Building permit fees tallied by the end of the third quarter of the fiscal year fell below the expectations of the city of Hailey for the second year in a row, causing a recent adjustment of the proposed city budget for fiscal 2020.
The situation in Hailey seems to parallel a drop in new home sales nationwide. Reuters news agency reported on June 25 that the sale of new homes in the U.S. had dropped 3.7 percent from a year ago.
“New home sales [data] are drawn from permits and tend to be volatile on a month-to-month basis,” Reuters reported.
Mayor Fritz Haemmerle rolled out a draft Hailey budget for fiscal 2020 recently, issuing a memo explaining adjusted expectations from permit fees, a source of revenue for the city.
“Building permits were overestimated in our last budget,” Haemmerle stated. “We have decreased building permit projections to a more realistic figure, down by $52,000.”
The city budgeted $301,912 from building permit fees for fiscal 2019, which ends in October. As of June 30, only $183,030 had been received.
“Actual receipts fell well below expectations,” City Administrator Heather Dawson said. “With only three months left in the year, we do not expect to reach the $301,000 revenue that is budgeted. Therefore, we have reduced our budget projections for FY 2020.”
The apparent downward trend in construction, as measured in building permit fees, began in fiscal 2018, when the city budgeted for an expected $262,500 in fees but received only $190,555 by June 30.
The city’s highest building permit fee revenue amount by the third quarter came in 2017, with $246,000 received, exceeding the city’s budgeted expectation of $220,000. That year, building permit fees were nearly equivalent to the $232,836 in permit fees received during fiscal 2007, just prior to the housing crash. The permit fee totals then fell to $80,026 in 2008 and slowly rebounded over the next four years.
Dawson said a major commercial development could raise the permits fees considerably.
Community Development Director Lisa Horowitz said a building permit application for a new 75-room Marriott hotel on Main Street in Hailey was received this week. She said the project, estimated to cost $12 million to $13 million, would bring in more than $100,000 in permit fees and development impact fees.
Horowitz said Hailey saw an increase in multifamily and commercial projects in 2019, compared to single-family homes, with 16 single-family dwelling permits in 2018, compared to 12 so far in 2019.
“But that could easily be made up for by October,” she said.