Traffic impact fees being collected; builders unhappy

Since the new traffic impact fee schedule was implemented by Mayor Kip Holden in late summer, the city-parish has collected $95,678 in permit charges from small residential and commercial projects. Many projects didn’t pay anything under the old fee system, which allowed commercial projects that are less than 30,000 square feet to be built without paying a fee -- even though many of these projects boosted the traffic on city-parish roads.

But Passman Homes owner Jerry Passman says the new fee schedule is unfair to businesses and homebuyers. "These are all taxes that get passed on to the end user. It's unfair to buyers that need property." Passman says there is a need to raise more money to fix parish roads, but said a wheel tax would be a better solution, since the money could be used for fixing old roads and older problems, as opposed to the impact fee, which must only go to new projects.

Passman says the fees that homebuilders pay are being passed directly onto buyers -- and at a slightly higher cost. While the traffic impact fee for a single family home might be $800, it ends up getting marked up by the standard 12% to 15% profit margin for builders and 5% commission for Realtors. "So you're talking $950, and that’s before you put that into a mortgage and pay interest on it for 22 or 23 years," he says. "That's one of the points that the homebuilders have tried to make." --Timothy Boone

White buys building for new office

Otey White & Associates, a regional advertising agency, has purchased an 8,300-square-foot office building near the Interstate 10/Essen Lane interchange for its new location. The agency paid $760,000, says Mark Hebert of Kurz & Hebert, who brokered the deal. The building, which was built by A. Hays Town in 1983, had been the offices for Fusion Architecture and the Safety Alert Network.

Housing slump makes architects hungry for business

The downturn in the national housing market has made it easy for homebuilders to find an architect, The Wall Street Journal reports. Residential architects are seeing their work backlogs drying up: A survey from the American Institute of Architects found that 42% had a backlog of less than three months, compared with 31% two years earlier. The decline is caused by drop in new home construction and the popularity of remodeling jobs that don't require an architect's expertise, such as installing new windows. Read the full story here.

Poll: Most don't expect slowdown in B.R. commercial activity

Major national retailers are cutting back on store openings and planning to close locations because of the sluggish national economy, but Real Estate Weekly readers don’t think the slowdown will affect Baton Rouge. Forty-eight percent of the people who responded to an online survey say commercial construction in the Capital Region will not be affected, while 43% think it will. Nine percent say they don't know what will happen. More than 100 people participated in the survey.

Today's question: Have you noticed a rise in construction costs as a result of the traffic impact fees in East Baton Rouge Parish?

Tom Cook: Port Allen acreage sold for $2.5 million

A&D Medical sold about 194 acres on the north side of Court Street, between La. 1 and La. 415 to Matt McKay and John Nolan. The purchase price was more than $2.5 million, or about $13,000 per acre, according to Jacob Richardson of Kurz & Hebert Commercial Real Estate, who brokered the deal. The property was marketed for $15,000 per acre. The sellers were represented by Scott Parr of ReMax Commercial Properties. According to Richardson, Nolan and McKay will probably develop a single-family residential development on the tract, as demand for residential housing in West Baton Rouge begins to expand.

The medical office park developed by Jimmy Nunnally at Camellia Trace Drive and Perkins Road, across from the Baton Rouge Clinic, has sold the front pad site to Perkins Surgical Center, represented by Dr. John T. Couvillion. The 7,912-square-foot site sold for $685,610, or $86.65 per square foot. The new owner intends to construct a medical surgical building, and construction should start shortly. The seller was Perkins 7300 LLC, represented by Nunnally. The other building on the property is the Dermatology and Aesthetic Institute, a medical spa owned and operated by Dr. Donna J. Nunnally. Branon Pesnell of Beau Box Commercial Real Estate represented the seller as a broker, and the buyer was represented by Martin Padial of Padial Real Estate.

(Appraiser Tom Cook owns Cook Moore and Associates. Reach him at 293-7006 or TCook@cookmoore.com.)

Brian Andrews: Misreading foreclosures

Headlines in the national press would lead most observers to believe that residential foreclosure levels are at historic highs from coast to coast. The truth of the matter is that while foreclosure levels are high, the lion's share are limited to certain geographic areas that do not include Louisiana.

According to a recent report by the Mortgage Bankers Association, new foreclosure rates in the third quarter of 2007 were the highest in Nevada, Michigan, Ohio, Indiana and Florida. The mortgage type with the highest default rate, adjustable rate subprime loans, is the worst in California and Florida, which together account for 33.8% of all foreclosure starts in the category. Previous data implies that if you take out the top five or six states in terms of foreclosures, the remaining states are fairly stable.

There is no doubt that there were subprime loans made in Louisiana that have gone or will go bad. It appears, however, that the levels are consistent with previous years and certainly not the epidemic level being experienced elsewhere.

The unfortunate consequence of the mistaken impression that foreclosure rates have spiked in Louisiana is that local homebuyers are delaying purchases, thinking that prices will drop as lenders take back properties. I just do not see this price drop occurring in the Interstate 10/12 corridor and I feel that homebuyers are unnecessarily delaying purchases.

With interest rates continuing to be at historically low levels and home prices returning to pre-Katrina levels, creditworthy homebuyers really have no reason to wait out the South Louisiana market. If, however, you are looking for a steal of a deal, considering picking up a foreclosure in Flint, Mich. You might want to wait until the temperature gets above freezing.

(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Mortgage and he can be reached at brian.andrews@acmla.com.)

Real estate recap: Towne Center listed for sale; Hotel developer agrees to build in Baton Rouge

On the market: A Dallas company is listing the Towne Center at Cedar Lodge retail center as an investment opportunity. Holliday Fenoglio Fowler is marketing the 358,000-square-foot shopping center as a trophy asset, noting that the retailers in Towne Center such as Whole Foods, American Eagle Outfitters and Coldwater Creek are consistently bringing in sales from $375 to $500 per square foot. The shopping center is nearly 97% occupied, HFF says. Company plans four hotels: Bell Hospitality Group has signed a development agreement to build a MainStay Suites in Baton Rouge. An official with Bell, which is based in Oklahoma City, says no site has been selected for the hotel. Bell will build a minimum of 10 MainStay Suites and Suburban Extended Stay hotels in cities across Louisiana, including Baton Rouge, New Orleans, Lafayette, Lake Charles and Alexandria. Plans are to develop four hotels with about 100 rooms each in Baton Rouge, says Chad Ortte, an agent with Donnie Jarreau Real Estate who is representing Bell in Louisiana. All of the hotels will be under development by Oct. 31, 2009.