HomeMy WebLinkAboutPermit System ReviewCITY AUDITOR 345 6 Street, Suite 600, Bremerton, WA 98337-1873 & Phone (360) 473-5369
April 11, 2014
Honorable Patty Lent, Mayor
Members of the City Council
The City Auditor has completed the attached report entitled Review of the Permit
System. This project was scheduled on the 2013 work plan.
The permit system is utilized by the Department of Community Development,
Department of Public Works & Utilities, and Bremerton Fire Department to administer
the issuance of various permits utilized by them in administering various codes. An
updated version of the software was installed during the review period. A few procedural
items were noted that should be addressed by the departments.
The cooperation and assistance of the Fire Marshall, Public Works Engineering
Technician, and the Department of Community Development- Building Division is
greatly appreciated.
Sincerely,
Gary W. Nystul
cc: City Attorney
Fire Chief
Director of Community Development
Director of Public Works & Utilities
Director of Financial Services
Purpose
Scope
REVIEW OF PERMIT SYSTEM
The City Auditor routinely reviews various funds, departments, divisions and
processes. This review of the permit system was scheduled in the 2013 work
plan.
The procedures and fees related to the issuance of building, fire and public works
permits for the period from October 2012 and through September 2013 were
reviewed.
Statement of Auditing Standards
This performance audit was conducted in accordance with Generally Accepted
Government Auditing Standards, except section 3.82 which requires an external
peer review. Those standards require the auditor to plan and perform the audit to
obtain sufficient, appropriate evidence to provide a reasonable basis for findings
and conclusions based on audit objectives. The auditor believes that the evidence
obtained provides a reasonable basis for the findings and conclusions based on the
audit objectives.
Objectives
• Review the process for the issuance of building, fire and public works
permits
• Review fees charged and the related fee structure
• Report any observations for economy, efficiency, effectiveness or
improvements to the system of internal control
Summary of Results
• Utility service agreements were not approved as required by ordinance
• One problem was noted with a fire department permit
• Some small fees were not in accordance with the fee schedule
• There are some opportunities to simplify the fee structure
BACKGROUND
Local governments adopt various codes to protect the health, safety and welfare
of their jurisdictions. This is accomplished through the adoption and enforcement
of several uniform codes including those promulgated by the International Code
Council. For example, the purpose of the city adopting the building code as stated
in Chapter 17.04 of the Bremerton Municipal Code is: "... to enhance the health,
safety and welfare of the public as a whole by ensuring that buildings, dwellings,
structures and land will be constructed, maintained and used in a manner so as to
reduce hazards, increase durability and require consistent patterns of community
development..."
The code activities include the use of building permits, fire permits, code
enforcement actions and public works permits. They are coordinated through a
centralized permit system. The Department of Community Development (DCD)
maintains the permitting system and houses the public customer service counter in
its spaces. This allows for the coordination between the Department of
Community Development, Fire Department and Department of Public Works &
Utilities for activities on property throughout the city and within jurisdictional
boundaries of the city utilities.
Individuals who require a permit submit their plans, drawings or other required
information. Permits for fire alarms and fire sprinklers are reviewed and issued
by the city Fire Marshal. Permits for water, sewer, storm, right-of-way work and
similar requests are reviewed and issued by Public Works & Utilities. Permits for
buildings, demolition, mechanical, plumbing and etc. are issued by the Building
Division of DCD. In addition to the DCD staff, Public Works has an engineer,
engineering inspector and an engineering technician staffing the permit center.
The permit system uses a proprietary software system which performs many
tasks. It allows the entry in the system of the name of the applicant, contractor,
project address, and fees charged. The plan reviewers insert various conditions of
the permit and include a list of specific types of inspections that are required. The
applicant or their agent signs the permit to acknowledge the conditions and
inspection requirements. This software was updated in August 2013.
The city building and code inspectors, public works inspectors, or fire marshal
record their inspections in the system. The progress of the project can be
observed by all software users. When all conditions and inspections are
satisfactory, the permit status is changed to "finaled." In a commercial project,
once the contractor or owner completes the required work covered by the permit
and calls for a final inspection, a certificate of occupancy can be issued and the
status is changed to finaled.
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In addition to the building permit fees, some fees and charges for connecting or
utilizing city utility systems are also collected through the permit system. These
fees are recorded in the various utility funds.
During the review period the following number of permits were issued:
Building 715
Public Works Utility 292
Public Works R/W 117
Fire 138
METHODOLOGY
A sample of building, fire and utility permits issued in the period October 1, 2012
through September 30, 2013 was selected. The actual fees charged were compared to the
approved fee schedule. The procedures used to issue building permits, fire permits and
utility permits were also reviewed.
REVENUE
The following is a schedule of General Fund permit revenue for Community
Development and Fire Department by source for the years indicated:
Account Title
Building Permits
Plan Checking Fees
Mechanical Permits
Plumbing Permits
Inter -fund Permits
Grading Permits
Demolition Permits
Re -inspection Fees
Mobile Home Permits
Total
2009 2010 2011 2012 2013
ACTUAL ACTUAL ACTUAL ACTUAL BUDGET
244,754
236,905
271,264
211,057
207,000
149,626
158,207
160,803
162,386
100,000
14,521
22,739
23,290
15,626
10,000
11,822
18,580
16,750
10,783
10,000
8,861
57,918
11,067
8,348
0
11,299
233
(58)
1,157
2,000
6,693
4,159
8,765
693
1,500
423
705
875
274
250
300
150
150
0
0
448,299
499,596
492,906
410,325
330,750
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OBSERVATIONS AND RECOMMENDATIONS
Items noted from reviewing a sample of DCD, Fire and Public Works permits issued
between October 2012 and September 2013 and the processes followed in the permit
system are as follows:
COMMON ISSUE
Some of the issues observed are precipitated by an absence of a standard procedure
manual or written guidance on the use of the permit system, procedures, and the flow of
documents.
RECOMMENDATION
City management should address the issue of departments working together to
correct errors and procedures in the permit system. It would be beneficial for the
Department of Community Development, Fire Department and Department of
Public Works & Utilities to review and document the permitting process. Such a
document may help reduce misunderstandings of various responsibilities in the
process.
PUBLIC WORKS AND UTILITIES
1. PUBLIC WORKS UTILITY SERVICE AGREEMENTS
Chapter 15.01 of the BMC establishes procedures to regulate the city utilities.
One provision requires each customer or person requesting utility service, to make
an application and enter into a utility service agreement. This agreement is the
"utility permit" issued by Public Works & Utilities. The ordinance also states:
"The agreement shall be effective at the time it is signed by the Director or his
designee." None of the permits examined were signed by the Public Works
Director or his designee. The current procedure used for the permit process does
not include this requirement in the issuance process.
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RECOMMENDATION
The Public Works Director or designee should sign each permit as required by
Chapter 15.01 of the Bremerton Municipal Code.
2. PUBLIC WORKS PERMIT DETAIL
The permit software has a provision for entering the project description.
However, during the 12 month period under review, there were 38 of 292 Public
Works permits that did not have a project description.
The status of one right-of-way permit was incorrectly listed as "issued" when it
was actually cancelled. It had been determined the permit was not needed and
should not have been issued.
RECOMMENDATION
Public Works should enter the project descriptions and site address on all permits.
This information is helpful to the Public Works field staff performing the work.
Staff entering permit data should take care to ensure the status is correct.
DEPARTMENT OF COMMUNITY DEVELOPMENT
3. DCD PERMIT PROCESSING
A random sample of permits was selected for review. A number of
inconsistencies were noted in the status of these permits. Some examples are as
follows.
The "old version" of software required a manual entry to change the status to
"finaled" after all inspections were completed. The new version automatically
changes the status to "finaled" when all inspections have been completed.
Several permits reviewed still had a status of "Issued" when the work and
inspections have actually been completed and the status should have been
"Finaled".
RECOMMENDATION
The Department should periodically review the status of permits to ensure their
status is correctly being reported.
4. ERRORS IN FEES
A few minor issues were noted while examining fees charged for building
permits.
The plan review fee has been established at 65% of the building permit fee. Two
small instances were noted where the fee calculation did not agree with the permit
fee.
One permit charged $12.00 for a gas fireplace. The rate is in the permit computer
fee schedule but there is no such rate in the resolution establishing the fee
schedule.
Another permit reviewed charged a mechanical gas pipe fee of $10. There was no
such rate in the resolution fee schedule in use at that time.
RECOMMENDATION
DCD should review the rate tables in the computer system to ensure they agree
with the adopted fee schedules. The new software appears to have corrected the
plan review issue on small permits.
5. FEE SCHEDULE UPDATED
As part of the annual budget process the city adopts a resolution establishing the
fees and charges for several departments in the city. The update proposed in
December 2013 includes several improvements. For example, the rates used for
many years had a provision for inspections outside of normal business hours, re-
inspection fees assessed, inspections for which no fee is specifically indicated,
additional plan review required by changes, and additions or revisions. These
hourly fees were: building $56, mechanical $49.50 and plumbing $30. The
revised rate for all the above is now a consistent $56 per hour.
Also revised were the mechanical permit fee issuance and plumbing permit fee
issuance. These were $23.50 and $20.00 respectively and are revised to $25.
However, the grading permit fee remains at $23.50.
There is a charge listed on new single family permits as "State Energy Code".
The fee is for the review by the city to ensure that the plans comply with the
Washington State Energy Code. This is a city charge to do an energy code plan
review and is not a state surcharge.
RECOMMENDATION
Consideration could be given to further reviewing the fee structure for
simplification and clarity.
Consideration could also be given to the title of the energy code charge to ensure
that the name conveys an accurate meaning to the public.
FIRE DEPARTMENT
6. FIRE PERMIT ISSUE
An application for a fire alarm permit was made on August 14, 2013 on behalf of
an organization that has several commercial properties. The street address and
assessor number of the property were entered incorrectly. Also, the name of the
contractor was not entered. On September 11, 2013 the firm doing the work paid
for two permits intending to pay for the August 14 application and another
additional permit. One of the payments was applied to a permit of a different
contractor.
This error was discovered soon after the payment was received. However, no
action was taken to correct the error until January 15, 2014 when the receipt was
reversed and corrected.
The issues:
o The permit file address and assessor number were for a parcel
across the street from the work location
o The work for this permit was completed, but the permit was not
issued.
o The payment was incorrectly applied to the permit of a different
vendor.
o The contractor did not review the permit for correctness when
making the payment.
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o Several individuals noted the problem but no one took leadership
action to correct problem for four months.
RECOMMENDATION
Care should be taken to review the data on a permit for accuracy when receiving
payment and issuing permits. The error could have been detected if the person
issuing the permit/receipt had noted that the contractor's name was different than
the person making the payment.
The fire marshal should take care to ensure that the street address and the property
assessor number are correctly entered.
7. FIRE DEPARTMENT PERMIT RECORDS
During the review of the permit process it was discovered that permits issued by
the fire marshal for fire alarms and fire sprinkler systems were not being signed
by the applicant. The process was for the applicant to deliver or send the plans to
the fire marshal. After his review he would notify the applicant who would then
pay at the DCD permit counter. A receipt would be issued by DCD but the permit
was not issued at that location and no signature was obtained. The applicant
would receive the approved plans from the fire marshal.
The result is that the city does not have a record of the owner or his agent
acknowledging the conditions and requirements of any fire department permit.
RECOMMENDATION
The Fire Department and the Department of Community Development should
prepare a written outline of the process for issuing permits for the Fire
Department. The outline should be specific regarding:
• what documents are acceptable to support an application
• the permit issuing process including signature of the owner or
agent
record retention requirements
8. FIRE FEE SCHEDULE
Item 8 of Rate Table E, the Annual Rate Resolution adopted by the City Council,
states that the Fire Sprinkler/Fire Alarm Plan fee charged is in accordance with
the International Fire Code. However, that code does not have any provision for
establishing fees. The practice has been to charge the same rate as the building
permit schedule using the value of the fire installation.
This Rate Table section provides for after-hours inspection or rush plan review at
"actual cost." Computing actual costs could be subject to different interpretations
and will vary for different employees. Someone would need to calculate it for
each situation.
RECOMMENDATION
The Fee Resolution should state how the plan and permit fees are calculated.
Adopting the building permit fee schedule is a logical option. It may also be
helpful to establish a fixed fee charge for after-hours inspection and rush plan
reviews. An established fee gives the user a clear statement of what their cost
would be.
9. FIRE PERMIT ISSUE
A permit was approved and issued 1/28/2013 for the construction of a new
single family residence. One condition of the permit was that a fire sprinkler
system be installed. The fire permit was approved 4/4/13. The final building
inspection was 5/24/13 but the final fire inspection was not until 8/28/13. The fire
inspector also imposed a code violation penalty of $125 because the required
plans were not on site and the owner's agent was not present at the scheduled time
for the inspection. The Building Department closed the permit before the fire
department did their final inspection. The $125 code violation penalty has not
been collected
RECOMMENDATION
The new permit software allows for linking building and fire permits. This will
allow for communication between the departments. The departments may also
wish to establish a procedure to notify each other when additional fees are
imposed or unusual circumstances occur.
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BUILDING PERMIT FEE COMPARISON
For a single family residence with
a value of $250,000.
Jurisdiction
Population
Fee
Olympia
48,480
$4,195
Sammamish
48,060
$3,313
Burien
48,030
$3,390
Lacey
44,350
$2,751
Edmonds
39,950
$3,515
Puyallup
37,980
$3,026
Bremerton
37,850
$3,427
Longview
36,940
$3,963
Lynnwood
35,960
$3,686
Bothell
34,460
$4,826
Bainbridge Island
23,190
$4,267
Port Orchard
12,870
$3,239
Poulsbo
9,585
$3,760
Kitsap County
$4,350
Average
$3,694
Median
$3,601
Note: Kitsap County includes plumbing and
mechanical fees in the cost of their permits.
Plan review fees in most jurisdictions are 65%
of the building permit fee and are included.
MEMORANDUM
Andrea L. Spencer, AlCP
Director of Community Development
City of Bremerton
345 6th Street, Suite 600, Bremerton WA 98337
360.473.5283 — andrea.spencer&ci.bremerton.wa.us
TO: Gary Nystul, City Auditor
CC: Mayor Lent
Jeannie Vaughn, Building Official
Al Duke, Fire Chief
Chal Martin, Director of Publi orks & Utilities
Tom Knuckey, City Engineer
FROM: Andrea L. Spencer, AICP
DATE: March 21, 2014
SUBJECT: Review of Permit System Response
I've appreciated the opportunity to work with you as you have examined the City's
building permit processes over the past several months. Over the years I have made it
a priority to make continuous process improvements within Community Development
and your evaluation has been another positive step toward making process
improvements to ensure that the City has an excellent permitting process.
As stated in your report, this has been a procedural audit, not a fact-finding statistical
audit. We welcome ways to improve our procedures and in turn offer better services to
the citizens of Bremerton. I have personally been promoting a more cohesive
collaboration between the three departments involved in permitting and in 2012
successfully lobbied to have Public Works staff located at the DCD permit counter so
that the city has a "one-stop" permit center. That being said, it is important to be clear
that these individuals and their respective departments (Public Works and Fire) are
separate for reporting and financial purposes. Therefore my comments regarding the
audit will only address my area of authority and responsibility; Community Development.
My comments below are organized by the headings outlined in your draft report.
SCOPE
"...for the period from October 2012 through September 2013 were reviewed"
DCD Comment
The reader of this report should note that the city's software program that is used
for our permitting system was implemented August 5, 2013. This audit period
then considers different variables and outcomes during the last few months. We
have been in a testing period with the new software and have been continuously
making process improvements.
METHODOLOGY
"A sample of building, fire and utility permits issued..... ":
DCD Comment;
While I can easily respond to the issues that were identified in the audit report, it
would be useful to clearly understand what the "sample" or "random sample"
selection criteria were for various topical sections in the report.
For example:
• How many permits were selected for review in relation to the total permits
issued?
e How many sampled were from old version of software or is it a mix?
e What determined quantity examined and how was that selected?
The report should detail the selection process and what formula was used to
determine which permits would be evaluated. It would be useful to know how
many permits were examined that had no identified issues. In the Background
section of the report it is summarized that there were 715 building permits issued,
and the audit report only indicates there were issues with a couple of permits. 1
would like to understand in your opinion how statistically prevalent these issues
are throughout all the permits we issued in 2013.
In consideration of the large volume of permits issued and revenue received, all
processed by a small staff, it seems the resulting findings are very minimal and
easily resolved.
REVENUE
"The following is a schedule of General Fund permit revenue for Community
Development and Fire Department by source for the years indicated."
DCD Comment:
The report should be updated with the 2013 Actuals now that that budget year is
closed out.
OBSERVATIONS AND RECOMMENDATIONS
COMMON ISSUE
RECOMMENDATION: "It would be beneficial for the Department of Community
Development, Fire Department, and Department of Public Works & Utilities to
review and document the permitting Process."
DCD Response:
I concur with your recommendation regarding the departments working together
to correct errors and procedures in the permit system and further agree it would
be beneficial to document the permitting process.
K
We are still making changes to the procedures and have implemented several
new cross checks and reports to identify errors. Additionally, we are still in
training mode with the new permitting software upgrade. Staff has already
conducted trainings and group discussions to work on procedures and will
continue to do so in the future. Janet Lunceford, the permitting system
administrator, has recently joined a permitting system users group in the County
with other jurisdictions so that she can better understand the system features and
will bring that information back to the staff training sessions. Once staff is fully
proficient in the system they will work with the other departments to document
procedures.
OBSERVATIONS AND RECOMMENDATIONS
3. DCD PERMIT PROCESSING
RECOMMENDATION: "The Department should periodically review the status of
permits to ensure their status is correctly being reported."
DCD Response:
The permit system upgrade has resolved the issue identified, and therefore I do
not believe that there is any further action that is required of DCD staff. The
Building Official has implemented a procedure to do a monthly report of all
building permits for the purpose of reviewing their status. No further action is
required by DCD.
OBSERVATIONS AND RECOMMENDATIONS
4. ERRORS IN FEES
RECOMMENDATION: "DCD should review the rate tables in the computer system
to ensure they agree with the adopted fee schedules. The new software appears
to have corrected the plan review issue on small permits."
DCD Response:
I concur, with the new software upgrade we've ensured that the fee schedule and
the permitting system are consistent. No further action is required of DCD.
I would like to note that the comments made that read "two small instances were
noted where the fee calculation did not agree with the permit fee" are likely
attributed to a change in project valuation as the permit progressed through the
review process. It is often the case that through the plan check review process
staff determines that the applicant has incorrectly noted the building valuation
and adjusts it before the permit is issued, and any underpayment or overpayment
of plan check fees are corrected during the permit fee calculation and issuance.
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OBSERVATIONS AND RECOMMENDATIONS
5. FEE SCHEDULE UPDATED
RECOMMENDATION: "Consideration could be given to further reviewing the fee
structure for simplification and clarity. Consideration could also be given to the
title of the energy code charge to ensure that the name conveys an accurate
meaning to the public."
DCD Response:
DCD evaluates the fee schedule (referred to as "Rate Table C") on an annual
basis during the budget process. While your audit was in progress, we were in
the midst of updating the fees for consistency and simplification. DCD will
continue to review the rate table annually.
OBSERVATIONS AND RECOMMENDATIONS
6.7.9. FIRE PERMITS
RECOMMENDATION: (Paraphrase) Generally across all of these audit items is
identified a theme of better data entry and fee collection, departmental
coordination, and record keeping.
DCD Response:
On March 12, 2014 we made a procedural change that now requires all permits
issued by the Fire Department to be submitted at the DCD one-stop permit
counter. The permits will be processed in the same method as any other building
permit, with the plan check fee required at the time of submittal and signature of
the applicant required at the time of issuance. The records will also be kept in
DCD in the same manner building permits are kept. The permit that was issued
to the wrong contractor was an anomaly that is unlikely to recur.
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Public Works and Utilities Department
100 Oyster Bay Ave. N. • Bremerton, WA 98312 * (380) 473-5315 • FAX (360) 473-5360
DATE: March 12, 2014
TO: Gary W. Nystul, Auditor
FROM: Chal Martin, Public Works & Utilities Director Z_r�5190
SUBJECT: Response to Draft Audit Report of Review of Permit System
This memo is provided in response to the Draft Audit Report regarding review of the permit
system that you distributed on February 21, 2014. My response is limited to the
observations and recommendations for Public Works & Utilities.
1) Public Works Utility Service Agreements: A Delegation of Authority Letter will
be provided to the Permit staff. This will allow them to sign the Utility Agreements
so that we are in compliance with the Ordinance. The current procedure will be
modified to allow for this step in the process.
2) Public Works Permit Detail: Our Public Works Staff staff will be directed to enter
the description of work and site addresses on all permits. Permit staff that is
entering the data will be counseled to ensure that the status of the permit is correct.
CC: Tom Knuckey, City Engineer
Andrea Spencer, DCD
1*KCMr.K 1 UN r1KC Ur.FPARTMCNT
Allison go*& 111, FIre Chief
A1.duke@d.bremerton.w&us
To: Gary Nystul, City Auditor
From: Al Duke, Fire Chief b
Michael Six, Captain Fire Marshal
Subject: Audit Report
6. FIRE PERMIT ISSUE
To even partially understand the complexities of a permitting system would literally take
hours to explain, but it all starts simply enough with the permit application. This
application has the basic information, contractor name, phone number etc. and project
address. More times than not the information on the permit application is not accurate,
but this is a starting point. And there may not be any clues as to the address or other
information and/or may not be correct. So most often the parcel number is used to "auto
fill" the address. The parcel number is entered or copied and the address of record is
filled in based on county records. In many cases this address is not correct, but it is the
closest thing to consistent available.
It is worth noting that on new building or site address it is a moving target and is likely to
change, sometimes more than once, during construction. So this field is not considered
a vital field, this is why a proximity map is also provided during the construction to assist
in locating the actual job. One last point, this address mis-print did not affect any portion
of the job, nor will it affect any element in the future. I would agree the paperwork
needs to as accurate as possible.
(last bullet) This item is incorrect; I personally notified the building department
several times. I provided the detailed specifics of which permit numbers were crossed
and who needed to receive refunds and who needed still to pay. The Fire Department
does not make/do refunds and it was my understanding this process was underway. I
would have no way to confirm who has or has not corrected payment.
7. FIRE DEPARTMENT PERMIT RECORDS
Up until the rough time of this audit it was my understanding the conditions list was being
signed at the time the permit was being paid for at DCD. However, this particular point
is not critical because any specific issues were addressed during plan review and those
specific points were clearly noted on the plans with notes made on the permit card itself,
which is a part of the plan set. Lastly, I don't believe the conditions piece is a required
0 Page 2 February 27, 2014
element. There are a number of features many programs we don't utilize. I was not
aware this is a required item.
8. FIRE FEE SCHEDULE
113.2 Schedule of permit res. A fee for each per olt shall be
paid asrequired, to accordance with the schedule as established
by the applicable gaventingawhority.
The overall intent of the language in Rate Table E related to "fees per the IFC" originated
from the Uniform Fire Code days when the fees were listed, however it does not create a
problem with this language pulling together the IFC with rate table E as referenced in
IFC 113.2 and allows for easy incorporation of future fee schedules, pending council
approval, in the future.
The rate table will be updated and clarified.
9. FIRE PERMIT ISSUE
The linking of the fire and building permits within "SmartGov" will reduce the likelihood of
a repeat of this issue. There was a "rush" to final the house and in fact the final fire
sprinkler inspection was never completed. An organized and methodical process needs
to be created and stuck to for all situations. This will be the most efficient way to
improve the overall permit process. A systematic approach, as adopted in the airline
industry and medical fields are models for creating expeditious accuracy.
In Summary
Overall I agree with the audit. However this review of the system should be a credit to
the staff working within the system. The permit counter is a rough neighborhood with
only the "City" standing in the way of the project. The City could/should use this audit as
an opportunity to unleash more of the capability of the "SmartGov" system purchased
last year and allow for a more automated permit experience. This would include
applying for a permit, digital review, online payment and issuance.
Example:
Permit submitted via portal--), Stored on a common folder in the "R" drive.
• Page 3
...........
February 27, 2014
Each department reviews the permit
and applies their own comments to
the permit in a dedicated
"layers"created on plan file (very easy
to do).
When the review is done, the
plat -is are given to the applicant
on a CO for printing to be kept
on the jobsite.
Advantages:
Saves printing costs
Easy to submit and resubmit plans
All departments will have access to other department
concurrent review
All notes on the plans will be legible and clear
Allows for faster review with plan review software
Simplifies field inspections
comments while still conducting
Disadvantages:
New -Some upfront costs (software)
Hard drive Storage space, but reduces traditional storage