From City to City, Development Fees Vary

The Northwest Arkansas skyline changes fast. Before one new building opens for business, ground is broken for another handful.

Amid the construction boom, cities have had to modify their commercial-development fees to accommodate the cost of improving infrastructure such as street, emergency and sewer systems.

Bentonville will attempt to head off those growing pains with an impact fee to be implemented July 1. Other area officials have discussed implementing a similar condition.

Towns in Arkansas use Southern Building Code Congress International guidelines for fee schedules and building valuations.

On top of the building permits and plan-review fees laid out by the SBCCI, city administrators also apply a state surcharge of .0005 percent — up to $1,000 — of the total construction cost. That money goes back to the state under Arkansas Act 474 to finance government-job training for permitting and city development.

David Swain, vice president of Little Rock-headquartered May Construction Co., said commercial development fees in Northwest Arkansas seem minimal compared to other popular areas.

“I don’t think our permit fees are exorbitantly expensive here,” Swain said. May Construction Co. contracts in 18 states and currently is developing projects in Fayetteville, Springdale and Bentonville.

Houston and Dallas, Swain said, demand phenomenally more expensive building permits and impact fees for commercial development.

The following accounts are estimates from city administrators of the fees that would be applied if a developer approached with plans to construct a metal or steel-framed, unsprinkled, 19,000-SF general-office building of “good” condition in a pre-zoned area.

According to SBCCI dominion, the hypothetical building’s estimated value was $1.37 million including materials and labor.

1. Bentonville

Bentonville’s impact fee will set the city apart for commercial development costs.

Annette Brightwell works in the Bentonville community development department as a development services technician. She said the impact fee is assessed to offset the development’s effects on existing water, sewer and fire systems.

For the comparison, Brightwell assumed only one water meter would be used, and the impact fee totaled $16,954.

Including a $2,264 building permit, a $1,132 plan-review cost — half of the original building permit — and a 474 surcharge of $1,000, Brightwell estimated the total project fees to be $21,350, or $1.12 per SF.

2. Springdale

Don Fitzgerald, Springdale’s chief building inspector, said the city straddling the Washington and Benton County lines is cost-comparable to its neighbors, unless the development covers more than one acre.

Those bigger projects must go through a large-scale development process, which requires approval from engineers, architects and the Springdale Planning Commission. Applying for the process costs $150 plus the time of the board and the cost of hiring the industry professionals.

However, the hypothetical plan fit on less than an acre, or 43,560 SF of land.

Fitzgerald said the building permit, with the surcharge and review fee, would total about $5,399, or 28 cents per SF.

3. Fayetteville

Dawn Warrick, a Fayetteville planner, said an impact fee is an eventual possibility. For now, the city applies a case-by-case utility fee rather than blanket charges. Fayetteville requires developers to upgrade sewer, street and water utilities if the addition of the proposed building will overwhelm the existing systems.

Permitting Clerk Sharon Cook said Fayetteville considers a developer’s building valuation before determining the fees. In this case, $1.37 million is the value, and the building permit, review fee, 474 surcharge and a $25 “driveway, sidewalk and curb cut fee” totals $5,127, or 27 cents per SF.

4. Rogers

The city of Rogers charges less than its southern counterparts in Northwest Arkansas.

According to records supplied by Rogers planners, $4,859 would be the the total fee for developing the project in Rogers. That figure, 26 cents per SF, includes a $3,396 building permit, a 474 surcharge of $684 and a $779 plan-review charge.

5. Lowell

Leroy Barker, Lowell’s chief building inspector, said the city’s building permits include a one-time sewer impact fee, which was $400 in this instance.

However, Barker said, Lowell doesn’t administer a plan-review cost. He estimated the building permit, including the sewer impact fee and 474 surcharge, would total $4,160, or 22 cents per SF.

6. Siloam Springs

Siloam Springs, for this example, had the least expensive city fees.

Charles King, city planner and engineer technician for Siloam Springs, said the city applies sewer, street and water-utility upgrades in a fashion similar to Fayetteville’s method.

If a project will max out the systems’ capability, developers must pay for the upgrade.

David Williams, a city building official in Siloam Springs, said the building permit would total $3,747, or 20 cents per SF, Williams said. That includes the 474 surcharge and a review fee.

However, builders must pay $285 to present plans for commercial development to the city planning commission, King said. They are also responsible for paying to alert the community of the proposed development through local media.