MacRo LTD Blog

Oh, to Build a House in the Woods- The Hidden Costs of Land Development

MacRo, Ltd. Vice President David Wilkinson chimes in with his first post on the MacRo Report Blog!

the cost of a dream house on a building lot in the woods

Over the past 10 years or so the complexity of obtaining building and development permits for building lots in Frederick County — and most other Maryland counties — has  increased substantially.

Akin to trying to interpret the Rosetta Stone, when asked to estimate the costs to build or develop land are, surveyors, engineers and real estate consultants will often respond with a very wide range of estimates followed by, “It depends on how the governmental reviewers respond to the plans we submit.”

This uncertainty is based on several factors related to land development in Frederick County including the fact that government reviewers are following regulations and policies, some unwritten,  which allow for a wide range of subjectivity. Also, agencies with approval power occasionally contradict each other causing costs to escalate considerably.

Industries of all types struggle when the regulatory environment is not stable.  Ask any business owner about this and they will tell you, “Just keep the rules consistent and we will adjust.”

The problem arises because politicians and government officials are constantly tweaking the process with the goal of “improving” things.  While each individual change in code or policy may not make a big difference, the cumulative effect is much worse.

I’ll give you one personal example on a small scale: I’m currently serving as a real estate consultant for a client we will refer to as “Tom.”  Tom purchased a fully-wooded building lot in 2005 as a site for his family’s new home.  While I advised him of the current governmental fees, policies changed after the fact.  In this case, after his purchase, the State of Maryland modified the regulations in its “Forest Conservation Act.”

Under the old rules, a property owner could clear up to 40,000 square feet of forest (just under an acre) without having to obtain special permits and replace trees.  Under the new rules, however, any tree clearing beyond 20,000 square feet triggers the forest conservation review process.

Unfortunately for Tom, it’s not possible to build a home on his wooded parcel while at the same time limiting tree clearing to less than 20,000 square feet.

Local Frederick County government regulations require the entire 10,000 square foot septic area to be considered “cleared” even though only a few trees in the septic area will actually be removed.  That’s half of the allowed 20,000 square foot amount and Tom still has to clear trees for the house, the driveway and well.

With the pending financial burden placed on him, Tom decided to reduce the area of his “yard” to a bare minimum.

According to Tom’s surveyor, his new plan showed 29,000 square feet of clearing on his seven acre lot (that’s less than 10 percent cleared).  Yet because he exceeds the new 20,000 square foot maximum, he will now have to submit a Forest Conservation plan and will then have to address paying a fee to cover about 9,000 square feet of the forest area he will be clearing.

So, how much of a financial burden will Tom face to fulfill his dream of living in the woods?

The bottom line:

  • $2,000 to the surveyor to prepare the Forest Conservation plan.
  • $500 county review fee.
  • $4,700 to purchase “Forest Conservation credits” or place a perpetual forest easement on his lot, which Tom doesn’t want to do because he hopes to build a garage and pool in the future.

Total increase in Tom’s costs due to changes in policies:  $7,200.

But of course that’s on top of the $15,185 impact fee to cover the “financial burden” that our county government thinks he will put on our roads, schools and other county services – an initiation fee of sorts for the privilege of living in Frederick County.  Interestingly, the impact fee increased 6% this year, in the midst of a devastated home building market.

Then there is a $2,500 fee for a building permit.

So before he even can put a shovel in the ground, Tom will have to come up with over $24,000.

As you can see when planning to build on a lot in the woods or in an open field, one must wonder if at some point it’s not worth it.  In Tom’s case, he’s now thinking whether to proceed with his dream home in the woods or abandon his plan.

Become a MacRo Insider

Dave Wilkinson has been a licensed Realtor and Vice President of MacRo, Ltd. since 1992.   He specializes in commercial property and rural land sales.  He also real estate consulting services for subdivision and development land.

Leave a Reply

Your email address will not be published. Required fields are marked *