The City of Shakopee is experiencing strong development activity.  Due to the volume of building activity, we anticipate we will have approximately $2.5 million in additional building permit revenue beyond what was budgeted for 2019 activity.  A large amount of development activity is much more favorable that the alternative, however there is concern when we have this amount of activity in one year.  For large commercial, industrial and apartment complexes, our expenditures (inspections, plan reviews, etc.) may not occur the same year the revenue is collected.  For instance, it may take a couple of years to complete a building project and if that building permit was received late in the year, we may still be incurring inspections costs in the following years.

Staff is recommending the City Council formally commit building permit revenues for future years.  The excess revenue would then be used over the course of the next few years to supplement the General Fund building inspection costs.  

The commitment will be based on a percentage of building permit revenues for uncompleted permits greater than $1,000 as of December 31.  The commitment requires a formal action by the City Council to establish, modify or remove prior to year-end.  The process of committing fund balance is consistent with governmental accounting standards, City fund balance policy and the City's priority of ensuring fiscal stability.