The costs of building a new home — or anything else — in Volusia County will likely rise next year, if the County Council adopts a new road-impact fee ordinance next month.
“We can’t just arbitrarily increase the impact fee,” county Growth and Resource Management Director Clay Ervin told the council during a two-hour discussion of the matter.
Noting the impact fees have not been changed since 2003, while the costs of building new roads and adding lanes to existing ones have risen markedly over the past 15 years, the council agreed Nov. 13 to raise the fees — in some cases, by more than double.
“I think we absolutely have to move forward with it,” Council Member Billie Wheeler said. “I’m definitely for increasing the impact fee.”
Calls to review the county’s road-impact fees and to raise them came earlier this year, as county and municipal leaders were preparing to ask Volusia’s voters to approve a half-cent local-option sales tax for transportation needs. Critics of the tax proposal urged the pre-construction fees be increased before any sales-tax referendum is slated.
An ordinance spelling out the council’s will is to be ready for action Dec. 4, and the increases in the fees will be phased in over two years. If the council passes the ordinance, it will go into effect March 1, 2019.
For example, the road impact fee for a new single-family home built anywhere in Volusia County is now $2,174. Under the new proposed fee structure, the impact fee for roads will go up to $4,034 March 1, 2019, and it will settle at $5,379 on March 1, 2020, for a total increase of 147 percent.
The impact fees for county thoroughfares charged for other types of development vary, but increases for multifamily housing, retail stores, restaurants, hotels and offices are also pending.
The county’s impact fees for roads are not the only upfront changes on new construction. There is also an impact fee for the Volusia School District’s capital projects, levied upon residential construction.
Moreover, several cities have imposed their own impact fees for their own roads, fire services, law enforcement and parks, as well as connections to municipal water and/or sewer systems. With the exception of the impact fee for schools, the impact fees are due and payable when a building permit is issued.
The County Council additionally decided to index the impact fees, meaning the charges will escalate annually after 2020, perhaps by as much as 8 percent, based on increases in the costs of road construction. The increases in the county’s impact fees are contained in the report of a study conducted by Duncan & Associates, a consulting firm headquartered in Chicago and Austin, Texas.
The county’s impact fees for roads now yield about $7 million per year. County officials estimate the higher charges will yield approximately $13 million annually. By law, revenues from impact fees may be used only for the construction of new roads or lanes.
By contrast, the proposed half-cent local sales tax for transportation would generate some $45 million per year, and supporters of the tax say as much as 40 percent of the annual take would come from visitors and tourists. The funds may be used in a variety of ways, including repairs and maintenance of existing roads, as well as building roads and trails.
The estimated $45 million take, however, would be divided between the county government and the cities, much like the county’s local-option gas taxes are now apportioned between the county and the cities.
The local gas taxes — a total of 12 cents per each gallon of gasoline or diesel sold for on-road use — have been mostly flat for several years, hovering at less than $23 million per year.
As they plan improvements of Volusia’s road network, County Council members say the choice is probably not either impact fees or a local sales tax; rather, the improvements will require both fees and taxes, and perhaps other sources of funding, to move people from here to there.
“The impact fees are not the end-all,” County Chair Ed Kelley said.
“Impact fees will not get us to where we need to be,” Council Member Joyce Cusack said.
Volusia County first imposed impact fees in 1986 as a growth-management measure. During an economic slump in the 1990s, the council suspended or waived some impact fees for commercial development in the hope of spurring construction.
In 2011, the County Council suspended some impact fees for home construction to ease the burden on builders during the prolonged downturn. The fees were subsequently reinstated as signs of an economic recovery appeared.