pf_00145 - Laserfiche WebLink

Home

APP�NDIX; LAND DEVELOPMENT COSTSI6 In order to have a better understanding of the procedures that the home builder or the land developer mus� go through, an example of costs for a typical subdivision has been developed. C o s t of Raw Land Raw lancl in one of the southwestern suburbs of Minneapolis is currently selling for about $1, 500 per acre. The dev�eloper mu�t tie up consider- able capital in the land until he can deve�op and sell it as lots or build and sell homes. Generally, the developer tries to buy the land on terms that �uill �Ceep his investment down and benefit the seller by spreading the payments over a number of tax years and thereby keep the capital gain tax low. Sales are often by contract for deed with terms that would run, for exampl.e, ten per cent down and ten per cent per year or pay- ment for lots as they are released for sale. Other developers , of course, may pay cash and lower the total price considerably. The going ra�e on the unpaiu balance is around six per cent. Other costs incurred may be taxes on �he land and keepi.ng the weeds cut if the land is not farmed. During this time, the developer's investment could be collecting six per cent interest if invested elsewhere. Preparation of the Site The following steps must be taken before the land is ready for building. A. Topographic survey of the property at a scale of 1" = 100' wi.th a 2' contour interval, This survey costs approximately $8, 00 per acre. B. A surveyor must find and place corner stakes at a cost of approxi- mately $2, 00 pex acre. C. A subdivision layout by a land planner or engineer and drafting of the preliminary plat will cost about $15. 00-$25. 00 pex lot. The land planner must consult with the village planner, and the Federal Housing Administration Land Planning Division and the Veterans ' Administration if the subdivision is to be financed by them, The preliminary plat is then presented to the village planning commis- . sion for approval and often further changes. D. After final approval of the prelizninary plat, the final plat is pre- pared. This is usually done by an engineer who also lays out the water, sewer, streets, lot grades, actual lot measurements, etc. Charges run from $35. 00 to $50. 00 per lot. The plat is then pre- sented to �he village planner, the village engineer, the planning comrnission, and the cour�cil, all of whom might still suggest some changes. Additional expenses and delays may raise the �costs anothe.r $10..OQ: per lot. 1 Carl Martin of the Spring Realty Gompany was especially helpful in working out subdivision costs� 43