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County Raises Impact Fees By SHANNON BEHNKEN

Jul 26, 2006

Good Morning From Lyn Acer

Here is an interesting article from today?’s Tampa Tribune.

County Raises Impact Fees

By SHANNON BEHNKEN The Tampa Tribune

Published: Jul 26, 2006

The increase in developer impact fees Hillsborough County approved Tuesday will eventually be passed on to consumers but will represent only a fraction of the skyrocketing price of a new home.

The average cost of a new home in the Tampa Bay area has jumped $100,000 since Jan. 1, the housing research firm Metrostudy revealed Tuesday. Home buyers can blame higher building material costs and a generally rising real estate market for increasing the average price of a new home to $349,209.

The local real estate community agrees that money is needed to build schools in new communities, but economists worry the impact fee provides one more deterrent for new home buyers who may decide to postpone their decisions. Homebuilding is Florida's second-largest industry behind tourism, and sales of new homes are an indicator of economic growth.

Hillsborough County commissioners voted 4-3 on Tuesday to increase impact fees for new schools. It was the first time in 20 years the county has raised the fee from the current level of $196 for a three-bedroom house, and it came after years of fighting between commissioners and school officials.

"The support from the community was great," school Superintendent MaryEllen Elia said afterward. "This is one piece in a picture of need."

The ordinance approved Tuesday calls for an assessment based on square footage rather than number of bedrooms. The fee on a house measuring 2,000 to 2,499 square feet will be $2,000 on Nov. 1 and will double to $4,000 on Aug. 1, 2007.

The increase comes at a fragile time in the residential real estate market. Area builders are struggling to lure buyers by slashing prices and offering sales incentives.

Mike Southward, Tampa division president of Lennar Homes, said although he agrees with the decision, the timing is bad. Impact fees for schools should have been raised gradually, he said, and would have hurt the building industry less if the increase had come several years ago, when the market was booming.

"The builders will tell you that we're all willing to pay our fair share," Southward said. "And we are. &hellip But the consumers are the ones who end up paying for it."

Every time builders' fees are increased, Southward said, the cost of their homes goes up. Because home prices are at record highs, he said, consumers will reach a point where they can't afford to buy the home.

"They'll either end up buying a smaller home for the same price, or they won't buy a home at all," Southward said.

Although the jump is huge for Hillsborough, it's not out of line with other counties' fees.

Kevin Robles, of McCar Homes, said his company pays $12,000 in impact fees for every home it builds in Pasco County. Of that, $4,300 goes toward new school construction. That's up from $1,900 last year, he said.

When the fees went up, he said, McCar raised prices. This year, however, area builders have found that they overestimated this summer's demand and are left with extra inventory.

To move homes quickly, they're offering incentives such as upgraded countertops, cabinets and carpet. Some are even offering leases on cars or special financing.

Robles said he is glad Pasco's increase came last year. Hillsborough builders might have to eat some of the increase so they can continue to be competitive in a tight marketplace, he said.

But builders will pass on every cent they can, said Elliot Eisenberg, a housing policy economist with the National Association of Home Builders.

"Builders can't afford to take a $4,000 hit on a house," he said. "This will raise the cost of housing, decrease affordability and push builders to move to other counties."

Lawrence Yun, an economist with the National Association of Realtors, said if new home prices go up, that could help people who are selling their existing homes - but only for a short time.

"There's competition between new and existing homes, and this will give sellers an advantage, but the long-term housing market in Tampa will be less vibrant," he said.

Tuesday's vote was the sixth time commissioners have addressed impact fees since October. It came two years after the county and school board jointly funded a study that recommended increasing the fees to about 10 percent higher than what was adopted.

The fee is expected to raise about $43 million a year once fully implemented next summer.

Commissioners Kathy Castor, Tom Scott, Ken Hagan and Mark Sharpe voted for the increase, with Commissioners Ronda Storms, Brian Blair and Jim Norman opposed.

"It's time for developers and newcomers to pay more of their fair share," Castor said. "Don't you wish you could go back 20 years and get the same gas price and insurance price?"

Among other details, the ordinance:

?•allows school officials to use impact fee revenue for construction rather than just buying property.

?•reimburses some of the impact fee on developments that include at least 20 percent affordable housing.

?•eliminates a county requirement for builders to mitigate the effect of their projects on local schools, either through donating land or providing money to add classroom wings to campuses.

Jim Knetsch, a real estate agent with ReMax Realty Associates, said the fees should have been increased long ago. Although it's a bad time to raise the fees, he said, it's worth it because building more schools will help the quality of life in new communities.

"Will this impact real estate? Of course," he said. "Will it devastate it? No, I don't think it will."