Overstated and Excessive Impact Fees Affect Everyone

The fast moving Florida real estate market has once again stirred local controversies about growth in many parts of what were once quiet, rural communities in west central Florida. The growth debate promises to continue, as population increases, economic pressures become more acute, and a fast paced demand for new development may lead to elevated growth patterns.

The argument about growth involves the issues of property rights, taxation, regulation, and government planning for public facilities such as roads and schools. Many refer to this government trend to maximize non-tax revenue as “regulation for revenue”.

Citrus and Hernanado County’s economy is similar to many emerging rural communities in that it is currently relatively free of excessive government constraints and regulatory oversight. The County’s future economic prosperity and diversification is largely driven by the existing market conditions. Impact fees

It is important to remember that development impact fees are not simply assessed against new residents or new business, but will affect existing homeowners and business owners by increasing their cost of living and the cost to operate their businesses. Impact fees are capitalized in the market value of the home without adding any value to it. The are added to the cost of the products and services we consume, and it prohibits natural market forces of consumer demand from acting naturally. From a taxation perspective, your taxable values will increase leading to hefty property tax increases without adding any value to your property.

The phrase "regulation for revenue" refers to the recent and widespread practice of imposing large "impact" fees, special assessments, and exactions on new residential and commercial real-estate development. Impact fees as high as $40,000 for a single family home and $30 per square foot for commercial development in Florida. Local governments often view impact fees an simply another way to increase their often bloated budget with little oversight or incentive to reduce spending and increase efficiency.

As an example, Table 1.1 below provides a snapshot of the median residential family income in Citrus County. As reflected in this table, over 41,000 or 73% of the families living in Citrus County would have to dedicate at least 71% of their net annual income to the payment of the proposed Citrus County impact fees. Families earning less than $15,000 annually would have to allocate 1½ times their annual salary before they could realize the “Great American Dream” of owning their own home. This excessive cost of regulation will virtually eliminate the opportunity to form many residents to own their own homes.