We are all well aware that there are severe fiscal problems at the federal, state, and local levels. I think it’s safe to assume that regardless of the solutions agreed upon, they will involve some level of both public revenue enhancement and expense reduction.
So, the question for us real estate folks is—we know we will have a target on our back, but what will the governmental entities aim at?
We will all need to start thinking about the revenue enhancement piece and how that manifests itself in our industry. Will transfer fees for real estate sales show up or be increased? With the development cycle slowly starting in multifamily and being talked about in office, will the municipalities abandon policies used to stimulate construction—such as TIF’s, infrastructure money, and tax abatements? Will they also increase development-related fees, like permitting/construction review, water/street/sanitary use, etc.?
At the end of the day, I think we all need to proactively work with the municipalities to minimize extra cost burdens—read: revenue enhancement for them—and also face up to the reality that we will need to factor these business costs into our go-forward plans.
Michael W. Dardick is president and CEO of Granite Properties Inc., which he founded in 1991. Contact him at [email protected].
