Charge Back

Changes in impact fees—the perennial bane of developers—are being applauded by critics of those one-time charges on residential and commercial construction, but some argue that the fees need to be reduced further—or even eliminated—to spur development.

The most notable move: the passage of a bill, effective July 1, sponsored by state Rep. Gary Aubuchon, R-Cape Coral, that place the burden of proof on governments regarding the validity of the fee and to show that the data and facts used to come up with the fee are correct.

It’s a “major victory for the building industry,” says Michael Reitmann, executive vice president of the Lee Building Industry Association, which Aubuchon serves as a board member.

The fees, which swelled during Southwest Florida’s robust growth earlier this decade, also are getting a second look from counties and municipalities.

Opponents of impact fees argue that municipalities aren’t collecting impact fees anyway because of the lack of development, and the prospect of having to pay such fees deters developers and businesses that might otherwise move forward with projects. Furthermore, they say, the data used to set the rates are outdated in some cases as a result of population trends and 2008’s historic economic swings. Reducing or eliminating impact fees could encourage construction, they argue.

“I think the fees are excessive, and I believe they are holding back the economy in some states, particularly here in Florida,” says Richard Durling, president and owner of Fort Myers-based Marvin Development Corp. and a past president of the Lee Building Industry Association and Florida Home Builders Association.

Counties are required to examine their impact fee formulas and rates every three years, although some do it more frequently these days. Certain fees in Southwest Florida have been reduced or eliminated, although the changes are not as monumental as in areas such as Manatee County, which in May eliminated school fees and cut road fees in half for two years.

“You’ve got to really work with reducing or suspending impact fees for commercial development for a time period,” Reitmann says. “It’s more than offset by the economic impact of increasing revenue for the government and creating jobs.”

The Bonita Springs City Council eliminated road impact fees along Old U.S. 41 as part of a plan to encourage development in the blighted area.

“If I brought this up five years ago, people would have come out with pitchforks thinking I was Frankenstein,” says Bonita Springs Mayor Ben Nelson Jr. “We became addicted to them.”
After the changes were instituted, which Nelson says could save a 1,000-square-foot restaurant up to $20,000, a couple of businesses expressed interest in moving forward.

After a recent review in Lee County, where impact fee revenues have dwindled with the drop in construction, school impact fees were reduced by 4 percent and road impact fees for shopping centers and hotels by 26 percent and 18 percent, respectively.

A proposed increase for a 7 percent road impact fee for residential construction was not approved and remains at $9,000 per home.

“At least they did not implement the increases,” Reitmann says. “I wanted them to roll it back completely, because they’re still high and they’re not collecting them.”

Lee County collected only $10 million in road impact fees for 2008-2009, down from an anticipated $71 million, Commissioner Ray Judah says. But he dismisses the idea that Lee County’s impact fees could send commercial development to other counties, and he says the 
area’s “phenomenal surplus” of available housing shows new home construction is not needed.

“Keep in mind that when people are talking about reducing impact fees, it’s to enhance housing opportunities,” he says. “We really are not necessarily encouraging more single-family or residential construction because of the incredible inventory that’s already out there that needs to be absorbed by prospective homeowners.”

In 2007, Charlotte County slashed its impact fees to 1998 levels, so the fees for a new home dropped from about $9,000 to $2,500; reductions were comparable for new commercial construction, for which fees vary depending on use. The county, which is working on a new fee schedule and methodology, has extended the expiration dates for the fee rollbacks to early September.

Jeff Ruggieri, the county’s director of growth management, says although the cuts appeared to help a few small businesses struggling to survive, the county didn’t experience a measurable sustained increase in building permit activity.

“As far as bucking the world economy we’re in, it didn’t have that for us,” he says. “I don’t even know how much it comes into play, even in a booming economy. Impact fees are really a small piece when a company is looking to relocate. If there’s a business coming to an area, they’re coming to an area for the long haul. The impact fees aren’t really a deciding factor.”

Collier County’s adjustments have included suspending impact fees for two years when a change of use, such as from general office to medical office, occurs in an existing structure more than five years old. High impact fees for medical offices, with costs reaching $80,000 to $90,000, have prevented new doctors from coming to Naples, says Margaret Eadington, executive director of the Collier County Medical Society.

“It’s only one step of many steps we need to take,” says Bill Spinelli, owner and president of Naples-based Titan Custom Homes and a past president of the Collier Building Industry Association. “When times are good and we can maintain a balanced economy, we should charge a reasonable impact fee. When times are bad like this, we need to get them down as low as we possibly can so we can create jobs and places for people to work.”