The Short Answer: your state association starts asking other local jurisdictions around the state — those believed to have excessive and unlawful permit fees — to modify their fee structures. With that communication, a copy of the final court decision in the Troy case will be included. This precedent-setting legal ruling is final and upholds Michigan law that says local governments can only charge reasonable fees tied to their permitting and inspection costs, meaning they can’t use building permit fee revenue to pay for other government functions. This effort may not immediately result in jurisdictions voluntarily changing their fee structures. Additional legal action may be necessary and HBAM is prepared to take such action. 

The court ruling concluded that the City of Troy’s fee structure amounted to a tax. Our state constitution includes a provision that was designed to protect Michigan citizens and discourage communities from imposing this type of hidden tax. When a court determines that a local government violates this part of our constitution, the party bringing the lawsuit is owed its legal fees. That is what happened and last month the city of Troy paid us $575,000.

HBAM has asked each local HBA around the state to identify jurisdictions in their area that appear to have excessive permit fee structures. Those that have dramatically increased fees in recent years are often using valuation methods to determine their fee structures. This practice alone doesn’t automatically mean a jurisdiction is acting unlawfully, but it is a strong indicator that they may be charging excessive fees. If you are reading this and know of communities in your market you believe should be considered for follow-up action, please notify your local HBA’s executive officer to add them to our list.