HBA letter to Greenville County Council regarding Land Development Regulations

The Honorable Butch Kirven, Chairman
Greenville County Council
301 University Ridge
Greenville, SC 29601
Dear Chairman Kirven,
On behalf of the 600 members of the Home Builders Association of Greenville, I am providing you with a detailed analysis and list of proposed changes to the draft Land Development Regulations ordinance which you will consider for third reading on January 23.
I wish to emphasize that the Home Builders Association is not in opposition to this ordinance.  In fact, we find many changes that we believe are needed and will improve the current ordinance.  However, there are several changes that will significantly impair the economic development of residential building lots and lead to increased housing costs in Greenville County.
This analysis was prepared by several of our members who are active in land development in Greenville County.  Most of them also were actively involved in the drafting of the Land Development Regulation ordinance that was adopted by Greenville County Council in 2016.  In fact, each of them, as well as myself, spent more than 200 hours over the course of three years working with county staff to develop the ordinance that is in place now.  Unfortunately, not of us were consulted on the current draft, but these comments have been received by county staff in a meeting that took place on January 10, 2018, at County Square.
Article 1
In the draft ordinance, an additional pre-submittal meeting has been added by county staff.  With this change to the ordinance, county staff will make the meeting mandatory and the meeting must occur before an application to subdivide real estate will be “accepted” for consideration.  It is our opinion that this new meeting will add at least one month to the process of reviewing and approving a subdivision.  It also is completely unnecessary in most cases.
Until recently, county staff made themselves available to developers and engineers, on an informal basis, to discuss a proposed development before the application to subdivide was submitted.  This is no longer the case and when combined with a constantly-changing process imposed by county staff, some applications for subdivision have been submitted with errors.  Staff has concluded that the developer and their engineer are at fault.  However, it is our opinion that what is really needed is accessibility, and in some cases an improved customer service culture, among the staff that handles these applications.
One other point: you should know that county staff has already implemented this new meeting, and has declared it mandatory, ahead of action by County Council.  In the first month some developers have been turned away because the meeting schedule was full.  It should be apparent that our 30-day estimate may be conservative.
Recommendation: The change in 1.6.1.A. should be rejected.
Article 2
Definition of Authorized Representative:
If adopted, the definition of Authorized Representative will limit to one person a representative who is available to appear on behalf of the application in meetings with county staff as well as the Planning Commission and County Council.  The problem with this definition is that it does not acknowledge the reality of people’s lives.  Should the authorized representative be unavailable for a meeting, the application will be delayed until the authorized representative is available.
Recommendation: Provide for Alternate Authorized Representatives when the Authorized Representative is unavailable to represent the project.
Article 3
Ordinances that are drafted with subjective language are especially problematic.  Subjective ordinances do the following:
·       Empower staff to make policy decisions that are rightfully the purview of County Council
·       Allow policy makers to inject political considerations into a decision that should be objective
·       Removes clarity in how land use is expected to occur in Greenville County
·       Diminishes the role of the Comprehensive Plan in land use decisions, which the language in 3.1 will do
Greenville County Council already has allowed itself to be overly influenced by Not In My Backyard (NIMBY) interests, and in some cases council members are fanning those flames uncessarily.  The people who oppose real estate development are not interested in sound planning decisions, they are interested in stopping any activity that might impact their personal property, even when their property is impacted positively, not impacted in any way, or is miles away.  Some don’t have a property interest in the area at all.
The language in 3.1 will only provide further ammunition for opposition to development that is otherwise consistent with county plans and ordinances.  In addition, because of its lack of clarity, it could be used to support litigation on both sides of a dispute, further clouding land use policy in Greenville County.
Recommendation: The new language in 3.1 should be rejected.
As has already been pointed out in the Definition of Authorized Representative, the pre-submittal meeting and lengthening of the review schedule is unnecessary.
Recommendation: The Pre-Submittal meeting should be made optional.
Sidewalks have been a touchy subject between developers and Greenville County.  In most cases, developers want to include them in their projects, but the bonding requirement is something they would like to avoid.  Bonding is expensive at 125 percent of construction cost.  In addition, bonding is not actually a bond, but cash placed on deposit with the county.  This money generally can not be borrowed, therefore it impacts the developer’s capital position for current and future projects.  Therefore, it is not just an issue of interest expense, but restricts the developer’s ability to take on other projects or to do more with their current project.  It therefore adds expense to the development that is beyond the cost of the financial security.
In the case of this change, which removes one word, “required,” it creates a disincentive for the developer to do more than the sidewalks required in the ordinance and on the site plan, because the developer will be required to bond any sidewalk that may otherwise be added by the developer, but is not required.
Recommendation: The removal of “required” in 2.4.7 should be rejected.
In our meeting with county staff on January 10, 2018, we questioned this new paragraph because of its vagueness and subjectivity.  In that discussion, county staff stated that their intention is to redirect a Minor Subdivision to the Preliminary Plan process if a road, whether public or private, is required.  They stated that it is not their plan to redirect Minor Subdivisions if a detention pond, sewer line, drainage swale, or other improvement, which could be defined as a public improvement, is involved.
Recommendation: In the last sentence of this paragraph, replace “improvement” with “road,” so that it reads, “If the County determines that a public or private road isnecessary for any reason, …”
Article 8
Requirements to place buffers in common areas will result in forcing a Homeowners Association to be created when no other common areas are necessary.  In addition, it will have a major impact on meeting lot area requirements for non-cluster subdivisions, particularly in R-S, R-R1 and R-R3 developments.  In addition, if buffers are expanded in the future, this will result in an even greater impact to the development.
Recommendation: Change the language to:  “Riparian buffers are preferred to be located in common areas, but not required.”
Requiring stormwater conveyance systems to be in common areas rather than in an easement will result in division of lots where stormwater has to flow through the lot.   This will particularly impact larger lots.  In addition, the county has stated that they want easements on all channels that carry water from two or more lots.  This could be interpreted to make these easements common area, which creates new property lines, building setbacks, and other issues that will reduce the yield of lots in a subdivision, raising the cost of the remaining lots.
Recommendation: Remove “through the common area.”
During the 2016 revision to the Land Development Regulations, the study committee agreed that ADA standards would apply only to the ramp portion where the sidewalk transitions to the street.  We arrived at this conclusion because Greenville County is a very topographically challenging county, with many steep slopes even in the Southern part of the county.  In many cases, it will be nearly impossible to meet the slope requirements of the ADA (5 percent) without substantial grading of the site, requiring the removal of trees and dramatic leveling of the site.  This not only adds great expense, but it is also contrary to the very concern that has brought rise to this revised ordinance.
In addition, we feel it is important to point out to County Council that the language, as written in the current ordinance, which includes the ADA requirement to which we object, was not what was adopted by County Council in 2016.  We brought this fact to the attention of county staff in Spring 2017, and we were informed that the ordinance would be corrected.  To date it has not been corrected, and the current draft implies no change to the language when in fact there has been a change made to an ordinance that was properly adopted by County Council.  This is a transparency issue that gives constituents reason to be suspicious of the integrity of the governing process and the motives of those who made the change after County Council approved the ordinance.
Recommendation: ADA standards should apply only to ramps and transitions from sidewalks to streets and the language should be restored to the language which was adopted by County Council in 2016.
We object to the proposed screening requirement for the following reasons:
  1. It is unnecessary to screen similar, or identical, residential uses from one another. This adds unnecessary expense.
  2. The act of installing screening may result in the removal of existing vegetation that would otherwise be left undisturbed.
Recommendation: The current screening requirement should be retained.  However, the Home Builders Association will support screening of residential uses from incompatible, non-residential uses.
Article 12
Requiring Private Roads will prevent certain types of development, like townhomes, which are generally regarded as more affordable than traditional single-family homes.  County staff has told us that this was not their intent.  But this issue in particular highlights the need for this ordinance to be returned to Planning Commission for further work.
Recommendation: The next to last sentence in this article should be be revised to read, “Private Roads or Private Drives are required…” 
We do not oppose the entire ordinance
There are changes in this ordinance that we do support, and others on which we do not have a position either way, which is why we are not recommending that you reject the entire ordinance, just make the changes that we have outlined in this letter.  For example, we support changes in Article 5 which provide for greater right-of-way when needed, and more consistency when designing streets. 
We also should note that county staff has agreed to certain changes to the ordinance:

  • 6.4.5.D.: Remove “whichever is greater”, to allow paving of the final surface coat of asphalt after 90 days of installation of the initial surface coat.
  •  6.5.2.B.5.a.: Consider 60 or 90 days instead of the proposed 30 days for compaction test reports.
  • 6.5.2.B.5.b.: Consider 180 days for grade depth expiration.

We also support certain changes in Article 8 that improve the engineering of catch basins under sidewalks, improving performance while reducing cost.
The regulated and regulators should work together to improve the process
I would like to note that this association has always been in support of, and has facilitated, training for engineers and developers to help improve the development process.  We have hosted these meetings in the past, and collaborated with others to facilitate them. 
We would, however, like to make the point that regulations and processes for compliance are continually changing at Greenville County.  Instead of developing processes and rules on a periodic basis, whether annually or semi-annually, we have found in recent years that a new rule is implemented frequently, as often as every month.  Some of the changes are minor, others major, but all contribute to the problem of applications that are not complete.
As a final recommendation, we urge Greenville County Council to initiate an independent review of land-use regulation, particularly development regulation, to search for ways to improve processes, communications, and customer service.  The alternative is that development will continue to move to neighboring counties, which have the same regulations but also a culture of the desire for growth.
There should be no doubt that increased regulation raises the cost of everything, not the least of which is the cost of housing.  And few activities are more highly regulated than home building.
And those regulations do add to the cost of housing.  Since 2000, according to the U.S. Census Bureau, the percentage of homes in the South priced at less than $200,000 went from 90 percent to 10 percent.  Let that sink in.  Fewer than 10 percent of all homes in the South today are priced below $200,000. 
The problem is, restricting growth is more popular than promoting housing affordability, particularly for citizens who have an incentive to see their home prices rise.  But even if you are a homeowner, and have concluded that your home investment is more important than someone else’s dream of homeownership, or just an affordable rent, ask yourself this question: where are my children going to live?
Land use regulations do restrict where housing development occurs.  It’s a basic business principle: locate where you are welcome.
In the first nine months of 2017, compared to 2016, the rate of growth in home building in the counties surrounding Greenville, was as follows:

  • Spartanburg County, up 21 percent 
  • Laurens County, up 33 percent 
  • Anderson County, up 17 percent 
  • Pickens County, up 76 percent

Meanwhile, Greenville County was down 5 percent.
Where are our children going to live?  Spartanburg, Laurens, Anderson, and Pickens counties.
Our Recommendation
We wish to reinforce that we are not opposed to amending and refining the Land Development Regulations.  However, as you should have concluded from this letter, this ordinance is not ready for implementation.
We recommend that Greenville County Council return this ordinance to Planning Commission with instructions to engage with the members of the Home Builders Association who have invested a great deal of their personal time in developing the current ordinance.  These professionals—engineers, developers, and other real estate development professionals—have the expertise and experience that the county needs to develop the amendments that will truly improve the Land Development Regulations in a manner that accomplishes our county’s goals for land development.
If you have any questions regarding any of these issues, please do not hesitate to contact me.

Home Builders Association of Greenville
Michael E. Dey, Executive Vice President
and Chief Executive Officer
The Honorable Willis Meadows, Vice Chairman
The Honorable Xanthene Norris, Chairman Pro Tem
The Honorable Joe Dill, Councilman
The Honorable Michael Barnes, Councilman
The Honorable Sid Cates, Councilman
The Honorable Rick Roberts, Councilman
The Honorable Bob Taylor, Councilman
The Honorable Liz Seman, Councilman
The Honorable Ennis Fant, Couniclman
The Honorable Lynn Ballard, Councilman
The Honorable Fred Payne, Councilman
Mr. Joseph Kernell, County Administrator
Ms. Paula Gucker, Assistant County Administrator for Community Planning, Development & Public Works
Mr. Mark Tollison, County Attorney
Lot Leads – Get the Dirt on Available Lots

Lot Leads – Get the Dirt on Available Lots

Your HBA has been alerted to a lot for sale in Greenville. See below for details:
Location: 6.42 Acres Woodland Drive Greenville, SC 29617, just 3 miles from Downtown Greenville, in area of homes off Poinsett Hwy between Cherrydale Point shopping center and Furman University.
Directions: From downtown Greenville, take Poinsett Highway 2.8 miles past Cherrydale Point shopping center. Take left onto Woodland Drive. Entrance to property is between two white houses on the right approximately 0.4 miles
Lot Details: Suitable for single family or rezone for multi-family development. Pre-approved preliminary subdivision plan available for consideration or develop as desired. County has pre-approved access drive, road location and cluster development. Currently zoned R10 but adjacent to RM20. Ample city water with access to new 6″ main. Sewer main easement on property with pre-approved capacity. Property is wooded with very tall hardwood for timber. 
Contact: Tax Map Number 0438000101001. Priced to sell quickly at $35/acre – $224,700 total. 
For additional information, please call 864-616-8888.

Rising Interest Rates, House Prices Push Thousands Out of the Market

One thousand dollars might sound insignificant when compared to the overall price of a new home. But that relatively small amount of money has a surprisingly big impact on affordability.

The National Association of Home Builders economists recently determined that for every $1,000 increase in the cost of today’s median-priced home, nearly 153,000 American households are priced out and would no longer be able to afford it.

Many builders and developers are finding it increasingly difficult to avoid these price jumps in the face of mounting regulations and government-imposed fees, which can add up quickly and shut the door on a growing number of prospective buyers.

Those numbers become even more eye-opening when looking at potential interest rate increases. With just a quarter-point rise in the rate for a 30-year fixed-rate mortgage, approximately 1.2 million people would be priced out of that segment of the market and forced to set their sights lower than a median-priced home—or delay their home purchase altogether.

But the impact varies widely across the country. The effects are more significant in areas where new homes are more affordable.

Eye On Housing recently revealed which states and metro areas have the highest percentage of priced-out households.

Supreme Court to Hear Property Rights Case

The U.S. Supreme Court docket includes a Fifth Amendment “takings” clause case that will undoubtedly affect home builders: Murr v. Wisconsin.

This case deals with the “relevant parcel” rule under the takings clause and can be explained in terms of fractions.

If you own 100 acres and the government takes 40 acres of your land, the fraction is 40/100. The “relevant parcel” is the denominator (100), the total that property courts should use to decide how much of that land has been taken by the government.

In the example, it is easy to determine the relevant parcel, but the Murr case shows why this issue is not as simple as it looks.

In the late 1950s, William Murr bought a small parcel of lakefront property, Lot F, on which he built a family cabin. A few years later, William separately purchased Lot E, the unimproved lot directly adjacent to Lot F. In time, the titles for both lots were passed on to Murr’s children.

In 2004, the Murr children began to look into upgrading the family cabin, but they required the proceeds from the sale of the unimproved Lot E to finance these upgrades. Unfortunately, local regulations prohibited the children from selling Lot E by itself because of minimum lot size restrictions. Further, the children could not develop Lot E because of a local ordinance prohibiting development of adjacent lots if owned by the same person.

In short, the Murr children were left with no options for Lot E except to keep it in its unimproved condition.

The Murr children brought a claim for the 100% taking of Lot E only. They did not include any claims for Lot F. However, the government argued that the relevant parcel for purposes of takings analysis was Lot E combined with Lot F; thus, the taking would be far less than 100% since Lot F is not affected by the government regulation.

The Wisconsin appellate court agreed with the government, and ruled that because the two lots are geographically contiguous and under common ownership, takings analysis requires combining the two parcels when determining the loss of economic value. This is despite the fact that Lot E and Lot F were created as legally separate lots, taxed separately, purchased at separate times, and passed on to the children at separate times.

As a legal side note, there is a huge difference when a landowner claims a complete taking (100%) of property as compared to a partial taking under 100%. A landowner subject to a complete taking is automatically entitled to just compensation (referred to as a Lucas taking). A landowner subject to a partial taking is subject to an additional hurdle: the Penn Central legal test. Penn Central takings cases are very difficult for property owners to win.

It is easy to see how this decision could affect the home building industry. For example, if a home builder has completed the first phase of a project and the government prohibits the development of Phase II, it would be very difficult for the builder to establish an unconstitutional taking if the relevant parcel includes the entire site.

National Association of Home Builders submitted an amicus brief to ensure that the interests of home builders are heard by the Supreme Court. The court has not scheduled a date for oral argument, but it is likely to take place sometime in 2017.

Lot Shortages Climb to All-Time High

If finding skilled laborers isn’t your top concern, chances are, finding lots to build on is your number one challenge.

For nearly 20 years, the NAHB/Wells Fargo Housing Market Index has periodically tracked builder sentiment regarding lot availability. In all that time, the percentage of builders reporting shortages has never been as high as it is now: 64% reported a “low” or “very low” lot supply — a 2% increase from the previous record set in May 2015.

Even back in 2005 — when the rate of housing starts was roughly twice that of today’s rate — the share of builders reporting shortages was down around 53%.

Nowhere is the scarcity of land more apparent than in the western U.S., where 39% of builders said lot supply was “very low” (compared to 23% in the South and 18% in both the Midwest and Northeast). But when referring specifically to premium “Class A” lots, builders from coast to coast reported more similar opinions of widespread shortages.

“Here in Northeast Ohio, the supply of ‘A’ lots has really dwindled,” said Bill Sanderson, vice president of Knez Homes, a Cleveland-area custom home building company. “A few spots are available for redevelopment, but that process takes time, and there still isn’t a ton of [land].”

Sanderson, who also serves as president of the Ohio Home Builders Association, says many builders have little choice but to look farther and farther out into the suburbs, where the prices need to be highly competitive to entice enough buyers.

“In those secondary locations, increased entitlement time and more regulations, including environmental and other issues, mean that lots are not coming online as quickly as planned,” Sanderson explained.