Our View: Re-think new house taxes

 

Our View: Re-think new house taxes

 

Date: July 6, 2011
by: Observer Staff

 
 

Building a new house in Manatee County will get a little more expensive beginning Oct. 1, thanks to the County Commission breezily approving a new impact fee schedule with nary a peep.

While impact fees decline for most commercial developments, new single-family houses, large commercial malls and churches will be hit with increases — churches nearly tripled. Commissioners asked a few lame questions of the county consultant and then unanimously approved the tax changes because that was what the consultant said the data said.

Make no mistake, impact fees are taxes on new development. You don’t pay, you don’t build.
But the very philosophy behind impact fees is deeply flawed.

The idea is to charge newcomers their fair share for roads, parks, law enforcement and public safety, so existing taxpayers don’t have to pick up the extra costs. Sounds great on the surface, but not once you peel back a few layers.

First, it is levied on buildings, not people. But buildings are only the conduit for the supposed impact. The people actually create the impact for which the fees are charged, such as roads. That distinction matters and here’s why.

If you have lived here your whole life, paying taxes faithfully, and decide to build a new house, you pay an impact fee when you are manifestly not causing any impact. Conversely, if a family moves down from Ohio into your existing house, it does not pay an impact fee although it manifestly has an impact.

The only defense you hear is that the building is the only place you can levy the fee. That’s probably not the case, if there were a desire. It could be charged at the change of residency time or during voting registration or maybe when getting a Florida driver’s license. But that would not be politically palatable because writing a huge check just to move in would be a killer. As an “impact fee,” developers are said to pay it. But they don’t really; the fee/tax typically becomes part of the mortgage.

So, then the defense of the fees turns to the concept that those road and public safety costs must be generated somehow. Maybe. But, then, don’t call it an impact fee when it clearly is not. Call it a new house tax, or development tax or construction tax. Something honest.

A further piece of evidence that puts the lie to this is that during the recession, when population was flat or even declined, counties continued to collect impact fees. There were some new houses, apartments and so on being built, but clearly there was not a net impact on any public services.

Unfortunately, no Manatee County commissioners raised any of these objections. It is a revenue stream in tough times and that is what matters.

Commissioner Donna Hayes questioned nearly tripling the church fees. But consultant Randy Young, of Redmond, Wash.-based Henderson, Young and Co., merely said, “It is what it is … the data is the data.”

If commissioners are going to be automatons for impact-fee changes based on whatever the consultant says the data says, they might as well just approve the latest flavor of formula and let the hired guns do the rest. After all, who can argue with data?

We can. Because there are elements to the impact-fee changes that just do not make sense. Why are transportation fees rocketing up for single-family houses when clearly the costs of buying the land, the materials and the labor have all declined sharply during the recession? No one asked. Church transportation fees increased. Does the formula include the fact that church use is mostly once per week on Sunday morning, maybe the lowest use time on roads? Should there even be a road impact fee for that?

Are any of the commissioners watching out for something other than the county’s revenue streams?

Commissioner Larry Bustle asked the common sense question whether newcomers might pay their own way in that they pay taxes like everyone else.

Consultant Young breezed by that saying that studies showed that was not the case. Really? Were governments always running behind until impact fees? That is not what a study of Collier County found.

A 2009 study of the full equation of revenues and expenses from new construction in Collier found that new construction actually paid for itself and a whole lot more. Over a 15-year period, the cumulative cost for new houses and newcomers to Collier County was $55 million. The total tax take from new housing and the newcomers was $115 million.

Some will suspect that study because it was conducted by Elliot Eisenberg, senior economist with the National Association of Home Builders, in Washington, D.C. But he duplicated it all over the country using standard methodologies. And as Young said repeatedly, the data is the data.

Impact fees are wrong on every level — they do not necessarily assess the fees on those creating an impact, and the impact from growth is apparently a net revenue positive to local government coffers. No negative impact.

To view our chart on Manatee County impact fee changes click here.

 

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