Villas on Broad Creek continues without fee waiver from town
By Tony E. Windsor
Developers of an upscale Laurel residential community along the shoreline of Broad Creek were unsuccessful in gaining the support of officials in response to a request for relief from town fees connected to the construction. Developers of "The Villas on the Broad Creek," a project located in the Laureltown area, were able to complete and sell 10 residential units before a downturn in the national housing market in 2008 halted the project.
Now, 10 years later, the developers are moving forward with an effort to complete the project. However, according to Randy Radish, a member of the limited liability corporation that is building the units, there has been a redesign strategy in order to help ensure the project is financially viable.
Developers of the Villas on Broad Creek project have reduced the square-footage of each unit and included a one-car garage. This has enabled an increase in the number of units for the entire project from 18 to 20. Radish said the revision does not lessen the quality and aesthetics of the units.
For additional financial support, developers applied for inclusion in Laurel's Downtown Development District (DDD), which provides special financial development incentives offered by the state. The DDD provides opportunity for reimbursement of as much as 20 percent of costs associated with construction, which helps give project-enhanced opportunity for profit.
Radish appeared before the Laurel Town Council in November to announce the resurrection of the Villas on Broad Creek project and seek relief from construction and water and sewer fees. "We have diligently, and successfully been working on and receiving the town's approval to increase our project size from 18 units to 20 units and redesigning the units to be less in square footage, while still maintaining the overall exterior appearance," he said. "We can sell these units at $235,000 and maintain the quality and look of the project; however, it results in making zero profit; basically selling them at cost. This is where the Downtown Development District program kicks in to help us gain some money back."
In an effort to find ways to help make the development project more economically viable, Radish went on to say that Villas on Broad Creek developers are requesting the town provide relief involving two fees, one being the one percent new construction fee, which in all would add an additional $1,700 to each unit.
The other fees involve the water and sewer connection fees that as assessed currently have doubled and tripled respectively since the project began. Radish said since 2008 when the project was waylaid, the water connection fees have gone from $500 per unit to $1,000 and sewer connection fees from $650 to $2,000. Radish said the town's new construction and utility connection fees would add an additional $15,000 to each of the 10 units currently planned for construction.
Radish told the council that in an effort to maximize the opportunity gained from the DDD process, developers are considering to permit all 10 units at one time. This, he said would bring $115,000 in permit fees to the town. "That's a lot of money coming into the town at one time," he said.
Laurel Mayor John Shwed offered the only comment from the council following Radish's presentation. He asked Town Manager Jamie Smith, "Was this company provided the town's fee structure at the time it applied for the Downtown Development District designation?" Smith said the fee structure was provided to the developer.
Following the public Mayor and Council meeting, council members met in closed session and voted on the Villas on Broad Creek, LLC's request for fee relief.
In a 6 to 0 decision (Councilwoman Cheryl Martin was not in attendance for the meeting) the town denied the waiver of development fees for the Villas on the Broad Creek project.
Radish said the project will move forward, but said the decision by the town makes the path forward, "tense." He said it is concerning that those fees for the project, which started in 2005, have doubled and tripled to date. He said this would make construction far more expensive. "I had hoped that at minimum the council would have considered a reduction in fees, rather than voting to simply deny a complete waiver of the fees. I believe I offered that as an alternative request in the letter I presented to the town," he said.
Mayor Shwed said the decision by the council to deny Radish's request was made based on "fairness." He said the fact that the Villas on Broad Creek project had been delayed due to the economic downturn could not be factored into a decision about a waiver or reduction of fees. "We had to look at being fair about how we make our decisions," he said. "The fact that the project had halted because of the economy could not be the basis of making a decision. This would be no different should any other property owner delay a project for 10 years and then come before the council expecting a fee waiver. We want to be fair in deciding these issues."
Shwed said the town had given some cost saving opportunities to the Villas project at the time of its approval for the DDD designation, including "breaks" on property taxes. "We wish the developers well and hope they are able to begin construction soon," he said.
Town Manager Jamie Smith said the town, like the state, offers incentives to help promote development through the DDD designation. "Under the DDD Program, the town allows for a reduction in impact fees," Smith said. "That reduction varies depending on how many EDU's a project consists of. The percentage is a minimum of a 40 percent reduction to a maximum of a 60 percent reduction."
She went on to say that based on the potential for doing all 10 units at once, the Villas on Broad Creek developers would be subject to the maximum 60 percent reduction toward impact fees. This she said could mean that the developers could see a $42,000 total reduction based on 10 units.
Another savings offered by the town, according to Smith is in the area of property taxes. "Each unit will also receive a tax abatement for five years on the town's real estate taxes," she said. "I do not have an amount on that, as we do not have an assessment yet, but it is fair to say that that amount is a minimum of $650, per unit per year for up to five years. Based on 10 units, that would be a savings of about $32,500 over five years. This is in addition to the 20 percent rebate on hard costs that is being offered by the State of Delaware."
The Villas on Broad Creek is a project that began in a collaboration between the Laurel Redevelopment Corporation (LRC), R.W. Radish & Associates, and the Meoli Companies. The LRC owned the property, which is the site of the former Oliphant Packing Company, a local canning business.
Information from the LRC's website identifies the Villas on Broad Creek property as "a very important piece of the LRC's mission to clean up the blight along Broad Creek."
The Villas on Broad Creek project, according to the LRC, beings benefits to the town of Laurel including use of previously unused or underused properties in the flood basin, more control on how the Broad Creek shoreline is developed and protected, and "the largest increase to the town's property tax roll in the last decade."
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