Some say impact fees stifle growth. Some say they’re needed to pay for growth’s impact on infrastructure. For more than three years they haven’t been collected at all. Now the fee waiver has expired. What’s next?
CRESTVIEW — When the economy faltered in the late 2000s, many communities, Crestview included, sought to stimulate growth by waiving transportation impact fees.
On April 29, the waiver expired, but without a decision on how to proceed, the fees weren’t being collected and both the city’s Growth Management Department and developers were in a sort of limbo.
At a May 26 special meeting, the City Council agreed to pursue an additional 16-month fee waiver period to allow Growth Management Department staff time to research construction costs, roadway indexing, synchronize capital improvement plans, “and just get the whole scheme of things in line,” Growth Management Director Teresa Gaillard said.
By state law, the city has to do the every-five-years study before it can pass an ordinance to waive or resume collecting traffic impact fees, Gaillard said.
“Most of the contractors are on hold,” she said. “They’re in limbo between their development order and purchasing permits.”
The prospect of the three-year fee waiver expiring spurred a development spurt as developers rushed to get their projects permitted before fees resumed.
“We had several commercial projects came through and secured development orders,” Gaillard said. “We’ve had them going on since the end of November. They all came in to make it before the end of the traffic fee waiver.”
INFRASTRUCTURE STRESS
Development contributes to stress on the city’s infrastructure, including state-owned highways 85 and 90, officials say.
But a substantial amount of that stress on Crestview’s streets comes from outside city limits, Public Works Director Wayne Steele said.
“The county has (permitted) almost 4,000 homes around Crestview in the last five years,” Steele said. “That is more than we built. We have other agencies around us that are allowing people to take up our capacity.”
Steele said impact fees are necessary to help mitigate development’s impact on local infrastructure, but some help is needed from Okaloosa County.
“If the county can allow development to occur in the rural areas right outside our limits, why should we ask our developers to carry that burden?” Steele said.
HELP AND HURT
Officials said impact fees can both help and hurt development. Major businesses, such as national chain stores and restaurants, factor local impact fees into construction costs.
“Sometimes those fees are enough to make or break a small company,” Gaillard said. “Your bigger people pretty much guesstimate when they’re planning. It’s the smaller companies the fees hurt. They’re not prepared to handle that amount.”
Steele said he doesn’t believe the fee waiver has spurred too much development as much as it has taken funds from infrastructure improvements.
“I haven't seen a lot of development happening here while we've had a moratorium,” he said.
And now developers are getting used to Crestview, Destin, Panama City and other neighboring communities scrapping their fees, Gaillard said.
“Traffic impact fees have pretty much been suspended or cities have come up with alternate funding mechanisms to fund transportation improvements where they don’t have to have traffic impact fees, and that’s going on statewide,” she said.
STUDY PERIOD
The 16-month fee waiver extension will be added to the 46 months the fee has already been waived out of the impact fee’s 85-month existence thus farm far, Gaillard said.
Crestview’s population is forecast to grow to 35,000 people by 2035, she said. It has experienced 41 percent growth since 2000.
“A fundamental requirement for economic growth is transportation management,” Gaillard said at the City Council’s May 23 meeting. “In order for us to prosper we need mobility and accessibility.”
“How can we complain about infrastructure and gridlock if we don't do anything?” Councilman Bill Cox asked. “We're dealing with issues now because previous councils have done nothing.”
Gaillard said projects currently on hold while developers determine what the council will do will probably move forward should the 16-month waiver be approved at a June 13 council meeting.
“By the time the projects we’re working on are worked through and ready for their permitting, the waiver will be in place,” she said. “If it had to happen sometime, now was a good time.”
Though the fees are waived until Sept. 30, 2017, the City Council has until July 31, 2017, to pass a new ordinance maintaining the waiver or reinstating the impact fees. Workshops will probably begin around April 2017.
“They’ll be looking at the figures and crunching options during workshops,” Gaillard said.
And in the meantime, Crestview will continue to grow.
Crestview has had traffic impact fees since May 2009. Of those 85 months, the fees have been waived for 46 months. Here’s how much revenue they have produced:
Fiscal year 2008-2009: $112,200
Fiscal year 2009-2010*: $180,419 ($292,619 balance)
Fiscal year 2010-2011**: $243,253 ($535,872 balance)
Fiscal year 2011-2012: $142,928 ($31,716 spent; $647,084 balance)
Fiscal year 2012-2013***: $17,820 ($664,904 balance)
Fiscal year 2013-2014: $0 (fee waived) ($664,904 balance)
Fiscal year 2014-2015: $0 (fee waived) ($30,643 spent; $634,261 balance)
Fiscal year 2015-2016: $0 (fee waived) ($6,075 spent; $628,186 balance)
*Fees waived first six months, 20 percent collected next three months, 40 percent collected last three months
**70 percent collected first six months, 100 percent collected last six months
***100 percent collected first three months; fee waived rest of year
Source: City of Crestview Growth Management Department
IMPACT FEE INCREASES PROPOSED
An April report recommends increases in the city’s traffic impact fees, which are currently waived.
“Everything we touched on about doubled and a quarter,” Growth Management Director Teresa Gaillard said. “But they’re waived until Sept. 30, 2017.”
Gaillard provided these examples showing what planned developments would have had to pay had fees not been waived, and what they would’ve paid under the proposed new traffic impact fees:
●Jimmy John’s: 1,250 square-foot sandwich restaurant: current impact fee (waived) $27,554
Proposed impact fee: $59,880
●Express Oil: 8,000 square-foot automotive shop: Current impact fee (waived): $17,552
Proposed impact fee: $38,272
●Single family dwelling:
Current impact fee (waived): $1,762
Proposed impact fee: $3,898
IMPACT FEES COLLECTED
This article originally appeared on Crestview News Bulletin: The impact of Crestview's impact fees