- Newly passed state bill limits impact fee increases to no more than 12.5% a year and no more than 50% over four years
- Impact fees help pay for infrastructure needs created by new development
- Florida’s population has grown from 18.8 million to 21.5 million over the past 10 years
DAYTONA BEACH — As Florida’s roads become increasingly clogged amid the unrelenting stream of newcomers, state lawmakers have passed a bill that limits how much counties and cities can raise impact fees to accommodate that growth.
The bill, which Gov. Ron DeSantis is expected to sign into law, caps impact fee increases to no more than 12.5% in a given year and no more than 50% over a four-year period.
“I’m disappointed and even a little bit surprised,” said Volusia County Chair Jeff Brower. He described the recently passed bill, HB 337, as an unnecessary effort by state lawmakers to take away the decision-making ability of local governments.
“We can’t keep up with maintenance of our existing roads and bridges much less come up with money for new ones,” said Brower, who was elected in November largely on his pledge to control development in the county. “Impact fees are the kind of things we should be deciding at the city and county level.”
How this impacts you:How impact fees work in Florida and what changes under the new law
The Florida Home Builders Association led the lobbying effort to get the bill passed both in the state House and Senate. Rusty Payton, the FHBA’s CEO and chief lobbyist, said the bill was needed to add more “predictability” to impact fee increases and to ensure that increases are more reasonable.
ESCALATING HOME PRICES: First-time buyers being squeezed out of the market
INFRASTRUCTURE OVERVIEW:How Florida stacks up with the rest of the nation
IMPACT FEES: Are they unfair?
What spurred the bill’s passage
“What precipitated the bill is that we had some counties make large increases all at once,” Payton said. “A phase-in of impact fees keeps predictability in the marketplace. Before, you could increase it by whatever amount. There were no limits.”
State Rep. Nick DiCeglie, a Republican who represents Pinellas County, was the sponsor of HB 337. A corresponding bill in the state Senate was sponsored by Sen. Joe Gruters, a Republican who represents Sarasota and Charlotte counties.
“I represent a neighboring county to Hillsborough. In April 2020, I read a news report that Hillsborough, during the middle of a difficult time for the economy because of the pandemic, was raising impact fees 100%,” said DiCeglie. “I also read that the City of Punta Gorda was raising impact fees 300% and that Orange County was raising its fee by 160%. That’s what prompted me to look at what could we do to slow down these increases.”
Impact fees in Hillsborough County actually went up 300% in the past year, according to Jennifer Motsinger, executive vice president of the Tampa Bay Builders Association.
“I’m not going to suggest that impact fees aren’t necessary. They are, but predictability is necessary to run a business,” DiCeglie said. “Huge impact fee increases are also a way to price first-time home buyers out of the market.”
DiCeglie said HB 337 provides a “relief valve” that allows local governments to raise impact fees higher than the new cap if they can show “extraordinary circumstances” that merit a greater increase.
In order to gain the exemption for the new cap, a local government would first need to hold at least two public workshops to show the data it is using to justify the impact fee increase. The fee hike under the new state law would also require approval by at least two-thirds of that local government.
In addition, if the proposed increase were to be challenged in court, the burden of proof would fall on the local government, according to HB 337.
“To suggest this will prevent local governments from raising impact fees is simply untrue,” DiCeglie said. “I believe we’ve created a very fair glide path to impact fee increases.”
Usage growing faster than roads being added
The bill’s passage comes at a time when Florida’s need for new roads and bridges, as well as other infrastructure needs, are becoming more acute. A “report card” recently issued by the American Society of Civil Engineers found 13% of the state’s roads were in “poor condition.”
The ASCE also found that since 1984, Florida has increased its highway system by 25% while the number of vehicles using those thoroughfares has increased by 84%.
By state law, impact fees in Florida can only be used to pay for new infrastructure needs created by the new development in question. They cannot be used to pay for repair or maintenance of existing facilities or address problems that existed prior to the new development. Impact fees also cannot be used to pay off existing debts or for projects that began before the new development.
Volusia County increased its road impact fee by 147% over a two-year period from $2,174 for a new single-family home in 2018 to $5,379 last year.
Despite that increase, Volusia last year saw its biggest increase in new homes built in a single year since 2005, with 3,564 permits issued, up from 2,758 in 2018, according to the county’s economic development division.
Those new homes generated a total of $12.3 million in money for new roads, including $2.4 million in “proportionate fair share agreement cash,” according to Ryan Ossowski, the chief financial officer for Volusia County.
Clay Ervin, the county’s director of growth and resource management, said the amount collected from impact fees did not include credits for various development that provided additional right-of-way and/or road construction in lieu of the fees.” Also, we credit those who tear down and rebuild,” he said.
The amount of cash Volusia collected from impact fees was only enough to build just over seven miles of new two-lane undivided roads, according to national average cost estimates provided by the American Road & Transportation Builders Association.
In Volusia, the cost of adding one lane of new road costs $1 million to $1.8 million per mile, said Maryam Ghyabi, a transportation engineering consultant in Ormond Beach. Ghyabi is involved in effort to address the growing traffic congestion in Daytona Beach. “Costs have been going up and can differ for each jurisdiction,” she said. The type of terrain can also affect the cost.
“Developers and builders, for the most part, haven’t been paying their fair share for infrastructure improvements to offset growth,” Ghyabi said. “If they were, then why are our roads in such a dire need? And I don’t agree with Tallahassee taking charge of deciding how much impact fees can be raised. How did they come up with 12½%? Where’s the data behind 12½%?”
State Rep. Anna Eskamani, a Democrat from Orlando who represents the district that includes Orange County, was one of only a handful of state lawmakers who voted against approval of HB 337.
The bill’s overwhelming 94 to 23 vote passage shows “the power of the construction lobbyists,” said Eskamani. “The proponents argued that impact fees are out of control. In reality, impact fees have not kept up with growth.”
Eskamani noted that several counties suspended impact fees during the Great Recession in an effort to prop up the then-struggling construction industry. While the new home construction market has been booming in recent years, some counties have yet to re-implement impact fees.
Citizen activist: impact fees not impediment to growth
In northwest Florida’s Panhandle area, neither Escambia or Santa Rosa counties collect impact fees for new development, even though both are experiencing a big uptick in new home construction as well as growing traffic congestion.
An attempt in 2019 by Santa Rosa County to raise money for roads by issuing a one-cent sales tax increase was rejected by voters. Some see impact fees as the county’s only remaining option for funding much-needed new roads.
Dana Hartigan is a Santa Rosa County resident involved in citizens group called Save Our Soundside that has been urging the county to implement impact fees, not just for roads, but also for schools and storm water retention.
“You think a $5,000 impact fee will keep them from moving here?” she asked, referring to prospective home buyers. “No, but I’ll tell you what will: repeated flooding and bad schools.”
Polk County raised its impact fees in 2019. County Commissioner George Lindsey said the new legislation should not have a pronounced impact on the area.
“Considering that Polk County already has engaged studies and have them updated every five years, we’re not far behind the curve,” Lindsey said. “Those communities, cities or counties that haven’t kept up, they will be adversely affected.”
The current rates, which went into effect in January 2020, brought the cost of building a single-family home in the county from $10,425 in impact fees to $11,625.
Zach Diaz, president of the Polk County Builders Association in Lakeland, said his association supports legislation limiting the increase of impact fees and phased fee implementation. He added that impact fees are part of what’s keeping housing costs high in the county.
“The same municipaliti
es that want to raise impact fees often come to us and ask how to make housing more affordable,” Diaz said.
Polk County is also facing a housing shortage. The majority of new home buyers are locals, not buyers from out-of-state. Higher impact fees leaves them unfairly shouldering most of the cost of growth in the county.
“Buyers of new homes are disproportionately paying their share of that because they’re already residents whose impact is already counted for,” Diaz said.
In South Florida’s Palm Beach County, some county leaders expressed concerns that HB 337 will prevent them from collecting the impact fees needed for new roads and other infrastructure improvements to address growth.
“If you don’t collect enough fees, even with current rates applied to predicted growth, ultimately we’re going to be short on the revenue to build that network,” said Nick Uhren, executive director of the Palm Beach Transportation Planning Agency.
Impact fees for a new house of between 1,400 and 1,999 square feet in size in unincorporated Palm Beach County currently total nearly $12,500.
Palm Beach County Vice Mayor Robert Weinroth said impact fees aren’t “dampening the appetite” for development as the area continues to see a boom in new home construction activity.
“We need to be able to build the infrastructure that’s necessary to accommodate those new residents and our current residents,” he said. The new impact fee cap is “going to not enable us to really prepare for the additional residents that are coming to Palm Beach County and to Florida.”
Fred Pfister, president of Palm Beach County’s Gold Coast Builders Association, disagrees.
The association and its members “fully support paying the necessary impact fees to support the new development and growth,” Pfister said. “This bill does not eliminate this obligation.”
Regulatory costs reaching ‘tipping point’
Motsinger of the Tampa builders group, said total impact fees for a new 2,500-square-foot home in Hillsborough County are now $28,000, up from roughly $9,000 a year ago. “Twenty-five percent of the cost of a home in the state of Florida is regulatory fees,” she said. “It’s a big deal.”
Other fees include the cost obtaining building permits and utility connections among others.
“There’s a tipping point to how high you can raise regulatory fees,” she said. “Right now, the average new home here is $350,000. When you raise the cost of building a new home, you’re not just hurting newcomers, you’re also hurting our kids who won’t be able to buy a home.”
Other factors contributing to the rising costs for builders include a jump prices for building materials as well as labor.
Bruce Moia, chair of the government affairs committee for the Home Builders & Contractors Association of Brevard in Melbourne, said the state’s new impact fee bill helps keep home prices more affordable.
“All increases in impact fees are passed on to the home buyer,” he said. “We want to keep homes affordable. We were definitely in support of some limitation” on how much counties and cities could raise impact fees. “If there needs to be increases, that’s fine. But the increases need to be within reason.”
Some cities charge impact fees of their own either on top of or in place of county fees. In Volusia County, builders in Daytona Beach pay more than $14,000 in total city and county impact fees, while in Deltona they pay a total of more than $17,000, according to a chart provided by the county.
Builder: we’re paying more than our fair share
Rick Daniels, chief construction manager for Vanacore Homes in Ormond Beach, said the total cost in regulatory fees including impact fees and permits, is roughly $17,500 for each new home his company builds at its Halifax Plantation master-planned community in north Volusia County.
“The idea that developers and builders don’t pay their fair share is so much a lie, it’s not funny,” said Daniels, who served as chairman of the Volusia Building Industry Association last year. “A developer pays, first-off, a development fee, then we have to turn around a
nd put in all the roads and sidewalks and utility lines, all out of our pocket. We’re paying Volusia County a road impact fee even though the roads at Halifax Plantation will never be widened and we’re paying a school impact fee even though there probably aren’t even a dozen kids who go to school out of the 1,900 homes here.”
Daniels said it isn’t fair to ask developers and builders to pay the lion’s share for new roads and infrastructure improvements.
“Go back before 1986, we didn’t have impact fees in Volusia County,” he said. “That means 72% of the existing homes in Volusia never paid an impact fee for roads or schools.”
Motsinger of the Tampa Bay Builders Association said she believes local governments should use ad valorem tax revenues to help pay for roads, schools and water improvements.
“Ad valorem taxes are the biggest chunk of revenue that local governments collect,” she said. “It can’t be 100% impact fees.”
Impact fees becoming ‘major issue’
Russ Owen, the mayor of New Smyrna Beach in southeast Volusia County, said impact fees were “a major election issue” among voters in Volusia both in the 2018 and 2020 elections.
Many were angered by news that Volusia County had not increased impact fees in 15 years prior to 2018. That period included three years immediately following the Great Recession where impact fees were temporarily suspended.
“Voters felt like new development wasn’t paying its fair share and the data showed it,” said Owen, who credits his advocacy for increasing impact fees as one of the reasons he got elected mayor in 2018.
“My commitment to voters was that in New Smyrna Beach we would make sure that developers would pay their fair share for new development,” he said. “Impact fees already had state controls to ensure a data-driven process for determining impact fees. If a city or county uses the data and methodology incorrectly, you can challenge it. You don’t try to fix an issue in one county with a statewide mandate.”
Owen said he finds is curious that many of the state lawmakers in Tallahassee who voted in favor of the new impact fee cap are also those who complain about the federal government telling states what they can or can’t do.
“That irony is certainly not lost on me,” he said. “I think someone should take a stand for home rule.”
‘We’ve got to make these builders more responsible’
Daytona Beach’s LPGA area has seen thousands of new homes and apartments in recent years, including the Jimmy Buffett-themed Latitude Margaritaville 55-and-older community that sold 640 new homes last year alone. The LPGA area has also seen the opening of three shopping centers, with more on the way, as well as a new Amazon last-mile delivery station.
Adding to the area’s growing traffic was the opening in March of the massive new Buc-ee’s travel convenience center next to the Interstate 95/LPGA Boulevard interchange. With 104 fuel pumps, it is the largest gas station in Florida, along with the Buc-ee’s center that opened in February in St. Augustine.
Greg Cardino, a longtime resident of the LPGA International golf community across the street from Latitude Margaritaville, said he has watched traffic get more and more backed up along LPGA Boulevard, especially west of I-95 where it remains just a two-lane road.
One of the big obstacles to widening the road on that side of the interstate is the aging Tomoka River Bridge, which was built in 1968 and sits near the main entrances to both LPGA International, Latitude Margaritaville and the new Publix-anchored Latitude Landings shopping center. Replacing it with a wider four-lane bridge would be extremely costly because it is over an environmentally sensitive waterway.
Cardino said he has started leaving his community the back way by driving south on LPGA Boulevard to avoid the traffic created by Latitude Margaritaville, ICI Homes’ new Mosaic “full life” community and the shopping centers which include Tanger Outlets and Tomoka Town Center on the other side of I-95 along with Buc-ee’s.
But even that stretch of LPGA is poised to become more congested. National home builder Lennar Corp. recently began clearing land for a new master-planned community just south of where Cardino lives.
“The line of traffic on LPGA is incredible,” said Cardino. “The bottom line is that it’s not getting better. We’ve got to make these builders more responsible for paying for the infrastructure needs these new developments are creating. If we don’t all of us taxpayers are ultimately going to have to foot the bill eventually.”
Gannett/USA Today Network reporters Dave Berman of Florida Today, Emma Kennedy of the Pensacola News Journal, Maya Lora of The Lakeland Ledger, and Hannah Morse of The Palm Beach Post contributed to this report.