State mandated permit fee changes affect new home construction

Posted at 5:34 PM, Jun 11, 2019
and last updated 2019-06-11 18:34:32-04

The cost of building homes is changing.

Last month the state legislature passed new regulations regarding how cities calculate building permit costs. Now, whether or not permits cost more depends on where you want to build.

House Bill 852 says cities can no longer base permit costs on a percentage of the project’s total value.  Those permits must now be calculated strictly by square footage; and how much per square foot is up to the individual cities.

Under the old system, permits for custom built homes were more expensive than production homes.  This new system is meant to level the playing field.

“The price of your fixture doesn’t really matter as far as the city stands,” said Trey Summers, Chief Operations Officer for Hogan Homes.  “What that permit is, they’re inspecting the same fixture regardless of the price.”

Several cities kept permit costs in line with what they had been.  In Corpus Christi for instance, the cost of a new residential permit goes up less than $2 per 1,000 square feet.

“I think the City of Corpus Christi was prepared for this,” said Summers.  “Other municipalities may or may not have had the staff to keep track of it like the size of the city staff here in Corpus.”

However, builders say some cities have significantly raised their permit prices with their new rate.  Those cost increases are then passed along to the customer.

“That really can affect whether that person can afford to buy that home or not.” Said Summers.

According to the National Association of Home Builders, every time a home’s price raises by $1,000, 1,200 hundred potential buyers are priced out.  With an affordable housing shortage locally, builders say they want to work with local governments to make permit costs reasonable.

“That’s a huge deal when you have all the industry coming to town,” said Summers.  “We’re already behind homes, affordable housing, in the area as a whole.”

The city council passed Corpus Christi’s new permit rate of $0.415 per square foot during today’s meeting.  The ordinance was an emergency one reading item in order to comply with the new law as soon as possible.