Impact Fees Could Be Suspended

Commissioners Hoping To Boost Home Market

September 25, 1991|By Adam Sachs | Adam Sachs,Staff writer

The commissioners are considering deferring, or even rescinding, development impact fees on new residential construction to stimulate Carroll's sluggish home building and realty industries.

Commissioner Julia W. Gouge recommended Monday that the county investigate the fiscal and legal implications of suspending the controversial fees, enacted in March 1989 to help finance costs of new schools, parks and water supplies to accommodate growth.

"I'd like to see what we can do for our own economy," Gouge said.

The previous board voted, 2-1, last year against raising the feesto help finance a wider array of projects.

Gouge said eliminating the fees from the cost of building homes could have a ripple effect -- increasing building permit requests, raising employment in the construction industry and enlarging the pool of prospective homebuyers.

"I think it would have a very large impact at this stage," said Gouge, noting that residential building is Carroll's most prolific industry.

Gouge also suggested basing the fee on the square footage ofthe unit, saying that would help reduce prices for first-time homebuyers. The benefits of collecting the fees are outweighed by the potential positive effects on Carroll's economy if they are dropped, at least during the recession, she said.

Commissioners Donald I. Dell and Elmer C. Lippy supported seeking legal advice and a cost-benefit analysis.

Opponents could argue that it would be unfair to those who already have paid impact fees, as well as those who might pay in the future if a deferral is lifted.

"There are pros and cons to everything," Gouge said. "You can't always be constant if you want efficiency."

Developers are charged $2,700 for every new single-family home and town house and $2,150 for each apartment unit, except in South Carroll, where the fee is $800 higher to pay for reservoir development.

Building permits and impact fee revenue have declined steadily over the last two years.

The county collected $2.64 million on 1,058 building permits in fiscal 1990, the first full year of the impact fee. Collections dropped to $1.96 million on 664 permits in fiscal1991. As of Monday, one week shy of three months into fiscal 1992, $465,000 had been collected. Almost $600,000 was collected in the first quarter in each of the previous two fiscal years.

Building permits issued for new residences dropped from 779 in the first eight months of 1990 to 476 during the same period this year. From 1987 to 1989, building permits issued averaged 923 for the first eight months of each year.

Several developers and Realtors said suspending the fees could help improve business, but probably wouldn't spark a turnaround in the industry. The effects of dropping the fees are hard to predict because many other factors influence the market, they said.

"Ihonestly don't think it would bring more buyers," said Lou Scharon of Long & Foster in Westminster. "I don't think it will effect a positive increase in new homes. It's not that big a figure in the total pie."

The average price of the 111 Carroll homes sold in August was

$143,856, reports the Central Maryland Multiple Listing Service. In the first eight months of 1990, 1,060 units were sold, compared to 854 the same period this year.

More than 1,100 homes, many of themnew, are on the market in Carroll, which is "very out of line for this county," Scharon said. High home prices are keeping buyers away, he said, and dropping impact fees would help reduce prices. However, he said he agrees with the rationale behind impact fees -- that those building new homes should help pay for the services they require.

Manchester developer Martin K. P. Hill said dropping the fees, combined with current low interest rates, would mean more people could afford mortgages.

"More and more people can qualify every time you reduce the price of a house," said Hill, president of Masonry Contractors Inc.

The $2,700 fee translates to about $4,500 on the final price of a home once a developer figures in increased costs for interest,real estate commission and settlement with the mortgage holder, saidHill, a board member with the Home Builders Association of Maryland.Carried over a 30-year mortgage, a homeowner would pay about $12,000to $15,000 because of the fee, he estimated.

"It's one step toward the direction we need to go to get the building industry back to where it was

before," said Sylvia Gorman, president of the Carroll County Association of Realtors. "I can't think of any one thing that has made such a difference other than builders not being able to get money for construction."

Hill described the housing market in Carroll now as "very soft."

"We'll take anything we can get," he said. "I don't believe it would put everybody back to work in the industry,but it's certainly a step in the right direction."

Budget Director Steven D. Powell is analyzing what impact the revenue loss would have on county construction projects.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.