County officials on Tuesday agreed a legal review would be needed before those who plan to build a home of 3,500 square feet or more are forced to pay a 15-percent surcharge in order to obtain a building permit.

That surcharge, which went into effect at the beginning of the year, was approved by the County Council in late December despite objections from local contractors and builders. It was endorsed along with a five percent price hike on most land-use and building permits, and also applies to any addition which would bump an existing home beyond that 3,500 square-foot mark.

No applications have been submitted so far this year which would trigger the surcharge, according to county officials. Ron Henrickson, director of community development and planning, said it adds roughly $800 onto a permit for a $1 million home and would have affected 12 permits, or 9 percent of the total number of applications received last year, had it been in effect in 2008.

But John Evans of Orcas Island, president of the San Juan Builders Association and a former county commissioner, is among those who believe that the surcharge should never have been adopted. Evans maintains it violates state law, in that it amounts to an extra fee that has no relation to any standard or criteria normally used in determining the price of a permit. Moreover, he said, state law prohibits counties from using size, by itself, as a tool to generate revenue, and asked that the surcharge be repealed.

“While many may feel that encouraging people to have a less expansive residential footprint has merit, it is not legal to make such a philosophical statement through additional permit fees,” he said as part of an e-mail to the council.

Though not among the issues the council had expected to weigh in on at Tuesday’s public hearing, the surcharge grabbed the spotlight nonetheless. While several minor changes were made to the December ordinance that ushered in the fee increases, the council, heeding the advice of the prosecuting attorney and administrator, agreed that the surcharge deserves another legal review.

According to Prosecuting Attorney Randy Gaylord, the objections raised about the legality of the surcharge by Evans and others have merit. Furthermore, he said, the burden of proof would fall on the county to demonstrate that it had been set by following the county’s standard “cost-allocation” equation if it were contested in court.

It’s not the first time the legality of local permit fees have been contested. In the mid-1980s, the county was forced to refund more than $200,000 in fees following a ruling by the state Supreme Court in a case known as Hillis Homes vs. Snohomish County. The decision in that case, a package of combined appeals filed by developers and property owners and developers in San Juan and Snohomish counties, found that San Juan’s “extended-use” fees, which were used to cover the cost of infrastructure improvements, were not directly linked to the impacts created by a particular development and therefore – at that time – unconstitutional. 

Friday Harbor attorney Carla Higginson, who argued the Hillis case before the Supreme Court on behalf of of local property owner Jack Cory, said, “Under our Constitution fees and taxes have to be fairly and even-handily applied.”  

The council asked for a legal review of two other permit-related topics as well. At the request of the San Juan Initiative, the council will consider whether an additional $100 fee should be tacked onto shoreline development permits to pay for post-construction inspections. It will also consider raising the cost of so-called “after-the-fact” permits from double, the current price, to as much as five times that amount.

All three issues are expected to be back before the council following completion of the pending legal reviews sometime in the next three weeks.