The question is often asked how we arrive at building valuations and why the value on the permit is different from the value placed on the application by the contractor or homeowner.
State law requires that the valuation placed on the building permit reflect the value of the labor and materials, even if a homeowner does the work himself or herself. This serves two purposes. First, a more accurate record of the total value of construction occurring in the city results. Second, permit applicants doing similar jobs will pay approximately the same fee so there is the issue of fairness.
Staff members compare the estimated cost on the application to cost estimates provided by the state and from other sources. Staff members will adjust the value for the permit if the estimate on the permit application significantly varies from comparative cost estimates. This also helps to address situations where applicants who are less than honest with the valuation estimate. State law requires that the building department establish the final building valuation.
Per square foot cost values used by the Inspections Division are conservative. You may find that an estimate provided by a contractor will be higher than the value established by the city for the same type of work.
A common misconception is that the value placed on the application will have an impact on property taxes. The value that a given project adds to a property is determined by an appraisal and may vary widely from the actual cost of the improvement. Depending on the improvement, property values may go up more or less than the actual fair market cost of the improvement.
For more information, contact at 952-548-6320.