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