After years of undercharging developers for growth-related costs, Lakeland is about to raise the fees it collects for things like new roads, police cars and fire stations.
City commissioners voted unanimously on Monday to increase non-utility impact fees on residential and commercial construction by up to 50% over the next four years — the maximum allowed by law.
That will add almost $4,000 to the cost of a new single-family home, boosting the total transportation, fire protection, law enforcement and parks levies from $8,627 to $12,608.
Still not enough: However, the increased fees will still fall short of the actual cost of growth, leaving taxpayers to pick up the difference.
At a special workshop on May 5, consulting firm Alfred Benesch & Company pegged the true non-utility impact of a new single-family home at $14,631, which is 70% more than the current fees.
What are impact fees? Impact fees are one-time charges on new development. They are meant to cover the expense of extending service to new users, but they must be based on documented costs and they cannot be indexed to inflation.
Impact fees can only be used for adding capacity. They can’t be spent to make repairs, replace aging infrastructure or cover operating expenses. However, they do free up general tax dollars for those activities.
Although the one-time fees are charged to builders, they are typically passed on to buyers. Residential impact fees are charged per dwelling unit. Office, warehouse, and industrial developments are assessed per 1,000 square feet.
Hard to catch up: A state law passed in 2021 limited increases of non-utility impact fees to 50% every four years, phased in equal installments, making it difficult for cities like Lakeland to make up lost ground.
However, there are no caps on utility impact fee increases, as long as a municipality can prove that the rates are justified and don’t duplicate other funding sources.
Lakeland commissioners voted on Sept. 16 to raise water and wastewater impact fees for the first time since 2011. They more than doubled the levy on new single-family homes from $2,966 to $7,275, effective Oct. 1.
Slowing the pace of growth? The last time Lakeland commissioners considered impact fees, in 2019, they raised them by less than the recommended amount, concerned that steeper hikes would have a cooling effect on the local economy.
At the time, the Lakeland Economic Development Council (LEDC) lobbied against large increases. However, this time LEDC President Steve Scruggs took a different position.
“We will support the 50% increase for the three things that we typically lobby for, and that’s warehouse, manufacturing, office,” Scruggs said at the May 5 workshop. “I’ve never come to a meeting since 1988 and said that. … [But] we’re for it. We think it’s needed.”
Commissioner Mike Musick said Lakeland’s attractive location has driven its growth.
“We’re the pretty girl at the dance, right?” Musick said. “But my daughter’s the pretty girl at the dance, and I want to protect her. So that’s how I look at this, too.”
“Someone on the other side is paying that, and that’s our residents. … [But] our infrastructure’s crumbling beneath our feet. We all know that,” he said. “There’s not enough money there for us to do what we need to do. It needs to be increased.”
Small portion of total cost: Nilgün Kamp, a principal associate at Benesch, said after the recession of 2007 to 2008, her firm looked at the effect that impact fees had on growth rates.
“Our conclusion was, in the big scheme of everything that goes into construction, the impact fee itself is not making that much difference,” Kamp said. “It’s not a big enough component to encourage development if you’re in the middle of a recession, ‘cause there’s all these other problems.”
Similarly, in the current development boom, she said higher impact fees alone are unlikely to stifle development. “Over a 30-year mortgage, it’s a very small portion of the total cost.”
Impact fee waivers: The city cannot legally waive utility impact fees. However, it has an agreement with the county to waive non-utility fees on development in the city’s core, where infrastructure is most well-established.
The city also offers impact fee mitigation, reducing non-utility charges for development that stimulates job growth or pays high wages.
Cindy Glover is a reporter for LkldNow, a nonprofit newsroom providing independent local news for Lakeland. Read at LkldNow.com.
