Earlier this month, The Board of County Commissioners (BOCC) voted 3-1 to approve an impact fee increase from $5,757 to $12,036 for single-family land use. Commissioner Steve Champion was the opposing vote, and Commissioner John Allocco was absent for the meeting on July 9. The increase is just over 109 percent over the current fee of $5,757.
The fee increase over 50 percent is allowed based on demonstrated need according to the statutory clause allowing for Extraordinary Circumstances.
An impact fee study conducted by Stantec in April 2024, indicates that extraordinary circumstances exist to allow the County to increase fees beyond statutory limits. Peter Napoli, representing Stantec, cited the county’s rapid population growth exceeding national and regional averages as a leading factor in the extraordinary circumstances. Stantec is a consulting firm that assists local governments.
On May 30, 2024, two public information meetings were held on each side of the county. Nine residents attended the meeting at The Lake House Spring Hill, and three attended the East Hernando Branch Library meeting.
An official public hearing to approve the new fee schedule will be held on July 30, 2024. It must pass by at least a two-thirds vote.
According to the impact fee study, there are other factors that demonstrate the need for extraordinary circumstances. Impact fees have not been updated since 2019, and no longer reflect the full cost of building impact, since inflation has increased the cost of capital improvements by 39 percent. Without increases, the County faces revenue losses, which could cost taxpayers more in balancing the difference.
Champion agrees that impact fees do need to be increased, but not to the level approved by the remainder of the Board. Champion reasons that such an increase will be unattractive to potential builders, primarily of commercial construction, and price small builders out of the market.
Using Single Family Land Use as the proverbial yardstick, Commissioners considered five scenarios to leverage more revenue for the county to provide for the expected growth. The fees differ for new commercial construction.
Impact fees apply only to new home construction, and are calculated based on the type of commercial space, plus square footage, or per square footage of floor space in a single family unit. Currently, the impact fee for a single-family home is $5,757. From this fee, several components are funded; Fire / EMS ($235), Public Buildings ($466), Correctional Facilities ($7.00), Law enforcement ($86), Library Facilities ($107), Parks and Recreation ($411), Education ($3,176), and Transportation ($1,269).
The new allocations approved are: Fire / EMS ($320), Public Buildings ($466), Correctional Facilities ($7.00), Law enforcement ($156), Library Facilities ($107), Parks and Recreation ($491), Education ($6,135), and Transportation ($4,354).
Champion is on board with the maximum regular increase of 50 percent, or $8,478 for the construction of a single-family home. “To triple it is unacceptable in a down-market, because it is going down.”
Considering building professionals, Champion said, “Most of our jobs in this county arguably are all-around construction. There’s a lot of bad things that will happen if the (impact fees) go up too high and too fast. The biggest thing is these small builders out there, they’ll get absolutely murdered by this. Large builders, they’ll figure it out … What about these guys that are building one or two houses?”
Champion also said all increases should be added to Transportation, due to the School Board having a 1/2 cent tax and 1 mill increase on a referendum presenting on the November ballot. “The immediate need is transportation.”
A live spreadsheet was available to the Commissioners for editing during the meeting that was not made available to The Hernando Sun or the public viewing. Changes made during the meeting were not available publicly.
Commissioner Chair Beth Narverud proposed the Board look at the scenarios pertaining to the extraordinary circumstances above the 50 percent increase, and also suggested increases be allocated to other areas besides Transportation. Champion bolstered his assertion adding that the pending one-cent sales tax would cover many Capital needs, such as Fire/EMS.
Narverud answered, “But one of the things you have to recognize is that when we talk about the ‘one cent,’ one of the biggest hurdles we’ve ever had is that we don’t have the impact fees supporting the other side of it, and residents are tired and want impact fees. None of them are going to support the sales tax if we don’t have adequate impact fees.”
Champion countered, “We’re asking for a 50 percent impact fee (increase), that’s a substantial increase …” The 50 percent increase is the usual increase allowed without extraordinary circumstances.
Commissioner Brian Hawkins also disagreed with Champion, “I don’t think impact fees are going to drive market or enterprise. This is similar to the one-cent referendum where, if it doesn’t get built, it just doesn’t get done … The impact fee is not a tax, it’s from the overall impact from the immediate growth in a particular area.” He illustrated this by saying that impact fees in one district don’t affect the revenue of another. By Statute, impact fees must be applied to the district in which they’re collected.
There are four districts within the county for roads and transportation, and five districts for parks and recreation.
Hawkins continued, “The citizens want this …” and continued in saying that the opportunity for the BOCC to approve an increase in 2022 was “punted” to a new administration. Admitting he was naive to the impact fee issue at his election in November 2022, Hawkins said, “I believe we’ve all learned and changed our thought process on this … it’s educated me on the necessity of this happening.”
Hawkins and Champion sparred on the necessity of raising the fees. At one point, Champion asked “Why should (Hernando County) be double than Citrus (County), to which Hawkins replied, “I believe that we should be … the reason impact fees get more expensive as you get toward quality-of-life, is because the quality of life is higher, you have more opportunity… Citrus is much different than Hernando County.”
The conversation went on, addressing millage rates. Champion asserted, “The people pay for this.” Hawkins answered, “New residents moving to the area pay for this, not the people who live here, and if we continue to kick this can down the road, then we’re going to have to raise millage.”
Champion stands by his 50 percent increase recommendation, and vowed not to approve anything higher.
Commissioner Jerry Campbell agrees with both arguments, postulating that if the County had adhered to a 12.5 percent increase without pause, the current impact fee would be over $17,000 for a single family home construction. Campbell hopes to address a Mobility Fee structure in the future, where impact fees vary based on location rather than square footage.
