Here's why builders expect regulatory burden to get worse, not better, in the months and years ahead

Fort Mill, a township of about 40,000 residents in South Carolina's York County, is considered one of Charlotte, N.C.'s "sleepy suburbs." It boasts a school district with a reputation right up there among South Carolina's very best.

 

Fort Mill is now on the maps of many national, regional, and local builders in the area, pinned with a big red flag and a note-to-self: closed for business.

 

Here's how BUILDER sibling Metrostudy's Charlotte regional director Jennifer Gooch describes the outcome of a York County council meeting on Monday night.

 

 

Just like that, with one swift vote (albeit drawn out into three stages), Fort Mill closed its doors for the homebuilder business. On the evening of July 16th, town council reaffirmed their previous vote to increase impact fees on new residential construction by 726% from $2,500 per single family dwelling to $18,158.

 

And with one swift rap of York County Council chairman J. Britt Blackwell's gavel, it is done. Every newly permitted single-family home will carry an additional $15,000-plus in its price tag, or the builder/ developer will get to eat the added cost. And on and on, in town and city and county and metro area, in an increasing number of jurisdictions around the country, the rap of the chairperson's gavel signals the same conclusion: new homes and new people bear the burden of upgrading and improving a town's infrastructure and services.

 

For Fort Mill, the consequence is material. Metrostudy's Jen Gooch says this about the virtual panic that immediately preceded the town council's momentous decision this week.

 

"A mad rush has been taking place in the Fort Mill Planning Department as builders have pulled as many permits as possible over the past few months. Any vacant developed lot with its sewer and water tap fees paid will no doubt have a building permit linked to it, even if there is not a buyer as of yet. We can expect to see a surge in spec inventory over the next six months, which is the length of time until the permits expire. Some powerhouse communities with substantial future phases are affected by the closing of this door, to name a few; Mason’s Bend – our HBAGC Community of the Year (with 384 SFR and 150 TH futures), Carolina Orchards (365 futures), Massey (365 futures), Waterside at the Catawba (185 futures), and McCullough (138 futures). In fact, at Metrostudy’s last count there were 1,154 vacant developed lots and 5,064 future lots in the Fort Mill school district’s boundaries. Starts in the second quarter are up 37.7% and now we know why."

 

Now, builders who have dealt with impact and entitlement fee shock for years in such places as California, Colorado, and, more recently, Florida have grown to be almost philosophically resigned about such dislocations in costs.

 

"There's nothing we're going to be able to do about this issue," many of them conclude. In fact, town officials, council men and women, and other local decision makers can get elected based on "no growth" or "slow growth" positions on planning for the future.

 

It's interesting, though, to think of how it is that Fort Mill got to where it is in the first place. How is it that you have a first-rate local school system were it not for the fact that good school teachers could afford to live near where they work? In York County, S.C., where the median household income, per the Census, is $56,482, how many people in that median household income bracket--including, perhaps, some of those very good school teachers and district officials--will be able to shoulder an extra $15,000 on the price tag of an entry-level home?

 

Too, what will happen to the affordability levels of existing home stock and of rental apartments and single-family homes in the market as municipalities like Fort Mill slam the breaks on new growth? Gooch concludes:

 

"Other towns in York County have exhibited the same slow growth mentality. Even the County itself has moved towards changes in its zoning ordinance, specifically the Urban Development designation, to curb residential growth. And, indeed, after the initial rush to permit, slow growth will take over in one of Charlotte’s most popular suburban cities."

 

Now, if men and women get votes and win elections based on their activist advocacy of slow-growth or no-growth local policies, do you think anybody would win an election based on solid planning that would result in a really good teacher's ability to afford to buy a home in the district?

 

In communities all over the United States, local policy--the single biggest influence on residential development and home building's enormous regulatory burden--homeowners mostly win, while renters mostly lose.

 

And would-be new homeowners always pay more.

 

Is there a teachable moment here? Or is the massacre at Fort Mill going to continue to play out in county after county after county until they're all too expensive for a young buyer to even think about the American Dream? Then, why bother with the great schools?

 

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