Lacey moves to correct permit fee schedule errors after homeowners overcharged 

Errors in the City of Lacey’s permit fee schedule have led to revisions more than a year after it was adopted by the city council via a resolution. 

The fee schedule was meant to correct discrepancies flagged by the Washington State Auditor's Office. However, residential and commercial charges were accidentally swapped, making it more expensive for homeowners to get permits than for businesses. 

The City of Lacey Community and Economic Development said residents have been overpaying for small projects since the mistake went into effect. It was detailed during a Lacey City Council work session on Tuesday, Aug. 12. 

Building Official and Fire Marshal Terry McDaniel explained the mix-up. He said the transposed tables left residential projects under the International Residential Code (IRC) at higher rates than commercial projects under the International Building Code. 

“Currently, right now, in our commercial building code, a project less than $10,000 is $191 is the fee you’d pay ... $10,000 to $25,000 is $573, and then less than $50,000 is $765,” McDaniel said. 

He added, “If you drop down to that IRC fee table, you see, we just have a less than $50,000 permit fee, and that’s $839. So for residential that would include a patio cover, a deck pergola, somebody would pay $839 for that permit. And then if you had a plan review fee, that would be around $1,210 on that review.” 

McDaniel said commercial permits typically require three to five inspections, compared to one or two inspections for residential work. 

“We identified that the intent was those needed to be flipped in reverse,” he said, calling the inversion the most significant error in the March 2024 adoption. 

Community and Economic Development Director Vanessa Dolbee acknowledged the city had already fielded objections from the public. 

“The expensive residential permit we received some complaints on that, so we’re really hopeful that we can bring that resolution back, to drop that fee back down to the $100 like little over $100 price,” said Dolbee, using the figure loosely to illustrate how much lower the intended residential rate should have been compared with the $839 residents were charged. 

Dolbee also said refunds cannot be granted because the adopted fee schedule was lawfully applied, but future applications will reflect the corrected charges. 

Changes 

According to the Community and Economic Development Office, the most visible correction is for small projects under $50,000.  

After the tables were flipped, residents ended up paying $839, while commercial developers were charged as little as $191. The update will fix that error so homeowners pay less than commercial builders, as intended. 

Other mistakes are also being corrected. 

Commercial design review fees had been copied wrong and showed charges that went down as project size went up. Development regulation amendment fees were also typed in incorrectly.  

In addition, environmental impact statement applications will again carry a $173 per hour staff charge; the hourly rate had been deleted in the 2024 version, leaving only a flat $173 fee. 

New fees are also being added. 

A $2,562 rezone with a development application will now be listed. This will let the property owners request a zoning change at the same time as they apply for development permits.  

Development agreements, which take significant staff time, will now have a set charge of $173 per hour. And a clarifying note will explain that the limited administrative review fee covers small approvals, such as temporary use permits, street merchant permits, variances and code interpretations. 

At the same time, four obsolete items are being deleted: the Village Center Application, Site Plan Minor Amendment, Wetlands Review and Wetlands Review. Staff said those application types are no longer processed. 

Two other changes will make the system clearer. 

First, annual fee increases will now be tied to a specific measure — the first half of the previous year Seattle/Tacoma/Bellevue CPI-W — if the city’s labor contract is not ratified by June 1. 

The current wording only says “use CPI,” which left the office guessing. 

Second, fees will now be charged at the time of payment, instead of being locked to the year of application. The office said this will prevent confusion, since it previously had to roll fees back to old rates when applications sat for years before being issued. 

Council member Carolyn Cox asked if fees would stay flat if the cost-of-living adjustment was zero. 

“Correct we would not increase the fees because the cola did not come up," Dolbee answered.

Deputy Mayor Malcolm Miller then asked if consumer price index adjustments would apply automatically. 

“That’s correct … it provides consistency, though, if we have to use that year over year, we are using the same metric versus coming up with a metric every time," Dolbee answered.

The amended fee schedule will be brought before the city council for adoption via resolution. That is  tentatively scheduled for Sept. 16.

For more details, see the 2025 Redline Fee Schedule. 

Editor's note: This story has been updated to correct a city council meeting date in September.