This section introduces the reader to the local bureaucracy that affects real estate usage and ultimately real estate values. The goal of this section is to indicate which officials within local government are most important to real estate investors and how the investor can develop a working relationship with these people. After some key terms are introduced, the section will discuss in detail the four most important governmental areas of real estate bureaucracy: the building and zoning department, elected officials, the planning department. and the tax assessment office. as well as how to build a working relationship with VIPs in these areas.
In this section, the following terms related to local officials are defined and explained:
• Building permit
• City manager
• Department of transportation (DOT)
• Public safety officials
Knowing and understanding these terms and issues related to them will help you to learn and apply the concepts presented in this section.
A building permit is the official authorization and license needed for Construction within most communities. This is issued by the appropriate governing authority (usually the building department), which generally requires plans and drawings showing that the desired construction meets all the rules and regulations that apply. In almost every instance, a fee is paid by the property owner to one or more governing authorities. A building permit to construct a borne can be very involved and could require separate approvals and inspections from many departments and agencies such as the fire department, water department, environmental agencies, Army Corps of Engineers, and state and county DOT as well as code enforcement for plumbing. electrical, structural, parking. and potentially health. In most areas of the country a building permit is required for any work that exceeds a base cost. This cost can be as low as $50 and covers virtually anything from minor repairs to major construction. If several contractors or subcontractors are involved, it is also likely that each will have to apply for permits separately. The ultimate purpose for these permits is to ensure that work is done according to the building codes. This is protection for the property owner. It is not unusual for a building to have improvements or repairs that were done without a building permit. even though one was required. Investors should pay close attention to this, as like the building codes, the failure to get the required building permit before making the repairs or improvements may become the new owner’s problem.
The city manager (or county manager) is a professional hired by the city or county w be the head of business operations. This person is not an elected official but is hired by the city council or county commission, which consists of elected officials. These professionals often retain their position for many years and are very influential and powerful within the community. Some communities function without a separate city manager. giving that job instead to the mayor. If this is the case, voters need to pay close attention to the experience any politician who is running for this office has In city or county management. Most elected officials running for the first time for any elected office fall short on experience, and they usually show it relatively quickly in their elected term.
Department of Transportation (DOT)
This authority controls and regulates the roadways In any community. Generally there is a DOT for the local city, another for the county. and a third for the state. If there are toll roads, such as turnpikes, there may be a DOT that specifically deals with those roadways as well. Road systems are very expensive to build and maintain, and much of the effort of any department of transportation agency goes toward the planning of future needs for the road system. Therefore DOT offices are a wonderful source of growth information. New roadways are one of the primary events that can cause property values to either skyrocket or plummet. Because any new road or major improvement to an existing one is very expensive. these systems are planned well in advance and can provide an investor with ample lead time to invest ahead of those who have not reviewed the future roadway plans.
Public Safety Officials
Public safety officials such as the police, firefighters, and other ancillary providers such as paramedics compose what is frequently called the department of public safety. These departments are an important source of information about an area. Every investor should know how safe a potential investment area of town is. Of these offices, usually only the fire department is directly involved with real estate concerns. Generally, all new construction must meet certain local or state fire codes, and it is the responsibility of the fire department to approve the plans and sign off” on a set of plans. This signifies that the department has approved the plans pending the full inspections it will make during construction. The fire department also makes periodic inspections of existing buildings to ensure that the property meets the necessary fire protection and fire safety rules and regulations. Every investor should know whether a property he or she is considering purchasing complies with fire codes either currently imposed or about to come into being.
Utilities (both public and privately owned) consist of water. sewage. garbage and trash removal, gas. electricity, phone, cable TV companies. and bus routes and other public transportation. Each of these utilities has its own structure and plans for the future:
each also has its own department heads and bureaucracy. These utilities can affect the values of real estate in a community positively or negatively. Clearly, the most dramatic effect would be the lack of an essential utility such as water or sewage. Each of these departments or companies is an excellent source for information about community growth.