Asking Tough Questions About Development: How to Get Involved in Local Growth Decisions

Do you ever have trust issues with authority, authority figures, whether it's the government, your trade association, your church, your school, wherever you are in life? If you have some trust issues, sometimes it comes from the realities around it, not just from whatever you went through personally in life. For me, I started trusting our leadership levels a little less after March of 2020 when I saw the policies that came into place during the COVID era. So when I ask questions now, I like to do the research, go a little bit deeper, and I don't just take things on face value. I hope you don't either. One of the things that we're discussing very heartily right now all over the country— well, maybe not all over the country, but definitely in Florida, Texas, North Carolina, South Carolina, the high-growth states where the jobs are coming and where the people are coming in great numbers— We're dealing with growth. Now, we've been popular for a long time. Frankly, we love living here in North Carolina. It's beautiful. But what's happening right now is we're growing at a faster rate because we have people that I like to call economic refugees. They are coming in from high-tax markets where the jobs are less scarce, or they may have less freedom because we have right-to-work laws here. And so they see, hey, y'all got Four Seasons and pretty nice people and good jobs and I can live there, so I'm gonna come ahead on. Well, that's great. We'd love to have you. But when we say yes to all of you, we have to figure out what to do with the people who come here. So our elected officials, particularly on the local level, county commissioners, city councils all over North Carolina in specific, they're faced with growth issues. And frankly, it's a tough road to hoe. Nobody really has a perfect answer, which by the way, let's just put an asterisk on that. We should stop expecting our elected officials to be perfect. They're not gonna be. They're humans. We should just expect that they be reasonable and be willing to engage with us and listen to us, whether we agree or not. That being said, we're looking at the fight amongst our candidates for elected office all over the place being no growth people over here that say, "We've grown enough, thank you. Nobody new, pull up the drawbridge." And then we have folks over here that say, We love it. It's great. Bring it on. Bring it, bring it, bring it. In real estate though, we are kind of unique in our profession because we generally know that the best solutions lie in this area where we can take out our own personal biases and focus on the problem at hand. Because growth, it's a good problem, but it is something that has to be discussed. In real estate world, we talk about it as smart growth. What are the best policies that can both welcome people but not sacrifice our community. And when I talk about sacrifices, I'll just point out that when you have unfettered growth, you can wind up with seas of neighborhoods with houses on pocket handkerchief size lots, so much concrete the water can't go anywhere. And frankly, that's why my backyard flooded and I lost 20 chickens because of the development upstream from a couple of years ago where the developer dumped a bunch of excess sand into the tributary, and then on one big heavy rain, it choked up into our yard and drowned our chickens. It's not something they intended to happen, but we can call that an unintended consequence of growth that can be good because it provides houses for neighbors. But you have to take a good look at what the ramifications are going to be of where the water goes, where does the construction debris go, How do we handle these things? So looking at all of that, we do want houses, but we want smart growth. We got to balance it out. By the way, if you're a voter, that's one of those questions you should be asking people is, what's your opinion on growth and best ways to manage it? Because if you're the person who doesn't want anything, let me just remind you, that makes it really hard for your kids and grandkids to live near you. And for me, who's lucky enough to live near my parents, my in-laws, my extended aunts, uncles, and cousins. To me, nothing is better than being surrounded by people to whom I'm related, and I want my kids to have that chance too. So we want to make sure we keep opportunities for our communities without totally destroying. So again, we're back to the middle. Now, one of the solutions to unfettered growth that you'll hear talked about a lot, because boy howdy, doesn't it sound good on paper? It's called impact fees. An impact fee is exactly what the name would tell you. There's going to be a fee to the developer or the builder for the impact on the community. Impact being additional burdens on the public schools, additional cars on the roads, additional people using the municipal water and sewer, additional people needing public services, using parks and rec. You can just keep on going. Every time we add a commercial property or a residential property, It does add people and it does add traffic. And so that's where the idea of the impact fee comes from. The theory being, if you charge this to the builder or the developer at the time of adding that property, you can offset the impact to the community. Right? Perfect. Nice little tweet, 140 characters. Perfect. Nope, nope, nope. Always, always, always, y'all, go deeper, read the research and see what really happens. The reality is that when you add an impact fee, and it could be anywhere from $4,000 in some communities up to $28,000 in some areas of California. Those dollars drive up the cost of housing. End of discussion. They drive up the cost of commercial building. End of discussion. You cannot, in real-world terms, think that those dollars are just coming off the hip of that developer or builder and he says, you know what, I want to give more money back to the government. No, not because they're greedy. But because, well, A, builders and developers are allowed to make a profit, and that's a true fact. Let's also consider the fact that particularly in the last 4 years of this wild run-up in the real estate market, our developers and builders have had a hard time making a profit at all, y'all, because they can't find good labor. If they find good labor, the labor doesn't keep showing up. If they get the good labor that does show up, we need goods and materials to build properties, and the supply chains have broken. And then When the goods and materials show up, they're often more expensive than when we started the whole process back here. And so the margins are continually squeezed, which means that if a community decides to add an impact fee in order to, in theory, offset all of these challenges to the community, the cost is just going to go up to the end consumer. Now, one of the conversations I know you've been a part of with your friends and neighbors is that housing has gotten really expensive. Not a day goes by that somebody in the current administration doesn't fuss and moan about how nobody can buy a house anymore. Well, that's actually not true. Always ask more questions, but it is more expensive than it used to be. The first house that I bought would not be available for a first-time buyer now, just because it would cost a whole lot more. So we have to ask ourselves, all right, if somebody else is paying it, Can they afford it? All right, so we add it to the buyer. Keep the low end of the scale, y'all, make it $4,000. And so now that property has become more expensive. Does that take it out of reach of people? I will tell you that it does. And in real estate, we see this all the time. We have buyers that wish they had bought when it was less expensive. For whatever reason, they didn't. Maybe their job wasn't secure, their credit score wasn't ready, or they just weren't emotionally ready for the commitment. Now they're ready and the cost has just gotten so high that they are feeling trapped as a renter. And nobody wants to be trapped. Everybody wants to have opportunities. That's the beauty of America. That's the beauty of property ownership is that you can absolutely see the light at the end of the tunnel where you'll have your own property, whatever it looks like, a single wide or a house on the golf course, doesn't matter. You want to be able to add your own shrubs, plant your tomatoes, and paint the bedrooms and make it your own. That is something that people dream of from day one. So when we add impact fees, we start pulling those opportunities back. Now, there's another little hidden story here about impact fees that you should be paying attention to with any fee, tax, or regulation that comes onto the books. Where do the dollars go? It's one of the challenges I have with spending in DC, period. There's a lot of spending and very little accounting at the end of the day. And frankly, my business would have gone under years ago if I didn't constantly look behind my dollars and make sure they're behaving, same thing in my household. If impact fees are charged by a community, they often go into the general fund. Do y'all know what the general fund is? That's right, the general fund is more affectionately known as a slush fund, and that's where your elected officials, county managers, city managers, whoever's in charge of it, can go dip in for projects. And you already know those projects seldom include schools, water, sewer. Roads. So we have a disconnect here. We have an idea that sounds good. We have a reality that costs the neighbors around here more money to build a house. And then we have a situation where we also decrease our trust in our elected officials because it doesn't do what they said it would do. How do we fix all this? Well, first of all, ask those elected officials or anybody that wants to be an elected official about impact fees. Or any other solution they have to growth, and ask them to produce some research from past history, other communities that have implemented it, where it has worked, hasn't worked. Look for the data. Please always look for the data. And if you need resources, you let me know and I will help you. The other thing I want you to think about is this: when we say no to somebody, why are we saying no to them? When we say no to somebody wants to live in our community, are we saying no because we're full and there's no room for them? But what if that were the next big Beethoven and you could have the best composer ever in your community? You wouldn't say no to them, but you don't know. So we want to make sure that we're thinking carefully about why we want to exclude anybody from a community. And then we want to ask ourselves, do we want to have a community where people thrive and grow and get creative and make it better? And that comes from making good decisions on day one. So if you want to have more trust in authority figures, leadership, government, anything, ask more questions. Sometimes, like me, you get pushed to the side because you ask too many questions. But I'd rather ask questions than never ever ask one because I assumed that somebody else was right. And I don't have to tell y'all what happens when you assume. You know that adage because it's true. So ask more questions, get involved, and let me know what you're staying up late at night thinking about.