Thursday, 08/21/08 7:15 PM
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Thursday, 08/21/08 7:15 PM |
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News & Information : In Contract Magazine : February 2005 : Community Development Charge Community Development Charge
In the revised Real Estate Purchase Contract, there is a new paragraph 2.2 discussing a Community Development charge and in the MLS Data Sheet there is a reference to a Community Development charge. Some have asked, "What is a Community Development charge?" In the Ohio Revised Code Section 349 there is reference to a Community Development charge. The following is taken from Section 349.07 of the Ohio Revised Code: "...any such instrument of conveyance containing said covenant of agreement, to pay annually or semiannually a community development charge for the benefit and use of the new community authority to cover all or part of the cost of the acquisition, construction, operation and maintenance of land, land development and community facilities, the debt service thereof and any cost incurred by the authority in the exercise of the powers granted by Chapter 349, of the Ohio Revised Code shall be deemed to be a covenant running with the land and shall, in any event and without regard to technical classification, after such instrument has been duly recorded in the land records of the county, be fully binding on behalf of and enforceable by the new community authority against each such person or entity and all successors and assigns of the property conveyed by such instrument of conveyance. No purchase agreement for any real estate or interest in real estate, upon which a community development charge exists by reason of a covenant running with the land, shall be enforceable by the Seller or binding upon the purchaser unless such purchase agreement specifically refers to such community development charge and identifies the volume and page number" or instrument number "of the deed records of the county in which the covenant running with the land establishing such community development charge is recorded". The previous paragraph is the reason that caused the language to be inserted in the Board Contract and added to the MLS Data Sheet. It is up to the listing agent to obtain the information and provide it for the writing of any offers. The most commonly known Community Development charge is in New Albany. As you will see in this article there are several more throughout Franklin and Delaware County which you may or may not have been aware of. There are others that have not been confirmed as of this date. How are these Community Developments formed?The developer would go to the governing authority and request that a Community Development be established for the area of land he is going to develop. The developer then installs the improvements. Once the improvements are completed, the governing authority then sells bonds to reimburse the developer for the improvements. A special assessment for a Community Development charge is then placed on the properties in the Community Development area to collect the money to pay off the bonds. A Board of Trustees is formed. It can have up to 13 members (6 members come from the developers company, 6 organizational board of commissioners appointees and 1 from the local governing authority). As the development is established and homeowners move in, they will eventually replace the 6 members from the development company and the 6 organizational board of commissioner's appointees. What is the Community Development charge for?Usually, the Community Development charge is to pay for the infrastructure (sewer, electric lines, gas lines, new roads, road widening, curbs, gutters, community facilities, etc.) that is constructed when the development was built. How is the Community Development charge determined?The Community Development charge is a special assessment placed on the property. It is deemed to be running with the land just as your property taxes. Therefore, the special assessment would be prorated just as we do property taxes. The governing authority would calculate a millage rate. Then, the special assessment is calculated by taking the millage rate times the assessed value of each of the properties in the Community Development area. The special assessment based on a millage rate is the most typical approach. The special assessment can also be determined on a uniform or flat fee which could be based on the types of property, types of buildings, the size of the parcel, etc. or on income (which we have not seen) or any combination of approaches. How do I find information on where the documents are recorded that set up the Community Development charge?As the listing agent, what you need to know is what is the county, volume and page number or instrument number where the original document that established the Community Development charge for that community is recorded. First, before going on your listing appointment, pull up the tax records on the property. See if there are any special assessments. If there is a special assessment, call the county and find out what the special assessment is for. Ask if the assessment was formed under Section 349 of the Ohio Revised Code. Second, you can review Appendix A and B of the Owners Title Policy. The information of where the Community Development documents are recorded may be there. Third, you can call the developer of the land for the subdivision. Ask if the development was built as a Community Development under Ohio Revised Code 349. If it was, asked where the documents that established the Community Development charge were recorded. What is the county, page and volume or instrument number? How long does the Community Development charge last?The Community Development charge is normally for a 30-year period. It can be extended in 10-year increments. If additional land is added to the Community Development, the time frame may be lengthened. Depending on how much money the Community Development charge provides to pay off the bonds, the time frame can be shortened. Is the Community Development charge on Commercial and vacant land?Normally the Community Development charge is assessed against all property in the Community Development area be it residential, commercial or vacant land. As was stated in a recent December 31, 2004 Business First article, REALTORS® can look for more of theses types of developments to occur. It is a way that the cities can have infrastructure improvements made and paid for up front by the developer. Many thanks to Bill for his time and diligence in chairing and assisting with all of the changes made to CBR contracts over the past year+. Of note are the articles he has provided for this publication to thoroughly explain and educate members on these changes - including last month's article on the revisions to the residential real estate purchase contract. Currently, we are aware of the following Community Developments
New Albany Community Authority Pinnacle Community Infrastructure Financing Authority Powell Community Infrastructure Financing Authority The RiverSouth Authority Although not confirmed, there may be a Community Development charge upon subdivisions in:
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