a part of their main job. And, while I'm being fair, this makes sense -- we are a town of less than 2000 homes and very few businesses; we likely have no need for a full time dedicated building inspector OR a full-time staff for a building department.
So -- what's the issue here:
The building department is most municipalities should break even or even be slightly profitable. It should, at the very least, pay for itself as its main source of income is building permits and its major expense ought to be inspections. So, I hope we can all agree that permits should at least cover the inspection fee, right?
How does our building department stack up with this breakeven model?
Who finds it weird that the building department started losing money once CAO Smith was in charge of the budget? Why are we budgeted to lose nearly $60,000 in this current year?
Two sides the equation:
I see a steady decline in building permit revenue -- which seems to make sense; as I'm not seeing developers building homes in our Village at the same rate they seemed to build them just 4 years ago. I'm not sure why we expect to have an increase in Architectural Review Fees with a reduction in Building Permits -- but let's accept this as it stands -- we are showing that we are taking in $58,000 in revenues for the building department, of which $42,000 is building permits.
In the rectangle are the expenses for the partial time the few village staff spend on the building department items. (This is why I looked at salaries in a separate post.) The only odd thing I see is the growth in the health insurance cost -- I'm guessing this is just in how CAO Smith divided the costs of that one person's health insurance -- but it's odd. Those two years that there are salaries (2018-19 and 2019-20) -- I believe that to be a portion of CAO Smith's salary that she moved out of RedTail's budget to make the golf course look less in the red -- but that's just my theory.
The two starred items are two examples of "spreadable office expenses" I mentioned before, but I find it curious that a department that essentially does not exist, because it's almost entirely outsourced is budgeted for $3,325 (Printing, Supplies, Computer Services, & Telephone)
But the WORST problem is that the inspection services are budgeted to be the entirety of the revenues for the department.
But wait, I thought that got covered when we went to HR Green?
Now, when CAO Smith asked to outsource the inspections, she called out how much more expensive HR Green would be over Woodstock, but explained that the permits would cover the added expense.
Can anyone explain to me how the "inspection fees are passed on to the permit applicant"?? Because the fees weren't raised after this agreement was signed and she certainly didn't budget for the increases in the revenues -- or even to cover costs.
So, even if you didn't put in a pool, a new deck, or even a patio -- you've paid for those improvements to be inspected throughout the village with your tax dollars. I wonder what our village could done with an extra $20,000 from last year? I think that would have even covered the overages for the deck on RedTail that wasn't required to be a polling place; but was pulled down in the middle of the night? What won't get done this year because the building department is planning to lose $60,000??