Impact Fee Fight

Impact Fee Fight

Normally, the inclination is to take the side of home rule. When the Feds meddle in state affairs, you want to tell them to buzz off. And when state legislators meddle in local affairs, you want to tell them to keep their camel-haired noses in their own tent. Butt out, Buckos.

But in this case - the fight over impact fees - it's not that easy. Two of our local legislators, Sen. Mike Bennett and Rep. Donna Clark, certainly have stuck their noses where they shouldn't be. But we'll give them this: They've done so with good intentions for the greater good and in the process they partially have opened a stinky sardine can that should be peeled wide open and exposed for a much broader airing out.

Bennett and Clark both will tell you they are trying, via Senate Bill 2302 and House Bill 1173, to bring more accountability and uniformity to a patchwork of varying impact-fee systems around the state (40 of 67 counties charge them). They're trying to make local governments be more forthcoming in reporting exactly how they spend impact fees each year - a practice already well in place in Sarasota County. And they're trying to eliminate some double taxation.

On the latter, the Bennett-Clark bills would require local governments to issue credits to impact-fee payers to offset the double taxation. The most controversial part, this has local government types in full squawk.

In some counties, here's how it works: A developer builds a residential community. He is assessed impact fees on a per-unit formula to pay for infrastructure - roads, sewers, street lights, etc. - to accommodate the increase in population and traffic in the area. But according to the impact-fee credit system, the developer (and eventually the home buyers) would receive credits, or reductions in impact fees. These credits would be issued to account for the fact that a portion of every buyer's gas taxes and property taxes (among other taxes) each year would be allocated to pay for the new infrastructure capacity in the new neighborhood.

Currently, counties are mandated to give federal and state gas-tax credits on impact fees. But they have an option to give credits on local gas taxes. Bennett and Clark's bill would make that credit mandatory.

Counties don't like that. They say the credits will reduce their impact-fee revenues and force them to raise taxes elsewhere. What's more, as Sarasota County Commissioner Shannon Staub told us, if the impact-fee credits become mandatory, where will the camel's nose go next? "If the home builders don't like what's happening, they should go to their local governments," Staub said - not to the state. "One size doesn't fit all," she said.

There are other good-bad parts to the bill.

Good: It would require local governments to use the most recent population and traffic data in calculating impact fees. Surprisingly, this doesn't happen in many parts of the state. Bad (for counties): New impact fees couldn't take effect until six months after they are enacted. Seems like a contradiction to the most-recent-data requirement. Here's another effect: The six-month delay would create a time lag in the collection of cash for counties and a flood of permit applications to beat the new fee rates.

These are niggling, picayune things that, unfortunately, end up expanding the size of government and are details that negotiators work out. But they also divert attention from what should be the bigger issue: the efficacy and logic of impact fees to begin with. That's what lawmakers should be talking about.

Impact fee systems are like all legislation. They're mushrooming in use and complexity and begetting more laws to offset effects of the original ones. Read, for instance, the voluminous chapter on impact fees in the Sarasota County code; it'll give you a headache trying to understand it.

But rather than focus on the process of impact fees, legislators and local governments would do taxpayers a favor by considering the approach suggested in the accompanying box. As economist Richard Stroup notes, impact fees are not justified.

WHERE TO VIEW THE BILLS

Before making judgments about the impact fee debate, it's worth reading the text of the bills and the legislative staffs' analyses. Go to:

SENATE BILL 2302:

www.flsenate.gov/session/index.cfm?BI_Mode=ViewBillInfo&Mode=Bills&SubMenu=1&Year=2005&billnum=2302

HOUSE BILL 1173: www.myfloridahouse.gov/bills_detail.aspx?Id=16848&sBillNumberText=1173&iSessionSelectedIndex=0&iChamberSelectedIndex=2

A BETTER APPROACH

Richard Stroup, professor of economics at Montana State University and a senior associate at the Property & Environment Research Center, wrote nine years ago about an alternative to typical impact fees. Here's an excerpt.

"Some current residents support impact fees because they feel that without them they would subsidize the development of roads, sewer lines and parks as their town or city grows. In most cases, they would not, because bonds are issued to cover the costs, and the tax revenues from the development will cover these bonds. Existing taxpayers do sometimes subsidize new development when a community builds in anticipation of growth and that growth occurs much later than expected.

"Still, that does not justify impact fees. A better remedy would be to require that the developer prepay several years' property tax if the municipal government has to buy park land or build a specific facility to serve the development. The developer would be able to sell each housing or commercial unit for a higher price due to its prepaid tax status. (The buyer would get the tax credit.)

"Taxpayers would benefit in this way: If the developer's plan does not materialize, the developer (not other taxpayers or other developers) will pay the cost of preparing for it. In such a case, the developer could sell the credit for the prepaid taxes to another developer who uses the new facilities. The prepaid-tax approach would also force the city government to be explicit about which expenditures are required for each new development, an advantage not shared by impact fees."