City budgets are moving targets in tight times

Henry Reimer has selfish reasons to be happy about the new ballpark being built in Minneapolis, and it's not because he's a Twins fan.

Reimer, the city's director of inspections, is happy because it's paying for his staff.

Minneapolis is among a few metro-area cities that are seeing an increase in building permit revenue this year. An economic downturn and real estate meltdown have slowed the rush to build new houses or big business projects.

That has meant budgeting for permit revenue, which generally pays for inspectors and paperwork, has become a moving target for city officials trying to put their 2008 budgets to bed and finalize the numbers for 2009.

In St. Paul, for instance, permit revenue this year is down about 30 percent, or about $2.7 million, through October. Minneapolis, on the other hand, has seen a modest $1 million increase.

Woodbury is looking at a $500,000 shortfall so far, but Maple Grove is ahead by about $40,000.

That's quite a spread. Plus, conventional wisdom -- if permit revenue falls, then workload should fall -- isn't holding true.

Several metro cities report that although some big commercial and industrial projects that would have boosted permit revenues fell through this year, permits for people who are staying put and renovating homes and businesses have filled the gap.

St. Paul has been dealing with growing numbers of vacant buildings, which use up a lot of resources for inspections and security.

In Edina, where home tear-downs and replacements have dropped this year, revenues from permit and license fees through September still reached $2.3 million, compared to $2.17 million for the same period in 2007.

"Whether that will hold through the end of the year is anybody's guess," said Edina city manager Gordon Hughes.

Blaine will probably finish the year with 300 new housing permits, down from recent years, and the value of the work is down about 30 percent, said Bryan Schafer, community development director.

"We have a few projects that, if they happen, the numbers will bump up," he said. The city has set conservative budget numbers for next year, and Schafer expects some "good-size" projects to happen.

In Plymouth, two large office building projects have not advanced as expected, but permits for remodeling and expansions of homes and commercial and industrial buildings have filled the gap, said Steve Juetten, community development director.

While Bloomington permits and license fees are lagging a bit, the city expects to miss its budget for that revenue by only 7 percent at year's end, said Lori Economy-Scholler, the city's chief financial officer.

Permits in fast-growing Maple Grove are actually running ahead of last year, with 182 new home starts compared with 170 last year at this time, said Rick Davidson, director of building inspection services. His department's revenues are running about $40,000 ahead of last year. But the city is trying to be prudent about staffing and has not filled the 1.5 positions in inspections it cut a couple of years ago.

"We've been lucky that the permits are still pretty good," Davidson said. "We're definitely keeping busy."

The number of permits for new housing in Woodbury through October was 314, down about 75 from the same time last year, said city spokeswoman Julie Lehr. "That's not horrible, but for us that's down."

Residential renovation permits, however, increased by 61.

Looking ahead to 2009, Woodbury officials have cut revenue expectations by about 1 percent and probably won't fill a couple of vacant positions in the building inspections department.

"We're not hitting any kind of a panic button at this point," Lehr said.

St. Paul, meanwhile, is looking at shifting some positions to a different revenue source and dipping into reserves. Revenue projections for 2009 have been reduced by about $1 million. The Department of Safety and Inspections is considering a new way to estimate the cost of smaller projects, as well as requiring homeowners to get estimates from a licensed contractor.

"We're not buying business cards, we're not spending anything," said department director Bob Kessler. "Things could get worse in 2009, but I'm optimistic that things can be fixed."

Across the Mississippi River, Minneapolis building officials are pleased with the status quo and anticipate a couple of larger projects again next year to keep their revenue flush. Reimer, the inspections director, will be the first to say he recognizes the city is in a good, and unusual, situation.

"We're just happy to be treading water and keeping our heads above it," he said.

Chris Havens • 651-298-1542 Mary Jane Smetanka • 612-673-7380