Builder says impact fee boost would raise prices for new homes

July 05, 1992|By Adam Sachs | Adam Sachs,Staff Writer

County residents who want to build a new house in Carroll and people migrating to new developments here probably would pay higher prices for homes if a consultant's recommendation to increase impact fees is approved.

Initially, homebuyers might not be affected by a fee increase for single-family homes because builders might absorb the additional costs to remain competitive, said Jeffrey Powers, president of the Home Builders Association of Maryland's Carroll chapter.

"We need to be very price-sensitive to surrounding areas," said Mr. Powers, vice president of Powers Construction Co. in Westminster.

But ultimately, when market conditions improve, an increase in impact fees will translate to higher home costs, he said.

County Commissioners Donald I. Dell and Elmer C. Lippy said the board will consider increasing the controversial fees. But the issue requires further study and probably won't be decided for several months, they said.

Impact fees, adopted in May 1989, are levied on residential de

velopment and are paid by builders, who generally pass on the costs to homebuyers. The fees are calculated so each new housing unit pays a proportionate share of the costs for expanding public facilities to accommodate growth.

Tischler & Associates Inc., a Montgomery County consultant, recommends increasing the fee for single-family homes countywide to $4,166. The fee now is $2,700 -- $2,500 for new schools and $200 for new parks. An additional $800 has been charged in South Carroll for Gillis Falls Reservoir, a project that has been set back because of environmental regulations.

The report recommends a $3,283 fee for town houses; that's a $583 increase, except in South Carroll, where it would be a $217 decrease.

The consultant also recommends dividing the county into school zones to assure that fees collected for development in one region are spent to expand school capacity in the same region.

Since all county residents can benefit from parks and water resource areas, regardless of location, the consultant doesn't recommend creating districts for collecting and spending the fee for those facilities.

Zones for elementary, middle and high schools should be created, based on attendance areas, says the consultant. Impact fees collected within a particular zone would be spent on school projects within that zone or an adjacent one, under the recommendation.

"It seems to be a reasonably rational approach," said Vernon F. Smith, director of school support services.

To withstand legal challenges, government must demonstrate that an impact fee charged for a housing unit is spent on projects that benefit that unit. Creating zones for schools strengthens the basis for assessing the fees.

Now, the county can spend impact fee money on any school expansion project, regardless of where the fee was collected. Mr. Smith said school districts with the most growth "obviously receive the greatest consideration for use of the impact fee."

Mr. Dell said he doesn't favor the zoning concept because it could be more difficult to administer, but added that he could be persuaded.

Charles County has had districts for school impact fees since enacting its ordinance in 1989. The system has worked well, said Richard Winkler, a fiscal services administrator.

Under the recommendation, impact fees would not be imposed for middle and high schools in northwest Carroll, because Northwest Middle School and Francis Scott Key High School have sufficient capacity for at least six years.

The impact fee for that area could be reduced and incorporated into a revised ordinance.

Rather than charging the $800 water supply fee in South Carroll for the stalled Gillis Falls project, the consultant recommends levying a new "water resources" fee countywide -- $545 for single-family homes and $512 for town houses.

The countywide fee is justifiable because the county has plans for a Union Mills Reservoir in northern Carroll, and all residents could benefit from recreational and open space amenities at reservoir sites, says the consultant.

"I have to think more about the water resource fee. I'm not sure it's equitable," said Mr. Dell.

The commissioners and developers clashed when the impact fees were enacted, and again in 1990 when the commissioners considered, but voted against, raising the fees to help pay for roads, senior citizen centers and government buildings.

"We've always espoused that the impact fee is unpredictable, and a lot of times it's an unfair way of raising revenue," said Tom Ballentine, HBAM assistant director of government affairs. He added that the organization can accept the fees if the calculation is sound.

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