Should I be concerned? - Posted by IB (NJ)

import · July 9, 2003, 7:51pm

Posted by Eric C on July 10, 2003 at 08:17:12:

Hi -

You’re right about the fact that those fees can sometimes exceed 10K – and sometimes that ability to “tap” into the municipal system just isn’t available at all.

In Austin during the late eighties and very early nineties, tap fees increased dramatically and the right to “tap” was severely restricted. However, “taps” were portable within the locale served by the municipality – in other words, if you had already paid for and received your “right to tap” for a specific lot, that right could be transfered to another lot without too much hassle. This led to a sort of “underground” market in tap fees (no pun intended). Often the the value of the “tap” far exceeded the value of the lot.

Since none of the institutions (FDIC, RTC, etc)holding the mass sales seemed to grasp (nor were they interested in)the true nature of the properties they sold, this was a very profitable time for some.

Take care,

Eric C

PS - I would also say that fees, restrictions, permit processes, etc. can add much more to some lots than most amateur (and some professionals) realize. It also leads to some very strange responses while other ones are more understandable.

In high dollar areas, one result is that the lots are often smaller than one would normally plan (beachfront,anyone?) and that the entire development has to move upscale – just to cover the additional costs.

Time can also be a major cost factor. Think about a regulatory environment where the time from initial plan to actual ground-breaking is measured in years. What happens in these cases, is simply that the “big guys” win. After all, who else can afford to have someone at every public hearing, every meeting, and every long range planning session. This is real power – staying power is the name of the game here.

import · July 9, 2003, 7:51pm

Should I be concerned? - Posted by IB (NJ)

Posted by IB (NJ) on July 09, 2003 at 19:51:43:

I’m in the process of purchasing a vacant lot located in the inner city. Uusally the vacant lots I deal with once had homes on them but usually as the result of a fire, the house has been torn down. However, the seller in this case purchased this property from a bank as an REO 14 years ago, as there was no dwelling on it back then.

My concern is whether or not it has access to city water and sewer. I would think that a vacant lot in an inner city and surrounded by other homes on the same street (where there’s also new construction going on) would have the same access to sewer and water as the other homes. Am I wrong? I stopped down at the city Engineering dept. and they couldn’t tell me. I also plan on calling the water dept. in the morning to see if they ever had water going out to the house. Maybe years ago.

Is this something I should be concerned about? Obviously the other homes right next to and across from the lot are connected to city water. Shouldn’t the same aplly to a newly constructed dwelling that will be built on this lot? It’s not like this is a plot of land in the middle of nowhere. I just want to make sure that when I resell the lot, the fact that it’s not connected to water and sewer doesn’t decrease it’s value. Your thoughts?

import · July 10, 2003, 5:25pm

Re: Should I be concerned? - Posted by Tom-FL

Posted by Tom-FL on July 10, 2003 at 17:25:26:

Ummmm, is there a curb trap or a meter box that you can see? If so, the stuff is likely there, but abandoned when the house was razed.

import · July 10, 2003, 10:33am

You’re not asking the Right Guys - Posted by Frank Chin

Posted by Frank Chin on July 10, 2003 at 10:33:18:

Hi IB:

I don’t think the guys in the Water Department or Engineering dept would know the answer. You might try:

1- Either the town “Planning Department”, or the “Building’s Department” (in cities), places where they issue building permits.

2- Ask architects who would normlly handle these issues. Call a few to say you’re thinking about building something, and say “by the way, how is water and sewer handled, and how much”. You may want to find out other issues, such as zoning, land/building ratio, and what’s buildable there.

3- Or call a plumbing contractor who has time to chitcat with you.

BTW, I had to connect to a town sewer system some time back, as the house had a septic tank, and it was under $1,000. But it did not include water hookup.

As to impact fees, I hear more about it in suburban towns as compared to inner cities. Inner cities depopulated in recent years, and usually has an infrastructure that handled a larger population in the past.

Suburban towns on the other hand, had to build more schools, roads, water, sewer as more house are built and must assess impact fees to prevent real estate taxes from going through the roof.

Frank Chin

import · July 10, 2003, 6:28am

Re: Should I be concerned? - Posted by RichV(FL)

Posted by RichV(FL) on July 10, 2003 at 06:28:10:

IB,

We have had some people in my part of FL hooking up to county water and sewer. They are comming off the old septic/well systems. Its about 3k for sewer and 3k for city water hookup.

Regards,

RichV(FL)

import · July 10, 2003, 2:21am

Re: Should I be concerned? - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 10, 2003 at 02:21:28:

IB–(NJ)---------------

I think you are right to be concerned. I remember a situation in Portland, OR, whereby an older section of the city had no sewers. The houses were on septic systems. The city put in sewers but did not require immediate connection to them. So there were houses be sold with septic systems only. Then the houses were required to connect, at a cost which I vaguely recall as $6K or so. Anybody buying a lot without a hookup to the sewer line would be liable for putting in a connection–big bucks.

Good Investing******Ron Starr

import · July 10, 2003, 2:30am

Hmmm … - Posted by Redline

Posted by Redline on July 10, 2003 at 02:30:23:

I see contractors with new lots building all the time, making connections to the sewer line at the road. How much can this possibly cost? Around here there is no septic, only sewer so this happens EVERYWHERE.

RL

import · July 10, 2003, 6:14am

Re: Hmmm … - Posted by Tim

Posted by Tim on July 10, 2003 at 06:14:55:

The actual running of the line is not the only expense. A lot of places have an impact fee for anyone connecting to city sewer, this fee is supposedly for the lines OFF the property. In my area the fee is $1000, & I seem to remember the fee being $5000 in some parts of Florida.

import · July 10, 2003, 7:43am

Sanitary Sewer Impact Fees - Posted by JT-IN

Posted by JT-IN on July 10, 2003 at 07:43:20:

Tim:

I have seen impact fees greater than 10K… and these vary depending upon the severity of the strain on the local sewer system. Many folks have a hard time understanding these impact fees, but as a former Mayor and one saddled with the fiscal responsibility of running a water and sewere system, I came to understand the rationale of these fees.

If you look at a number of users on a sewer system, say 10000 users/customers. The system is larger enough for these current users, without additional development. Along comes another 1000 users, albeit one by one, and the strain that these additional users place on the systems capacity requires an upgrade in capacity. Let say that this updgrade costs 500K or 1 mil, which is not hard to spend when dealing with municipal utilty systems. Why should the current 10K users shoulder the cost of this necessary growth…? Answer being, they shouldn’t have to, and that is the reason why the new users creating the need to expand the system need to pay the cost of expansion… Hence the impact fee.

One other point… the impact fee does not cover the cost of or the right to “Tap” into the sytem. This comes in the form of a “Tap fee”, which will range from 500 to 5K, on average. These costs can get pretty steep in a hurry, but compared to adding a septic field, if it were even permitted, the sewer costs are usually less, except that you now have a monthly user fee… for life.

The impact and tap fees vary widely from area to area and seem to be something that folks have a hard time understanding… Hopefully this provides some insight from the inner workings of a sanitary sewer system… and why the costs exist. With stingent EPA requirements on sanitarty sewer systems today, it will get nothing but more expensive as time goes on.

JT-IN