City of Sequim fees may discourage modular homes

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For many retirees, first-time homebuyers, and for virtually anyone interested in purchasing “affordable housing,” buying a manufactured home can be an attractive option.


But then there’s the question of where to build. Jeanne Murray and Mel Hendrickson, co-owners of LJM Properties, which operates both Hendrickson Estates and Hendrickson Heritage Park in Sequim, say their business has been on a bumpy ride, with good times and bad.


City fees, which often rise, and occasionally drop, play a major role in the health of the business.


LJM has an interesting business model: The modular homes are purchased by the individual homeowner, but the homeowner then pays a monthly fee to rent the land on which it sits, and for certain services, including water.


To increase its revenues, LJM must increase the number of modular homes in the development.


And that’s not happening.


Murray says, “it’s been slow” for some time, a fact she attributes in part to the downturn in the housing market that began in 2009.


They’ve put in “maybe three or four since,” she said.


The City of Sequim’s impact fees aren’t helping, the two said.


One recent example: They are now installing a new modular unit for a family member.


The city’s basic fee for the new mobile home is established by state law at $250. But then there are the other fees, including a “general facility sewer” fee of $8,050, a “general facility water” fee of $6,100, a “park impact fee” of $2,210 and and a “transportation impact fee” of $1,178. Add those up, toss in the smaller permit fees, and the total comes to $20,357 for a 1,512-square-foot modular home, plus a 434-square-foot garage.


That’s a significant percentage of the cost of the new home, Hendrickson said.


The fees likely contribute to the brisk re-sale market in existing modular homes, Hendrickson said.

Unfortunately for Hendrickson, those transactions have no impact on his bottom line.


The two are quick to say the city fees aren’t the only reason business is slow, but they also add they’re not taken lightly by those inquiring about a lot in the development.


In the county

Rick Kavanaugh, owner of Buy-Rite Homes in Sequim, which sells Karsten Modular Homes, says the fees make a big difference. He said he recently had a client who purchased a lot in Sequim. “I told him about the city fees and he just put the property up for sale.”


“I’ve had others that tried to buy (in Sequim), but they haven’t proceeded because of that.”


Kavanaugh is blunt regarding the fees: “It’s just ridiculous.”


While noting that every permit is different, and results in different fees, Kavanaugh said by comparison the average fee for placing a new modular home in Matriotti Creek Estates in Carlsborg, including water hook-up, is “less than $1,000.”


Kavanaugh also noted that the savings aren’t nearly as substantial for those who buy a county lot and are required to drill a well and install a septic tank. Those costs often match or exceed the fees charged by the city.


City Manager Steve Burkett said there’s little distinction in fees between a mobile home and a stick-built residence. He said that’s the case because the impacts on the city — increased traffic, use of parks and the utilization of city water and sewage services are very similar.


“These are growth-related fees. They are all related to the philosophy that (new arrivals) should pay their share of the cost of growth. Our philosophy is that we’re not going to raise the fees on those who live here. We’re going to have the growth pay for that.”


He noted that the city anticipates major costs to deal with anticipated growth. “Our projections show 3,000 new people.”


He said among the city’s concerns is the availability of water, which the city will have to purchase.


He noted that water already is in short supply in the county. “One constraint on people going outside the city and building is the availability of water. We plan to have water for the next 100 years.”


On-site fees

The city’s fees for so-called stick built homes are slightly higher because they’re based in small measure on the cost of the construction.


For example, a single family home now under construction on Morgison Loop, which is located off West Sequim Bay Road near the Purple Haze Lavender Farm. The 3-bedroom, 2.5 bath home, has 1,863 square feet of living space and a 576-square-foot garage.


The city fees on the home, which is valued in the permit application at $248,450, are $22,983.


Another example: the city collected $32,403 in fees for a new duplex — essentially two homes — now being built in Maple Ridge Estates, a development of duplexes just south of U.S. Highway 101 near South Third Avenue.


The building, which includes 3,116 square feet of living space and another 514 of garage, is valued in the permit application at $358,702.
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