Legal actions initiated to bring building permit fees into compliance with state law in order to protect housing affordability and homeownership
Housing First Minnesota has initiated lawsuits against the cities of Corcoran and Dayton in Hennepin County District Court over disproportionate building permit fees, which are contrary to state law. The two cities have self-reported a combined $5.5 million surplus in collected permit fees in recent years. Today’s lawsuits come after an administrative panel with the Minnesota Department of Labor and Industry declined to hear the matter, stating that it did not have oversight over this challenge.
In its past correspondence to these cities, Housing First Minnesota detailed how the cities were overcharging for building permits, asked that building permit fees be brought in line with state law, and demanded that surpluses be refunded to homebuyers.
Housing First Minnesota’s executive director, David Siegel, issues the following statement regarding the lawsuits initiated today:
“While excessive permit fees are not the largest barrier behind our region’s soaring housing costs, they are one of the most solvable issues to address in order to bring down the cost of housing in our state. The lawsuits initiated by Housing First Minnesota are necessary as cities have continued to overcharge homebuyers in conflict with state law even after they have been directed to comply.”
“There is no dispute regarding the need for inspections to ensure safety and durability in homes. However, that process cannot become a profit center for local governments. We must remember that any city engaging in this practice of gouging new residents through building permits, is adding to the state’s housing problems. At a time when Minnesota is facing a crisis in housing inventory and affordability, illegal housing costs must be addressed. All housing stakeholders, including local governments, should be working to reduce barriers to homeownership.”
Background
Under Minnesota law, building permit fees “must be by legal means and must be fair, reasonable, and proportionate to the actual cost of the service for which the fee is imposed.”
The Minnesota Department of Labor and Industry has explicitly stated to local governments that building permit fees cannot be used to bolster the city’s general revenue fund or for special purpose projects. Documents obtained from both Corcoran and Dayton confirm the unauthorized use of building permit funds.
Following a review of public data, Housing First Minnesota found that many metro cities overcharge for new building permits. Housing First Minnesota sent a letter in December to several metro cities demanding that their permit fees be brought into compliance with state law. The filing of the lawsuits follows several attempts to have these cities reform their permit fee structures to comply with state law and Department of Labor guidance.
While Corcoran and Dayton are the only cities named in the current lawsuits, they are not the only Minnesota municipalities currently overcharging for building permit surpluses.