Editorial: St. Petersburg's impact fee formula needs review

St. Petersburg's beautiful, booming downtown has benefited from incentives intended to drive new development to the city's core. That was the right approach to help revive a stagnant area now thriving with restaurants, businesses and residences. But it's time to take a fresh look at the incentive formula to ensure the rest of the city isn't getting shortchanged. LOREN ELLIOTT   |   Times
St. Petersburg's beautiful, booming downtown has benefited from incentives intended to drive new development to the city's core. That was the right approach to help revive a stagnant area now thriving with restaurants, businesses and residences. But it's time to take a fresh look at the incentive formula to ensure the rest of the city isn't getting shortchanged.LOREN ELLIOTT | Times
Published June 3 2016
Updated June 3 2016

St. Petersburg's beautiful, booming downtown has benefited from incentives intended to drive new development to the city's core. That was the right approach to help revive a stagnant area now thriving with restaurants, businesses and residences. But it's time to take a fresh look at the incentive formula to ensure the rest of the city isn't getting shortchanged.

City Council member Karl Nurse, who represents downtown and neighborhoods to the south, raises an intriguing issue that deserves broader discussion. He questions whether an impact fee schedule aimed at driving development toward downtown and away from other areas has served its purpose and should be rebalanced. The fees are paid by developers on new construction to compensate for the impact new restaurants, apartment buildings and the like have on roads. City staff have characterized the fees as a defense against sprawl. But St. Petersburg is largely built out and not vulnerable to sprawl.

The city's fees also are outdated. They are based on data collected in 1990, which showed more people drove from their homes to restaurants in suburban areas of the city, requiring more road money. Eager to bring new life to downtown, city leaders structured the fees to make building downtown a sweeter deal.

Now a sit-down restaurant downtown is assessed fees at $2,181 per 1,000 square feet, compared with $8,205 in most of the city. Condos: $924 downtown; $1,248 everywhere else. The disparity could be justified when flophouses were a drag on downtown real estate. But in an era when a Beach Drive penthouse just sold for nearly $7 million, it's worth asking whether the disparity in fees is too great.

The lower fees also extend to Midtown, a long-struggling district where new development is sorely needed. But developers thus far have set their sights on downtown, now home to high-end restaurants and pricey condos and apartments. That's further evidence that the fee formula is not working for everyone and should not be allowed to become a prop for luxury development.

Council member Ed Montanari, who opposes raising the fees downtown, suggested lowering them everywhere. Charlie Gerdes argued for adding in the costs of pedestrian improvements and bicycle lanes — two significant ingredients in downtown's successful recipe. Both ideas are reasonable, bearing in mind that development doesn't pay for itself and that any new discounts should get close scrutiny.

The transportation impact fees that St. Petersburg charges developers are based on outdated data about driving habits and a growth policy for a different city in a different era. When new data is available, possibly next year, the council and city staff should put everything on the table. It may be the case that the discounts have served their purpose for downtown and development should be encouraged in other areas that need a boost.

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