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Gov't Mandated Site Development fees and the cost approach

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Jason Cowan

Sophomore Member
Joined
Dec 12, 2002
Professional Status
Licensed Appraiser
State
Virginia
how do government mandated site development fees fit into the cost approach, if they do at all? In my state, (Virginia), these "voluntary" fees are called building proffers, and are used to offset the costs of additional services (schools, fire and rescue squads, etc.) In some cases, these fees can be substantial, as much as $6,000 per lot. Should these be added into the cost of the site along with other site improvements such as well, and septic? Please bear with me, as I am new to this profession.
 

Will Trueheart

Sophomore Member
Joined
Feb 18, 2003
Jason,

That is a good question. These type of "proffers" are typically a cost of development and are passed on in setting the price of the lots the developer will sell.
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
called impact fees here. I've only seen one area where impact fees are sometimes passed along and added to sales. Usually it's the developer that pays it and passes it along in the individual site prices.
 
W

walt kirk

Guest
My county charges a fee of $2,500 to connect to the sewer system (manditory). I now add this fee to the cost approach under site improvements.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Jason:

I don't think there is any specific standard as to WHERE you put the fee in the cost box: but on exisiting construction it should definitely fall either in the site slot or the site improvements line, so as to avoid any automatically calculated depreciation. New construction where there is no physical depreciation it matters not if you call it part of hte cost to construct and roll it into the other figures however you want...

It does call for a oneliner explaining inclusion and where.

Think on this: the lower line indicates '"as-is" value of site improvements... to me this would involve more explaination and I would want to be darn sure that a lot on which the 'cost' had been PAID had "as-is" 'worth' of the full cost of the improvement (paid fee).

I tend therefore to place it in the site value above...

just my answer to the problem.

(I am now prepared to have some of the other brain surgeons on this site tell you and me both that I am way wrong and why :wink: It's a stupid form.)
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Site impact fees are essentially taxes on the property. As such, they come under such things as business risk, interest on construction, survey costs, etc if you are doing a segregated cost analysis. Conversely, it can be argued that it is part of the site value because it is required in order to build on the site. So.... if you have good site values for a subdivision, you probably have the impact fees built in as they are normally charged to the developer. Otherwise, if you are estimating the site value and extracting construction costs from new construction in the subdivision, the effect will most probably be that the fees will get built into the $/SF portion.

Should they be itemized separately? No. No more than taxes during holding, builders risk, or other items.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Lee Ann
I tend therefore to place it in the site value

Me, too. That is where it belongs after construction...but... Rog is right, too.

they come under such things as business risk, interest on construction, survey costs, etc if you are doing a segregated cost analysis.

Where lots are not being sold individually, the cost pops up as the builder develops in our area, and are paid when the building permit is let (and we call them Impact Fees)
 
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