Aside from government officials, home builders and developers, very few people pay attention to impact fees. While rezone hearings may draw standing-room-only crowds, most impact fee hearings have more Commissioners than members of the public in attendance.
Many people feel that since impact fees are only charged on new development, they have no reason to be concerned. However a comprehensive look at what impact fees are intended to do and what they actually accomplish should raise serious concerns with all Sarasota County taxpayers.
Impact fees are a one-time charge to new development that can only be used to fund infrastructure such as land, roads and buildings that are needed to service new development. The fee can only be levied to the extent that new development benefits from the infrastructure built by the fees, and can not be used to fund any existing infrastructure deficiencies or for maintenance or operating cost.
An Impact fee is actually the sum of several fees that are calculated individually, depending on the cost of the infrastructure. A formula is developed that estimates the proportionate share of the need for additional infrastructure for one development unit (typically a house). An easy example is water. The impact fee is calculated by simply dividing the cost of a water treatment facility by the number of customers it is capable of serving. If the facility cost $10 million and it is capable of serving 5,000 customers, the impact fee would be $2,000. However most impact fee formulas are much more complicated and subject to wide interpretation – sometimes very wide.
Sarasota County has been charging impact fees for roads, parks, libraries and emergency services for about sixteen years. Hypothetically these impact fees were to cover most of the cost of infrastructure needed by new growth, and capital budgets would remain solvent. In reality, infrastructure needs required for growth are outstripping impact fees by a wide margin, contributing to future capital budget deficits that could choke a python. And Sarasota County is not alone. Virtually every growth county in the state is desperate to identify enough money to fund the projected infrastructure needed to accommodate future growth. Despite collecting impact fees for decades, infrastructure budgets are going bankrupt and Florida’s counties are facing congested roads, crowded schools and a diminishing quality of life.
One illustration of this predicament is roads. Sarasota County has been assessing a road impact fee on new growth since 1989. The formula used to calculate the fee is very complex and understood by few. Despite substantial increases in the cost of land, labor and materials, this fee has changed little in the last x years.
A recent study estimated how much it would cost to build a minimum road network necessary to accommodate Sarasota County’s projected 2030 population. The study also estimated how much money would be generated over that same period of time from impact fees, gas taxes, property taxes, telecommunication taxes and surtaxes. The costs were estimated at $1.8 billion dollars; the revenues were estimated at $300 million. That’s a deficit of $1.5 billion, on a $1.8 billion budget! Even though Sarasota County subsidizes road impact fees with more additional revenue sources (primarily paid by existing residents) than any other county in the state, we can’t keep up. We can’t even get close!
Regrettably, the County’s future school, recreation, administrative and judicial facilities budgets are also forecasted with large deficits. Many of these infrastructure needs, including roads, are already deep in the red today.
Solutions are limited. Part of the gap could be bridged by restoring state funding that has been reduced as the result of funding cuts, diverting “Trust” funds, and lowered return rates on school and gas taxes. But restoring these reductions will only chip away at the mountain side. The present trend is toward additional State cuts, not increases. Without adequately funded infrastructure budgets, facilities will deteriorate, resulting in crowded roads, schools and parks and inadequate judicial, public safety and administrative facilities. There is no shortage of examples where this has already occurred.
To avoid a diminished quality of life or denial of development petitions, the future infrastructure budget needed to accommodate new growth must be adequately funded. To do so, either impact fees, property taxes or some other tax will need to be increased.
As a community, Sarasota County needs to answer two fundamental questions. What is the true and full cost to fund the facilities needed to support new development? And, how should funding that cost be split between impact fees, paid by new development, and other taxes, primarily paid by current residents?