By Fallan Patterson
Staff Writer

It started with a bar.

After Jeff Rinehart, owner of downtown St. Cloud’s Soldier City Saloon, poured a concrete patio behind his tavern and added an outdoor bar, a wooden fence and a plastic covering – doubling his occupancy – the city’s code enforcement department said he needed more bathrooms.

His two restrooms, one for each gender, will cost about $4,500 after labor, materials and permitting, which he plans to apply for this month. However, he also needs to pay the city an additional $7,900 in impact fees – money paid to offset any costs to public services caused by new or expanding development.

Todd Swingle, St. Cloud’s public service administrator, said the impact fee also was imposed due to the increase of capacity of the business, not just the bathrooms.

“Basically, it’s any time there’s an increase in the use,” Swingle said.

Rinehart, who took his case to the St. Cloud City Council last month, calls impact fees “double taxation” and said the government needs to look for other ways to boost its budget or business won’t flourish in St. Cloud.

“They’ve built their economy on it. Impact fees are a thing of the past,” Rinehart said. “They’re going to have to do something else.”

Swingle said the city has to balance providing infrastructure and growth needs with the development of new and expanding businesses.

“We have to be able to pay for infrastructure,” he said.

Impact fees help government build infrastructure such as roads, schools, water treatment facilities and sewage lines when development occurs. These fees are paid before construction begins and for both new and expanding buildings and homes and are determined based on studies conducted by the city periodically on the projected impact new construction would have on departments, such as transportation, law enforcement and water and sewer. Impact fees are paying for the Nolte Road extension project.

“I know it’s hard times for people and businesses in this economy but in order for us to grow, we must apply impact fees,” Swingle said.

According to Swingle, the most recent impact fee studies were conducted in 2006 for transportation and 2008 for water and sewer.

Impact fee funds do not go to the city’s general fund; rather, depending on what type of impact fee it is, it goes into one of seven restricted accounts: public safety, recreation, education, sanitary sewer, potable water, sanitary sewer tap and potable water tap fees. The money cannot be used for maintenance, according to Swingle.

Rinehart’s concern also lies with continuing impact fees. For example, if someone starts a business, the owner must pay impact fees. If that business fails and another comes into the same building, the new owner must pay impact fees as well and so on.

“Look at all the empty buildings downtown. I’m not impacting anything,” Rinehart said. “This building has been here since 1960. It owes this city nothing.”

Rinehart also is currently in talks with Osceola County to purchase a 45,000-square-foot building on Orange Blossom Trail in Kissimmee and turn it into a live music venue and tavern. While the impact fees for the building, a former car dealership, started at $1 million, the county has dropped it down to $39,000 because it’s in an economic recovery zone, which can be funded by a federal bond because it is an area having significant poverty, unemployment, home foreclosures, or general distress. The discount sweetens the deal, but Rinehart wants the fees removed completely.

Kissimmee commissioners are considering lowering impact fees within its city limits by 27 percent, according to city spokeswoman Carla Banks. The decrease is based on the reduction in construction cost per the Florida Department of Transportation.

According to Osceola County’s spokesman Larry Krause, county commissioners are looking at alternative funding sources that could reduce impact fees, including the passing of the 1 percent sales surtax initiative on the Nov. 2 ballot, which would fund road improvement projects.

“If passed, the county could look at possible impact fee reductions. At this point, however, the impact fees are the same as last year,” Krause said.

Ted and Michael Palmer, the father and son team who own Mutt’s on 13th and Philly Subs and Steaks, both in St. Cloud, had planned to move the sub shop to the property behind Mutt’s but were dismayed by the impact fees.

“We want to expand, we want to hire more people but the biggest obstacle is the government’s rules, regulations and fees,” Ted Palmer said.

They also wanted to open a drive-through at Mutt’s to offer more convenience for customers. The area is already paved and a window was installed but in order to use it, the Palmer’s would have to pay $85,000 in impact fees.

“It’s the reason why small businesses like myself can’t compete with major corporations,” Ted Palmer said.

City Council members at public workshop Thursday night beginning at 7 p.m. at City Hall will look into solutions to help existing businesses and lure business to the area.

Rinehart suggests the city form a business owners advisory board to make recommendations to the council. He also knows if the city waives or defers impact fees, revenue will have to come from somewhere else.

“The reality is they’re going to have to raise taxes to compensate for all this expense and cut the budget down,” Rinehart said.

Jay Polachek, a City Council member who is running for mayor, said he plans to make addressing impact fees a top priority if elected. He favors sunsetting impact fees for a few years to bring business in or setting up a payment plan to ease new businesses into the area. He also plans to work with the county on the impact fees in unincorporated Osceola County.

“I’d rather attract businesses to St. Cloud and get continuing tax revenue year after year than a fee upfront,” Polachek said.

Council member Jarom Fertic agrees with Rinehart, in that removing the impact fees may result in higher taxes but insists incentive programs and other creative avenues could encourage business growth and spruce up the town. He cites the Palmers’ recycling of a closed gas station into their hamburger restaurant as an example.

“We need to find something that works for our town,” Fertic said. “The objective is to do something that works for both businesses and residents at the same time.”

The City Council meets at the City Council Chamber, Building A, Third Floor, 1300 Ninth St.