Growth Doesn't Pay for Itself!

Happy President's Day!

Today, we are going to chat impact fees. Last week, the commissioners held their first public workshop to potentially raise impact fees. This is because the consultant who the county used for the impact fee study did not include right of way purchase costs into the calculation for impact fees. In fairness, this had never been done for whatever reason, so it was not necessarily a mistake on their part. However, did they ask the question if we should include them? Why not provide an option for both and let BOCC decide?

In any case, impact fees were raised last year and took effect in October. Commissioner Barek recommended that we hold off on raising them until the right of way study was completed and do the entire thing at one time. The board did not agree and voted for the first increase... Then directed staff to bring back right of way... and then decided last week not to raise them again to account for that.

Why is right of way acquisition important? Because impact fees can only be used to increase capacity. The best way to do that is widen the road. In order to do that, the county has to have enough right of way on both sides of the road. To do that, they need to acquire it and that costs money.

By not including those estimates into the impact fee calculation, we do not collect enough money from impact fees to pay for it. Hence, the problem.

Now any increase in impact fees requires a 5-0 vote. Good luck with that. I am not even sure if we can increase them as we used the extraordinary circumstances reason for the increase in October. I am not sure the state allows us to double dip.

Assuming that they do, the presentation was to increase the cost approximately $4,000. This would be a multi-year process as the law requires the increase to be implemented over two years.

Commissioner Bays was against the increase. She stated that she felt this would negatively affect the builders and contractors in this county and cited a study from 2013 or so suggesting that. She fears it would negatively impact our local economy as a result of an increase because people will build less houses and thus, less work for contractors.

Sounds good in theory, but not in observation. You see, we raised the impact fees in 2021 and we did not see a reduction in permits as a result. In fact, they skyrocketed, reaching 2,443 in 2024. I do not have 2025 numbers yet, but I expect them to be higher.

There was a slight dip in 2023, but then a big jump in 2024. Even with the slight reduction in 2023, they were still higher than before we did the increase. The building industry did not crumble.

This also ignores the fact that collecting more in impact fees will allow other projects to be started, like widening, which will also be money spent in the economy. We still need to hire road contractors and those are mostly local options. So while home builders MAY see a decline, local road builders will DEFINATELY see an increase.

Does that offset the slowdown risk, if it even exists?

That aside, where is the data showing that housing slows as impact fees increase and why are we relying data and studies from 2013 to make that argument? 12 years is a LONG time and completely different economic realities.

Sumter is the only surrounding county that has seen a decline since the most recent impact fee increase. Notice, Hernando and Marion have both seen increases in building since their fees were updated. The lines in red show the recent impact fee increases.

I believe all 3 counties have increased fees again in 2024 or 2025, so it remains to be seen what the data is since those increases, but the data suggests growth will continue.

Is it accurate for Bays to suggest that increasing the fees again over the next 2 years will cause economic collapse in the building market? Not so sure.

But... politics.

You see... 2026 is an election year. Bays will get a lot of support from the Chamber and building community. In fact, she received $12,350 in her 2022 election from builders and contractors alone... both of which she claims will lose revenue with an impact fee increase. Nothing wrong with that of course, but as I have been told by several directly... they support candidates who they feel will help their businesses the most.

She raised a total of $75,590.91.

That does NOT include other growth type industries like insurance agents, realtors, storage facilities, spas, doctors, dentists, accountants, etc, which make up a large percentage of the other contributions.

This is that chart.

Over 70% of her contributions in 2022 were from those who have development interest in the sense that more people equals more potential clients. Every single industry mentioned above benefits with more people in the county.

Her argument is that growth will continue for the large national builders (most of the large projects approved) but hurt the local builders (less local building permits).

If that is the argument now, why approve all the large developments that will NOT use local builders? No issue then for the locals.

Speaking of... I was told of a lunch meeting last week at the Citrus County Builders Alliance where a prominent developer went in and basically told the builders/contractors/etc that attended that they will use national builders and NOT local ones. Ouch!

But lets continue to approve those projects... got it.

Why am I continuing to point out Bays in this conversation? Because she was the ONLY one that was against the impact fee increase last week. The other four seemed inclined to increase them again to reduce the burden on current residents. Remember, had they postponed the vote in June/July and pushed it back to later September, as myself and Barek suggested, they could have passed this with a 4-1 vote. Now a single hold out will delay any future increases.

Why delay this for a future board when you can do it today. We have no idea if a future board will ever be able to agree 5-0 on this and everyone agrees ROW acquisition needs to be included... so why not today? Impact fees can always be walked back, but can only be increased every 4 years. We have a chance to catch up.

So what now? That $4,000 increase for single family homes and the other increases for other types of property, like commercial, now falls on tax payers.

You and I now have to buy that right of way for 491 and other roads that need to be expanded, rather than the new development paying for it.

So what does that cost taxpayers? No one has put a number on it, but I will.

2024 saw 2,443 housing permits issued. Using the $4,000 figure for ROW, that would have produced an additional $9,772,000 in impact fees that were not collected for that SINGLE year.

Guess what? You and I paid for that and will continue to pay for that each and every year... not the people building new homes here in Citrus, including developers.

Now taxpayer math. 1 mil equals roughly $15 million. This means the $9,772,000 is equal to .65 mils.

In 2025, our median house value was around $250k. That means, ROW acquisition is costing each home approximately $162.50 in taxes before any exemptions. That is money that residents are paying to account for ROW acquisition that could be collected by impact fees.

Now mind you, this does not include commercial growth and the fees that they pay. Those fees would also be increased. For instance, if a store the size of Target comes in after this increase, they would pay an additional $1,284,184 in transportation impact fees than what they would NOT pay today.

I suppose now you have to decide if you are happy with continuing to pay $162.50 each year (or more/less depending on your home situation) to pay for rights of ways to expand our roads that developers could be paying via impact fees. If not, time to send some emails. There is still one more workshop next month.

Let her know what you think: rebecca.bays@citrusbocc.com