It's not even always so blatant. I currently live in a rural county in Maryland. A buddy of mine built a detached garage last year. Parts of it he contracted out, and the contractors handled the permits. Other parts he did himself, and so had to file for his permits in person. It went something like this:

Homeowner: "I'd like a permit to build a garage."

County Clerk: "Your contractor will handle the permits for you."

Homeowner: "I'm going to build it myself."

County Clerk: "Why would you do something so selfish? Don't you want to create jobs for hard-working locals by hiring a contractor?"

"Hard-working locals" being a euphemism for "My friends and relatives." The parts that were handled by contractors sailed through inspections. The parts he did himself, he had to wait months for a county inspector to come out and in some cases was repeatedly failed for bogus reasons. Nobody ever wanted a direct bribe, they just wanted him to pay their friends/family for services he didn't need.

"Why would you do something so selfish..." Just got an "Atlas Shrugged" flashback ;).

Would you mind naming the county?

I think that the permit fees are supposed to go toward the expenditures that the city has in paying for someone to look over your application and do the appropriate research for zoning, local impact, etc. With the salaries and benefits given to a lot of public sector employees it wouldn't surprise me if a big portion of that $500 pays for the salaries of all the rubber stampers that oversee the paperwork.

There was a whistle-blowing insider article in the Daily Mail (note: proceed with caution) a few months ago. A graduate who had been working for a council planning department in London for a year decided to spill the beans. Basically they only worked a few hours per day (some actually took their phones off the hook and took naps), it was impossible to fire anyone, they went to lots of nice catered 'workshops' for traning, and despite the terrible inefficiency they had absolutely no budget problems: whenever someone wanted to build sonething in the borough, they had to pay £2000 for a simple 'consultation' (basically just a meeting, no research beforehand) and then wait months and incur more fees for their application to be processed.

Apparently architects new their game though so they would respond more promptly to them.

Sometimes yes, sometimes no. It depends on the structural corruption of the regulatory system – i.e., whether permits and such are fairly priced.

For example, we could make a kind of slippery slope argument going the other way as well:

“Can I use this service you offer at $500?”

“No.”

“How about if I pay you $500?”

“Okay then!”