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Flagler School Board Rejects Building-Tax Cut, a Blow to Builders and the Chamber

| October 2, 2012

They don’t build themselves: Belle Terre Elementary is the second-newest school in the district, built in part with impact fees, the one-time building tax builders pay and pass on to home and business owners. (© FlaglerLive)

They were neither shy nor restrained. They begged. They pleaded. They Lectured: one home builder after another, one top representative of the Flagler County Chamber of Commerce after another, asking the Flagler County School Board Tuesday evening to suspend its building tax for two years—the so-called impact fees that builders pay one time on new homes or businesses, and pass on to property owners.

Those fees foot the bill for the infrastructure demands that new construction causes—new schools, new parks, new roads. Eliminating them jeopardizes local governments’ abilities to meet those needs, especially at a time when government coffers have shrunk, as the school district’s has. But builders and the chamber argue that suspending the fees for two years will help the battered local building industry back on its feet and put people to work.

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They did not convince the school board despite a long case for it by Andy Dance, a school board member who closely aligns with chamber interests. “We’ve got to do something” to keep families in classrooms and families in the county, Dance said. “This is one way the school district can help in conjunction with other governments.” But when Dance made a motion to adopt a two-year moratorium similar to the one the county passed Monday, it died for lack of a second.

All local governments levy impact fees, though the county has just suspended its transportation and impact fees, which total $1,707 for a single family home. Bunnell has a similar suspension on its books. The school impact fee is $3,600 for a single-family home. It is generating about $500,000 a year for the district. That money goes into an escrow account, now totaling $3.5 million. It cannot be used for anything but school construction.

The initiative is being pushed by the Flagler Home Builders Association and the Flagler County Chamber of Commerce. Getting the county and the school board was only part of the strategy. The big prize is Palm Coast, where impact fees are just over $15,000 per new home, and where, so far, Mayor Jon Nets has been steadfast against a moratorium, calling it irresponsible and short-sighted. The builders and the chamber were hoping that with the county and the school board going along—and increasing the pressure–“the city of Palm Coast will fall in line,” as Doug Baxter, president of the chamber, put it to the school board Tuesday evening.

The board’s rejection is making the chamber’s and the builder’s campaign that much harder.

But the builders’ case before the board, similar to the case before the county commission,  was made without any evidence that a moratorium would generate significant employment or an increase in building permits. School Board member Colleen Conklin made that point explicitly, saying none of the research she’d done showed that correlation. “This is a national issue. It’s not a building issue,” she said.

Yet virtually every three-minute presentation to the board, including those of Garry Lubi, who heads the chamber, Charles Rinek and Luis Medeiros, both past presidents of the local home builders association, and several builders, was summed up by one common theme: that a moratorium would help their industry. They argued that by doing so, most other local industries would be affected, because construction plays such a large role locally. But they had little convincing evidence.

Colleen Conklin. (© FlaglerLive)

“I don’t see that eliminating or doing away with the impact fees are going to help the real issue, and that is the economic development of this county, and jobs,” Conklin said.

Board member John Fischer said a few more homes won’t put very many people back to work—not when many homes remain unsold. He also didn’t like the contradiction between asking voters just two months ago to approve a sales tax levy only to ask them to agree to “give something back” to the builders.

And Sue Dickinson, the chairman of the school board, directly addressed Baxter’s hope of a domino effect in governments adopting moratoriums. “I don’t believe in my heart that all governments are going to come together on this,” Dickinson said, going on to speak as forcefully as Dance did, but from the opposite perspective, against undermining the district’s long-term finance. “We have to look at the whole general population of the county, we can’t just look at one group of people,” she said.

There were two surprises among the dozen people who spoke to the board, one of them likely the strongest clincher for them: Tom Tant, the district’s finance director, who seldom wades into political issues except to provide numbers, did so the way a general might appear before a congressional panel to talk about a military decision civilians presume to make. He knew the weight of his words and figures.

Tant reminded the board that when it adopted school impact fees in 2004, the independent consultant hired to figure out what those fees should be had recommended a fee of close to $6,000 per single family home. The board adopted a far smaller fee.

“So when the school board did enact the impact fees back in 2004, they were being very generous to the community and to the builders to reduce almost less than half what the impact fees were calculated by this independent group, and this was back in 2004 when we were receiving $18 million in PECO money that offset a lot of the cost,” Tant said. PECO is Florida’s school construction fund, or Public Education Capital Outlay fund. It’s mostly depleted. And what money remains, the state is handing out to charter schools, not traditional public schools.

Tant continued: “We don’t receive any PECO money now. Our capital funds have decreased from $24 million to $9 million, and our debt service is still at $6.3 million. So as you can see, our capital funds are very depleted.”

While the district is collecting just $500,000 a year, it may not sound like a lot, Tant said. But, he added, “if we have to build a school in five or 10 years, with this impact fee, we could have enough money to actually build that school; in cash, for the growth that the new construction is causing, and therefore we would alleviate a bond issue. A bond issue for $20 million is at least half a million worth of financial costs, plus the interest we would be charged. So my contention is, if we continue with our minimal impact fees, we will in the future have the money to build the schools we will need as construction picks up.”

The second surprise was the appearance of Flagler County Commissioner Alan Peterson, who was the lone dissenter against his colleagues vote for a moratorium on Monday.

alan peterson flagler county commission

Alan Peterson (© FlaglerLive)

“I’d like to represent the 80,000 adults who currently are living in Flagler County, who will be adversely impacted if you put a moratorium in your school impact fees,” he said. Unemployment isn’t just about construction, he said. It’s every industry. “There is no correlation between a reduction in impact fees and economic development. Polk County eliminated their impact fees two years ago and did a study and could find no relationship between the reduction or the elimination of impact fees and additional employment. Volusia County has no impact fees, but Volusia County’s school population is declining. Flagler County’s is not. We have a lot of houses here available for sale. As those houses are sold and occupied the school population is likely to rise.”

He added: “If a moratorium is implemented and additional building is created because of it, it will lower the tax values, because you’ve increased supply, you’ve done nothing to help the houses and the people who are already here.”

“Sorry folks,” Dickinson told the disappointed group of builders and chamber representatives as their filed out of the board room at 8:20 p.m. this evening, in sharp contrast with the applause that had rung out in the same chamber when the commission had adopted the moratorium.

2012 Impact Fees for a Single Family House in Flagler County, Bunnell, Flagler Beach and Palm Coast

Flagler County School BoardSchools$3,600
Total Impact Fees in Bunnell:$8,638.10
Flagler BeachWater$1,891.60
Parks and Recreation$268.45*
Total Impact Fees in Flagler Beach:$9,931.35
Flagler CountyTransportation$1,438.10*
Parks and Recreation$268.45*
Total Impact Fees in Flagler County:$5,306.55
Palm CoastParks and Recreation$1,208
Fire and Rescue$189.75
Water and Sewer Required Hookup Charge$2,535
Total Impact Fees in Palm Coast:$15,270.98
(*) The Flagler County Commission on Oct. 1, 2012, suspended the transportation and park impact fees for two years.
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19 Responses for “Flagler School Board Rejects Building-Tax Cut, a Blow to Builders and the Chamber”

  1. Ben Blakely says:

    Did anyone really believe the government was going to reduce tax or suspend a tax?

    The school board never met a dollar they were not in love with, regardless of how they get it and at whatever cost.

    SHAME! This county is sinking as ethics and integrity of the governance descend to new lows.

  2. DoubleGator says:

    Bravo for making the right, all be it a tough, decision. The building boon did not lead us into the current recession nor will it lead us out. We will all walk out together. We all tighten our belts and move foward. No need for unjustifed special favors to one group that other citizens will have to pay for . Thanks again.

  3. Magnolia says:

    Wow, thanks to the School Board for showing the right leadership in this case. Impressive, makes me feel good about my community again.

    We do this together, we all pull our weight, no special favors. Awesome.

  4. Sue Dickinson says:

    It was a very difficult night! But I believe overall the right decision was made for Flagler County residents.

  5. You've been tricked says:

    At least the School Board gets it. Don’t ask the voters to subsidize a particular industry. Once again, want to sell houses? Create a great school system. There is your cause and effect.

  6. Reality Check says:

    If the School Board needs money, tell them to take a cut in their $30,000 a year part time jobs!!! You will not see one of them offer up that idea since it is the only job that many of them have. They need to stop wasting money, such as now this year hiring an assistant superintendant, why do we need this position. The entire county government structure is out of hand with its spending. The time for an enema in local government is here, it is the people’s choice and if you vote them back in you are telling them it is okay to waste your money.

    • FPC Graduate says:

      The Assistant Superintendent is not a new position it was just left vacant when Janet moved to Superintendent. An assistant Superintendent is totally justified. It is also a good move because it gives the person on the job training to replace the Superintendent.

  7. DWFerg says:

    Again I say, trade upfront impact fees collected for increased annual assessments of the Taxable Base value by an amount equal to the existing Impact Fee TAX( Applied only to those newly constructed buildings)—In this way, money is collected over the course of time like an annuity type schedule (over 20 years or in perpetuity), which over time may exceed the total of the upfront fee. Clearly, I am in favor of the suspension of the upfront payment of the impact fee, and might even buy a newly constructed house in Palm Coast with this 7 % discount on a $200,000 new house investment

    Understand that a school board may be concerned about the capital needed to construct new schools to educate our children—Is it not true that enrollments are down, performance of students (SAT’s) is declining and charter schools are mushrooming–Consequently, no new schools are anticipated to be built for several years due to excess capacity in place ? I believe Economic Growth is largely predicated on Excellent schools and high academic achievement—Not pretty buildings ! As soon as more people Get This Concept, and our political decision makers manage our tax base receipts more effectively, Flagler county will continue to spin its wheels in attracting new business (and tax paying residents) to this naturally beautiful recreation/retirement focused community !-Welcome any/ all dissenting opinion–D W Ferguson

    DWFerg says:
    October 1, 2012 at 6:55 am

    Clearly the impact fee is a TAX—–Most taxes are a drag on economic growth—-Evidence is when federal tax receipts actually INCREASED when they were reduced @ the national level in ihe mid 2000′s..I predict that If this tax were suspended for a year or two, the results of whether economic growth is affected would be demonstrated with Fresh , Local data- Remember, the real estate mantra, Location, Location, Location
    As a form of conciliation / compromise , I suggest that the resultant taxable value base be Increased on newly developed properties, free of the Impact Tax to reflect an ongoing means to collect additional revenue——In this way, the Evidence can play out in Flagler County in 2013 and a longer range decision to continue to waive / reinstate the Fee can be made with “clean “, attributable Evidence

  8. Kendall says:

    We should never lower contribution to schools in favor of any kind of industry. I’m glad our school board recognized that.

  9. Mario DiGirolamo says:

    Honestly, we have more than enough houses in Palm Coast … Vacant, foreclosed, rented, abandoned, & in utterly poor shape. How about we take care of what we have, before we build any more … that can end up in the same pitiful way.

  10. Edman says:

    If the state won’t properly fund our schools the impact fees need to be levied. It will not stop anyone who wants to build and our schools need every dime they can get. Great decision!

  11. debi peterson says:

    Once again, I stand amazed. No one should know better than the School Board what an Impact Fee is.
    It is governed by state law, is very discriminating (new construction/new residents only) and can only be used for capacity caused by new student growth. We don’t have new student growth, we have available classrooms and schools. The School Board is required to adopt and send to the state a 5 year work plan. They did that last night and it clearly shows the next ‘NEED’ as a possible classroom addition to Old Kings Elementary School in the 2016-2017 school year. Approx. cost: $3,375,000.00 AND they have current Impact Fee monies to cover this. The next item in also 2016-2017 DESIGN for a potential new school in West Palm Coast that will most likely be pushed back further due to NO need for a new school. If you don’t have a NEED then under Florida case law there is no need for the Impact Fee to be collected. That is the story. . . if not collected, it will no incur any additional taxes of any kind. WHEN it is needed, it should be collected again, but it is not needed now AND if by a 2 year moratorium it could help the local economy at all, then why not give it a try. The School Board opted for a ‘potential’ $1 million income of impact fees over the next 2 years instead of trying something that just might have made a difference in some of the families of the students in the school system. Oh, those impact fees also have a 7 year time frame to be spent on new capacity or be returned . . . REMEMBER. . . these funds cannot be spent for anything but NEW capacity created by new students. . . charter schools are a larger threat to the declining public schools than impact fees reductions/moratoriums ever will be. Impact fees will always pay their fair share, even if the people building the new homes have no children. They will continue to subsidize the system for those of us that do have children and perhaps purchased a resale home that may have NEVER paid impact fees. Just once, I would like to see a comment left on here that actually understood what Impact Fees were ever enacted for and also understand when it is time to say: we actually don’t need it right now, let’s see if we can help make a difference for a couple of years in our local area.

    • Kendall says:

      I have not heard of the building industry providing assistance to schools during this difficult time in which they are facing cutbacks and very slim budgets.

      Why are builders eligible for charity but schools full of our future are not?

  12. Jim says:

    @debi from the Flagler Home Builders Association, you’re just angry because your industry isn’t going to get a boost (see Corporate Welfare) from taxpayers. Where’s my beer so I can cry in it?!

  13. Logical says:

    Kudos to the school board for making the right decision. Common sense tells us that if the money will come from somewhere , meaning that would be out of MY pocket eventually if the revenue is necessary through property tax dollars to fund whatever is needed down the road. I would prefer it to come from the ones that are making the impact rather than those of us who already help fund the school board needs on a yearly basis through our taxes (and paid when our home was constructed)>

    Think clearly citizens of Palm Coast – there are capital projects (whether you agree with them or not) that will need to happen in this community, the money comes from impact fees – if you allow your council to do away with them, guess who will be footing the bill?

  14. Liana G says:

    debi wrote “They did that last night and it clearly shows the next ‘NEED’ as a possible classroom addition to Old Kings Elementary School in the 2016-2017 school year. Approx. cost: $3,375,000.00 AND they have current Impact Fee monies to cover this.”

    So Impact Fees can also be used for additions/extensions? I understand that the district rents school protables. Therefore, the Impact Fees can be used to build permanent school fixtures eliminating the need and cost of renting school portables.

    I’m sure there are countless of other ways this district can use these impact fees that far outweigh easy money to line the personal pockets of folks responsible for tanking PC’s economy. PC is often cited as one of the hardest hit housing bust because of overbuilding.

    The FED is printing money with no end in sight to buy up mortgage securities/foreclose houses, which will be sold at even lower market values in order to get rid of them. This will cause surrounding home values to drop even more. Printing all this money out of nowhere means the dollar is also going to lose its value which means that these houmes will also be worth less. Besides, how is adding new homes to the mix going to help. Who is going to buy a new home for $200,000 when they can get the same for $40,000. No bank will even lend a person $200,000 to purchase such a house, since they,’the bank, would conceive the house as overpriced given houseing values in the current market.

    Whose interest is Mr Dance representing, exactly?

  15. Vanessa Cheesewright says:

    Interactive map of the national foreclosure from 2007 – 2012 …check out Flagler’s foreclosure. Good call Flagler School Board

  16. confidential says:

    Kudos to the School Board!
    They voted down the same proposal. Take from students to give to wealthy developers? Hello..? Something is pretty wrong with this picture…
    Now they come after Palm Coast residents, taking advantage that their one lobbyst seats in the council.
    Hope Councilman McGuire votes with Mayor Netts and Mr. Lewis.

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