Wednesday, May 23, 2007

More Bad News for Amrep (AXR)

AMREP Corp. (AXR) is the $400M company in Rio Rancho, NM that owns approximately 18,000 acres of the town.

What's bad for Rio Rancho is bad for Amrep, and there's a lot of bad news:

1. Starting in August 2007, Intel is laying off 1,000 workers at its chip fab plant in Rio Rancho. There are only about 40,000 people of working age in Rio Rancho.

2. Rio Rancho building permits were down 66% from March 2006 to March 2007.

3. The city of Rio Rancho is increasing by 29-40% the impact fees charged to homebuilders. (An “impact fee” is assessed by the city against new construction, and due at the time of the issuance of the building permit.)

All the fees in the tables below are per unit. Remember, an increase of $3000/unit means an extra $9000/acre in cost assuming 3u/ac.

The fees differ based on whether the lot is in a master planned community and connected to city services, or else in an area with domestic wells, septic systems, and limited roads and drainage.

This is the change in fees for lots in master planned communities:

This is the change in fees that would apply to lots not connected to city services (e.g. the famous "scattered lots"):

Sources: 1,2,3.


BP said...

Sharp increases in "impact fees" that Rio Rancho charges homebuilders will deepen its housing crisis. Especially in the case of so-called "scattered lots," the increases in "impact fees" have nothing to do with increases in the value of services.

CP said...

It is entirely possible that the impact fees are intended to choke off development in Rio Rancho.

When I visited there in April, I found the inadequate road system to be clogged with traffic.

Also, all existing homeowners stand to benefit from a reduction in development. Every new house adds to the inventory overhang.