06/04/1990 Park Board Packet - Laserfiche WebLink

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the developer may elect to take a higher profit. A hypothetical example of a residential development serves to show this problem: HYPOTHETICAL EXAMPLE A residential development of 25 single family homes is proposed on 10 acres (0.4 acres per lot) . The developer paid an undeveloped fair market value of $ 15,000 per acre or $ 150, 000 for the land. The local government requires a land or equivalent cash park dedication of 10 % which translates into 1 acre with a value of $ 15,000. If the local government requires cash instead, it has set a fee of $ 400 per dwelling unit which would be a total of $ 10,000. Obviously, in this example the two dedications are not equal as the land dedication is in effect costing the developer $ 600 per dwelling unit while if he paid cash alone it would only cost $ 400 per unit. The other factor which comes into play is development density. If the number of homes on the site is increased to 40 units (0.25 acres per lot) , then the total dedication increases to $ 16,000 (40 units x $ 400/unit) which is closer to the value of the land. The important point in this example is not that development density should be increased as this is often determined by the overlying zoning and property characteristics such as site location, topography, vegetative cover, and lastly market acceptance. In other words, the developer will usually build what the market will accept within that zoning class. Rather, the cash park dedication formula selected should reflect the value of the land, if possible. Table III lists the established single family fees for cash dedication if applied to developments within thirteen of the seventeen local governments. A substantial range of values is shown with the descriptive statistics indicating that the average fee would be $ 465 per dwelling unit. Because of the relatively low number of values included in this analysis, the median (fiftieth percentile) of $ 400 may be more representative. However, it should be noted that many of the recent changes by communities in their ordinances has taken place in those which already had units fees which were relatively high. Finally, it should be pointed out that the fair market value of the undeveloped land does not always increase in direct proportion with the upgrading of a zoning classification [single family to multiple family] . Care should be taken so that there is not a reverse of the above hypothetical example in the application of cash dedication formulas where the developer may pay far in excess of the value of the