Impact fees: Can county continue to collect them?
Another battle seems to be brewing over impact fees – this time not over whether old fees that were collected should be refunded, but instead over whether impact fees levied by the county going forward need to be paid.
Charlie Wilson, a Vero Beach businessman and sometime candidate for local office, last week sent the Indian River County Commission a spread sheet he says shows the county cannot legitimately continue to collect some impact fees.
The county, needless to say, disagrees.
But Wilson, president of Impact Fee Consultants, said he plans to help builders and businesses avoid paying future impact fees, and warns the county will be subject to a class-action lawsuit if it forces his clients to pay.
“Indian River County may have overcharged businesses and homeowners up to 30% for impact fees collecteed from 2005 to 2013,” Wilson said. “The overcharges totaling up to $30 million are a result of inflated population estimates and overestimating costs of construction and land acquisition.
“A study by Impact Fee Consultants reveals that Indian River County may not be allowed to continue to collect impact fees from new construction for law enforcement, public buildings, parks, libraries and schools due to surplus capacity built up since 2005.
“The overcharges were caused by collecting too much and accelerating spending to prevent refunds,” Wilson said.
State law on impact fees is murky. Courts have found that counties can collect fees from developers and builders to pay for new infrastructure necessitated by their projects, but they must be able to show the new development, whether it is a big box store or a 100-home subdivision, will require a specific amount of additional road capacity, classroom space, park acreage and other infrastructure and then charge reasonable fees to meet the added need.
Wilson contends the county set rates and charged fees during the building boom that turned out to be unneeded and then rushed to spend the money to avoid refunding it, as required by law when fees are not spent within a certain time period.
He says the county has purchased more parkland and built more public buildings and other infrastructure than it needs and is not entitled to collect those type of impact fees going forward.
“The worst is Parks and Recreation,” Wilson said. “The impact fee code adopted in 2005 and adjusted for errors in county population estimates show a 160% level of service surplus. At current rates of population growth the county will not burn off its surplus for 71 years.
“Unfortunately we have spent most of the money needed for the next generation, maybe two generations. When we really need more parks, the money may no longer be there to fund them. As it stands now the county should not collect any impact fees for parks until 2084.”
County officials, not surprisingly, disagree. “The county does not believe that it has over-collected impact fees,” according to County Attorney Dylan Reingold.
“We have the ability to continue to collect impact fees,” Budget Director Jason Brown said. “There is absolutely nothing wrong with the way we are doing it,” Brown said. “Mr. Wilson is acting as an expert, which he is not. He is incorrect in many of his statements, as usual.”
Brown is known as a capable financial analyst and administrator and his categorical contradiction of Wilson’s assertions might seem definitive except for the fact that Wilson prevailed over the county in an earlier impact fee dispute.
In 2011, Wilson appeared before the commission a number of times to contend the county owed $1.2 million in impact fee refunds to island residents because the money had not been spent for its intended purposes of road construction during the time allotted by law.
At first, commissioners and county staff basically laughed Wilson off and said absolutely no refunds were due.
After a prolonged dispute, in which Wilson continued to press his point despite being maligned as a gadfly and troublemaker, the commission eventually saw the matter in a different light and refunded the money.
Wilson, through his company, made money by helping home and business owners apply for and collect refunds, which typically amounted to thousands of dollars.
This time around, he expects to acquire and advise clients who plan to build in the county, whether individual homeowners or large developers, helping them challenge impact fee bills.
According to an article in the August 2008 issue of the Florida Bar Journal, “impact fees ... may be refuted by the developer with additional evidence or an alternate study.”
“The county has created a new opportunity for us to provide a service to clients,” said Wilson, who plans to use his analysis of population growth and county finances as an “alternative study” to show that his clients do not have to pay.
He said the burden of proof in such a dispute would be on the county, citing a 2009 Florida statute he summarizes this way: “In any action challenging an impact fee, the government has the burden of proving by a preponderance of the evidence that the imposition or amount of the fee meets the requirements of Florida law.
“The bill also prohibits courts from using a deferential standard (towards local governments) when considering such cases.”
Impact fees are based on a pre-established level of service the county is committed to providing. Wilson believes the county may try to circumvent what he says are the consequences of excess impact fee collection by simply raising the level of service standard, decreeing that more infrastructure per resident is needed than under the earlier standard.
That would allow the county to continue collecting impact fees in order to meet the higher standard but Wilson said the county would be on shaky legal ground if it goes that route. He added that if it enforces collection of impact fees by that means, there will be a class action lawsuit filed against it.
Reingold said, to the contrary, Indian River County does have the right under Florida law to change its level of service standard, but that it does not need to.
“Simply put, local governments have the inherent authority to establish and modify the levels-of-service for public facilities within their jurisdiction, [but the] county does not believe that it needs to change the level of service to continue to collect impact fees. Therefore, although a local government has the authority to change the needed level of service to justify continuing to collect impact fees, that is not the case for Indian River County.”
Though Wilson prevailed in the earlier impact fee dispute, other of his initiatives have been less successful and it is hard to tell if he will get traction with this effort.
Impact fees and the accounting behind them are complex and there may be two legitimately arguable sides to the question.
Most Florida impact fee law has been put in place by courts responding to lawsuits brought by developers and citizens against government entities collecting and spending impact fees and this dispute could end up being sorted out the same way.