County eyes impact fee hike

County eyes impact fee hike

Published in Cape Coral Daily Breeze Feb. 5, 2015 issue

The Lee County Board of County Commissioners will begin its discussions about a possible impact fee increase during a public hearing scheduled for March 3.

The current fee is set at 20 percent of the estimated cost of constructing such things as roads, parks and schools necessitated by growth. The starting point for next month’s hearing would bring the charge on new construction up to 45 percent of cost or more than double the current amount charged.

District 4 Commissioner Brian Hamman said the analogy he uses for impact fees is it is a “set up charge,” or an “activation fee” for joining a community when building a new home. The impact fee covers the new infrastructure they would possibly have to build to accommodate additional population.

By law, the money collected from impact fees cannot be used for maintenance or regular government operations. The money can only be used to add capacity.

In other words, the funds can be used to add a lane to a road, but not to repave a road. They can be used to construct a new bridge but not repair an old bridge.

“These are supposed to be fees that cover the impact of growth and not regular maintenance,” Hamman said.

The dollars collected from impact fees also have to be expended in the same district where the money was collected.

“If you are going to collect fees in Estero, you have to spend that impact fee in Estero,” he explained. “It is the most volatile of funds because they rely strictly on the economy and construction being good.”

Hamman said there does not need to be high impact fees to generate a lot of revenue.

“You will encourage more growth and more building with lower fees and more revenue to build infrastructure with,” he said.

The impact fees collection rate has the potential of going from 20 percent to 100 percent of cost on March 13 if the Lee County Board of County Commissioners does not take further action as that is when the reduction to 20 percent of cost is set to “sunset.”

At 100 percent, including a cost adjustment, it would add a fee of $12,985 to build a new home and $11,116 for a single family home at the 85 percent rate. Currently, at 20 percent, the fee is $2,942.

“If you were to let the reduction expire and let the fee jump up to $13,000, you are adding $10,000 worth of cost to the house,” Hamman said. “The builder is going to pass it onto the consumer. That cost is going to hurt a middle class home. I am trying to think of how we can keep housing affordable for families that want to build a house.”

While commissioners will start their conversation at the 45 percent rate, county staff is recommending that the commission provide a 15 percent discount, or 85 percent of cost. He said at 85 percent, the fee would go from $2,900 to $11,000 on a new home.

“I think you would slow down the market with that kind of increase,” Hamman said. “My position is that a 55 percent reduction actually means a $7,000 saving to a middle class family. That could mean a difference for families of whether or not they continue to build a home.”

Brian Rist, immediate past president of the Cape Coral Construction Industry Association said it is obvious that Lee County needs money, but he does not think impact fees are the correct way of going about generating the funds.

“There are other ways of generating revenue that seem to me to be more logical,” he said. “Like if you are going to build roads, why not add a few cents to the gas tax?”

Rist said the problem with impact fees is the charge is only assessed to new construction. Currently, 80 percent of the homes being built are $200,000 or less.

In regard to impact fees to build schools, Rist said the majority of people buying new homes in Lee County are moving from up north after their kids are grown and out of the house.

“Impact fees don’t affect people going to school,” Rist said. “But when real estate changes hands, that is everybody.”

Rist believes the commission is going to set the impact fees anywhere from 45 percent to 85 percent of cost.

“At this time new construction is just starting to return to a good level. It is definitely improving,” he said. “But it is just starting to recover and things like this could set us back again.”

One solution Rist believes would help would be through a real estate transfer fee. He said if a smaller amount of money is paid when real estate changes hands it would make more sense.

“When real estate goes down, when the economy goes down, people don’t buy new houses, but real estate constantly changes hands,” he said.

In March 2013, Hamman said the county commission decided to temporarily reduce the impact fee rate by 80 percent to help jumpstart the local economy.

“That is really largely because our economy in Lee County is driven by growth and new construction,” he said. “Since 2007, we really saw no new growth. Permitting was dead. People were out of work. Long-time businesses were closing down.”

Hamman said the commissioners really could not find a way to climb out of the recession.

Single family permits pulled went from more than 9,000 per year at the peak of the construction boom to 373 permits in 2011.

Lee County is starting to see the rise in permits pulled with 933 last year.

Although the growth is starting to appear, Hamman said they are only about a third of where they were before 2000. He said they were at a sustainable growth rate they could handle at about 2,600 permits a year.