0 | Unannounced Audit of Petty Cash and Change Funds February 2016 111 Karen E. Rushing Clerk of the Circuit Court and County Comptroller Office of the Inspector General Sarasota County, Florida Audit of Building Permit fees December 2024
1 | Audit of Building Permit Fees December 2024 Contents Executive Summary 2 Background and Objectives 3 Opportunities for Improvement and Management Responses 6 Audit Services Jeffrey Lilley, CPA, CIG Director of Internal Audit and Inspector General Lead Auditor Blake Withee, CFE Internal Auditor/Investigator Auditors Sofya Bogdanova, CFE, CIGA, CIGI, CGI Senior Internal Auditor/Investigator Eleanor Connell Internal Auditor/Investigator Please address inquiries regarding this report to Jeffrey Lilley, by e-mail at jlilley@sarasotaclerkandcomptroller.com or by telephone at (941) 650-0948. This and other reports prepared by the Office of the Inspector General are available at http://www.sarasotaclerk.com/inspector-general/inspector-general-audit-reports.
2 | Audit of Building Permit Fees December 2024 Executive Summary As part of the Annual Audit Plan, the Clerk of the Circuit Court and County Comptroller’s Internal Audit Department and Office of the Inspector General conducted an independent audit of Sarasota County Building Permit Fees. The purpose of the audit was to review internal controls and test compliance with applicable laws, ordinances, resolutions, and departmental policies and procedures related to permit fee assessment rules and regulations. The audit identified the following deficiencies: • Permit fee reductions beyond authorized periods • Lack of controls in preventing incorrect permit submissions • Lack of clear internal procedures in Departmental Directive 1.10 • Outdated Standard Operating Procedures for impact fees Strong internal controls in the Permitting Department are crucial for managing resources responsibly and maintaining public trust. Deficiencies identified in fee reductions continuing beyond authorized periods, time inefficiency due to control deficiency in preventing incorrectly submitted permits, and ineffective policies and procedures all increase the risk of financial loss and non-compliance. Without clear and effective controls, the department is vulnerable to these avoidable risks. By reinforcing controls in these areas, the Permitting Department can ensure it adheres to applicable laws, ordinances, resolutions, and departmental policies and procedures. This not only strengthens accountability but also supports reliable service delivery to the County, building confidence in the department’s operations.
3 | Audit of Building Permit Fees December 2024 Background and Objectives The Clerk of the Circuit Court and County Comptroller’s Internal Audit Department and Office of the Inspector General has completed an audit of Sarasota County Building Permit Fees. The audit was planned and conducted in conformance with the International Standards for the Professional Practice of Internal Auditing (Standards). Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The purpose of the audit was to review compliance with applicable County Ordinances, County Resolutions, and departmental policies and procedures related to building permit fees. Background The Sarasota County Permitting Department operates both a North and South County office and oversees the permitting process for residential and commercial construction, renovation, demolition, and other forms of modification or additions that require a permit within the County. This includes managing applications, reviewing plans, processing permit fees, and ensuring projects comply with building codes, zoning requirements, and safety regulations. The department also manages inspections and reinspections and processes their respective fees as part of the overall permitting process. When an inspection reveals that corrections are needed, a reinspection fee may be charged to cover the additional resources required for follow-up. The Permitting Department plays a critical role in public safety and community development by ensuring structures meet local standards and by enforcing County and state regulations. In 2023, Sarasota County introduced the Accela Civic Program, a digital platform that streamlined the permitting process, allowing applicants to submit permits, track application status, and make payments online. This system aims to improve efficiency, reduce wait times, and make the permitting process more accessible to the public. During the audit period of October 1, 2023, through May 31, 2024, the Permitting Department issued thirty-one thousand four-hundred fifty-seven (31,457) permits. An estimated revenue of nearly thirty-seven million dollars ($37m) was generated solely on permits issued during this period.
4 | Audit of Building Permit Fees December 2024 Objectives, Scope and Methodology The objectives of this audit were to determine if the Permitting Department’s processes related to permit fee assessment are operating effectively and if they are in compliance with departmental policies and procedures, as well as the following ordinances and resolutions: • Sarasota County Code of Ordinances, Chapter 22, Article II, Building Code. • Sarasota County Code of Ordinances, Chapter 70, Article I, Impact Fee Administration. • County Resolution 2021-107, Adoption of fee and penalties schedule. • County Resolution 2023-061, Adoption of temporarily reduced certain building permit fees and reinspection fees for the period of April 1, 2023 through March 31, 2024. The scope of this audit included a review of issued permits and financial transactions within the Accela Civic Program for the period of October 1, 2023, through May 31, 2024. The methodology used to meet the objective(s) of the audit, and the procedures performed included, but were not limited to, the following: • Performed inquiries of management and staff of the Planning and Development Services Department and Enterprise Information Technology Department (EIT). • Obtained an understanding of the process for issuing permits and collecting fees. • Reviewed Sarasota County Ordinances, County Resolutions, and departmental policies and procedures related to: o Permit fees. o Impact fees. o Mobility fees. o Inspection and reinspection fees. o Cancelling Fees. o Refunding and voiding fees. • Examined the following items regarding permit transactions: o A stratified sample of 116 issued permits and their associated fees between October 1, 2023, through May 31, 2024. o A stratified sample of 100 refunded transactions between October 1, 2023, through May 31, 2024. o A stratified sample of 40 voided transactions between October 1, 2023, through May 31, 2024. • Conversed with the Office of Financial Management (OFM) to inquire about the reconciliation of financial information from the permitting system to the financial system and examined a random sample of 16 days between October 1, 2023, through May 31, 2024. • Questioned and determined why certain fees were reduced outside of the reduction period listed in County Resolutions. • Examined and verified why non-refundable fees were being refunded.
5 | Audit of Building Permit Fees December 2024 • Discussed the online permitting platform, Accela Civic Application, with Enterprise Information Technology (EIT) Department to gain an understanding of what user rights are given to employees of different levels of authority and when user access is revoked from former employees. • Systematically compared the adopted fee schedule in the County Resolutions to the Sarasota County Code of Ordinances to ensure consistency. • Identified opportunities for improvement.
6 | Audit of Building Permit Fees December 2024 Opportunities For Improvement and Management Responses The audit disclosed certain policies, procedures, and/or practices that could be improved. The audit was neither designed nor intended to be a detailed study of every relevant system, procedure, or transaction. As a result of the audit, observations and recommendations identified below are related to Standards: International Professional Practice Framework Standards (2017) • (Standard 2110) Communicating risk and control information to appropriate areas of the organization, and • (Standard 2130.A1) The effectiveness of controls related to operations and programs, reliability and integrity of financial and operational information, safeguarding assets and compliance with laws, regulations, policies, procedures and contracts. The Opportunities for Improvement presented in this report may not be all-inclusive of areas where improvement may be needed. There were five (4) Opportunities for Improvement identified as a result of the audit: 1. Permit fee reductions beyond authorized periods 2. Lack of controls in preventing incorrect permit submissions 3. Lack of clear internal procedures in Departmental Directive 1.10 4. Outdated Standard Operating Procedures for impact fees
7 | Audit of Building Permit Fees December 2024 1. Permit fee reductions beyond authorized periods Observation Permit fee reductions are sometimes implemented through County Resolutions to assist in economic recovery for reasons such as the COVID-19 pandemic. While these reductions are intended for specific time periods, the Accela Civic Program currently applies reduced fees based on the application date, even if payments are made after the fee reduction period specified in the County Resolution has passed. This results in non-compliance with County Resolutions and loss of revenue. County Resolution 2023-061 was passed on March 21, 2023, which temporarily reduced certain building permit fees and reinspection fees by twenty-five (25) percent. The County Resolution took effect on April 1, 2023, and had a sunset date of March 31, 2024, whereby beginning April 1, 2024, all permit fees will revert to their prior full rate. The auditor selected a stratified sample of one hundred and sixteen permits (116) out of a population of thirty-one thousand four hundred fifty-seven (31,457) permits that were issued during the audit period of October 1, 2023, through May 31, 2024. During the review of the one hundred and sixteen permits (116), observations included forty-eight (48) permits that were charged reduced fees by twenty-five (25) percent after the sunset date of March 31, 2024, listed in County Resolution 2023-061. Due to the Accela Civic Program applying reduced fees after the sunset date of March 31, 2024, a total of thirty-one thousand three hundred-thirteen dollars and sixty-seven cents ($31,313.67) was observed as lost revenue within the audit sample, suggesting the actual impact across all reduced fees after the sunset date may be substantial. Recommendation After conversations with management, it was determined that while Chapter 70, County Code of Ordinances, specifies the application date as the basis for impact fee changes, it does not address permit fee changes, which fall under Chapter 22, County Code of Ordinances. However, aligning the methodology for all fee types makes practical sense. Planning and Development Services should ensure that future resolutions clearly specify whether any fee changes are based on the submission or payment date. Management Response Planning and Development Services has consistently through the years had a past practice of applying the methodology of using the application date for a permit for any fee increases or reductions. This is primarily due the permit intake date is a specific point that can be effectively tracked. In contrast, the processing, review and approval of a permit is an unknown time for an applicant. This methodology is consistent with Chapter 70, County Code of Ordinances, relating to the various Impact Fees, which state permit applications submitted and accepted by the County prior to or on or after a specified date are subject to certain rates. Planning and Development Services will include in future fee resolutions specific language as to when an application qualifies for a fee change based on submission date.
8 | Audit of Building Permit Fees December 2024 2. Lack of controls in preventing incorrect permit submissions Observation During the review of refunded non-refundable fees, specifically state surcharges, it was identified the department lacks a control to prevent incorrect permit submissions before payment is made. The Permitting Department currently refunds all fees when customers submit incorrect permits through the Accela Civic Platform, including non-refundable fees, resulting in the need to resubmit a new application and pay fees again. When the Accela Civic Platform was originally implemented, the Permitting Department was not refunding state surcharges to stay in compliance with the County Resolutions, however, this process was revised to prevent customers from being charged surcharges twice upon submitting a new application. This process creates inefficiencies and increases the volume of refund transactions, as there is no control in place to prevent incorrect submissions upfront. Recommendation Implement a pre-submission review process within the Accela Civic Platform to allow employees to flag incorrect applications before any fees are charged. This would allow staff to notify customers of errors prior to payment, minimizing the need for full refunds and improving operational efficiency. Additionally, the department should enhance customer education by providing clear instructions at the point of submission to reduce the number of incorrect applications. Collaboration with the Enterprise Information Technology (EIT) department or software vendor may be required to adjust the system accordingly. Management Response Based on staff experience, a majority of incorrect permit submissions do not come from frequent submitters, but from residential homeowners that do not have experience applying for permits. In addition, changing the workflow or adding an additional step universally would not be conducive to a streamlined process for customers. A link to permit guides and selecting the correct permit type has been added to the homepage of the Accela Permitting System, providing clear instructions at the point of submission to reduce the amount of incorrect submissions. We will monitor this issue moving forward and incorporate additional information into future Lunch and Learn events. All refunds will follow the updated Departmental Directive references in Opportunity for Improvement No. 3.
9 | Audit of Building Permit Fees December 2024 3. Lack of clear internal procedures in Departmental Directive 1.10 Observation The Departmental Directive 1.10 references County Resolution 2021-107 for the cancellation and refund policy but lacks clear internal procedures. Several key issues need clarification and improvement: 1. Exceptions to Non-Refundable Fees: The directive does not clearly outline when nonrefundable fees can be refunded. County Resolution 2021-107 states there shall be no refund on any State Department of Community Affairs (DCA) surcharge or State Department of Business Regulation (DBPR) surcharge. Additionally, the Sarasota County Code of Ordinances state that plan review fees are non-refundable. In practice, staff sometime issue refunds of these fees, such as if an incorrect permit is submitted and the department issues a full refund. It should provide specific guidelines on how and when these exceptions apply. 2. Exceptions to Written Requests: County Resolution 2021-107 and the Sarasota County Code of Ordinances require written refund requests. Sarasota County Code of Ordinances also require written refund requests to be signed. However, there are exceptions to these requirements. Staff automatically issue partial refunds when an applicant switches over to a private provider inspection, or a full refund when staff discover errors in applications. In scenarios like these, a refund is provided without a written and signed request. While reasonable, this process is technically non-compliant with County Resolution 2021-107 and the Code of Ordinances and exceptions should be documented in the directive. 3. Refund Process Details: The directive should clarify: • What forms of refund requests are acceptable in scenarios where written requests are required (e.g., whether email requests are sufficient). • Who is authorized to request a refund and sign the written request. • What specific documentation is required to process refunds, as the directive currently states "ensure documentation". 4. Job Titles and Roles: The directive uses vague job titles such as “supervisor/manager.” It should instead clearly list all roles with refund approval authority in alignment with the organizational chart to avoid confusion about approval authority. Positions such as “Zoning Plans Reviewer” or “Business Professional” do not fit a general description of “supervisor/manager” but these positions have approval authority. Recommendation The Departmental Directive 1.10 should be updated with the following changes: 1. Clarify Non-Refundable Fee Exceptions: Update the directive to provide clear guidelines on exceptions to non-refundable fees and their application.
10 | Audit of Building Permit Fees December 2024 2. Formalize Written Request Exceptions: Update the directive to include any exceptions of written refund requests. 3. Detail the Refund Process: Include explicit guidelines on refund approvals, documentation, and acceptable request methods (e.g., email). 4. Specify Roles and Responsibilities: Revise the directive to use specific job titles, reflecting the authority needed to approve refunds, that align with the organizational chart. Management Response Departmental Directive 1.10 has been updated as of 11/26/2024 to include the recommended changes suggested. Staff has been notified of the update and are implementing the changes. Per the Planning and Development Services Departmental Directive 1.09, the SOP will be reviewed yearly for any updates needed.
11 | Audit of Building Permit Fees December 2024 4. Outdated Standard Operating Procedures for impact fees Observation The Permitting Department’s Standard Operating Procedure (SOP) on impact fees, last updated on May 16, 2017, is now obsolete. House Bill 337, which became law in June 2021, introduced caps on annual and multi-year impact fee increases, as well as new transparency and reporting requirements. Additionally, the department implemented the Accela Civic Platform for permit submissions in 2023, necessitating new procedures to align with both the legal requirements and the technological update. Recommendation Revise the SOP to reflect HB 337’s provisions and the transition to the Accela Civic Platform to ensure compliance and operational efficiency. Management Response The Impact Fee Standard Operating Procedure (SOP) has been updated as of November 26, 2024. The updated SOP is attached for reference. Per the Planning and Development Services Departmental Directive 1.09, the SOP will be reviewed yearly for any updates needed.
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