Construction Fees Multifamily vs single family

Started by CatherineS3 • 8 replies • 422 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

CatherineS3 (North Carolina)
Posts: 31

Posted:

There is a 3.5 ac parcel of land in our PUD designated for multi-family townhome style condo dwellings and our current architectural guidelines do not address construction fees for this type of development. The builders design shows one building consisting of 4 two story single family townhome style condos per .31 ac of land. Our non-refundable subsurface drainage and road impact fee is the same amount for any single family home being constructed no matter the size of the lot, or the square footage of the building. Should there be a separate fee schedule for these townhomes/condos? Are there any suggestions on how to address this? We will also need to create guidelines for typical stacked style condos.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Cath

What is the present fee structure? What do you expect the new townhomes to sell for? What do you expect the future condos to sell for?

SheliaH (Indiana)
Posts: 6,964

Posted:

Is your community controlled by the homeowners or the developer? If it's the developer, it typically runs the show until the homeowners take over, so I would think construction fees, road impact fees, etc. would be their issue.

If the homeowners (HOA) own the land, you need to consult an attorney, especially if you're going to foot the bill to build and sell these units. Perhaps homeowners want to do something else with the land, in which case you may have to talk to the zoning board. In short, this sounds like something that's beyond a website like this.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

CathyA3 (Ohio)
Posts: 6,299

Posted:

Are you a homeowner or a board member in your community? Is the developer still in control of the association?

The communities I'm familiar with that have both styles of homes usually have a separate set of CC&Rs for the condo/townhome section as well as a separate, additional fee. For example: the entire community pays an annual assessment that covers the community entryway as well as amenities such as a clubhouse. The condo/townhome owners also pay a monthly assessment that covers lawn care and insurance for the common area around their buildings.

I'm sure there are other ways of organizing this stuff, depending on local laws and zoning requirements. The answers to your question will depend on the details of your particular community and whether or not that multi-family section is defined as a part of your association or a separate entity altogether.

The developer should be having the townhome CC&Rs written and recorded with the county, at which point they are public info and available for viewing by anyone. He will also determine the initial amount of the monthly assessment that the townhome owners will pay. There shouldn't be anything for single family homeowners to do (including any board members) unless the developer is asking for input. I suggest asking him your questions and see what he says.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

A story along these lines. Townhouse development in IL of some 80 or so townhomes. Small pool, small clubhouse, and two tennis courts. Nice but nothing fancy. Original builder buys an adjacent piece of land and wants to build/extend the neighborhood so he asks the BOD for a "buy-in" so the new townhomes will be members of the HOA and entitled to the existing amenities. BOD has an owner/lawyer on it and he convinces the BOD to play hardball and request the new builder pay 5 years of dues per townhomes. The BOD gets greedy and requests the 5 years.

Builder is a very volatile type guy but he goes back and forth with the BOD. Finally he get pissed (as he would) and he submits a preliminary zoning change request to build cheap, high rise condo buildings. The BOD backs down and says they will accept his first offer. Builder replies that offer is no longer on the table. Here is my new offer.

A revolt among owners took place. They voted out 4 of the 5 BOD Members (including the lawyer) and the new BOD (I was one of the new BOD Members voted in), came to an arrangement with the builder. We got 40 new identical townhomes but with less of a buy-in then originally offered plus the BOD had incurred some legal costs in the whole deal. The buy-in was larger then legal costs but not by much.

CatherineS3 (North Carolina)
Posts: 31

Posted:

To answer a couple of questions.....I am a board member and we are a 30 year old self-managed community. The parcels of land in question are privately owned, part of the PUD (planned unit development) and subject to the Master Association CCR's as well as the architectural guidelines. (As condos they will have their own CCR's as well.) Unfortunately our Master Association's architectural requirements and construction fees have never addressed construction guidelines for condos....only single family homes. We are now faced with the task of establishing a schedule of fees for this category. Do we charge per condo unit or do we charge per building? Would the fees remain the same as those charged for construction of single family homes (if the fees for a single family home totaled $1000 for instance then it would cost the condo builder 4 times as much in construction fees for a 4 unit townhouse building on the same size plot of land as the single family home with the same square footage.) I hope my explanation of our situation makes sense. Thought one of your mixed-use communities would have a construction fee policy in place that you could share and that we could possibly adapt to our particular situation. All suggestions and comments are welcome.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By CatherineS3 on 02/18/2021 6:16 AM
To answer a couple of questions.....I am a board member and we are a 30 year old self-managed community. The parcels of land in question are privately owned, part of the PUD (planned unit development) and subject to the Master Association CCR's as well as the architectural guidelines. (As condos they will have their own CCR's as well.) Unfortunately our Master Association's architectural requirements and construction fees have never addressed construction guidelines for condos....only single family homes. We are now faced with the task of establishing a schedule of fees for this category. Do we charge per condo unit or do we charge per building? Would the fees remain the same as those charged for construction of single family homes (if the fees for a single family home totaled $1000 for instance then it would cost the condo builder 4 times as much in construction fees for a 4 unit townhouse building on the same size plot of land as the single family home with the same square footage.) I hope my explanation of our situation makes sense. Thought one of your mixed-use communities would have a construction fee policy in place that you could share and that we could possibly adapt to our particular situation. All suggestions and comments are welcome.

Thanks, that's helpful. More questions: What is a "construction fee"? Am I correct in assuming that the developer of the single family area is no longer in the picture and will not be involved in the townhome/condo area?

In the communities I'm familiar with, a single developer handled both areas of the development, the CC&Rs for both areas were written and recorded with the county before construction began, and the kinds of questions you're asking were settled by the developer long before any homeowners sat on the board.

I strongly recommend bringing in the professionals (especially a lawyer) since the board is trying to make decisions that are outside of their expertise. It's especially important since the decisions that need to be made will be legally binding, and mistakes can set the stage for costly litigation down the road.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By CatherineS3 on 02/17/2021 8:52 AM
There is a 3.5 ac parcel of land in our PUD designated for multi-family townhome style condo dwellings and our current architectural guidelines do not address construction fees for this type of development. The builders design shows one building consisting of 4 two story single family townhome style condos per .31 ac of land. Our non-refundable subsurface drainage and road impact fee is the same amount for any single family home being constructed no matter the size of the lot, or the square footage of the building. Should there be a separate fee schedule for these townhomes/condos? Are there any suggestions on how to address this? We will also need to create guidelines for typical stacked style condos.

-- What leaps out at me is that this is a PUD. I would like some clarification as follows:

-- Since this is a PUD, is the City billing the HOA a certain amount in impact fees? And then does the HOA then turn around and pay the impact fees that the HOA collects from Owners?

-- If the city bills the HOA for impact fees, what is the formula that the city uses to bill the HOA?

-- I do not think road impact would be meaningfully different between different styles of one-family units. But I can see a good argument for subsurface drainage effects being different. Hence I think what you are seeking is a rational basis for billing for subsurface drainage in particular.

-- I also bear in mind that one does not buy a home as much as one buys a neighborhood. Adequate subsurface drainage is important to all in this HOA. This might be as good an argument as any for billing all one family homes the same.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Cat

Depending on the sale price of the townhomes, I would not be concerned about a $1K construction fee. That said, if you want to justify it it begin with what services are included in the monthly dues for each home and see if the same or some of the same apply to a townhome. As an example trash collection, water, landscaping, wear and tear on the roads, etc.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here