Developers Expect Higher Fees With Floridas Propertytax Cuts
Written by Risa Polansky on June 14, 2007
By Risa Polansky
Some developers and development experts say they expect local governments to charge higher permitting and user fees to make up for revenue lost to statewide property-tax cuts.
Others figure municipalities have enough fat to trim elsewhere in their budgets without raising the fees and lessening service levels.
"We would love nothing more than to see a rollback of real estate taxes," said Matthew Greer, chief operating officer of Carlisle Development Group. "We also think because they’re going to cut city services, they’re going to turn around and find use taxes that are going to hit us disproportionately. We’re kind of schizophrenic."
Raising rates is "just a natural conclusion," said residential real estate development attorney Richard Schanerman, shareholder at Akerman Senterfitt. "The money has to be made up someplace, and an obvious place is permitting and impact fees."
Governments will "be more likely to do that than say, "Let’s fire 20% of our staff,’" Mr. Greer said.
However, Mr. Schanerman said, it’s all just speculation until the Legislature reaches a decision on property-tax reform during its special session that began this week.
"I’m not worried about that," said Inigo Ardid, vice president of Key International. "One-time taxes are a lot better than recurring taxes, than a real estate tax."
Regardless, he said, governments have seen an increase in revenue in recent years, and "I’m not pulling my building permits any faster today than I was in 2001."
Silvio Cardoso, president of the Builders Association of South Florida and United Homes International, agreed that permitting did not become quicker with revenue increases in past years and said it shouldn’t slow down now.
Fees, he said, already vary too much from city to city.
The state builders group is lobbying for standardization regardless of the impact of cuts in property taxes, he said, and if local governments do raise fees and use taxes to make up for revenue lost, "then we’ll have to worry about challenging them and making some sort of standardization so it doesn’t matter where you go, you’ll know what your impact fees and permitting process will be."
Also, Mr. Cardoso said, outsourcing licensed experts to do inspections required for permits could streamline the process and governments may want to "establish a private provider system where you have checks and balances."
But "the most important battle we have is insurance and taxes in the state," he said. Without property-tax reductions, residential developers are "not going to have to worry so much about the permitting process" because there won’t be a need to build if people can’t afford to live here, he said.
"On the one hand, you’re going to be reduced in taxes, but on the other hand, that reduction would be offset by volume," said Eli Dreszer, partner at MFM Construction.
There was not an increase in planning department staffing created by the last boom, he said, so there shouldn’t be a need for staff reductions even if government spending is cut.
Miami-Dade County last summer budgeted 12 new staffers to expedite its permitting and inspection processes but later removed the positions "due to the slowdown in construction activity," said Miriam Rossi, spokesman for the county’s building department.
While staffing and budget decisions hang in the balance as the special session continues, the department has "no plans to raise permit fees or use taxes," she said.
Representatives of the Miami and Coral Gables planning departments said the same.
Attorney Neisen Kasdin of Akerman Senterfitt said even if cities do choose to make up for lost revenue through increased fees, they may relax regulations and limitations.
"Smart cities," he said, "will also be trying to increase the level of business activity."