Village May Reduce Fees to Restart Stalled Subdivisions

There are seven partially-completed subdivisions in the . In an effort to get those neighborhoods built out, the village is considering lowering the amount those developers would pay in fees.

It’s an idea that has divided the Village Board, and at Tuesday’s Committee of the Whole meeting, Village President Marilyn Michelini was asked for her thoughts, in case the issue came down to a split vote. Michelini supported the proposal.

It’s been a tough few years for residential development in the village. According to village records, only 46 residential building permits were issued in 2011. That’s down from 67 in 2010, and a far cry from the 559 permits issued in 2005, when the real estate market was booming. The tumbling market found developers with buildable lots, but no demand for homes, so they stopped building.

The hope is that lowering fees for these residential developers by up to $2,000 per home will encourage them to kickstart these stalled subdivisions, according to Jamie Belongia, assistant to the village manager. The idea was inspired by a question from a developer, Belongia confirmed, and spurred on by Trustee Matt Brolley, who said he has been pushing for reduced fees to spark development for some time.

Should this measure pass, the reductions would not apply to any new annexation agreements for developments, only to these seven subdivisions.

And the reduction would only apply to the village portion of the fees—the fee also includes impact payments to the school district, library district and fire protection district, as well as water tap fees.

The exact fees are negotiated per agreement, Belongia said, which is why the per-home amount a developer would owe is different for each. In Marquis Pointe, for example, the per-home fee would be $15,489, with the village getting $7,148 of that amount. But in Fieldstone Place, the total fee per home is $8,073, and the village’s portion is $5,448.

And in Blackberry Crossing West, the situation is even more complicated, since developer Ryland Homes has already paid all its fees up front, even for the homes that have not yet been built. In doing so, Belongia said, they secured a lower fee structure—the total fee per home in Blackberry Crossing West is $7,683, and the village’s portion is $1,858.

That means, should the reduction pass, the village portion of the fees for Blackberry Crossing West would be eliminated completely, and the other six subdivisions would see fees come down by the full $2,000.

Belongia said the timing is good for a move like this, since the village is starting to see more interest in commercial and residential development. This reduction, she said, may encourage these developers to get started building out sooner.

And more residential development would lead to more residents, meaning more property tax revenue for the village and an increased population in the next census, edging the village closer to the 25,000 mark needed for home rule. As of the 2010 census, Montgomery had 18,438 residents, an increase that led to an additional $158,000 in annual tax revenue.

Brolley said the reduction would also help the village's reputation among developers, and may encourage them to locate new projects in the village as well. And finishing those subdivisions will also lead to completing the public improvements there, like sidewalks, curbs and gutters, some of which stalled when the housing market tumbled, he said.

Trustees Andy Kaczmarek and Pete Heinz opposed the idea at Tuesday’s meeting. (Trustee Stan Bond was absent.) Kaczmarek said Montgomery’s fees are already lower than those in many surrounding communities, and the village would take a significant financial hit, which perhaps would mean a reduction in services.

Kaczmarek is also concerned that the village would be giving developers a break, and those savings wouldn’t be passed on to people buying the homes. Belongia said the village did not look at it as a way to save consumers money, but rather a way to spur long-term development.

Bond, reached by email, said he would likely vote no. He said the board should treat all developers equally, not develop policies that benefit a few, and noted that fees should be based on the actual cost of services, and shouldn't be arbitrarily lowered.

"I'd rather review fees for all than lower fees for a few," he wrote.

The Village Board will vote on this issue in the coming weeks—the proposal will take some time to put together, Belongia said.