In July 2005, the City of Windsor established a Cost Stabilization Fund as permitted under the BCA. The purpose of this fund is to record any cumulative operating surpluses to help offset any potential permit revenue declines inherent with the economic cycles of the building industry. A deficit in the Building Permit Fee Reserve can be addressed by increasing permit fees, reducing expenditures, subsidization from the general tax levy, or a combination of all three.

Costs reported on the statement include both Building Services direct costs as well as indirect Corporate costs. Financing charges incurred on any balances in the reserve are also itemized.

Section 7 of the BCA does allow the municipality to levy fees to offset the anticipated costs of providing service. There is no provision supporting retroactive recouping of losses. This means that fees cannot be adjusted to recover past revenue shortfalls thereby penalizing future permit applicants.

Approximately 70% percent of the Building Services budget is utilized directly in carrying out the enforcement of the Ontario Building Code. The remainder of the Building Services budget is funded from the tax levy and provides for the enforcement of regulatory by-laws, property standards and the delivery of housing rehabilitation programs inspections, storm and sanitary sewer inspections and liquor license inspections.

Considerations To Address The Budgeted Draw On Reserve

To reduce expenditures, a reduction of staff complement and/or operating expenses would be required. It should also be noted that many factors can come into play that impact the service being provided. For example, the Ontario Building Code may be revised annually by the Ministry of Municipal Affairs and Housing. Numerous changes

Discussion:

Any surplus in the Building Permit Fee Reserve Fund is limited to use for Building Code enforcement related activities. The Fund may be used to offset costs where revenues in any given year do not cover actual operating costs, or where there are anticipated new costs (i.e., new staff or capital expenditures), which are projected in future years. There is no limit specified in the Building Code Act with respect to the magnitude of the balance in the Fund (either positive or negative).

A reduction in the draw on the Reserve can be achieved either through increasing revenue, or decreasing expenditures.

To enhance revenue, Administration has recommended increases (mostly inflationary) in permit fees in most budget years. The 2019 budgeted draw on Reserve was set at $807,388. The budgeted draw on Reserve is the estimated additional amount needed over and above anticipated revenue in order to pay the total forecasted direct and indirect costs of Building Code Enforcement for the year. In other words, for every permit revenue dollar earned, there is a corresponding reduced need to draw against the Reserve Fund in order to pay for the total operating costs.