SALISBURY — In the hopes of stimulating a resurging home-building spree in Wicomico, county officials this month approved an extension on a moratorium on public school impact fees.
For years, Wicomico County imposed a $5,200 impact fee on new single-family home construction as a means to offset the cost of additional strain on the public school system caused by more families moving into the community. When the recession hit and the real estate and construction industries stalled in Wicomico, county officials voted to put a moratorium on the public school impact fees imposed on new single-family homes.
The hope was the moratorium on the impact fees would serve as an incentive to drive new single-family home construction in the county and the revenue generated by a revived home-building market would offset the lost revenue from the impact fees and then some. Thus far, the moratorium is achieving the desired results, according to County Executive Bob Culver, who urged the council to extend the moratorium last Tuesday.
“We’re hoping to continue the moratorium,” he said. “It’s doing so well. Single-family housing construction has rebounded and extending the moratorium will encourage bringing building back to Wicomico County.”
Even when the economy soured, apartment and condominium construction in Wicomico continued to thrive, particularly in and around the Salisbury area. With increased demand from the growing Salisbury University campus and by struggling families left out of the starter home market, apartments and condos continued to be built at pre-recession levels in the county, but the bottom fell out of the single-family home market.
In 2014, just 13 building permits for new single family homes were issued in Wicomico, compared to 21 during the same time period in 2013. After the public school impact fee moratorium was put back in place, county planners expected those figures to increase significantly. County Planning and Development Director Jack Lennox told the Council last Tuesday, the moratorium is achieving the desired results.
“Going into fiscal year 2015, we projected 74 new single-family homes,” he said. “As it turns out, we took in those 74 permit applications by the first half of the year. There have been 67 permits issued since April and we still have 82 applications to process.”
Lennox explained while the impact fee moratorium is largely responsible for the spike, the state-mandated sprinkler system requirement is also a contributing factor. Starting July 1 of this year, the state is mandating sprinkler systems on new single-family home construction, which is adding an estimated $25,000 to the cost of a new home.
“We saw a bunch of applications come in right before that July 1 deadline,” he said. “The permit applications filed before July 1 would not have to meet the state-mandated sprinkler law and we have seen only one application come in thus far after July 1.”
Culver agreed the sprinkler law has contributed to the spike in single-family home building permits in Wicomico, but said the public school impact fee was also a contributing factor in the larger picture.
“When we have the septic fees, the sprinkler law and the school impact fee, we can see where there all of that could add $25,000 to the cost of starting a home,” he said. “That’s not a very good incentive, but if we can extend the moratorium on the impact fees, we can offset some of that.”
Lennox agreed not extending the public school impact fee could reverse the growing optimism surrounding the single-family home market in the county.
“If you were to decide not to extend the moratorium, those who applied will have to pay the impact fee,” he said. “We have to keep that in mind.”
With that said, the council voted to extend the public school impact fee for an additional year and three months.