On Monday, city commissioners will consider updating the impact fees that dictate how much each owner of a newly constructed home, business or industry must pay to offset the cost of providing city infrastructure.
The one-time fees typically are paid by the builder and passed on to the new homeowner or business/industry owner.
The proposed city fees (see them here or at the end of this article) vary among residential, business and industry uses; most fees will go up, under the proposal.
For example, the proposed cost for a new single-family home adds up to $8,447 in non-utility impact fees for transportation, fire, police and parks/recreation/cultural facilities. That is $1,440 more than the city’s current charge.
Wastewater and water impact fees are additional charges that will not be considered on Monday; however, those fees would add another $2,966 to the cost of a new home inside the city limits.
In addition, the city collects impact fees on behalf of Polk County for transportation, schools, jails and emergency medical services. Earlier this year, those fees added another $7,657 to the cost of a new single-family home.
Commissioners could set every fee at 100 per cent of what consultant Tindale Oliver & Associates of Tampa said the city could justifiably charge for each category of residential, retail, office and industrial construction. But they may also set the fees lower.
“At 100 percent of the calculation, it covers the impact of the new growth,” said Brian Rewis, assistant director of community and economic development. “Not charging the full 100 percent creates a shortfall that must be made up some other way or the level of service will drop.”
The formulas used to arrive at the justifiable fees were explained in three reports that Tindale-Oliver had presented in August.
The city of Lakeland typically reviews impact fees every five years, employing a consultant to gauge the fees needed from anticipated growth to pay for the additional municipal services.
Commissioner Stephanie Madden said she could not see charging 100 percent of the cost in the housing category because of the need to create housing that is affordable.
Commissioner Scott Franklin spoke about weighing the consequences of setting the fees at 100 percent of the justifiable cost.
“We should also take into account whether the developer decided to build or not; do we know the cost of those who walk away because of the cost?” Franklin questioned.
And, he said, driving up the cost of new housing with impact fees shifts the market to the existing housing stock and those prices also go up, which means there is less and less affordable housing.
Commissioner Justin Troller was steadfast in saying if growth does not pay for itself the burden is unfairly shifted to existing residents and business entities and it is even more difficult for the city to catch up with the ever-growing need for more roads and parks, community centers and libraries.
“We made it through the Great Recession without dropping our rates, and our level of service did not deteriorate,” Troller said, adding there is no reason to drop it when the economy is strong.
Still, Troller said, “I don’t know that anyone can get ahead of transportation. It is a question of how far behind do we want to be.”
Commissioners shied away from charging the thousands of additional dollars needed to cover the full impact that new construction has on transportation and parks/recreation/cultural facilities.
Using Excel spreadsheets on their laptop computers, the commissioners fiddled with various percentages to look at proposed dollar amounts of impact fees and how those fees compare with current fees and Polk County’s recently approved fees.
Commissioners informally agreed that since police and fire fees add only a few hundred dollars to each project, they could set the proposed impact fees for those at 100 percent of the justifiable charge.
Oddly, at 100 percent of the justifiable charge, the police and fire fees will actually drop because the formula used by the consultant took into account that neither department is planning growth-related new construction during the next five years, Rewis said.
Coming up with a proposed impact fee to cover transportation was the most difficult for commissioners.
By consensus they eventually came up with transportation fee proposals that deviate from the 100 percent justifiable rates: 75 percent for single-family, mobile homes, motel/hotels and retail, 60 percent for multi-family dwellings, 50 percent for office and institutional uses, and 30 percent for manufacturing.
Other than manufacturing, which tends to create high-paying jobs, they proposed setting other industrial uses, including warehousing, at 100 percent of the justifiable rate.
Parks, recreation and cultural fees cover only residential facilities and by consensus the commissioners agreed to propose they be at 80 to 85 percent of the justifiable rates.
As commissioners studied and discussed the issues for approximately six hours during the policy workshops, they struggled with numerous issues.
* The desire to establish fees that are not so onerous they push developers to go outside the city limits yet are high enough to help offset the growth-driven costs of new infrastructure.
Several commissioners said builders are going just outside the city limits because county impact fees are lower; however the city still has to deal with the additional traffic and use of public parks.
Commissioner Sara Roberts McCarley said that those going just outside the city limits are not getting the same levels of service as in the city in terms of sidewalks and drainage.
* Recognition that most of the current impact fees, which were set in 2015, do not cover the cost of growth. That means the city already has lost out on possible revenue. Continuing to keep impact fees artificially low will only exacerbate the long-term loses.
Nicole Travis, director of community and economic development, said that the current parks fee was set at 90 percent of the justifiable rate, which led to a lost of $630,594 over the last 4.75 years.
Chuck Barmby, city transportation and development review manager, painted a bleak picture of expected transportation revenue for coming years. “The message we are continuing to hear from the Florida Department of Transportation is no new dollars for major capacity projects in Lakeland. What we are seeing is things that are eking out changes to make it a little more travel-able.”
* Recognition that both the city and county are waiving non-utility impact fees in a core improvement area that covers much of downtown. The area, which accounts for nearly 5 percent of the land in the city, was established to incentivize urban development and redevelopment.
Travis said that waiving the impact fees in the core improvement area added up to $598,261 in lost opportunity.
While infilling downtown with multiple-family housing complexes conceivably saves on transportation costs, it does not save on parks and recreation costs, Travis said.
“The people moving in downtown cannot play softball or baseball downtown; they have to go somewhere else,” Page said.
* Knowledge that waiving non-utility impact fees for large affordable-housing apartment complexes shifts the cost burden to existing taxpayers and rate-payers.
One of the City Commission’s priorities has been to solve the affordable housing crisis for working-class and low-income residents. Recently, the commission waived more than $400,000 impact fees for the proposed Swan Lake Village on Griffin Road.
* Recognition that projected revenue from impact fees is dependent on growth continuing at the expected rate and there being no economic slowdown.
Steve Scruggs, executive director of the Lakeland Economic Development Council, said he does not believe the consultant’s projection that collecting 100 percent of the justifiable transportation fee would raise $3.9 million a year. In 2009, a recession year, the transportation fee raised only $25,000. And in 2018, the last full year, it raised only $1.8 million, he said.
* Acceptance of the long-term financial consequences of capping lease payments that Lakeland Regional Health pays the city. The cap means the city is short an expected $6 million over the next five years, and much of that money was earmarked to supplement impact fees in building new parks, recreational facilities and other capital improvements.
Pam Page, assistant director of parks and recreation, said, “Our existing parks are maxed out. We cannot add additional ball fields. The only way we can continue the same level of service as now is purchase additional land.” However, losing the expected cash infusion from the hospital lease payment forced the city to set aside plans to buy land for a regional park in the fast-growing southwest quadrant.
“There are 5,000 single-family housing units already approved in the southwest area,” Travis said. “That is 13,000 people moving into that area. To put that in perspective, that is an area the size of Bartow with no parks.”
Mayor Bill Mutz said, “We are dealing with competing causes: controlling costs for developers while covering for the impact of new development. We cannot get enough money to do what we would like to do. We are trying to maintain our levels of service with impact fees.”
Because Lakeland’s population is projected to grow in the next 25 years from 107,552 to 145,052, “it is really important that we do not get further behind in infrastructure,” Teresa Maio, planning manager, told commissioners early in the study process.
After commissioners had weighed the issues, they directed their staff to draw up ordinances that may help offset the impacts of growth but not meet it. Here are the basics:
Single-family unit: Current total non-utility impact fee is $7,187. If increased to 100 percent of the justifiable cost, it would be $10,898. The proposed fee of $8,627 breaks down to $4,316 for transportation infrastructure, $3,333 for parks, recreation, cultural facilities, $398 for fire facilities and $580 for law enforcement facilities.
Multi-family (apartment) per unit: Current total non-utility fee is $4,843. If increased to 100 percent of the justifiable cost, it would be $7,770. The proposed fee of $5,019 breaks down to $1,837 for transportation, $2.491 for parks, recreation, culture, $281 for fire and $409 for law enforcement.
General office per 1,000 square foot: The current total non-utility fee is $3,120. At 100 percent of the justifiable cost, it would be $5,654. The proposed fee of $3,178 breaks down into $2,616 for transportation, $293 for fire and $369 for law enforcement.
Retail/commercial per 1,000 square foot: Current total for non-utility fees is $5,762. At 100 percent of the justifiable cost, it would be $8,854. The proposed fee of $6,822 breaks down into $6,096 for transportation, $253 for fire and $473 for law enforcement.
Wholesale/warehouse per 1,000 square foot: Current total for non-utility fees is $979. At 100 percent of the justifiable cost, it would be $1,055. The proposed fee of $1,55 breaks down into $841 for transportation, $87 for fire and $127 for law enforcement.
Manufacturing/industrial per 1,000 square foot: Current total for non-utility fees is $732. At 100 percent of the justifiable cost, it would be $2,227. The proposed fee of $818 breaks down into $604 for transportation, $87 for fire and $127 for law enforcement.
The proposed impact fee schedule: