Consultants say FAR reductions could lower builder offers by tens of thousands; committee asks for per‑lot visualizations

RKG Associates presented revised fiscal and market modeling to the Large House Review Committee on Oct. 27, showing how stepped reductions in allowable livable square footage could change the price a builder would offer a homeowner and the town’s assessed‑value base.

Eric Halverson, principal at RKG Associates, told the committee the new analysis focused on differences by lot size: “The one thing that was missing from last time was looking at houses on different sized lots — what might the impact be to the sale price of someone looking to sell a house in the future as a result of potential zoning changes.” RKG used 202 teardown‑rebuild transactions from 2020–2025 as a principal sample, with smaller subsets for undersized (<9,500 sq ft, n=10), conforming (~10–11.5k sq ft, n≈22) and large (>12k sq ft, n≈23) lots.

The consultants described a stepwise approach to smoothing noisy price‑per‑square‑foot data across the reduction scenarios (labeled reduction 1, 1.5, 2 and 3) and then translating the change in livable area into an estimated change in the price a builder would pay while preserving an assumed 15% developer margin. For the “base” sample the estimated downward change in the price a builder would offer ranged from about $17,600 under the mildest scenario to nearly $92,000 under the most severe reduction. Halverson emphasized the results are estimates of the builder/investor market: “Under all these scenarios we’re trying to figure out if a builder were the primary target buyer for that property…what would the potential reduced price that they might offer the existing homeowner be.”

RKG converted those sale‑price estimates to assessed value (the consultants used 95% of sale price as a working estimate for assessed value) and applied the town residential tax rate to estimate annual municipal revenue effects per house. The presentation showed a per‑house annual tax difference to the town on average of roughly $1,400 for the mildest reduction up to about $6,400 for the most severe reduction for the base‑house scenario. Halverson noted the finance committee had asked for per‑house numbers so they could scale the result by an assumed count of affected lots; presenters used an illustrative count (65 teardown/rebuilds) during discussion to show the town‑level arithmetic.

Committee members pressed on data quality and interpretation. Mary Cooley asked how assessor condition ratings were defined; Halverson said the consultants used assessor labels pulled from public records and that the majority were recorded as “average,” adding that the assessor’s descriptors involve judgment and can vary by parcel. Several members asked whether builder purchases are typically off‑market; presenters acknowledged many builder transactions occur off‑MLS and said the study used recorded sale prices when available.

During the Q&A committee members underscored that the consultant estimates apply to the developer/builder buyer and do not directly predict retail prices paid by owner‑occupants. Halverson said that distinction matters: owner‑occupant purchasers sometimes pay more than builders, and “it’s not a foregone conclusion that somebody selling a house that’s not going to be torn down would necessarily lose value.”

RKG also cautioned that sample sizes in some lot buckets were small (for example the undersized‑lot group used 10 comps) and that price‑per‑square‑foot behavior was volatile; the team smoothed values to avoid counterintuitive jumps in per‑square‑foot estimates. Halverson characterized the likely market effect as a potential near‑term “blip” in builder offers that could moderate over time in a high‑demand community: “I do think there might be this little blip, and then it’s gonna come right back again.”

What’s next: RKG and staff will finalize the combined design/fiscal packet and present at a public community meeting planned for Nov. 18. The committee asked for a spreadsheet/tool and visuals that will let staff and residents enter a lot size and see the modeled effect under the consultant scenarios.

Sources: Presentation and Q&A with Eric Halverson and Allison Christiansen of RKG Associates at the Large House Review Committee meeting, Oct. 27, 2020.