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Business groups seek caps on project fees

Sean Ryan

Business associations are meeting opposition in their push for municipalities to cap the amount their private consultants charge developers for plan reviews.

Many municipalities hire private engineering firms to review traffic changes and environmental effects and design plans for new projects. The project developers pay the consultant fees for the reviews.

Some private consultants increase their workload by arbitrarily asking for plan modifications, which leads to more review time, said J. Scott Mathie, government affairs director for the Metropolitan Builders Association.

The MBA and five other development groups asked municipalities to prevent consultants from charging developers higher hourly fees than those charged to public agencies and to set a maximum fee based on a percentage of the overall project construction cost.

It’s a problem, Mathie said, that increases developers’ costs to the tune of tens of thousands of dollars.

“It’s significant across the board, and we want to give communities some options of things they can do,” Mathie said. “During tough times, this is going to be a bigger issue with consulting firms maybe trying to make up for lost revenue.”

Municipal consultants should not be blamed for long review periods or returned plans, said Philip Ramlet, president of Omnni Associates Inc., Appleton. Often, the plans must be sent back for revisions because the developers’ engineers did not prepare the plans correctly, he said.

“If the quality of the submittals is not there,” Ramlet said, “that increases the time that needs to be spent reviewing the submittals.”

Furthermore, Daniel Ertl, Brookfield’s director of community development, said the private market should determine the consulting price, and municipalities should not set caps. Limiting fees could limit municipalities’ ability to hire the best and most experienced consultants to review projects, he said.

“Professionals are professionals, and they should be paid their fair share of costs,” Ertl said. “Why should a government entity control those prevailing rates?”

Municipalities are asking developers to pay a growing portion of consultants’ plan-review costs, which may be why it’s a rising concern, Ramlet said.

“Let’s say 15 or 20 years ago, maybe the reviewing agency didn’t pass along the costs they do now,” he said.

“As cost has crept up over the years, one of the things (municipalities) have looked at doing is trying to recoup as much as possible.”

The fee limits are part of a broad package of requests six business groups released last week. Beyond the consulting-fee caps, the groups asked municipalities to allow for higher-density development, limit project impact fees and streamline regulatory processes. The six associations supporting the proposal are the MBA, the Wisconsin chapter of the International Council of Shopping Centers, the Wisconsin Economic Development Association, the Greater Milwaukee Association of Realtors, the Wisconsin chapter of NAIOP and the Metropolitan Milwaukee Association of Commerce.

Ertl said he supports lowering the cost of development and supports the call to allow for higher-density development. But, he said, municipalities should lower developers’ costs by using government grants and loans rather than by capping consultants’ fees.

Ertl said Brookfield signs two-year contracts with consulting firms and selects them by sending out requests for qualifications.

“We look at expertise first, cost second in that area — a close second,” Ertl said. “I feel pretty strongly that, again, having a community cap professional rates is not appropriate. That should be set by the marketplace.”

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