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Increased development costs continue to make it a challenge to deliver new housing in New Braunfels.
Last year, New Braunfels Utilities, the city's municipally owned water and power provider, increased fees associated with running water and sewer to new developments — called impact fees — by more than 100%. Those costs are now trickling down to the end-consumer said Max Harford, vice president of finance with ASA Properties, a developer building a 2,500-acre master-planned community in New Braunfels called Veramendi.
"Impact fees do affect us. I think it’s clearly a challenge. I'm not going to sit here and say it’s not," Harford said. Impact fees are directly used to offset the cost of infrastructure improvements in New Braunfels to accommodate new development and a growing populace, and Harford said the fee increases are a symptom of the city grappling with a rate of growth that is bumping up against its ability to support it.
By New Braunfels' own projections, nearly 87% of the land inside its city limits will be fully developed by 2034.
"We want to pay our fair share," Harford said, but there is a threshold to how high costs can go and still be supported.
In addition to the increased cost of impact fees, he said there were 40-50% increases in civil construction costs over the last two years driving up the cost of housing as well. Harford said that the developer is fortunate that its pricing strategies are allowing it to absorb some of the added costs.
"This is a short-term challenge, and we're in this for the long-term," he said.
Other developers building major projects in the area have expressed similar sentiments. SouthStar Communities, another New Braunfels-based developer, is building a 1,900-acre master-planned community along Interstate 35 called Mayfair. In April, Thad Rutherford, president and CEO with SouthStar, also admitted the cost of developing lots in New Braunfels had increased.
When the new impact fee schedule was announced, SouthStar had tried its best to get as many new lots officially recorded as it could before the new fee schedule took effect. Based on the number of lots at Mayfair, the increases were set to run the developer about $20 million in added development costs, but Rutherford said there were ways of spreading the cost so that it wouldn't singularly burden the developer, the builder or the home buyer.
"Am I happy that fees increased? Of course not, but when you plan a community like Mayfair you have to expect the unexpected," Rutherford said.