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Halving impact fees reveals Hernando County Commission's faulty strategy

Hernando County commissioners continue to aim low. Tuesday, commissioners halved the county's impact fees on new construction for the next year after listening to unsubstantiated statements that it will stimulate home-building activity. The strategy hasn't worked elsewhere in Florida, so why Hernando County is presumed to be different is unknown.

The drastic slowdown of home construction is not tied to a reasonably priced infrastructure surcharge but to a surplus inventory of resale homes, the exodus of investors from the market, unemployment, tighter credit and an inability of potential buyers to sell their current homes for a reasonable return.

No matter. The desperation to do something — whether justified or not — overwhelmed commissioners and they, following the lead of the Hernando School Board, placated the building industry representatives by cutting impact fees for all new construction. Impact fees are the one-time charges to help pay for roads, schools, parks, libraries and other infrastructure demands caused by new growth.

Part of the rationalization for the cut — taking impact fees to the level assessed from 2001-05 — was the falling costs of construction. Commissioners, however, never heard factual data from their own staff to justify the action, just anecdotes from the audience members with a vested interest in the outcome.

Long-time commission critic Janey Baldwin made the most sense in calling for a consultant to recalibrate the impact fees rather than picking a number out of the air.

The commission is mistaken if it believes costs are on par with 2001, an unrealistic theory first offered by Commissioner Jim Adkins two weeks ago. It fails to account the cost of real estate needed to build schools, roads and other services.

Take the county's top-rated road priority, County Line Road, as an example. It's intended to be widened to four lanes, with the eventual expansion to six lanes, to ease east-west traffic.

In 2000, the Florida Department of Transportation estimated the cost at $119 million. Now, improving the road from East Road to U.S. 41 at Ayers Road carries cost estimates (in 2007 dollars) of $209 million, with $122 million of that needed just to buy the right of way.

The county is expected to contribute at least $24 million toward that project. It remains unfunded and now there will be less money available from new home construction for that widening, the need for which was exacerbated by the housing boom near the county line.

The only clear vision in the commission chambers came via a letter from the city of Brooksville that was signed by Mayor Joe Bernardini. It correctly warned that if new development didn't contribute its fair share to infrastructure, existing taxpayers will have to make up the difference down the road. That sound logic, however, fell on deaf ears and reinforced the image that new growth — i.e. business for area home builders and contractors — was more important than the future tax burden of existing residents, some of whom already had paid the impact fee.

Hernando, it must be noted, is not at a competitive disadvantage in the construction industry. Its current fee for a for a single-family home is less than half the approximately $20,000 charged in neighboring Pasco County. Likewise, its current commercial and industrial fees are significantly less or comparable to the charges in Citrus County to the north.

Perhaps more distressing than kowtowing to a politically influential special interest is the lip service paid to diversifying the local economy that is too reliant on the home-building industry. Commissioners did agree to allow new businesses to pay impact fees over a three-year period, but there seemed to be a genuine inability to grasp the need for targeting industrial recruitment.

A diversified economy is not defined by a national chain restaurant coming to town because there are enough new residents living under new rooftops to support the business.

Halving impact fees reveals Hernando County Commission's faulty strategy 11/12/09 [Last modified: Thursday, November 12, 2009 4:31pm]
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