INDIAN RIVER COUNTY — The drive to suspend the impact fees that developers pay on new construction projects died after commissioners heeded their staff’s dire predictions of massive tax increases.
After Commissioner Tim Zorc recused himself after it was suggested that he might have a conflict of interest, the County Commission voted 3 to 1 to kill an impact fee moratorium.
The lone commissioner continuing to back the idea of a moratorium was Wesley Davis, who twice previously had proposed a moratorium on impact fees at commission meetings and twice failed to get a second on his motion.
A builder and developer, Zorc did not recuse himself from the May vote in which he joined Davis and Flescher in supporting an 18-month suspension plus year-long phase-in on the fees charged developers to pay for infrastructure.
“I wanted a lively debate,” Flescher said in defending his introduction of the issue.
He said County Administrator Joe Baird’s dire warnings that the suspension could force a massive property tax increase to make up lost revenue gave him pause and led him to reverse his initial “yes” vote.
“I still think we need to do something,” he added, calling fees “overbearing and biting” and “decision-altering” for developers.
Impact fees are intended to make growth pay for itself and keep property taxes low.
n May, the trio of Flescher, Zorc and Davis asserted that suspending the fees would spark economic development and new housing starts in Indian River County. But Baird warned that, had the ordinance passed as drafted, residents could have seen their property taxes jump dramatically.
Impact fees on new construction at the peak of the building boom raised as much as $33 million for traffic improvements alone.
Other impact fees that would have been halted included money earmarked for schools, parks and law enforcement. Over the proposed 2 1/2-year suspension, revenue lost to the county could have totaled more than $4 million.
Baird called the move “catastrophic,” saying it could require a 50 percent property tax increase in three to five years to compensate for the lost revenue.
That surely would have changed the county’s position of having one of the lowest tax rates in the state, Commissioner Peter O’Bryan predicted, as he joined Commissioner Bob Solari in voting against waiving the fees.
Baird couldn’t have put it more strongly.
“This decision is the worst decision I’ve ever seen in my career, financially,” he said during the May debate. “This is one of the biggest mistakes we could ever do for our community. There’s going to be a huge impact on Indian River County.”
Flescher in May took the opposite view. “It could be one of the best opportunities that could go forward.”
The county suspended some small impact fees during the recession – corrections, solid waste and public buildings.
With fees in those last three categories already suspended, builders of a 1,800-square-foot house today pay about $9,000 in impact fees, half of that in traffic fees.
Six months after the suspension of the smaller impact fees, county officials said the move had not stimulated development.
“Building activity was flat – if anything, it went down a little,” said Keating. “That’s what’s ironic. The time you need the fees is when you have the growth.”
With little money coming in, county staff claimed its impact fee coffers had been all but emptied on projects like the Oslo Road widening.
Yet as of March 31, the county reported having a balance of $12.28 million in its account for traffic impact fees alone.
Flescher, in initially supporting the moratorium, called impact fees “the brick wall” that was keeping people from choosing the county as a spot to launch new developments.
But Baird apparently made an impression on Flescher – though it took three weeks to sink in – when he lamented having to stop work on projects like improvements to Oslo Road and County Road 510.
“In two years, I will be out of money,” he told commissioners. “We will be cutting projects from the books. The rating agencies are going to start looking at us.”
In the end, Flescher voted to preserve the status quo after Solari made the motion.
“I’m going to move we don’t do anything,” Solari said. “A moratorium just negatively impacts the people who’ve already paid impact fees. I don’t know why you would try to give people a temporary advantage. Things are getting unstuck, and they’re moving forward. This will just derail that process.”
