Lakewood proposes annual contractor licenses, higher minimum building permit and pavement-degradation fees

Lakewood City staff on Aug. 4 told the City Council they plan to overhaul permitting fees and some processes, proposing an annual contractor registration, tiered grading and erosion-control fees, a $150 minimum building-permit fee, tighter plan-review penalties and pavement-degradation charges tied to pavement condition.

The proposals, presented by Keith Hensel, the city engineer for development services, and introduced by Maria D'Andrea, Lakewood’s director of public works, aim to better align fees with staff costs, improve permit turnaround and capture fees currently not collected on many permits.

Hensel said the department’s review began as a cost-recovery exercise but expanded to include customer-service improvements. “We’re gonna propose that we change our registration period to 1 year,” Hensel said, describing a shift from the current three-year renewal model to an annual review that would let staff track contractor complaints, stop-work orders and expired permits and, when warranted, assess penalties.

Why it matters: staff said many existing permits do not cover the city’s processing and inspection costs. Hensel cited internal data showing a substantial number of right-of-way and grading permits issued in 2024 carried nominal fees; for example, 70% of right-of-way permits had fees under $104 and 39% had fees under $26. He also said nearly one-third of building permits issued in February 2024 expired without a final inspection or pass, which the city wants to address through stricter contractor oversight.

Key proposals and details

- Contractor registration and licensure: Move from the current registration/renewal practice (new registration $150; three-year renewal $400) to annual recertification and pursue a licensure model for some work areas. Annual checks would collect insurance documentation at once and allow tracking of complaints and stop-work orders; the change is intended to speed permit issuance and reduce repeated insurance-related delays.

- Grading and erosion-control: Consolidate grading and erosion control into one fee and create four size-based categories: single residential lots; commercial sites under 1 acre; projects 1.0–4.99 acres; and projects 5+ acres. Staff proposed precalculating recommended collateral to reduce case-by-case engineering estimates.

- Right-of-way (ROW) permits: Simplify and reduce manual fee calculations that currently require permit technicians to verify contractor-supplied quantities. Staff noted many ROW permits require at least two inspections and that a large share of ROW permits in 2024 did not cover inspection costs. For larger public improvements, staff proposed using the engineering division’s collateral estimate and charging a permit fee equal to 2.5% of that estimate to avoid duplicate calculations.

- Building permit fees and minimum fee: Establish a $150 minimum fee intended to cover initial issuance and the first inspection. Hensel said the minimum is targeted at ensuring small permits cover at least the initial staff cost; council members raised concerns about the relative burden on low-cost homeowner projects.

- Extended plan-review fees: For entitlement and plan review, staff proposed a $1,500 fee for a fourth review and $2,000 for each review thereafter to discourage protracted review cycles. Hensel said some projects now require up to nine reviews, consuming extra staff time.

- Floodplain reviews: Introduce tiered fees for floodplain reviews (residential and commercial tiers) because some floodplain reviews require substantial FEMA-related documentation; the city currently charges nothing for some floodplain reviews.

- Pavement degradation fee and repair standards: Create a pavement-degradation fee tied to the pavement condition index (PCI). Staff proposed three tiers: PCI 85–100 (tier 1) at $4 per square foot; PCI 70–84 (tier 2) at $2.50 per square foot; and tier 3 (PCI 69 or below) exempt from the fee. Hensel said stricter repair standards will accompany the fee (for example, requiring lane overlays rather than narrow wheel-path patches on newer pavements).

Fiscal/administrative notes and data

- History and benchmarking: Staff noted the last large fee update was in February 2014, with smaller changes in 2020 and 2021 (the 2021 adjustment tied to adopting the eTrakit permit system). Staff used Mortenson Construction construction-cost indexing (Feb. 2025) as context for increases in construction costs.

- Examples and sample counts: In February 2024 the city issued about 20 permits involving right-of-way/floodplain items and roughly 33 residential floodplain permits; staff also presented an audit example showing a public-way permit with a collateral estimate of $960 but a collected fee of $52.

Council response and follow-up

Council members largely thanked staff for the comprehensive review and pressed staff on impacts to affordability and small homeowner projects. Councilor Isabel Cruz and Councilor Lowe both asked whether increases for low-valuation permits (for example, $1,000–$3,000 jobs) risk encouraging unpermitted work; Hensel and D'Andrea acknowledged the concern and said staff would reexamine fee tiers and that minimums can be adjusted before final adoption.

Councilor Ryan suggested raising higher-end fees to offset relief for low-cost permits or creating a waiver process; staff said they would provide the full fee table for council review at a future meeting.

Next steps

Staff told the council they intend to follow the study session with a resolution setting standard fee adjustments and one or more ordinances to establish new fees that require code changes (for example, contractor registration and pavement degradation). Hensel said the implementation target is “right around the first of the year” and that staff will return with more detailed tables and proposed ordinance language.

Attribution: Direct quotes and specific proposals are drawn from remarks by Keith Hensel, city engineer for development services, and Maria D'Andrea, director of public works, during the Aug. 4, 2025 virtual study session of the Lakewood City Council.