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New fee increases housing costs

Cost to build new home in Frederick may jump by $10,000

Thursday, Oct. 27, 2005

Building a new home in the City of Frederick costs nearly $10,000 more than it did in 2002, due to city and county fees.

If the city adopts a proposed transportation impact fee, the price would jump another $10,000, making some wonder if affordable housing in Frederick is just a pipe dream.

Conventional wisdom says the increase is passed on to the homebuyer.

‘‘We’re going to tax ourselves out of affordable housing,” said local real estate agent Billy Shreve. ‘‘What are we going to do? Just put up a gate and only let rich people in?”

But, city officials say they need roads and cannot allow development to continue without a fund to pay for those roads. Mayor Jennifer P. Dougherty (D) wants to see the fee adopted before a new slate of leaders takes the helm at City Hall in January.

‘‘This is the board that adopted the Comprehensive Plan,” the mayor said. ‘‘This is the board that should follow through with the impact fee.”

The impact fee is part of the 2004 comprehensive plan that outlines an aggressive growth scenario for the next 30 years – doubling the size of the city primarily through annexation of 6,300 acres.

Based on that scenario, city planners and consultants identified the roads that need to be built to support that growth. Using the plan data, consultants Tishler Bise produced a 30-page report that lays out the complex formulas to figure the cost of building roads.

‘‘This is a mechanism to support growth,” said city planner Tim Davis. ‘‘It is an impact fee so that the people who already live here do not have to pay for that growth.”

Since 2002, the city has raised building permit fees along with water and sewer impact fees so that developers and new residents shoulder their share of the cost of growth, according to Dougherty. Coupled with impact fees Frederick County charges, and a $720 excise tax to pay for roads, builders shell out $26,235.75 for each home, before they turn a shovel of dirt.

One area developer wonders if the road projects on the city’s wish list, and the costs associated with them, are realistic.

‘‘The list of roads the city wants to build is a very large list – it includes areas of the city that it hasn’t even annexed yet, like Biggs Ford Road,” said Mike Smariga of Harris, Smariga & Associates, a land development and engineering firm.

Smariga, also a member of the Frederick Area Commission on Transportation, said he and other developers will hear a presentation by planner Davis next week, so his thoughts on the matter are ‘‘just preliminary.”

If the need is compelling and the formula fair, though, Smariga said he does not see a problem with developers contributing their fair share. Passing the fee now, he said, would be rushing the process. County, state and local officials need to coordinate regional road priorities, and that will take time.

Former city engineer and candidate for mayor W. Jeff Holtzinger (R) agrees that a new board should take a look at the proposed fee, but that it could provide a funding source for an Adequate Public Facilities Ordinance. The APFO, which is designed to manage growth by requiring that infrastructure is in place before new development is approved, has been the mantra of nearly every candidate running for mayor or alderman this election season.

‘‘It’s a bigger decision and it should probably wait,” he said.

Davis admits there are lots of complex issues surrounding the impact fee, including credits for roads built, an appeals process and a grandfather clause. And, if passed, when would it go into effect?

‘‘Is it fair to make people who would have built before the water allocation process started now have to pay the fees?” he said.

Still, Davis believes the prudent course is to set up a steady stream of revenue so the city can be in a better position to build roads as they are needed.

A 400-home development on Hartgis Farm on the east side of the city would generate $4.1 million for the road fund – money that can be put to good use to ease congestion associated with that many new homes, Davis said.

Real estate agent Shreve, also the former president of Habitat for Humanity, is more concerned that another fee will make Frederick the home of the elite.

Instead, he would like to see fees added to homes that are larger and more expensive.

‘‘That much in fees for a $500,000 home is not a big deal. But it is a big deal for a $200,000 home,” he said.

And while he said the building community understands that fees go up every year, if the city truly wants affordable housing, it cannot do it and keep increasing fees.

And what about the new fee’s effect on business? Smariga said that the added cost to industrial and commercial buildings, as much as $20 per square foot, could deter new business from the city.

‘‘An added transportation fee makes it harder to justify developing a business in the city,” he said.