Minnesota solar electric Building PerMit survey

By Willy Miley, Sierra Club Volunteer, and Joshua loW, Sierra Club Senior Organizing Representative

Research by Martin gordon, cecilia lee, ernesto luna, rachel schindler, and chi tran

ExECutiVE SummaRy

As Minnesota continues its transition beyond coal to clean energy, the amount of electricity we get from solar will increase dramatically. In 2012, less than 1% of Minnesota’s electricity came from the sun; however, Minnesota now has a statewide goal for 10% of its electricity from solar by 2030. Solar reduces our reliance on imported energy, creates highly skilled, good-paying jobs, and gives people and businesses the opportunity to be energy producers, not just consumers. To unlock Minnesota’s full solar potential, it is important to cut the red tape that unnecessarily drives up costs and slows down solar installations.

the uS Department of Energy’s SunShot initiative

identifies that “soft costs”, such as permitting, customer

acquisition and operation, account for 64% of the total

costs of installing residential solar panels in the united

States. in Fall 2012, Sierra Club volunteers decided to

survey minnesota communities to better understand

the soft costs associated with solar permits. this survey,

conducted by Sierra Club volunteers, found:

• Out of 77 cities, 29 cities had fees of $300 or less, 14 cities had fees of $400 or more, and three cities did not require a permit and charged no fee. the average permit fee was $308.

• Over 80% of the minnesota cities in our survey set permit fees based on a method that included the cost of solar panels despite panel cost and system size having little bearing on the resources a city must devote to review PV systems.

• as of July 2013, the permit fees varied from $0 to $531, or 0% to 4.4% of the total pre-rebate cost ($12,000) of a low-cost, hypothetical, standardized PV installation.

• 64 cities included the cost of solar panels in calculating the permit fee; the average permit fee for these cities was $333.

• 10 cities did not include the cost of solar panels in calculating the permit fee; the average permit fee for these cities was $240.

• Only 30% of cities surveyed offered online submission for permit application.

Based on these results and the findings of the

Department of Commerce’s minnesota Solar Challenge,1

we recommend minnesota cities implement a consistent

permitting process that incentivizes higher capacity and

higher quality PV systems, with building permit fees

based on actual cost recovery for reviewing the permit

application. to do this, we suggest:

1. Calculate the cost of a building permit fee in such a way that excludes the costs of solar panels for residential PV systems. The cost of solar panels and system size has little bearing on the cost to a city to review the permit application and system.

2. Utilize the standardized load factor tables created by Minnesota Department of Labor and Industry and Department of Commerce.2 These tables identify common building and roof construction types and create a prescriptive method for addressing structural considerations instead of requiring full structuring engineer analysis.

3. Provide an online platform for permit application and fee submission. An online permit submission process will promote efficiency and reduce delays for PV system installers and local governments.

in the summer of 2012, Sierra Club volunteers and staff were meeting with solar companies to identify ways to move minnesota beyond coal by growing minnesota’s solar industry. in several conversations and in press reports,3 the issue of solar soft costs came up; specifically, reports of varied and seemingly high building permit fees came up. Soft costs are the costs of a project not considered a direct construction cost, such as financing. the anecdotal evidence was based on a variety of solar PV systems that ranged in costs widely, so organizers began to ask Sierra Club staff and volunteers in other states what they had done about permit costs. Kurt Newick of the Loma Prieta Chapter in California had surveyed dozens of cities in California, and he found widely varying costs of building permits for a solar PV system. this survey is inspired by and builds on his work.almost all cities charge solar PV installers a permit fee. Charging a fee is reasonable, as it covers the cost of the city ensuring a solar installation is safe and meets engineering standards. We argue that cities should work to ensure that these permit fees do not unintentionally penalize homeowners for choosing a higher quality solar panel, especially those made in minnesota, and that the fees should not slow minnesota’s solar energy progress.

as of July 2013, the permit fees varied from $0 to $531, or 0% to 4.4% of the total pre-rebate cost ($12,000) of a

low-cost, hypothetical, standardized PV installation. this hypothetical, standardized solar PV system is significantly cheaper than the average cost of a solar PV system in minnesota. Since most cities include the cost of solar panels and inverters in calculating the cost of a building permit, an average cost solar PV system would have a wider variation of the cost of a building permit.

in February 2012, the minnesota Department of Commerce’s Division of Energy Resources (DER) was awarded a grant under the uS Department of Energy’s

Sunshot initiative with the goal of indemnifying and implementing “policy and process improvements that will make solar installation faster and less expensive.”4 under this program, the DER worked with experts to create a model permit, provide technical resources to cities and counties, identify policy barriers to solar, and, recently, to create standardized tables for the amount of load put on a residential roof by a solar system. if municipalities adopt the tables for their use, this could eliminate the need for solar installers to get a costly professional engineer (PE) stamp.

the minnesota 2013 Solar Energy Jobs act5 includes multiple new energy policies that are expected to spur demand for photovoltaic (PV) energy systems (solar panels). While rebate programs and technological advances in PV systems have made installing solar systems more affordable for middle-income homeowners, permit fees and processing inefficiencies at the local level can be barriers to installing solar systems. this study was undertaken to compare local permitting fees and procedures across minnesota cities to identify potential areas of improvement. the ultimate goal of this study is to reduce barriers for solar installations by streamlining the permitting process for local governments and solar installers.

study Method and ParaMeters

the Sierra Club contacted city building departments across minnesota to collect information regarding building permit fees, fee calculation, processing method and time frame, and structural engineering requirements for solar electric systems. the survey data was verified by follow-up contact with the cities after initial data collection.

total number of Minnesota cities surveyed: 77

survey period: Fall 2012 through Summer 2013

We created a hypothetical, standardized PV installation for this project. that system is below. Note that some cities may reasonably charge higher fees for installations that require more time and resources to assess. this study used the following PV system specifications to standardize the comparisons across cities:

• A licensed solar contractor installs the system per industry standards.

• The system is flush-mounted to the roof of a one-story, single-family house.

• The system is installed on a composite-shingle roof with one layer of roofing and the PV system roof load is three pounds per square foot.

• The system is three kilowatt (kW) (peak AC rating) in output size and covers 320 square feet.

• The system has a pre-rebate valuation of $12,000.

study results

as of July 26, 2013, the permit fees varied from $0 to $531, or 0% to 4.4% of the total pre-rebate cost ($12,000) of a hypothetical, standardized PV installation. Out of 77 cities, 29 cities had fees of $300 or less, 14 cities had fees of $400 or more, and three cities did not require a permit and charged no fee. the average permit fee was $308.

ten cities did not include the cost of solar panels in calculating the permit fee; the average permit fee for these cities was $240 (when including the three cities that did not require a permit and charged no fee, the average permit fee was $184). However, 64 cities included the cost of solar panels in calculating the permit fee; the average permit fee for these cities was $333.

the table below provides the building permit fees for a standardized PV installation, ranked from highest to lowest fee cost. the building permit fees include applicable plan review fees and the state surcharge. the same table is sorted alphabetically in appendix a.

CITyIs soLAr PAneL CosT

InCLUDeD In CALCULATIng bUILDIng PerMIT fee?

bUILDIng PerMIT fee fILe onLIne?

Burnsville Yes $531 No

West st. Paul Yes $527Not at the time of the survey,

but they were working on that capability.

neW hoPe Yes $521 No

south st. Paul Yes $521 No

eden Prairie No $473 No

aPPle valley Yes $463 Yes

saint Paul Yes $425 No

* = Building permit not required.

StaNDaRD SOLaR SyStEm BuiLDiNg PERmit FEES

CITyIs soLAr PAneL CosT

InCLUDeD In CALCULATIng bUILDIng PerMIT fee?

bUILDIng PerMIT fee fILe onLIne?

FarMington Yes $417 No

Mound Yes $407 No

sPring lake Park Yes $407 No

roseMount Yes $406 No. Forms online.

MaPleWood Yes $405 Yes

Brooklyn Park Yes $400 No

neW Brighton Yes $400 Yes

Belle Plaine Yes $392 Partially. The paperwork can be filed online.

Brooklyn center Yes $386 No

Mankato Yes $386 No

st. louis Park Yes $377 No

coon raPids Yes $376 No

cottage grove Yes $376 Yes, by email.

richField Yes $376 No

raMsey Yes $371 Yes

little canada Yes $371 Yes, by email.

inver grove heights Yes $371 No

Forest lake Yes $371 No. Forms online.

lakeville Yes $371 No

hugo Yes $371 No

Prior lake Yes $371 Yes

WoodBury Yes $365 No information.

Fridley Yes $363 Yes

crystal Yes $356 No

st. Paul Park Yes $356 No

chanhassen Yes $355 No

hoPkins Yes $351 No. Forms online.

andover Yes $351 Yes

rochester Yes $351 No, but faxes are accepted.

st. Francis Yes $351 No

chaska Yes $338 No

Mendota heights Yes $330 No

east Bethel Yes $326 No

MinneaPolis No $325 No

roseville Yes $323 No. Forms online.

CITyIs soLAr PAneL CosT

InCLUDeD In CALCULATIng bUILDIng PerMIT fee?

bUILDIng PerMIT fee fILe onLIne?

Falcon heights Yes $322 Yes, by email.

FariBault Yes $319 Yes

duluth Yes $305 Yes, by email.

Mounds vieW Yes $300 No

anoka Yes $294 No

chaMPlin No $286 Yes

austin Yes $282 No

Winona Yes $272 No

Minnetonka No $265 Yes

shakoPee Yes $253 No

eagan No $249 No

oWatonna Yes $244 No

lino lakes No $236 No

edina No $233 No

north st. Paul Yes $228 Yes

savage Yes $227 No

haM lake Yes $227 No

saint cloud Yes $225 No

MahtoMedi Yes $221 No

stillWater Yes $220 No

roBBinsdale Yes $220 Yes

White Bear lake Yes $215 No

hastings Yes $215 Yes

coluMBia heights Yes $215 No

oak grove Yes $209 No

BlooMington Yes $196 No

elk river Yes $186 Yes, by email.

oakdale Yes $158 Yes

golden valley Yes $157 No

PlyMouth No $151 Yes

shoreWood No $149 Yes

shorevieW No $33 Yes

MaPle grove NA* $0 Not applicable for this survey

Moorhead NA* $0 Not applicable for this survey

orono NA* $0 Not applicable for this survey

* = Building permit not required.* = Building permit not required.

StaNDaRD SOLaR SyStEm BuiLDiNg PERmit FEES StaNDaRD SOLaR SyStEm BuiLDiNg PERmit FEES

PerMit Fee assessMent diFFerences and outcoMes

a city’s fee assessment method, its required safety and engineering reviews, and the training of its inspectors have a significant effect on solar permit fees and processing times.

Cities typically compute solar permit fees using a flat-fee method, a project valuation-based method, or a combination of these methods. the flat-fee method applies the same fee regardless of system cost. the valuation method usually bases fees on the pre-rebate cost of a PV system; therefore, a larger or more expensive PV system results in a higher permit fee. Over 80% of the minnesota cities in our survey used a valuation method that includes the cost of solar panels to calculate the permit fee.

However, solar panel cost and system size have little bearing on the resources a city must devote to review PV systems. For PV systems of similar design and complexity, the time required to review PV systems with fewer or more solar panels is typically the same.

Compared to other home improvement projects, material costs for PV systems (primarily the cost of solar panels) are high relative to installation costs. in addition, the quality and cost of solar panels can be highly variable, often depending on whether the solar panels are foreign-made or made in the u.S. thus, PV systems of similar design and complexity (requiring the same level of permit review) can be highly variable in project value, resulting in a wide range of permit fees under a valuation-based method.

For example, the City of St. Paul uses a valuation method that includes the cost of solar panels to calculate the building permit fee for PV systems. if a homeowner plans to install a standard 3kW PV system with a value of $12,000 in St. Paul, the permit fee would be $425. However, if the homeowner plans to install a standard PV system with more or higher quality solar panels valued at $26,000, the permit fee would be $816. yet, if these two PV systems are of similar design, the city’s level of effort for permit review will be essentially the same.

therefore, a valuation-based method that includes the cost of solar panels is arbitrary and inconsistent in calculating permit fees for standard PV systems. in addition, the valuation-based method results in a disincentive to installing higher quality and larger PV systems—penalizing solar installers that aim to produce more renewable energy.

Minnesota’s Progress Made reducing solar systeMs soFt costs

the minnesota Solar Challenge project (mSC), a collaboration between the minnesota Department of Commerce, Division of Energy Resources (DER), the cities of minneapolis and Saint Paul, Fresh Energy, and xcel Energy, provides assistance with permitting, zoning, and interconnection of solar electric systems for local communities that wish to facilitate solar deployment.7 the mSC developed a model building permit for solar systems to be used by cities for consistency and efficiency in the permitting process. the solar model building permit suggests that cities implement a fixed permit fee of between $100 and $250 (to be determined by the city based on permit review cost recovery) with an additional $50 fee for re-inspection. implementation of the solar system model building permit will reduce soft costs and increase project efficiency.

the minnesota Solar Challenge also worked with the minnesota Renewable Energy Society and the Clean Energy Resource teams to provide direct technical assistance to communities in best practices. they conducted 6 workshops and webinars for city officials across minnesota from November 2012 to February 2013.

in June 2013, the minnesota Department of Commerce (DER) published a report that provides guidance regarding the need for structural engineering review on residential solar installations. 8 the report includes standard tables that outline limitations for the placement of residential rooftop solar electric and solar thermal systems on existing single and multi-family dwelling structures. the standardized tables are intended to encourage safe and structurally reliable systems while reducing costs associated with unnecessary structural review for many residential applications; thus, resulting in a more cost-effective and efficient permit process for solar installers and local governments.

While probably not directly related to the goal of decreasing solar soft costs, 23 cities provide some sort of online submission, and another was working on that capability at the time of the survey. One was working on the capability at the time of the survey, and another allows submission of paperwork by fax. Providing online submission should lower the amount of staff time for solar installers and developers, allowing that staff time to be focused on sales, construction, and other business needs.

CONCLuSiONS aND RECOmmENDatiONSminnesota cities should implement a consistent permitting process that incentivizes higher capacity and higher quality PV systems, with building permit fees based on actual cost recovery for reviewing the permit application. minnesota has several good options for reducing the soft costs of solar systems. to that end, several policies could reduce the cost of residential solar PV systems:

1. The Minnesota Department of Labor and Industry could first issue guidance to building permit officials encouraging building permit officials to calculate the cost of a building permit fee in such a way that excludes the costs of solar panels for residential PV systems. according to minnesota Rules, Chapter 1300.0160, permit fees should be “fair and must be fair, reasonable, and proportionate to the actual cost of the service for which the fee is imposed.”9 Larger solar installations require more labor to review, but, given the variation in cost and quality of solar photovoltaic panels, a smaller, quality installation that uses minnesota-made solar panels may cost more before rebates than a larger installation that uses lower quality solar panels. including solar panels in the fee calculation disincentives using minnesota-made solar panels, so we recommend that the cost of solar panels not be included in the calculation of the solar permit fee.

2. Cities or the state of Minnesota could provide an online platform for permit application and fee submission. an online permit submission process will promote efficiency and reduce delays for PV

system installers and local governments. already, 23 cities provide some sort of online submission, and another was working on that capability at the time of the survey. Rather than driving to a central location and waiting in line to submit a permit, online building permit submission could save solar installers time and money.

3. Cities should adopt the Department of Labor and Industry and Department of Commerce’s “standardized Load Tables Characterizing residential solar Thermal and solar electric Installations for residential structures in Minnesota” for flush mounted, solar systems on otherwise structurally sound residencies. a Professional Engineering (PE) stamp can cost more than the cost of a building permit, and the loading of solar panels is generally less than snow. this stamp was required by many of cities. these tables were recently produced by the Department of Labor and industry (DOLi) and the Department of Commerce. We are excited for the prospect of cities adopting the standardized load tables.

implementing the above recommendations will reduce barriers to residential solar installations throughout minnesota, increasing the state’s capacity for clean, renewable energy. minnesota cities should adopt a reasoned and efficient uniform permitting process for PV systems to promote consistency and cost-effectiveness for local governments, the solar industry, and consumers.

InforgraphIc source: Doe sunshot InItIatIve

CITyIs soLAr PAneL CosT

InCLUDeD In CALCULATIng bUILDIng PerMIT fee?

bUILDIng PerMIT fee fILe onLIne?

cityIs solar panel cost included in calculating

building permit fee?Building Permit Fee File Online?

andover Yes $351 Yes

anoka Yes $294 No

aPPle valley Yes $463 Yes

austin Yes $282 No

Belle Plaine Yes $392 Partially. The paperwork can be filed online.

BlooMington Yes $196 No

Brooklyn center Yes $386 No

Brooklyn Park Yes $400 No

Burnsville Yes $531 No

chaMPlin No $286 Yes

chanhassen Yes $355 No

chaska Yes $338 No

coluMBia heights Yes $215 No

coon raPids Yes $376 No

cottage grove Yes $376 Yes, by email.

crystal Yes $356 No

duluth Yes $305 Yes, by email.

eagan No $249 No

east Bethel Yes $326 No

eden Prairie No $473 No

edina No $233 No

elk river Yes $186 Yes, by email.

Falcon heights Yes $322 Yes, by email.

FariBault Yes $319 Yes

FarMington Yes $417 No

Forest lake Yes $371 No. Forms online.

Fridley Yes $363 Yes

golden valley Yes $157 No

haM lake Yes $227 No

hastings Yes $215 Yes

hoPkins Yes $351 No. Forms online.

hugo Yes $371 No

inver grove heights Yes $371 No

lakeville Yes $371 No

lino lakes No $236 No

little canada Yes $371 Yes, by email.

MahtoMedi Yes $221 No

Mankato Yes $386 No

MaPle grove NA* $0 Not applicable for this survey

APPeNdIx A: STANdArd SOlAr SYSTeM BuIldINg PerMIT FeeS AlPhABeTICAllY BY CITY NAMe

CITyIs soLAr PAneL CosT

InCLUDeD In CALCULATIng bUILDIng PerMIT fee?

bUILDIng PerMIT fee fILe onLIne?

MaPleWood Yes $405 Yes

Mendota heights Yes $330 No

MinneaPolis No $325 No

Minnetonka No $265 Yes

Moorhead NA* $0 Not applicable for this survey

Mound Yes $407 No

Mounds vieW Yes $300 No

neW Brighton Yes $400 Yes

neW hoPe Yes $521 No

north st. Paul Yes $228 Yes

oak grove Yes $209 No

oakdale Yes $158 Yes

orono NA* $0 Not applicable for this survey

oWatonna Yes $244 No

PlyMouth No $151 Yes

Prior lake Yes $371 Yes

raMsey Yes $371 Yes

richField Yes $376 No

roBBinsdale Yes $220 Yes

rochester Yes $351 No, but faxes are accepted.

roseMount Yes $406 No. Forms online.

roseville Yes $323 No. Forms online.

saint cloud Yes $225 No

saint Paul Yes $425 No

savage Yes $227 No

shakoPee Yes $253 No

shorevieW No $33 Yes

shoreWood No $149 Yes

south st. Paul Yes $521 No

sPring lake Park Yes $407 No

st. Francis Yes $351 No

st. louis Park Yes $377 No

st. Paul Park Yes $356 No

stillWater Yes $220 No

West st. Paul Yes $527 Not at the time of the survey, but they were working on that

capability.

White Bear lake Yes $215 No

Winona Yes $272 No

WoodBury Yes $365 No information.

1 http://mn.gov/commerce/energy/topics/clean-energy/Solar/Minnesota-Solar-Challenge.jsp

2 http://mn.gov/commerce/energy/images/FINAl-Standardized-load-Table-report.pdf

3 haugen, dan. “Cities aim to cut red tape for solar installers.” Midwest energy News. April 4, 2012. ( http://www.midwestenergynews.com/2012/04/04/cities-aim-to-cut-red-tape-for-solar-installers/)

4 united States department of energy. “Sunshot Initiative”. http://apps1.eere.energy.gov/solar/sunshot/projects/project.cfm/project_id=418

5 https://mn.gov/commerce/energy/topics/resources/Newsletters/renewable-energy/2013-renewable-energy-News/June-2013/new-state-legislation-gives-big-boost-to-solar-and-other-clean-energy.jsp

6 Carl Mills and Kurt Newick, Sierra Club, Solar electric Permit Fees in Northern California, 7/29/2011, pg. 16. http://www.solarpermitfees.org/NorCalPVFeereport.pdf

7 http://mn.gov/commerce/energy/topics/clean-energy/Solar/Minnesota-Solar-Challenge.jsp

8 Minnesota department of Commerce energy resources division, Standardized load Tables Characterizing residential Solar Thermal and Solar electric Installations For residential Structures in Minnesota, June 2013. mn.gov/commerce/energy/topics/clean-energy/Solar

9 http://www.dli.mn.gov/ccld/PdF/SBC/1300.pdf

ENDNOtES

aCKNOWLEDgEmENtS this study was inspired by and based on the work lead by Kurt Newick to analyze PV system permitting fees in Northern California. mr. Newick and his team members worked hard and accomplished a great deal to create a fair and efficient permitting process for solar systems in California. We thank mr. Newick and all his team members for their foundational work in this area.

the following Sierra Club intern volunteers contributed greatly to this study by surveying cities and validating data: martin gordon, Cecilia Lee, Ernesto Luna, Rachel Schindler, and Chi tran. Joshua Low was staff lead on this study. all their hard work is highly appreciated; without it, this study would not be possible.

We also appreciate the input from stakeholders including Doug Determan of the association of minnesota Building Officials, Stacy miller of the Department of Commerce, Ross abbey of Fresh Energy, Vicki Carey, City of minneapolis Permit Compliance Officer, and Brian Ross of CR Planning.

Feel free to contact us for more information about the study:

michelle Rosier, Sr. Campaign and Organizing manager, michelle.rosier@sierraclub.org, 612-659-9124 x304

William miley, study author, willy.miley@gmail.com, (651) 210-1805

2327 e franklin Avenue, suite 1 Minneapolis, Mn 55406

www.northstar.sierraclub.orgwww.facebook.com/sierraclubmnwww.twitter.com/sierraclubmn