Lower your dues

How do you reduce your dues bill from the municipality?

business owners with construction plans face construction fees. Their cost is not childish. The average rate charged by municipalities for construction fees is 3.2 percent of the construction sum.

Every business owner with building plans faces construction fees. Fees are fees a citizen pays to the municipality for administrative actions the municipality must perform for a service. The fees vary for each service. Applying for a new passport costs a few tens of dollars. But for a construction project, the costs are many times higher. In 2017, the average fee charged by a municipality for an environmental permit - that is the permit to build - was 3.2 percent of the construction sum. On a construction project of one million, that's €32,000 in fees, a hefty sum.

Construction fees vary by municipality

The amount of dues varies by municipality. Until recently, the municipality of The Hague had a maximum dues rate of €2.5 million. Although that was lowered to €1 million this year, it indicates that building fees are large sums of money. This fee note often turns out to be far too high because municipalities regularly make mistakes in their calculations, as a result of which the applicant pays too much for his permit.

No dues thanks to municipality mistake

Municipalities have to publicize dues. This sometimes goes wrong. It pays to check whether the ordinance (with the fees table) has been published correctly. In many dues regulations (and accompanying charges table) reference is made to the UAV 2012 or NEN standards for the determination of construction costs. The NEN standards and the UAV 2012, if referred to in the dues ordinance or the rates table, must be published in the municipal gazette or made available for inspection. Many municipalities have not done this. Some municipalities admit that they have not done this properly. The consequence is then that the fee ordinances are non-binding and no fees can be levied. So it pays to check the notices of the dues ordinance, because instead of high dues, you as business owner may then pay no construction fees.

How do you keep your building permit price tag as low as possible?

Do your homework

Construction fee rates vary from one municipality to another. When making a building application, you should first take out the municipality's fee ordinance plus the fee list and read it carefully. Then you can calculate what is cheaper: one application for several buildings/components or several separate applications.

Leave unlicensed components out of the application

Not every part of a construction is subject to licensing. This is true, for example, of indoor finishing. Suppose you are building a new club. A large part of the construction costs relate to the finishing inside. The design, level of finish, and installations for sound and lighting result in high construction costs that are often included in the contract price. If, based on the building code, these finishing costs are not necessary for the intended function of the building, you can leave them out of the application. And therefore also excluded from the calculation of construction costs for fees. Always indicate clearly in the application which parts of the construction are permit-free and therefore for which you are not applying for a permit.

The latter is very important. Because if you make the mistake of including components that do not require a permit in the application, the municipality may charge fees for them. In other words: if your beautiful extension to your restaurant does not require a permit but you list it as such in the building application, the municipality may charge construction fees for that extension. If you do not include the extension in the application or if you note on the application "permit-free, not part of the application," then the cost of the extension does not count when determining the building fees.

Look critically at the paper

It pays to critically examine the municipality's dues bill. After all, a municipality may not make a profit on the fee rates. The fees must cover costs. In other words, they must be in proportion to the costs incurred by the municipality in carrying out these services. This is a precise job that municipalities sometimes get wrong.

Anyone who studies the estimates carefully and tests them against the applicable rules - this is work for a specialist - finds that the fees often exceed the costs. The court has ruled that if the rate exceeds the actual cost by more than 10 percent, the entire fee ordinance is non-binding.

An example is the dues ordinance of the municipality of Wijchen a few years ago. On paper, revenues did not seem to exceed expenses. But the municipality had neglected to properly estimate larger projects. There was considerable 'profit' on those. This was also the opinion of the Arnhem Court of Appeal, which declared Wijchen's dues ordinance non-binding.

This is rather painful for such a municipality because it can no longer levy construction fees at all until there is a new ordinance. The municipality must also take this risk into account when deciding whether it wants to litigate over a fee note or is willing to compromise.