The slump in Gainesville’s construction market is just another blow to the city’s budget.

Revenues from building inspection fees were $4,027.88 last month, less than 5 percent of what they were in January two years ago.

The slumping revenues are no surprise to city officials who have watched the numbers of construction projects drop steadily since 2008 and see the decline as a mirror to the national situation.

“I think, locally, it’s a reflection of all of the things you’re seeing nationally in regards to the economy,” Gainesville Planning Director Rusty Ligon said. “I think we’re reflecting that locally; that’s not news.”

Although permits and fees from construction and zoning are less than 5 percent of the city’s total revenue, in today’s economic
climate, every dollar counts.

City Manager Kip Padgett presented the numbers to the council at its recent planning retreat. His report included charts with bars that stood tall until fiscal year 2008, when revenues from permits dropped nearly in half.

The discussion was Padgett’s attempt to show the city’s entire financial picture.

“We never talk much about the money or funds we get from building inspections,” he said.

Padgett is not anticipating the revenues, which were near $600,000 in fiscal year 2007, to return to their former level. He’s just hoping they stabilize soon.

Some council members have broached the idea of running Inspection Services like a business, keeping a full staff of inspectors when there is plenty of building activity and cutting staff when the market is down.

Yet Larry Brown, manager of inspection services, says the department has three inspectors who stay busy. Brown says that while residential development is almost nil, commercial renovations keep the department occupied.

The expansion at Northeast Georgia Medical Center, which has brought in more than $274,000 in inspections fees since work began in late 2006, keeps the department’s commercial building inspector involved almost every day, he said.

Planned projects such as the Georgia Mountains Center parking deck and the future public safety facility will ensure more work, although they won’t bring in more revenue.

“We don’t make any money on those,” Brown said. “But it keeps our folks busy; we make all the inspections and such.”

Still, inspectors who performed an average of 14 inspections per day in January 2007 had nearly half that work last month.

Despite the sharp decline in revenues and a forced 5 percent cut in expenses this year, Brown said the seven-employee Inspection Services department is operating within budget.

“It’s very lean, but we’re in budget,” he said.

Brown acknowledges that he will have to make some tough decisions as he prepares the budget for fiscal year 2010. Raising permit fees might be considered, but the chances are slim.

“There’s room there for adjustment, but I don’t think it’s the time for that right now,” Brown said.

Brown said that with the number of inquiries the department has received, he hopes construction activity might pick up in the spring. If not, Brown will have to consider ways to further cut expenses, which could include eliminating staff.

“If things stay as slow as they are and the work that we’ve already got under way finishes up, we definitely don’t want to be a drain on city tax revenue,” Brown said.