From a permitting cost perspective, the City of San Jose is an expensive city to build in. The combination of plan review fees, inspection fees and high development tax rates make building permit fees some of the highest in the US, let alone California.
The City of San Jose outlines its fees in its Building and Structure Permit Fee Schedule document. As you’ll see, there’s a lot to consider and it can be confusing to come up with an accurate estimate.
The three most significant factors that affect this project expense are the type of construction, square footage and construction valuation (this is the big one).
1. Type of Construction
The type of construction matters. For example, tenant improvement projects involving some light-interior updates will cost much less than constructing a new building. This is because there is a lot more to review and consider with new construction.
The City of San Jose charges $198/hour for their processing and coordination time, $288/hour for plan review fees, and $295/hour for inspections. It’s important to note there are circumstances where these per-hour rates change.
2. Square Footage
The size of the space also has a direct impact on the cost of plan review and permit approvals. The City of San Jose document above includes tables that break down fee structures for some construction types and a range of square footages.
For example, the review and approval of a 1,000 sq. ft. tenant improvement project cost thousands less than a 20,000 sq. ft. new construction project.
Permit issuance, plan check and inspection costs are all directly influenced by the type of project and project square footage.
3. Construction Valuation
The most considerable expense is the city tax. The City Development Tax is calculated as a percentage of the total construction valuation.
For buildings designated as commercial use a 1.5% tax on the building valuation is applied. So, a project valued at $100,000 will pay $1,500 in taxes, which are due with the permit fees. This tax is in addition to state fees.
There is no getting around these fees. It’s just the cost of doing business in San Jose. That said, there are a couple of tips we can offer to help streamline the review process and potentially save you some money.
1. Be Accurate
When calculating your project’s construction valuation, be as accurate as possible. Not only will this streamline your work with the city, but it will also help you get a realistic estimate of what your fees and taxes will be for budgeting purposes.
2. Standard Material Averages
Some projects use high-end materials and finishes to create a certain atmosphere and ambiance. The challenge with this is that your construction valuation is far higher than a similar-sized project using standard materials, and thus your tax burden is significantly higher than it needs to be.
When evaluating a construction valuation, the City of San Jose bases its expectations on the cost of standard building materials. So, if you’re investing in top-of-the-line materials, consider calculating your construction valuation based on standard material costs instead. This may help you save thousands in taxes.
If you need commercial permitting help in the City of San Jose, Permit Place has helped get hundreds of projects get their permits reviewed and approved quickly. We can also help you come up with permit fee estimates.