I read the article in Friday’s “Daily Sun,” with great interest. Now it seems it is fashionable for state level politicians, elected by local citizens to represent them, to limit the ability of other local officials in the performance of their sworn duty. I do not oppose growth if it is done in a planned and organized manner and in a way that requires that those requesting the services pay for them. Fee for service is still the most economical and clear method to pay for anything. You get a water bill you know what you pay for it. Here, you get new development, not only don’t you know what it costs you have no idea what you are paying for as a taxpayer.
Can we clear the air once and for all? The state of Florida is a desirable place to live. No state income tax on individuals, no corporate income tax, no estate taxes and beautiful weather. So, I guess it is clear that many people want to live here and especially retire here.
States across the U. S. are battling to get new residents and businesses to re-locate in their state to help their state and local economies. To do this, state officials keep taxes low by having higher taxes on sales, which spreads the cost to all visitors and residents – that’s fair! Those that live here pay and those that come to enjoy what we have built pay as well. For example, food and clothing are not taxed in Pennsylvania so Pennsylvania has a gross income tax to make up for that significant difference. In Florida, the sales tax is on everything and we have many more tourists and visitors so we make more in sales tax than most of the other states.
What if the federal government said to Florida, no you cannot tax food and clothing, since these are essential needs of the residents? Florida would be up in arms and challenge the right of the Federal government to limit a system that works so well for Florida and makes Florida an attractive place to live.
However, the Florida Legislature and now even the governor are offering support for a bill that would limit the amount of impact fees charged to developers for the cost of improvements required by the growth they create.
Impact fees have been around for many years now. When a developer proposes to build a new facility in a county or town that requires additional services, like police, water, sewer, roads etc. engineers attempt to estimate what that cost is and advise the local officials so that the cost can be paid by those who are creating the need – the developers and ultimately their customers.
So, impact fees in high growth areas are necessarily going up to accommodate new growth that is exponential by comparison to even recent years. How do you expect local officials to come up with that extra funding, it is either by impact fees or raise property taxes.
Consider how developers do it. They must build all the internal structures to promote their development: recreation facilities, road drainage and retention facilities, roads, mail boxes, golf courses, bridges etc. You get the drift. So, who pays for that? Well many developers either create local government agencies to whom they sell the improvements or make agreements with existing local governments to float a bond issue and buy those improvements as long as they are built to certain specifications. Those local agencies then float a bond and pass it on to each homeowner when they buy their house. In fact, the developer does take a risk that he may or may not sell his houses but in Florida that risk is very small and the homeowner then pays that bond along with his mortgage or over time set by the bond.
Why the controversy then, because all of the other necessary improvements, outside the development but within the community, required by the new growth, fall on county and local governments. How do they get made whole? They levy an impact fee based on the engineering estimates agreed to by the developers when the plans are approved. Those impact fees are vital especially since the only alternative is to pass those costs on to the local property taxpayers and that certainly is not fair.
Looking at it further explains the problem. The developer passes all costs on to the buyer which includes the developer’s profit: If a house costs the developer $150,000 in land, material and labor plus impact fees and he sells it for $175,000 he makes $25,000 profit. If impact fees double from $1,000 to $2,000 you would assume the developer makes $1,000 less on each house. But, we all know that is not true! The developer will simply raise the price to cover the additional cost which means the new homeowner, who is paying for the cost of recreation centers, pools, mailboxes etc., is also paying for the county and local government impact they have created by requiring more services.
The main argument of the developers is that they cannot pass on the increased impact fees to the homebuyer. If you believe that, I have a bridge for sale! In the past, I have commented on the fact that if Florida was barren ground with no existing taxpayers to push these costs on we would not even be discussing this – the newcomers would be the only ones to pay these costs because I guarantee you the developers would pass them on. Why else would they be in business?
People are flooding to Florida to get what is here – and that is good. It is also good that people moving to Florida and creating the need for additional services should pay for them. I think even they know that.
Our job is to convince the members of the Florida Legislature that they should keep their noses out of our business. It has no effect on any state government issue other than the desire to keep the flood gates of new residents open. Reasonable people can agree or disagree whether unbridled growth is always good especially considering the fragile environmental conditions of Florida.
In the end, this state bill to limit impact fees will make the developers of Florida very happy indeed. But they never pay the bill! So why do they care? It is a competitive market out there and they all want the lowest cost product to compete. However, the buyer of their product and the local taxpayers pay all bills in the end, not the developer. The only question is who pays and when those bills are paid. I think the bill should be paid up front, by the consumers, not in the end by the existing taxpayers.
I am disappointed that the Florida state legislature has chosen to change the rules midstream since they have authorized local officials to make these decisions years ago. Now when it is pressured by the big developers who support their campaigns they want to change the rules in favor of their friends. Let them know you are watching and express your opinion any way you can that this is not acceptable. My two cents.
Robert Nyce is a resident of the Village of El Cortez.