Builders gauge impact of regulations on prices

March 13, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

New-home builders in metropolitan Baltimore have long argued that increasingly stringent regulations force them to pour thousands of dollars into improvements buyers wouldn't choose, don't need or don't even know about -- ultimately driving up the cost of new homes.

Now builders are after some hard statistics to prove their point.

The Home Builders Association of Maryland has embarked on a year-long mission to determine the building industry's impact on the state's economy and to identify the costs state and local regulations add to a typical house.

Until now, such studies have mainly looked at limited regions or specific regulations.

For instance, Prince George's County builders estimated in 1991 that they were paying $47,000 per lot to install sprinklers in town houses, protect wetlands and pay for storm water management reviews, fees and closing costs, said Craig Bangert, director of government relations for the Maryland Builders Association.

Builders in most suburban counties near Baltimore and Washington are subject to similar costs, Mr. Bangert said.

"Homebuyers don't necessarily know what's going into the cost of their home," Mr. Bangert said. "The building industry is the most regulated industry in the state. Some of the regulations are things the industry can live with. Other things like impact fees, we understand why it's done, but we're not sure new home buyers should suffer."

Last July, he said, builders in Frederick County determined they pay about $25,000 per home to comply with building regulations. That includes charges for impact fees, at $2,000, sprinklers, at $2,800 to $3,500, storm water management review and permits, at $1,800, as well as to meet other requirements for forest conservation, reviews, permits, water hookup fees, homeowner warranties and bonds.

In the Baltimore region, builders complain that their industry, and new homebuyers, are asked to take on more than their share of costs to save trees, protect wetlands and offer fire safety.

"We're pushing for balance in the regulations," said Clark Turner, president of the homebuilders association. "We all need to be environmentally conscious but you have to take the human factor into account as well in making these decisions. The population is growing and people want a place to live. We could force the young people today out of the market, of being able to afford a house."

In 1989, the state began requiring sprinklers in townhouses, with standards for water flow set by the National Fire Prevention Association. The law already has helped save dozens of lives and millions of dollars in property, fire safety officials say.

But builders were expected to hook sprinklers through domestic water systems, said John Clark, president of Winsome Homes, a builder and developer of single-family homes in Perry Hall and White Marsh. And because sprinkler flow exceeds the capacity of most water lines, builders have had to pay an additional $1,800 per unit in installation costs, besides the $2,000 cost of the systems themselves, Mr. Clark said.

"What's it worth, you have to ask yourself?" he said. "Any additional cost the government puts on takes money out of the consumer's pocket. For $1,800, I'd just as soon give people a microwave and refrigerator and color TV."

Another costly regulation, builders say, has been the state's Forest Conservation Act, which applies to most public and private development projects.

The 1991 law -- which took effect in January 1993 -- grew out of concern about the loss to development of some 10,000 acres of forest per year during the past two decades, said Eric Schwaab, director of forest service for the state Department of Natural Resources.

It requires developers to retain from 15 percent to half the trees on a site or pay around $4,000 per acre into a reforestation fund. That costs builders an average $3,100 per house, the Maryland Builders group estimates.

"If you buy a farm, you have to replace trees the farmer took down 50 years ago," complains Jay Weiss, president of Ashley Homes.

But Mr. Schwaab says such cost estimates usually include a projection of loss of density, which he said a builder can offset by agreeing to plant trees off the site or paying a fee. He estimated costs at closer to several hundred dollars per lot up to about $1,000 per lot. The law requires builders to plant up to 20 percent of an unforested site to avoid channeling all development into agricultural areas, he said.

"What we're really after is good site design," he said. "We didn't want a law that pushes sprawl development into agricultural area. The law assumes some forestland is lost and that afforestation will make up for some of the forestland lost."

The increased number of regulations also leaves little room for creativity in design of new communities, builders complained.

"You can't put your signature on it, and we end up with cookie-cutter communities designed to bureaucratic requirements," said Donald Billing, president of Headwater Homes.

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