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Counties Struggle Over Impact Fees

Courtesy MarkGregory007/Flickr

Since the financial collapse, counties in Southwest Florida have struggled over how to handle impact fees.

Impact fees are one-time taxes on new construction spent on supporting expanding communities with such things as roads, parks and libraries.

County Commissions across Florida have debated whether reducing impact fees spurs growth.

Commissioner Cecil Pendergrass said Lee County reduced its impact fees by 80 percent this year to entice developers.

“Back in 2005, Lee County tripled impact fees because of the economic growth of the county,” he said. “They never adjusted the rates back down to where they should have been. My goal was just to reduce, adjust the rates based on the market right now.”

Pendergrass believes lower impact fees encourage development. More development means more taxable properties.

Pendergrass said there are results. In June of last year, Lee County issued 56 building permits for single family homes. This year that number rose to 94.

“For commercial, we had 12 permits pulled worth $8.5 million compared to $600,000 in June of last year,” he said.

Reduced impact fees and $4.6 million in aid were among the reasons the Hertz Corporation agreed to move to Lee County this year.  

Commissioners voted four to one to reduce three of the five categories of impact fees.

The one holdout was Commissioner Frank Mann.

“I think it was a serious mistake,” Mann said.

Mann said impact fees have nothing to do growth. He said people build when banks have money to loan out.

“When the money was available, it didn’t matter how high the impact fees were and in fact when they were at their very highest - at $12,000 let’s say on a single family resident here five years ago - we issued more building permits that year than any other year in the history of the county,” Mann said.

Mann also said the market is still flooded with foreclosures. Which begs the question, why would someone build a new home and pay an impact fee when they can buy a foreclosed home?

As of this June, 1 out of about every 650 homes in Lee County is in foreclosure, according to the database RealtyTrac.

Mann also said new infrastructure needs to be paid for; with or without impact fees. If money doesn’t come from impact fees then the county might have to look to other alternatives such as raising taxes.

“This very year my county commission voted four to one to do away with impact fees,” Mann said. “It’s probably going to raise taxes on the existing tax payer partially to cover what the impact fees are not covering right now.”

Charlotte County stopped collecting all of its impact fees except for the one meant for transportation two years ago.

Charlotte County planning official Shaun Cullinan said there has not been an explosion of development since; just a slow climb like its neighboring counties.

“People are being cautious, but they are starting to pull the triggers a little bit,” Cullinan said. “But we can’t see a correlation between that and the impact fees.”

Cullinan said Charlotte County recently had to dig into its general fund to find money to buy new vehicles for the Fire Department.

Yet just last month, Collier County Commissioners agreed to research the idea of exempting up to 3 million dollars’ worth of commercial impact fees.

Executive Vice President of the Collier Building Industry Association Kathy Curatolo hopes the reduction will boost commercial construction.

“In Collier County, I believe commercial represents about six percent of our tax base distribution. In Lee County, it’s 10 percent. In Sarasota County, it’s 13 percent. There’s too much more of a burden on residential for our tax base. Somehow we have to stimulate that commercial growth,” she said.

While earning his doctorate degree at Florida State University, University of Oklahoma economics professor Gregory Burge contributed to a chapter on Florida impact fees for a book.

Burge said a 2010 study examined 20 counties in Florida. Nine reduced or dropped their fees and 11 did not.

“The nine counties that dropped their fee rates didn’t grow any faster than the 11 counties that they looked at that held firm and held their impact fees at a steady level,” Burge said.

Collier commissioners will examine impact fee recommendations in October.

The Charlotte County Commission will decide what to do with its impact fees in April.

Lee County’s reduced impact fees will last until 2015.

Topher is a reporter at WGCU News.