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Dade City's suspension of impact fees won't bring growth

Dade City is poised to mimic the unsuccessful economic stimulus plans attempted by other local governments — suspending impact fees to try to stir building activity.

Following public hearings Tuesday and again May 8, the City Commission will vote on a proposed ordinance to suspend transportation impact fees for two years because "it is in the best interest of the public health, safety and welfare to attempt to encourage construction of homes and businesses within the city limits.'' How did they leave out Mom and apple pie from this rationalization?

The logic is flawed because it wrongly presumes the city is at an economic disadvantage when competing against Pasco County's new mobility fees. The city's road impact fee is $5,223 per single-family home. Pasco fees, based on location and home size, can range from $1,563 for a small house in a so-called traditional neighborhood design to more than $9,300 for a large home in a suburban location.

Waiving impact fees is a feel-good measure that doesn't translate into renewed growth. At least not yet. When adopting its lower transportation mobility fees last year, the Pasco County Commission also suspended its impact fees for public safety, parks and libraries. The result was a mere 884 permits issued for single-family home construction in 2011, a 9 percent decline from 2010. The same strategy failed miserably in neighboring Hernando County as well. There, commissioners initially cut fees in half and watched single-family home construction permits for a nine-month period drop from 134 to 89. Instead of backtracking, they suspended the fees entirely in November.

Blaming a stalled residential-construction industry on impact fees — the one-time charges intended to make new growth help pay for the demands on roads and other government services — is a favorite tactic of builders. But, it fails to account for foreclosed and short-sale homes saturating the market, tight credit, and high unemployment that also keep people from building new homes.

Likewise, waiving fees for commercial construction makes more sense if the beneficiaries can document specific job-creation.

Dade City has significant attributes that much of east Pasco County cannot match: Downtown retailing anchored by its antique district, a pedestrian-friendly community, enhanced police protection, the only county library branch east of New River and, most importantly, no sprawl or resulting traffic congestion.

Dade City shouldn't fear competition from the county and it would be wise to study the current dilemma in New Port Richey. That city has never charged transportation impact fees, believing it would give it an economic development edge over the county. Yet, over the past 10 years, New Port Richey's population has declined and its council now faces a looming budget implosion because private-sector investment in the city hasn't materialized.

A more appropriate tactic for Dade City — part of which is included in its proposed ordinance — would be to commission a study to devise a new, more accurate impact fee. Doing so at least recognizes that falling road construction prices has made the current road fee outdated.

Waiving the fee entirely smacks of desperation and unfairly penalizes people who already have invested in the city.

Dade City's suspension of impact fees won't bring growth 04/21/12 [Last modified: Saturday, April 21, 2012 10:34am]
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