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To: Moominoid who wrote (62773)	4/25/2005 7:04:50 PM
From: Elroy Jetson	Respond to of 74559

Why would higher Development Fees make it be uneconomic to build? Land price declines by the amount of the increased Development Fees. This is the market in action. Every Builder, Appraiser and Lender uses Residual Land Value Analysis. It might make a land owner grumpy and refuse to sell as is their right. But for every land owner who refuses to sell there is one who will. The only time developers get bagged by higher Development Fees is when they already own the land. This means lower profit margins, or even a loss, on that project because raising the home price mean they don't sell. Often it means you cut your prices to sell out your homes faster before something worse happens! Don't do a Maurice Winn and retreat into fantasy. This is reality. Home builders sell their homes at the highest price they can get, whether that means a 50% profit or a 10% loss. Its the harsh reality of the market - Development Fees can't be passed on to the home buyer. .

To: Moominoid who wrote (62773)	4/26/2005 4:09:49 PM
From: gpowell	Read Replies (1) \| Respond to of 74559

Let's not forget to distinguish between development fees that pay for infrastructure. Presumably these are fees that new home buyers will use - and value. To the extent this is true, some of the development fee is extracted from the home buyer - up to the extent of the perceived benefit. Further, in the absence of perfect competition, some of the fees will be absorbed by the developer, as well. It's been estimated that "only" a quarter of the development fees are absorbed by a reduction in the value of the land. Only if new home buyers perceived no benefit in the infrastructure (or alternately - the fees were used elsewhere) and the supply market were completely competitive, would all of the burden of development fees fall on the landowner through a reduction in the value of their land.