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Will Impact Fees Increase in Florida?

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More Fla. metros studying higher impact fees on new homes

DAYTONA BEACH, Fla. – Nov. 12, 2018 – It took some coercing in the past year from city officials and residents, but Volusia County finally appears set – for the first time since 2003 – to ask developers to chip in more for road improvements around new growth.

The question, though – one that's expected to be answered during a council meeting Tuesday – is how much will impact fees be raised.

A consultant has recommended hikes of more than 100 percent in some categories to compensate for fees that haven't kept up with rising construction costs. That option is expected to generate an additional $7 million a year for road fixes. But building industry leaders and some council members worry an increase that steep would stifle development or drive up the cost of homes.

While it could make homes more expensive, experts say, other counties that have raised impact fees recently, like Orange County, haven't experienced a slump in growth.

Still, one alternative that has been tossed around is to roll out increases over a period of years, instead of hitting developers all at once.

"The impact fees need to be adjusted and they will be," said County Chair Ed Kelley. "I think there will probably be discussion about how much and how to do this. I'm in favor of phasing it in because I think that would be fair to everyone."

That's the approach that the Volusia Building Industry has suggested. In a Nov. 6 letter to the council, the association's president wrote that the "current fee structure is broken and cumbersome" but cautioned against the proposed increase.

"Impact fees, like all other development and construction costs, are a component of a new home's price," wrote Paul Rechichar. "Any regulatory fee or increase in costs limits access to homeownership."

The impact fees, he wrote, should "rise in a more balanced way," and not all at once in order to avoid a major stall in the industry that's already "facing stiff increases from labor rates, material costs, tariffs, increasing interest rates, scarce land supply and increasing regulation."

Whatever is decided, new impact fees won't go into effect until 90 days after they're adopted.

Tuesday's council meeting, which also includes the selection of a consultant firm to lead the search for a new county manager, starts at 10 a.m. It will be held at the county administration complex, located at 123 W. Indiana Ave. in DeLand.

The impact fee issue rose to the forefront as local officials were scrambling for solutions to a pressing problem: a noticeable need for new roads and repairs to existing ones – $1.4 billion worth, according to a needs assessment compiled by local officials countywide – but not enough money to fix them.

In an attempt to bring in more revenue, city and county leaders were pushing for a referendum on a half-cent sales tax that would have gone before voters this year. The county seemed poised to sign off on the ballot measure, until mounting criticism over the council's reluctance to raise impact fees convinced officials it would be a bad idea to ask voters to pay more before they asked the same of developers.

A higher sales tax – projected to generate $42 million a year – would produce far more money for roads than raising impact fees, but a consultant's report showed just how much money Volusia has been missing out on by not keeping current with its fees.

To bring those fees up to date, the study conducted by Clancy Mullen, a principal with Duncan Associates, recommends increases of 107 percent for shopping/retail centers, 135 percent for hotels and 147 percent for single-family homes.

Compared with neighboring counties, the proposal would move Volusia's impact fees for homes from the low-end of the scale to the high end. The suggested updated fee of $5,379 – roughly $3,000 more than the current rate – is less than what Orange, Osceola, Brevard, Lake, Alachua, Polk and Indian River ask of developers for new homes.

After the report was finalized, the county gauged public opinion about the proposed hikes through a series of town hall meetings. Several residents encouraged the council to follow the consultant's proposal. Former county administrators were also there with the same plea.

At one meeting, Dick Kelton, a former assistant county manager, noted how much worse roads have gotten since impact fees were first implemented. At another, Mary Anne Connors, who retired as deputy manager in 2015, advised the council to "take action now" to the fullest extent possible.

"This is absolutely critical in terms of fairness," Connors said at an Oct. 30 meeting in Daytona Beach. "Until the county has addressed impact fees, as a fairness issue, and brings them completely up to date, there cannot be broad support for the sales tax, which is the real answer for what needs to happen."

She continued: "They (impact fees) need to be fully implemented. Not phased. They've been phased for years."

Copyright © 2018 The News-Journal, Daytona Beach, Fla., Dustin Wyatt. Distributed by Tribune Content Agency, LLC.

              

Information provided by Florida Realtors.  Click here to see the original article.

Reprinted with permission Florida Realtors. All rights reserved. 

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