City hands electrical inspections over to state

Updated: April 26, 2007 - 1:59 pm

Union inspectors may ask new Council to reverse decision

The city of Minneapolis has ended its electrical inspections program, turning the duties over to a state program in a move city leaders say will speed up service and save money for customers and the city.

An official from the International Brotherhood of Electrical Workers (IBEW) calls the city’s financial analysis flawed.

The City Council voted Sept. 23 to end the city program. As of Oct. 1, the city stopped issuing electrical permits. Anyone seeking an inspection now has to get a state permit. A recent agreement allows city inspectors to work until April 30, 2006, or until they find other work.

City Councilmember Lisa Goodman (7th Ward) supported the change, based on the savings for her constituents. “The fact that eight [Councilmembers] would vote to do the right thing shocks me, actually,” she said, referring to labor opposition.

Steve Claypatch, business manager for IBEW Local 292, said the vote happened fast, and the city did not reach out to the union and the contractors who use the city inspection system to discuss the change. The Council itself was ill-informed about the costs and benefits, he said.

“The city has one of the premiere inspections departments in the nation,” he said. “We are proud to be part of that.”

The city has had 10 electrical inspectors who reviewed new electrical work. They have worked without a contract since April 2004, disputing the city’s 2 percent wage increase policy.

The IBEW took the city to District Court, claiming it had not bargained in good faith. Judge Harry Crump issued a temporary restraining order on the city’s decision to eliminate the program, and ordered the two sides back to the table.

The contract and legal dispute are being resolved. The Council voted 12-0 Nov. 18 to approve the new contracts, with a 1.6 percent across the board increase for 2004-2005 contract and 1.4 percent across the board increase for 2005-2006, plus the automatic increases based on years of service. It also voted to settle the lawsuit.

Henry Reimer, head of City Inspections, said the city agreed to employ the inspectors through April 30, the end of the contract. In return, the union would drop the lawsuit. He said the inspections backlog on permits issued prior to Oct. 1 would keep them busy.

“It gives them transition time to make plans,” he said. “What we want is some certainty. The lawsuit hinders our ability to plan.”

Extending the inspectors’ employment through April 30 buys more time for lobbying. Claypatch said union members plan to talk to members of the incoming Council about reviewing the decision. “Not to look at it would be foolish,” he said.

By the numbers

On its face, the change appears to save permit-buyers money.

The minimum electrical inspections fee charged by the city is $60.50, according to information from the City Inspections Department. The minimum fee under the state program is $20.50.

The city inspection fee for a new 200-amp service with 40 circuits in a one- to two-unit family dwelling costs $499.50, the Inspections Department said. Under the state program, it is $81.50, or $418 less. A city permit for an electrical inspection of a 40,000-square-foot office building with 92 circuits costs $805.50; the state charges $460.50, or $345 less.

Claypatch says blaming the inspectors for high fees is “garbage.” The Council — not the inspectors — set the fees. If the issue is high fees, the city should lower them, not eliminate the program, he said.

Reimer agrees the Council sets the fees. However, the city has to charge enough to recoup costs. “Our fees are high, [yet] we still are losing money on the program,” he said.

Reimer points to a city fee study that says the city could save money by jettisoning the program.

In 2004, the city collected $1.26 million in electrical permit fees. It paid $1.02 million in salary and fringe benefits to inspectors and customer service representatives, the study said.

By that measure — counting direct service costs — the city actually got $240,000 from the electrical inspections program in 2004.

However, the program had $679,000 in administrative overhead in the Regulatory Services Department and from indirect overhead — vehicles, computers, legal costs, human resources and a fractional share of citywide costs, such as the City Council and mayor’s budgets, the consultant’s analysis said.

By that measure — including direct costs and all possible overhead — the electrical inspections program cost $437,000 in 2004. Whether the city gains or loses under the new model depends on how much it cuts the various overhead costs.

Claypatch is looking into the city’s analysis, and says the $679,000 overhead costs are out of line for 10 inspectors. “They just loaded it up with administrative costs,” he said.

Reimer said salaries are typically less than half the actual cost of a full-time employee in both the public and private sector. The Finance Department would give his department a targeted cut for 2006. “The Council will expect cuts to offset the loss of revenue,” he said.

On thing is clear, the change in inspections and proposed electrical inspectors settlement will cost the city money next year. It will not collect electrical permit revenue but will continue to pay inspectors. The amount is unknown, but it could be in the $300,000 range.

State inspectors are not state employees, but independent contractors licensed by the state, Reimer said.

Lost services?

If the issue goes back to the Council, expect several disputes to emerge.

– One-stop shop: Claypatch said the change hurts the city’s one-stop shop for developers — where they could get all needed permits and reviews from one office.

Reimer agrees the change would create an extra stop, but people pulling permits would pay less. “I don’t think they will complain too loudly,” he said.

– Fixing existing violations: Claypatch said the city’s in-house inspectors could cite housing code violations of existing electrical work while inspecting new installations. State inspectors could not, allowing electrical hazards to continue, he said.

Reimer disagreed, calling it a red herring. State inspectors are bound by ethics and contract to follow up with hazardous situations, he said. Further, the city has kept the authority to inspect existing electrical work and continues to employ housing inspectors.

– Extra fees: Claypatch said the city historically had not charged government units — such as public housing, public works, the libraries, etc. — for electrical permits. That is one reason the program appeared to be expensive, he said.

Reimer said the city has not waived fees as Claypatch suggests. Spokespersons for Public Works, the Minneapolis Public Housing Authority, the Minneapolis Library Board, and the Minneapolis Park and Recreation Board all said they have been paying for city electrical permits.