By. Neil Williamson
It’s not the best of times, it’s not the worst of times, but as one local businessman put it, “This is the worst I’ve seen in my thirty years here.” With this backdrop, two neighboring localities were considering their building permit fees. Charlottesville, without significant outside influences, chose to temporarily cut their building fees by 50%. Albemarle is in the process of increasing their building permit fees. Which locality is on the right track?
The cost to build the home has a direct impact on the price that the builder can offer to the customer,” he said, adding, “Every reduction in cost can be translated to a reduction in price for most builders.” . . . . .Jim Tolbert, Charlottesville’s director of Neighborhood Development Services, said the fee reductions are not only meant to help homebuilders, but also property owners who may be considering additions.
“It’s not just builders,” he said. “There’s a lot of our small business people who are really suffering right now. This is just one way to help them get through this time.”
Beyond the fees structure the other hurdle facing commercial and residential builders is the ability to line up financing for their projects. I spoke with one local developer who told me money was just drying up for projects that really have sound financials. This is a very different environment than 36 months ago, when investors were competing to line up such financing.
How is Albemarle County responded to this new market reality? After the Albemarle County Planning Commission endorsed a 75% cost recovery system that would result in a huge increase in building fees, Albemarle County’s Board of Supervisors decided to advertise a cost recovery of 50%, which is still a dramatic increase but is less than what passed the Planning Commission.
Some in Albemarle believe the fee increase is overdue and because of the slowdown in building it really won’t impact that many people right away because they can’t get financing for their projects anyway.
Chalottesville chose to temporarily drop building fees by 50%, Albemarle is leaning toward increasing building fees by more than 50%; which approach will stimulate economic growth? How do these positions square up with each locality’s desire to promote affordable housing?
Only time will tell. I know which way I am betting.