Impact Fees Negatively Affect Central Florida Housing Market Affordability

Home builder George Glance wants to price homes reasonably in the Central Florida housing market.

But a Lake County decision expected in the next couple of months could make that a challenge not only for Glance, the president of KB Home Orlando LLC, but for nearly all builders.

Two impact-fee studies, one for transportation and another for schools, propose raising fees to total nearly $30,000 per new home, making it Central Florida’s costliest county for builders.

The transportation plan, under review by a county-appointed committee, could go before the Lake County commission as early as next month.

Meanwhile, the school study was slated for presentation to the commission April 17, but was withdrawn so a consultant could reevaluate the methods used to determine the proposed increase, says Cindy Hall, Lake County manager.

The fees - charges by local governments on developers to offset the strain of new projects on roads, schools and other infrastructure - help governments keep up with growth. In some counties, including Lake, the amount charged per new home varies based on factors such as the home’s location, size and type - single-family, multifamily or mobile home.

Unhappy builders
It’s unfair to expect Florida home builders to provide the quick-fix, says Glance. “It can’t come from one source, and you can’t solve the problem overnight,” he says.

Further, if builders have to pay more to build, increases likely will be passed through to Florida home mortgage borrowers. “It’s sort of a cascading problem,” says Glance. “You’re putting affordability out of reach, and that hurts jobs.”

High impact fees also hurt builders’ bottom line, says Tony Martin, executive vice president of development for the Orlando division of Tarragon Corp. “Because of impact fees and property values going up, we’re making less than we ever have,” he says.

Hefty hike
Under the proposed study, the transportation impact fee would increase by $8,800, going from a maximum of nearly $2,600 per new home to top out at about $11,400. It would be implemented incrementally over three years, Hall says.

That proposed impact fee will be presented May 9 to the Lake-Sumter Metropolitan Planning Organization, the lead agency for transportation planning in Lake and Sumter counties. The agency’s recommendations then will be presented to the Lake County Commission.

A decision to implement the higher fees could be made by June or July.

Although raising fees for builders would affect affordability of homes in the county, it’s necessary, she says. “From the county’s perspective, the costs from the construction of schools and roads also has gone quite high, and the demand for services is high.”