Clancy Mullen
Since the 1980s, impact fees have been an important tool to fund infrastructure needs created by development. The landscape for local governments use of impact fees in Florida has changed over the past several years. There has been an economic downturn. Legislative and state referenda have limited local government’s
ability to generate revenue to fund infrastructure. Given these new circumstances, does the use of impact fees need to be rethought, and if so how? Given the changing climate in Florida, this session will provide planners and planning lawyers the tools to rethink their use of this critical infrastructure funding tool.
Horngren’s Cost Accounting A Managerial Emphasis, Canadian 9th edition soluti...
9/9 FRI 2:45 | How to Pay for Growth - Impact Fees 2
1. Impact Fees Under Siege
by Legislators and Local Governments
2011 FAPA Conference, Palm Beach, FL
Clancy Mullen
2. The Two-Front War
Legislatures restricting local authority
2006: WI prohibits county fees, rec facilities, vehicles
2007: NV prohibits jurisdiction-wide service areas
2009: FL puts burden of proof on local government
2009: AZ places 2-year moratorium on fee increases
2010: AZ extends moratorium of fee increases another year
2011: AZ prohibits gen gov’t, solid waste, regional park fees
Local governments bowing to developers
Fees being suspended/reduced nationwide, but especially in FL
24 counties in Florida have suspended reduced fees since 2007
3. Collapse of Housing Bubble
Monthly Single-Family Building Permits, Florida & Arizona, 2000-2011
4. 2011 Arizona Legislation
AZ municipal enabling act was much like FL
Could address any “cost to the municipality” from growth
Modest annual changes, starting in 2007
Locked in fees for 2 years at plat/site plan; required list of projects;
lengthened time periods for notice and phase-in
SB 1525 prohibits fees after 1/1/12 (unless pledged):
General government facilities
Solid waste facilities
Parks over 30 acres, rec centers over 3,000 sq. ft.
Libraries over 10,000 sq. ft., books or furnishings
Police/fire training facilities, administrative equipment
5. 2011 Arizona Legislation
SB 1525 requires full compliance by 8/1/14
Land Use Assumptions
Infrastructure Improvements Plan
Refunds if actual costs exceed estimates
Fees locked-in for 2 years at plat/site plan
Credit for any “discriminatory” construction sales tax
Advisory committee or biennial audit
8-month adoption process
6. FL: Local Pressure to Reduce Fees
Developers/builders more aggressive
Desperation: few projects still in process can’t compete with
falling prices of existing homes, trying to cut all costs possible
Opposition to growth weakened
Taxes on existing residents no longer going up because of
unbridled growth; collapse of housing bubble has created more
visible problems
7. Arguments for Fee Reductions
Need to be competitive to attract development
Developers & businesses will go where fees are lowest
New housing can’t compete with existing housing
Might stimulate construction and create jobs
What have we got to lose? (revenue low)
If we don’t try it, we won’t know
Worth it if it creates even one job
If it doesn’t appear to have worked...
We don’t know how much worse it would have been
We will be positioned for the recovery
8. Arguments Against Fee Reductions
Impact fees have never been shown to deter growth
Development follows market opportunity, not lowest cost
National chains not deterred by fees; “mom & pop” stores rent
Industries want good transportation, labor force, low operating costs
Impact fees are visible, but not only development costs
Developers will continue to make road and other improvements
If it does work, it will only make things worse
Increase housing oversupply; depress housing prices
Reducing/suspending impact fees will create inequities
Developers finding their credits devalued (recent flap in Volusia Co.)
Builders who have paid fees competing with builders who did not
Funding for growth-related improvements will shrink
9. So Who is Winning the Argument?
Brevard Co. – Mar 2009: suspended road fees for 2 years; extended to March 2012
Charlotte Co. – Jan 2008: rollback fees 2/3; June 2011: suspended non-road fees 1 year
Citrus Co. – Jan 2009: reduced road fees 50%; suspended Apr 2010; reimposed June 2011
Clay Co. – Jan 2009: adopted/suspended road fees for 2 years; extended to July 2012
Collier Co. – Oct 2010: road & park fees reduced based on study, school fees halved
Columbia Co. –2009: suspended fees adopted Feb. 2008; July 2011: extended indefinitely
DeSoto Co. – Jan 2008: suspended fees adopted late 2006 and refunded fees collected
Glades Co. – Nov 2008: all fees suspended, roads to be back to 50% in Jan. 2012
Hendry Co. – Sep 2008: all fees suspended until Jan 1, 2012, when come back at 50%
Hernando Co. – Dec 2009: fees rolled back to 2001 levels for 1 year; extended to Dec 1, 2011
Highlands Co. – July 2009: all fees suspended
Indian River Co. – Mar 2009: suspended 5 fees; extended 3 fees until March 2012
Lake Co. – Mar 2010/Jan 2011: road & school fees suspended until March/April 2012
Manatee Co. – Jan 2009: road fees halved until Jan 2013, school fees suspended
Marion Co. – Jan 2010: road fees suspended 18 months; extended to Jan 1, 2013
Martin Co – July 2009: all fees suspended except roads & schools, reimposed Oct. 2010
Nassua Co. – July 2008: all fees suspended except schools until Jan 2012
Orange Co. – May 2011: fees reduced 50% schools & 25% others for 18 months until Nov. 2012
Polk Co. – Apr 2009: cut all fees but schools 50%; suspended all but schools until Aug 2012
Putnam Co. – Mar 2009: all fees suspended 2 years; 2010: extended to March 1, 2013
Santa Rosa Co. – Feb 2009: suspended road fees; extended twice until Jan 2012
Sarasota Co. – Dec 2010: school fees suspended for 2 years until Dec 2012
Volusia Co. – July 2011: road, park, fire fees suspended for 2 years in non-growth areas
Wakulla Co. – Sep 2008: suspended fees – reinstated March 2010
12. FL County Fee Reductions/Suspensions
Based on 2007-2011 Change in Fees
13. Research Design
Time periods
Fee-reduction period: 19 months (Jan. 2008-July 2009) during
which a number of counties reduced their fees
Year before fee-reduction period: 2007 calendar year
Year after fee-reduction period: Aug. 2009-July 2010
Change in single-family fees
Total non-utility fees (water/wastewater excluded)
Percent change in single-family permits
15. Sample Selection
Starting point
42 counties that charged fees in 2007
Exclusions
2 counties that adopted and suspended fees during the period
1 county that reduced fees, then increased them
3 counties that reduced fees after the period
8 counties with relatively low fees in 2007
6 slow-growth counties
2 counties for which building permits were not available
16. Sample Counties
9 fee reduction counties
Brevard, Charlotte, Citrus, Highla
nds, Indian
River, Manatee, Martin, Nassau,
Polk
11 non-reduction counties
Collier, Lee, Miami-
Dade, Orange, Osceola, Palm
Beach, Pasco, Sarasota, St.
Johns, St. Lucie, Volusia
17. Sample County Characteristics
Population size and growth
Fee reduction counties tend to be smaller (average 2008
population of 247,000 vs. 742,000)
Both types of counties grew about 20% from 2000-2008
Single-family fees
All sample counties charged at least $6,000 in 2007
Fee reduction counties tended to have lower fees in 2007
(average of $9,849 vs. $12,631)
Fee reduction counties reduced fees an average of $4,000
Single-family permits
Permits declined more in reduction counties (60% vs 56%)
18. Initial Regression Analysis
Not statistically significant
Slope of line in expected
direction (bigger fee reduction
= lower decline in permits)
Explains only 1% of variation
64% chance of random result
Manatee County is a major
outlier distorting the
relationship
19. Excluding Manatee County
Statistically significant
Slope of line in opposite
direction (bigger fee reduction
= greater decline in permits)
Explains 22% of variation
4% chance of random result
Conclusion
No correlation between
reducing fees and issuing more
permits
21. Conclusions
Fee reductions are not an economic stimulus
Nevertheless
Pressure to lower fees will continue
Annual legislative battles will continue
But growth will return some day
Few alternative funding sources to pay for growth
Most suspension/reductions automatically expire
Growth paying for growth remains popular