Tarpon Springs probably missed the opportunity to collect funds for much-needed capital improvement projects by failing to update its impact fees during the last 17 years. That's much too long to wait, but at least city commissioners decided last week to address the problem by considering an increase in the fees, though not enough in some situations.
Impact fees are one-time fees charged to those who build new projects — homes, businesses, even schools — and are supposed to reflect the cost of adding public services and infrastructure to serve the new development.
It is important to note that the impact fees are designed to reimburse the government for its costs so that existing residents and taxpayers don't have to bear the cost of the new development. Instead, the new development bears the new costs.
When the cost of providing those services, be they police or streets or parks, goes up, impact fees should go up, too. Clearly, the costs of such services rose substantially in the last 17 years, but Tarpon Springs did not raise its fees.
Tarpon Springs is not the only local government that has failed to keep up. For example, in 2006, Hillsborough County tackled its school impact fees, which had not been increased in almost 20 years. Meanwhile, schools had become overcrowded. Schoolchildren paid the real price for new development.
A consultant hired by Tarpon Springs to review its impact fees estimated that the city's capital costs rose 75 percent between 1991, when impact fees were last reviewed, and 2008. Yet impact fees were not boosted to keep step with the increased costs.
The city was looking at enormous increases in impact fees to catch up. Consultant Burton & Associates calculated that to fully recover the city's costs for increasing service for new developments, impact fees for residential projects would have to go up 219 percent, and for commercial developments, 58 percent.
Commissioners refused to raise impact fees for new homes 219 percent, worried that doing so would discourage development. They preferred a 72 percent increase.
A proposed new impact fee ordinance reflecting those increases will be considered in public hearings at 6:30 p.m. Oct. 28 and Nov. 4.
Current impact fees total $1,341 for a new home, but that would go up to $2,312 if the new ordinance were approved. The current fees for projects that are not residential are $0.429 per square foot. That would increase to $0.679.
Builders likely will be among those opposing any increase in the fees. Expect them to claim that the increase will discourage development.
But impact fees that better reflect costs have not stopped development in other communities, and won't in Tarpon Springs.
To the public, it may seem counter-intuitive to raise impact fees when development has slowed severely because of the troubled economy. However, a new fee structure will put the city in a better position when the economy turns around and growth surges again.
More than ever, the city needs the increased revenue new impact fees would bring in. Local governments are cutting existing services because lower taxes have been mandated by voters and lower property values are bringing in less tax revenue. The time has passed when local governments are flush enough to just absorb the cost of adding services for new development.