My topic of the day is the increasing fees proposed by the city for the construction of any new house. I apologize in advance for the length of this post. But, at the same time, I apologize for not having enough time to get into more additional detail that is warranted. This fee restructure comes at a time we all acknowledge that housing costs are far out distancing "work force" family's incomes and the their ability to pay for the new home. These are not low income families. These might be families with $60-$90K per year in income, but they can not qualify for a loan to purchase a medium Rowlett home. I would estimate average price of homes in Rowlett to be creeping over $300K. You can not use tax appraisals as a guide!! Go talk to a realtor. My target would be to produce a very nice 1300 sq.ft. home with three bedrooms, two baths, with a "great room" concept for lounging, dining, and entertainment. Then, on the outside have a covered patio, and a one and one-half car garage. The target price would be $190K, or less.
I have been active with the Rowlett Housing Finance Corporation. In fact, I was one of the originating incorporators. That was two and a half years ago. I have recently been working to try to get affordable new and comfortable homes into Rowlett. This is not only good for the potential buyers, but also for the City of Rowlett. We need to accommodate all our citizens. Pricing and costs are a never ending problem. One of the things we rely on is some cooperation of the city to help control costs. That wishful thinking seems to be heading straight to the proverbial toilet.
Now, before you think I'm taking a shot at City Council.......I'm not. There may be some empire building within staff, but that's their problem......not mine. I also ran into what I think might be conflicting information on the charts. However, I may not be fully understanding the data. Have you ever asked someone the time of day and they told you how to build a watch? That's kinda what the City Council Brief does. The reader is just overwhelmed by "stuff." When I was in college, I took a 200 course called "Communicative Writing." I think the one who wrote the brief was ill that day of class.
Coming before the City Council soon is the consideration of a proposed new fee structure for new construction, among many other new fee structures. You have to see the list. I, of course, encourage you to go to the city website and read the proposals for yourself. However, I must warn you, the "brief" submitted to Council is pretty close to jibberish if you're not inclined toward bureaucratic data mumbo jumbo. It is probably technically correct, but if meant to communicate with we regular common folk, it misses the mark spectacularly. It reads like someone was showing off a uniquely invented vocabulary given birth by some sour kraut inspired nightmarish dream. That's the nice comment. It could be an intent to become relevant and to show us all how dumb we are. I reluctantly recommend you skip over that brief and go straight to the data exhibits. It saves your eyes from glazing over. The data is mathematical and seems to be intended to be communicative and self explanatory....at least much does.
Below is my analysis of the data and following that is a conclusion, using a 1300 sq. ft. house as an example, which is what this is all about.
New Construction Existing Proposed
Plan Review Fee No Fee $200.00
Permit and Inspection Fee 50 cents per square foot $300.00 + 50 cents per sq. ft.
Therefore, the initial city fees of a 1300 sq. ft, house would move from $650.00 to $1,150.00 per house. The city supplied data contains a chart comparing Rowlett's fees within a 13 city comparison regarding residential building permit fees. Of the 13 cities, Rowlett is exceeded in fees by Sachse, McKinney, Fate, Farmer's Branch, and Coppell. Rowlett's proposed building permit fees of a 1500 sq. ft. house total $1,250.00. That places Rowlett as 6th highest of the 13 towns. Not too bad. However, we ain't done yet.
A house has to be built on a lot. If a developer approached the city requesting Planning Fees for a Preliminary Plat, the cost is $1,700.00, exceeded only by Garland's $6,000.00 fee of the 13 cities. The average cost of each of the 13 towns is $835.00. That places Rowlett second highest in cost for this function. However, when requesting the fee for the Final Plat, the fee is $2,300.00, again behind only Garland's $6,000.00. The 13 cities average cost for Final Plat is $831.00. Of course, the developer passes these costs on to ultimately the home buyer.
Now, if the developer disagrees with the actions of the Planning and Zoning and the City Council, appeal can be made to the Board of Adjustment for a Variance. That fee is a whopping $1,900.00, far and away more expensive than any of the other 12 cities. Forney is the closest with a fee of $500.00. Of course, if successful, this fee is also passed on to the consumer. Furthermore, if a zoning change is needed, that will cost the developer $3,000, up from $650.
I could go over the data and produce a mathematical ranking of Rowlett's position with the other 12 towns, but that's too time consuming here. However, I think it's safe to say Rowlett places in the upper third, or quarter, of the 13 towns. In a couple of cases, the fees are outrageously more expensive than other cities. In fairness, some minor fees didn't change.
Now, a little bit about developers and builders. Most people think they're greedy, because they're constantly trying to "get a better deal." Certainly there are some greedy builders and developers, but not that many and they usually don't last long because competition is too tough. Most builders and developers negotiate hard because they have to. They are just trying to run a business, just like any business. Their housing competition is doing the same thing. If one builder produces a comparable house as another builder down the street, but is priced $10,000 less, he will get the sale. David Weekley is a good example of a builder that has a different marketing strategy. He builds slightly smaller, but with upgrades everywhere. Its a good strategy. The point of the story is that $10,000 makes a difference, both in consumer selection and in financing criteria.
I have scraped, begged, traded and bought lunches over hundreds of negotiations just trying to save a couple of thousand dollars per house. It's that important.
Now, let's take my 1300 sq. ft. house that I would like to produce for a $190K price tag.
Depending on several things, including desired lot density, one can pay $1.00 to $1.50 per foot for suitable raw land. It costs about $125K per acre to develop, providing there are no large offsite costs. If one wants about 4 lots per acre, and adding all the developers profit, interest cost, surprises, etc., one could expect to produce about a $50,000 lot. Now, the 1300 square foot house is going to cost about $100 per sq ft. to build, thus costing $130K. Add some fees and the total has reached the $190K price. I have talked to mortgage companies that state that the maximum price that the HFC financing package can accommodate is about $190K. We would be at the limit.
Now, what does Rowlett's new fee structure do?
1. Increased fees and inspections for the house..$500.
2. If I understand the data correctly, a Preliminary Plat Fee is $1,700 and a Final Plat Fee is $2,300 for a total of $4,000 for say, a 50 lot subdivision......or $80 a lot.
3. If, say, the developer feels he needs to appear before the BOA for a waiver, add another $1,900.
4. There are other fees for tree studies, flood plain studies, pools, if any, and on and on....hot water heaters, furnaces, etc. See the exhibits for a list (long).
5. A $200 fee is added for each resident plan review. Folks, in a 50 lot subdivision, there is only about 5 or 6 different plans. All else are changes in elevations, brick colors, porch design, change the hands, etc. However, the 5 or 6 plans basically don't change. Once you get an understanding of the 5 or 6 plans, you can put them on the shelf and use them as you need them. That's not hardly worth $200 a pop times 44 or 45 "pops."
If you consider all the above, it's easy to see that perhaps $2,500 to $3,500 could be added to the price of the house. That knocks the HFC out of the price range. Something will have to give. Smaller lot, or smaller house......all of course, hurting desirability.
Now, if the homes are built on, say a 12-15 acre site producing 50 lots and including homes built on them for a total price of $190K, the ad valorem taxes would be around $1,500 per year. Say total fee increases during development and construction total $1,500 per house, then $75,000 in fees was generated from development and construction. In addition, $75,000 per year will be generated from ad valorem taxes. I doubt that it would cost $75,000 per year for the city to "preside over" the subdivision during future years.
Apparently, the fee re-consideration is in response to a new House Bill limiting fee increases to 3.5% per year. What's wrong with that? With Rowlett's rapidly increasing tax base values, and miserly tax rate reductions, what's to worry? Do you all get a $3.5% raise in salaries every year? Talk to someone on Social Security. Well, maybe we need some Assistant Assistant Managers for more of our departments.
I think this fee structure thing needs some more thought. A city doesn't gain anything by making sorely needed attributes more difficult to get.