HBA MICHIGAN SCORES MAJOR VICTORY IN PERMIT FEE OVERCHARGE LAWSUIT

This summer the Michigan Supreme Court issued a unanimous opinion affirming HBAM’s position that the City of Troy charged excessive fees for building permits and used that money improperly.

Section 22 of the Michigan Single State Construction Code requires a building department to charge fees that must “bear reasonable relation to the cost” of providing building department services. Further, Section 22 specifies that municipalities “shall only use fees generated under this Section for the operation of its building department and construction board of appeals,” and “shall not use the fees for any other purpose.” This state law has been overlooked by literally hundreds of communities across Michigan in recent years and HBA Michigan took action nearly a decade ago to try and halt it.

This precedent setting decision is HUGE as it relates to how communities across the state assess fees in the future. So it’s not just a victory for members doing business in Troy. It is a victory for all of our members in every community across the state. The HBA of Michigan is going to communicate with every local government in the state advising them of this decision, asking them to examine/correct their schemes.

Background on the Troy Case:

• In 2010, the City of Troy entered into an arrangement to receive a kick-back (up to 25%) on every permit their contractor issued on their behalf. HBA Michigan and two other construction organizations filed suit saying this was a violation of State Law; • Troy argued that this money was being used to allegedly fund past deficits of the building department;

• The case was bogged down for years because of technical challenges made by the City;

• Early this year the merits of the case were finally heard by the Supreme Court;

• On July 11th the Supreme Court issued its opinion, agreeing with HBA of Michigan in saying that Troy violated state law and was assessing inappropriate fees.

After ruling the fees violated state law, the Supreme Court remanded (sent back) the case to the Oakland Circuit Court to determine how the proper amount of overhead expenses Troy could charge against the fees and for HBAM to show its members actually paid these fees which would allow our additional Headlee complaint to be heard.

Your state and national associations have invested more than $300,000 on this case and we’re about to see that investment pay off. It is an example of STRENGTH IN NUMBERS that needs to be echoed loud and clear to members and non-members alike. This is what can be done when we stick together and support our HBAs.

This is a tremendous victory with far reaching implications. You certainly will see and hear more on this from HBAM as the year goes on. l