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County slashes its impact fees to help attract businesses

STORY BY LISA ZAHNER (Week of May 1, 2014)

Businesses looking to build or expand in Indian River County will have a slightly lighter burden now that the Board of County Commissioners voted unanimously last week to revamp the schedule of impact fees assessed on non-residential development.

Rather than have unpredictable, fluctuating fees, the commissioners said they wanted business owners and commercial developers to know what the fee schedule would be for a project long-term.

Commercial real estate developer and Castaway Cove resident Keith Kite praised the county for devising a plan that corresponds with actual infrastructure needs. “I think it’s an immediate benefit to continue our economic recovery,” he said.

In addition to developing the Springhill Suites on Indian River Boulevard adjacent to Grand Harbor, Kite just broke ground for the new $8 million Hampton Inn on Miracle Mile.

“From what we’ve figured,” he said, “it will be almost a 50 percent savings off the old schedule.”

In addition to the up to 25 permanent hospitality jobs the 90-room hotel will bring to Vero once completed in early 2015, the project will employ local construction workers as Proctor Construction is the general contractor.

Kite said he’s one of many who closely monitored progress on this issue. “A lot of people were in flux as far as the impact fees. Other developers and contractors have been waiting to file for their building permits.”

“I think it’s going to spur the right kind of development in this county,” Kite said. “This is my opinion, but we don’t need to keep building gigantic subdivisions out on 58th Avenue. We need to go back and in-fill our communities.”

Benefits of reduced impact fees extend to northern Indian River County, which has been hard-hit by the recession. Sebastian River Area Chamber of Commerce Executive Director Beth Mitchell said the move was about seven years in the making, since she and Indian River County Chamber of Commerce Executive Director Penny Chandler in 2007 headed up an Impact Fee Task Force.

“I think any little bit helps our businesses,” Mitchell said, noting that she still takes issue with the way the county calculates expected “trips” to a proposed business to determine impact on county roads.

“Reducing impact fees is absolutely a move in the right direction,” Mitchell said. “I’m really relieved that they have a plan in place.”

Despite the temporary waivers of some fees approved in recent years, businesses planning major construction projects had no long-term projection on how to budget for those fees, assessed by square foot based on the type of commercial enterprise.

Prompted by mounting concern about the dampening effect of continued, high impact fees despite an extended period of stagnant growth and a down economy, the county hired a consultant to look at its impact fee structure and to work with staff to come back with options.

Former Vero Beach councilman Charlie Wilson, founder and president of the new Vero Beach Chamber of Commerce, appointed himself as chief crusader on impact fees a few years ago and though he hoped for even more sweeping reform, Wilson said the county’s move marks significant progress.

“We are pleased with the progress and the reduced fees sorely needed by Vero Beach business for expansion and employee hiring but there is more to do,” Wilson said.

The staff recommendations will establish a fee structure based on the square footage of the store, restaurant, manufacturing plant or office building property owners seek to build.

Some fees will be eliminated, others will increase slightly, but many will be reduced by 40 to 80 percent, depending on the type of business. Net changes would result in savings for every type of non-residential development.

The owner of a retail building would pay $6,341 in impact fees per 1,000 square feet of building under the current fee structure. Under the new plan, total impact fees would be $4,392 for each 1,000 square feet. That’s a savings of 30.7 percent, according to the county staff’s presentation.

Banks would save 49.5 percent. General office buildings would save 54.7 percent. Manufacturing facilities would save 53.2 percent and fast-food or restaurants would save 39.7 percent.

County Planning Director Stan Boling gave a lengthy presentation on the history of impact fees in the county, and the results of the consultant report that began in January.

“We want to have some certainty to the fees. We want to know that they are reduced and they are reduced to this level,” Boling said.

In regard to the uncertainty of the factors that influence the impact fees, he said “Projections will go up and down. I don’t think we want to be doing this any more than every three to four years.”

Commissioner Tim Zorc highlighted the need to attract manufacturing, specifically the automated facilities that offer skilled, high-wage jobs, by being able to provide set impact fee rates prior to a company building or moving in.

Commissioner Wesley Davis also expressed a desire for greater consistency, to “have a specific package ready to go. That way there are no questions, no discussions – that is your category.”

Chairman Peter O’Bryan said he liked having the rate schedule tied to what the county will need in the way of capital improvements. “That seems like a lot better planning. I think we have a good plan here to go forward,” O’Bryan said

For nearly 30 years, the county has charged traffic impact fees for every new home or business to help pay for the wear and tear of the extra vehicles and trips that structure will put on the roadways, and the new or enlarged roadways that would need to be built.

Then in 2005, in response to rapid growth, the county expanded the categories of impact fees it charged, providing hundreds of millions of dollars to increase law enforcement protection, fire and emergency medical services, jails, water and sewer utility infrastructure, parks, recreational facilities and public buildings.

The Indian River School District also imposes impact fees, which are collected by the county, but only on residential development; increased student population is derived from new homes and apartments, not from retail shops or factories.

In the coming months, after the School Board determines whether or not it will collect impact fees for the coming year, the County Commission will go back and consider staff recommendations for restructuring residential impact fees as well. 

Staff Writer Lisa Barry contributed to this report.