5-year time payments for transportation impact fees considered

By Marvin G. Cortner
Editor

Allowing transportation impact fees to be paid over time is one option the Osceola County Commission is now considering to help stimulate the local economy.

Commissioners during a workshop Monday discussed a number of options for stimulating both residential and commercial building activity. However, most of the options come with a price tag: a millage increase to compensate for the short-term hit to the transportation impact fee fund.

Transportation impact fees are assessed on new development to mitigate the impact of the additional traffic the development would place on local roadways. Other county impact fees include those for schools, parks and fire/rescue.

Joe Johnston, customer service manager for county impact fee administration, told commissioners that transportation impact fees peaked in fiscal years 2005-06 and 2006-07 at about $23 million annually, compared to $10.5 million for 2008-09 and a projected $5 million for the current fiscal year.

Some county governments to help stimulate their local economies, Johnston said, have taken a variety of actions, including suspending impact fees, waiving the annual increase, reducing the fees or allowing time payments.

“Several counties have implemented moratoriums on the fees, many have taken a wait and see attitude,” Johnston said. “I’m convinced the time-payment option could stimulate commercial and residential development.”

The time payment option for both residential and commercial property, according to county officials, would require a 20 percent down payment of the fees owed, with the balance paid over five years in five equal installments. To protect the county financially, a lien would be placed on the property for the amount owed, plus any participant would have to pay interest on the fees owed. The county also would issue short-term bonds to generate the financing needed to fund road projects, with payments used to service the debt.

Johnston said the benefit to the property owner would be reduced upfront costs that could be invested into a business, payments over five years and there would be no penalty for early payment. The benefits to the county would be increased building activity and an increased tax base.

Participants in time payments also would face certain deadlines about how soon construction activity would have to start after building permits were issued or how soon buildings would have to be occupied.

Johnston said county staff was looking at Oct. 1 (the beginning of the fiscal year) as a possible start date for a six- or 12-month pilot program. At the end of the first year, the county would evaluate the program to determine whether it was worth continuing.

Interim County Manager Don Fisher reminded the commission that it would have to consider a small millage rate increase to offset the cost of the time-payment program so the action would not “further exacerbate the estimated $34 million budget deficit.”

“There are a lot of unknowns to look at; you could dedicate a small millage adjustment to deal with this … until the economy picks up,” Fisher said.

But commissioners were wary of any possible property tax rate hikes.

Commissioner Chairman Fred Hawkins Jr. said he wasn’t opposed to time payments but was “not in favor of a millage increase” to pay for it.

Commissioner Brandon Arrington said he “was not a fan of a moratorium” on impact fees but would be interested in looking at time payments.

“Obviously, there is an upfront cost but it would come back to us over time,” Arrington said.

Arrington also suggested the county look at a one-cent charter county sales surtax for transportation purposes as a way to generate additional income for road and transportation projects.

“It’s a reliable way to pay for transportation infrastructure,’ he said.

No mention was made at the workshop, however, of a gasoline tax to supplement transportation funding.

The county currently has seven transportation impact fee districts and has borrowed from reserves in one district, for example, to fund road construction in another.

Commissioners in the end suggested further investigation of costs associated with time payments and whether the option could be applied to specific areas of the county considered in greater need of development, such as portions of the U.S. Highway 192 corridor or for specific targeted industries. The county already provides a waiver of a portion of transportation impact fees when certain industries relocate or start up operations locally.

“The County Commission addressing impact fees is a step in the right direction,” stated Joe Volpe, spokesman for the Osceola County chapter of the Home Builders Association of Metro Orlando, in an e-mail. “I believe the commissioners realize that impact fees are not the revenue source to fulfill their commitment on improving the transportation system in Osceola County.”

Angel de la Portilla, president of Central Florida Strategies, a local government consulting firm, said Osceola County will have an excellent opportunity to benefit from the development of Medical City currently under way in Lake Nona and that companies in the health care industry will also look at potential sites in Osceola County

“This is an appropriate time for the county to assess its current impact fee structure, especially for targeted industries that would generate well-paying, stable jobs in Osceola,” Portilla said.

“When you compare impact fees by county in Central Florida, Osceola currently has the highest amount per square foot and this potentially could deter development and growth at such a critical time.”

Portilla said another strategy for the county would be to defer impact fees.

“If a developer is able to defer his impact fees and not have them as part of the construction budget, this may help secure financing in today’s restrictive lending environment,” he said.