1435 Navahoe Drive

Pittsburgh, PA 15228
March 27, 2011

Mr. Steve Feller

Municipal Manager
Municipality of Mt. Lebanon
710 Washington Road
Pittsburgh, PA 15228

Mt. Lebanon Building Permit Fee – HS Renovation Project

Dear Steve:

This started as a quick e-mail, but as I progressed, I decided it warranted a full-fledged letter.

On Monday evening the Commission will be discussing building fees for the School District.
Obviously this is about the HS Renovation project.

Over the last couple of years I have been asked my opinion on this subject by a number of
folk. The extreme positions I encountered in the discussions:

1) Charge a maximum “full” fee that would likely exceed the true out-of-pocket cost to
the Municipality and consequently provide funds to shore up the operating budget, or
fund starving capital projects.

2) Charge no fee. It is really just moving the cost from the taxpayer’s right pocket to
their left and besides, by not paying a Building Permit fee there will be more money in
the project budget to spend on stuff.

I do not support either of these positions.

The latter, frankly, is dumb. It does not attribute the true cost of the project to the project. It
effectively increases the cost of the project to the MTL taxpayer. And lastly, it puts an undue
burden on the municipal operating budget; possibly requiring a municipal tax increase, a
reduction in other services and/or community investment, or an expenditure of municipal
reserves.

Option #1 is unfathomable because the municipality should not “make money” on this
service. The expense should be cost based and justified. I do not support robbing Peter to
pay Paul.

That being said, I recall the Peter/Paul thing as not being beyond the realm of possibilities
when the school district is contemplating economic policies. A District TIF guidelines draft
included two incomprehensible provisions:

 A one percent (1%) fee of the aggregate principal amount will be assessed on each
tax increment project to be used for school development, including capital projects,
renovations, additions or new buildings.

 Any commercial project located within 500 feet of a school will provide the District
with access to 10% of parking spaces located on-site.
Steve Feller
March 27, 2011

Here Paul (the District) has no issue with robbing Peter (the TIF project developer). Peter’s
project is already contemplated to be uneconomical without a TIF. Adding more unrelated
expense to the project … egads … what were they thinking?

I guess fairness is a matter of perspective.

Some history on permit fees, in particular the fee that might apply to the HS Project. In 2008,
urban legend has it that a new category was added to the 2009 Inspections Fee Schedule as
a consideration to the School District, in anticipation of the HS Project: Substantial
Commercial & Multi-Family Building Permit Fees.

The change added a new criterion:

o New commercial construction of 200,000 square feet or $50 million in estimated costs
uses this same formula or .85 per square foot whichever is less.

This is similar to the “non” substantial Commercial & Multi-Family Permit Fees, except the
“non” substantial fee applies a whichever is greater standard.

The building permit fee issue has been around for a couple years as evidenced by the
numerous discussions and the above referenced amendment in 2008 to the 2009 fee
schedule. It is remarkable the District is having this serous discussion with the Commission
at this late date, after applying for a building permit and letting the project out for bid.
Although it is emblematic commentary on how this project has been managed.

In the end, I think the municipality should not make money on the permit, yet the time for this
discussion was when the Fee Schedule was being considered in December 2010. At least
the District’s timely participation, just about 4 months ago, would have demonstrated respect
for the Commission and the Community. This Johnny come lately approach is sophomoric.

Sincerely,

William R. Matthews III

cc: MTL Commission

Dr. Steinhauer
MTLSD Board of School Directors
Joe Berkley
Keith McGill