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Commission reverses earlier vote; decides to keep impact fees

STORY BY MICHELLE GENZ, (Week of June 20, 2013)

The drive to suspend the impact fees that developers pay on new construction projects died last week.

With County Commission Chair Joe Flescher heeding county staff’s dire predictions of massive tax increases, and Commissioner Tim Zorc recusing himself after it was suggested that he might have a conflict of interest, the Commission voted 3-to-1 to kill an impact fee moratorium that the body had approved 3-to-2 at its previous meeting.

The lone commissioner continuing to back a moratorium was Wesley Davis, who twice previously had proposed a moratorium on impact fees 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.  In 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 inpact fees, county officials said the move had not stimulated development.  “Building activity was flat – if anything, it went down a little,” said Keating.

In the end, Flescher voted to preserve the status quo after Solari made the motion.  A moratorium just negatively impacts the people who’ve already paid impact fees, Solari said.  “Things are getting unstuck, and they’re moving forward. This will just derail that process.”