Fee increase to make new homes less affordable, builders say

June 22, 1992|By Lorraine Mirabella | Lorraine Mirabella,Staff Writer

A July 1 increase in county utility fees will make new homes more expensive and less accessible to potential homebuyers, say county builders and Realtors fighting for relief for their troubled industries.

Building industry representatives, arguing that county fees already add at least $13,000 to the price of a new home, want to pay water and sewer charges later in the development process, instead of up front. They also hope to convince the county to delay a $400 utility fee increase until next year.

"In Maryland, the settlement costs on new and existing homes are among the highest in the nation," said Tom Quattlebaum, executive director of the Anne Arundel County Association of Realtors.

"Anything that adds to the cost of the home makes it less affordable and puts it further and further out of reach for the average citizen. Our goal is that everyone who wants to own a home has an opportunity to buy a home."

Realtors, along with members of the county chapter of the Home Builders Association of Maryland, the Anne Arundel Trade Council and the Associated Builders and Contractors, met Tuesday with county officials, who said they plan to review the fee structure.

"The fees have been a very, very large part of what we pay in constructing a home," said Milt Horn, president of the homebuilders association. "In the economic state we're in, if we can pay at the settlement table and pass savings on to the consumer, every builder could sell a few more homes."

The county charges builders $4,600 per connection to finance major improvements to water and sewer systems. A developer must pay 25 percent up front and the remainder over five years, or when he starts building -- whichever comes first. The county also charges 40 percent of the estimated water and sewer bill up front.

As residential building has slowed along with the demand for homes, builders have found themselves paying out thousands of dollars before they've turned any dirt. And banks won't finance such fees.

"We haven't asked the county to reduce any charges, but to just move the collection period to later in the process when [fees] can be financed," said Gene Harvey, a senior vice president with engineering consultants Harms and Associates. "This helps the homebuyer because the fee is not financed over a four- or five-year-period, so the interest is not there."

The business groups' joint committee proposed charging builders 10 percent up front, then half of the remainder when the county issues a building permit and the other portion when it issues an occupancy permit.

The committee also asked the county to suspend a $400 per connection increase for another 12 months, Horn said.

"The economy is not moving along," he said. "We're trying to keep our costs down as much as possible and deliver a product to the consumer at the best possible price."

He said builders now pay county impact fees, water and sewer fees, building permit and other fees that add at least $13,000 to the price of a new home.

After meeting with Ardath M. Cade, county planning and zoning officer, the business groups agreed to wait about six weeks before proposing legislation to bring about the changes.

During that time, county officials will analyze the fee structure and come up with alternate ways of relieving the industry, Cade said.

"We understand their dilemma," she said. "We've assured them we will sit down and go through several scenarios of spreading the costs."

But she warned that spreading the costs more broadly could lead to rate increases for existing water and sewer customers.

"We'll take a few weeks to do an analysis before we make suggestions to the county executive and County Council of approaches," some of which might require legislative changes, she said.

"We agreed to that," Harvey said. "We don't think we have the only answer. If they have an answer that's just as good, we don't have a closed mind."

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