TOP STORY >>Cost of Cabot growth
Leader staff writer
Cabot City Council last week passed an impact fee that could over the next three years add more than $4,268 to the cost of a 4,000 square-foot home and $3,103 to a 1,000 square-foot home. Add to the impact fee, a new policy being drafted by the Cabot Water and Wastewater Commission that could add many thousands to the cost of providing sewer to a new subdivision because developers would have to help pay for improvements outside their subdivisions, and it is clear that building in Cabot is becoming more expensive.
Builders and developers have warned city leaders that by increasing their costs they are running the risk of moving growth outside the city limits. And in fact, city officials are expecting building permits to be down next year. The numbers are already down about 100 from this time in 2005 when by the end of the year 650 permits had been sold, said Jim Towe, director of public works. And since builders are likely to buy the permits they will need for next year during the 90-day grace period before the impact fee begins Nov. 20, the permits sold next year could be as low as 250, he said.
The draw of Cabot for most new residents is the school system, builders and developers say. But Ward and Austin also are in the Cabot School District and both cities are courting developers. And for that matter, Beebe also has a good school district and room outside its municipal borders to grow.
Jim Childress, a builder, warned the city council during the public meeting before the impact fee was passed that if the growth moves outside the city limits of Cabot, where impact fees are not charged, the new residents will still come into the city to shop and to eat. They will be a burden on the already overburdened streets, but the city won’t get any of the state tax money for them.
James Moore, developer and builder and a former member of the Cabot City Council, agrees that some of the growth will move north. Ward and Austin are already growing. But it’s not because of any fees Cabot intends to charge. It’s because the land is cheaper there.
“Today undeveloped land in Ward and Austin is selling for $8,000 to $12,000 an acre,” Moore said. “In Cabot the same land would be $15,000 and up.” The cost of developing those acres is essentially the same regardless of where they are located, so the only savings to pass along to young families trying to buy their first homes is the savings on the land, Moore said. And these days, the small houses, those under 1,500-square feet, are being built in Austin and Ward.
A developer paying $10,000 an acre for a 40-acre tract of land will pay $400,000 before he starts laying streets, sidewalks, water lines and sewer lines, Moore said. Forty acres can usually be divided into at least 120 lots which sell for about $20,000 each. But the developer will typically end up with only about $4,500 in profit from each one. In Cabot, that same lot would sell for about $25,000, he said.
“Ten years ago, we could buy land in Cabot at the same price we do now in Ward and Austin,” Moore said. “But the price went up with the demand.” A building permit pulled at random at Cabot Public Works Tuesday estimated the cost of building a 1,911 square-foot house at $82,950, not including the lot. About 1,800 square-feet is average for Cabot.
The builder paid $187 for the building permit. Then a plumbing permit for $90.30, a heat and air permit for $70.35 and an electrical permit for $95.55 were added for a total of $443.20 in permits alone. Moore said those fees don’t seem too high for the inspections the city provides. Neither is he overly concerned, he said, about the impact fees that will be charged to homebuyers as appraisals fall in line with the new fees.
But if city officials are correct in their estimates about how many building permits will be sold in Cabot next year, the impact fee won’t be a boon to the city coffers. Phased in as it is supposed to be over a three-year period, less than $300,000 would be collected in the first year.
The new money will be divided unequally depending upon the need, between streets, wastewater, library, parks and fire.
Based on the estimate of 250 permits in 2005 those departments would collect $95,750, $35,750, $9,000, $56,250 and $72,000 respectively.