Since the start of the Great Recession, new construction has all but flatlined in Calaveras County. However, a significant fee reduction by the Calaveras County Water District, which went into effect Dec. 11 and impacts new construction projects in the Ebbetts Pass area, is a bright spot in otherwise dark economic times.
“This reduction gives me a lot of hope,” said CCWD board member Don Stump, adding that he thinks the reduced connection fee will give developers an incentive to build in the county. In turn, Stump believes this could serve as a catalyst for greater economic activity in the area.
Before the recent fee reduction, it cost $12,200 to connect into CCWD’s lines. With the fee reduction in place, however, the price for new connections now stands at $6,200.
Arnold contractor Justin Dollar, who owns JG Dollar and Associates Inc., said every little bit helps in a market where buying a house is much cheaper than building a new one.
“It might push some people over the edge,” he said. “Costs of construction haven’t gone down. They’ve gone up. It’s not going to start a revolution in building here, but it’s certainly a good thing.
“I’m really shocked CCWD would even propose something like that,” he continued. “They must be feeling really flush after their last big rate increase.”
The connection fee reduction came on the heels of a study that was commissioned by the water district and performed by Karl Brustad of Peterson Brustad Inc., a water-engineering firm based in Folsom. According to CCWD General Manager Mitch Dion, an assessment of connection fee prices is carried out every five to six years as part of the district’s due diligence process.
“The news here is that we’re bringing a cost consciousness to the utility,” Dion said. “We’re looking at what’s required to continue providing safe and reliable service to the public, and at the same time, keep costs low.”
Connection fees are paid when a new home or building is constructed on previously undeveloped land, Dion said. As part of the construction process, the developer or private home builder must pay a fee to link into CCWD’s infrastructure.
Dion added that CCWD is currently assessing connection fees in other parts of the district to ensure that they are competitive.
“The due diligence process is going area to area,” Dion said. “We just started in Jenny Lind and we’re going to Copperopolis next.”
While the cost of connection fees in the Ebbetts Pass region has plummeted, Dion doesn’t predict that prices will fall as sharply in other parts of the county.
“We knew Ebbetts would be a savings for the rate payer, but in those other areas, the connection fee rates probably won’t move dramatically,” Dion explained.
Despite the fact that connection fees might not drop in other parts of the water district, Stump believes the price drop in Ebbetts Pass will be a boon to new development in the area.
“Builders in Ebbetts Pass are going to have a few thousand extra dollars in their pockets,” Stump exclaimed, adding that he thinks the additional funds will serve as an incentive for new construction.
Stump isn’t alone in his enthusiasm about the connection fee reduction or what it could mean for development in Ebbetts Pass.
“There are lots of parcels on the market and I think (the connection fee reduction) will make a lot of those parcels attractive to developers and buyers,” said Beth Parker, co-owner and realtor for Cedar Creek Realty in Arnold. Parker added that, because of the economic downturn, many of the parcel prices in the Ebbetts Pass area are very competitive.
“Prices are still down,” she continued. “There are plenty of lots to be had in the $20,000 to $30,000 price range.”
Although land prices are still low in Ebbetts Pass, Parker pointed out that the area’s home values have experienced a marked increase over the last year. At the end of 2012, for example, the median home price in the Ebbetts Pass area was $170,000. Today, the median home price in Ebbetts Pass has risen to $220,000.
Although home prices in Ebbetts Pass have rebounded, Parker pointed out that they are still a far cry from their glory days of the mid-2000s. At the peak of the real estate boom in 2006, the median home price in Ebbetts Pass stood at $405,000.
“Development is never really huge in the Arnold area and new construction has slowed down considerably over the last four years,” Parker said.
However, she added that the connection fee reduction is just one positive prognosticator for development in the area.
“We’re seeing construction pick back up again,” Parker said. “Loan fees and interest rates are still low, so it’s a good time to buy. Parcels haven’t been selling well recently, so (the connection fee reduction) is another healthy sign of what’s to come.”
While Parker and Stump see the connection fee reduction as a harbinger of good economic fortune in the Ebbetts Pass area, Dion is more guarded with his optimism.
“It’s not like there are subdivisions waiting to be built in that area,” Dion said. “If you had someone who was going to build 5,000 houses up there, the connection fee would be a big deal. But (the fee reduction) isn’t going to spur that kind of activity.”
Dion went on to say that the most important thing about the connection fee reduction is that it shows the community that CCWD is doing everything it can to keep water rates and fees low and the quality of service high.
“We’re doing all we can to work with the community and run a public agency in a fiscally responsible way,” Dion said.