Proposed 90% Increase in Flagler Beach Impact Fees Shadowed by Questions and a Looming Development

After hearing it first proposed last July and twice opting not to adopt it just yet since, the Flagler Beach City Commission will try again on Thursday to approve a revised impact fee schedule that would raise water and sewer fees for the first time in 14 years and create new impact fees for parks, police, fire and the library system. 

But questions about the study rationalizing the new schedule, including from a city commissioner and from the Flagler County Home Builders Association, continue to shadow the proposal. 




Overdue though it may appear, the timing of the proposed increase is not necessarily coincidental, with the 2,700-home Veranda Bay development poised to annex into the city. Veranda Bay would essentially double the size of the city at buildout. Flagler Beach would stand to capitalize substantially in impact fee revenue alone from that annexation. 

Flagler Beach government had previously assailed Veranda Bay, when it was called The Gardens. One of its former city commissioners is still battling a defamation suit stemming from his opposition to the development before he was elected, as is a former community activist. 

The city has since gone from critic to courtesan. In January the city changed its annexation rules specifically to enable a fell-swoop annexation of Veranda Bay while writing what amounts to an official love letter to Ken Belshe, the developer, to woo him away from possibly annexing into Palm Coast. That city has not been as nakedly solicitous. 




The proposed schedule in Flagler Beach would raise total impact fees on a typical single-family house of between 1,500 and 2,000 square feet from $5,592 to $10,648, a 90 percent increase. New fees account for three quarters of the increase. The schedule does not include school impact fees, which add $5,450 for a single-family house, or a revised administrative fee schedule that would add modest amounts to the total.  

The new fee for police and fire would be a little over $1,000 each, the library fee would be $284, the parks and recreation fee would be $1,250, assuming a house between 1,500 and 2,000 square feet.  That would be “the maximum supportable impact fee schedule for the non utility impact fees,” as L. Carson Bise, president of TischlerBise, described it to city commissioners last July. TischlerBise produced the impact fee study. 

For water and sewer alone, the fees would increase from $5,592 to $6,813, or 22 percent. But that increase looks bigger than it is. When adjusted for inflation, the water and sewer fees are still a decrease compared to where they would be if the city were merely keeping its fees in line with inflation. 

Flagler Beach’s water and sewer impact fees have not changed since 2012. Adjusted for inflation, the fees set in 2012 would be equivalent to $7,656 today, according to the Bureau of Labor Statistics’ inflation calculator. In effect, the proposed increase still falls $843 short of that parity, or purchasing power, at today’s dollars. 




Nevertheless, the political climate is such that raising impact fees, which are all but indistinguishable from taxes, can be risky. Similar calculations apply to the 2022 increase in school impact fees, an increase that fell short of keeping up with inflation, yet still at least in part cost the superintendent and the board attorney their jobs. They had pressed for higher fees. The local chamber, with three school board members in its corner, retaliated. 

Palm Coast just approved a 30 percent increase in water and sewer impact fees phased in over four years. The local home builders’ association did not oppose that increase and the chamber kept mum, so the fact that the city manager lost her job days later may have been coincidental. 

The Flagler Beach City Commission tends to be more effectively insulated from special-interest pressures. It is basing its impact fee schedule on a study by TischlerBise, the Bethesda-based consultancy that has conducted similar studies for the school board, Palm Coast and numerous other Florida governments. 




Local governments may not arbitrarily set fees where they please. They are required to justify their impact fee increases through rigorous and transparent studies, which must establish a need based on demonstrable evidence. Starting last year, local governments have been barred by state law from increasing their impact fees more than once every four years, and even then, the increase must be limited to 50 percent. If it is to be anywhere between 25 and 50 percent, it must be spread over four years. 

Flagler Beach City Commissioners in September held back from discussing or approving the study’s recommendations, opting instead to give their new manager time to digest it. In November, the proposal was yet again pulled from the agenda.

“We sent it back because there were a lot of discrepancies and inaccuracies” in the study, City Commissioner Rick Belhumeur said. He was also looking for a funding mechanism for sidewalks in the city, which would amount to a transportation impact fee, which the current proposal still does not include. 

The Flagler Home Builders Association, which has sought, within reason, to accommodate local governments’ needs for higher fees, is also finding the proposal problematic even after it was revised. 




“Once again, we found errors and miscalculations,” Annamaria Long, the association’s executive officer, said today in a statement. “The need for impact fees in Flagler Beach rests largely on the anticipated annexation of Veranda Bay.  Some may see adopting impact fees ahead of the annexation as ‘putting the cart before the horse,’ but it is good government to do the research. Unfortunately, some of this research provided by TischlerBise is inaccurate or overreaching which will have long-lasting consequences for the Flagler Beach tax-payers in terms of legacy costs that they will be responsible for paying for ad infinitum.” By legacy costs, she means that while impact fees pay for a new facility, that facility must then be staffed and maintained, at costs borne by the general fund year after year. 

In a written analysis, Long cited nine errors, though several of those are more in the category of picayune rounding errors than the kind of errors that would make a difference in the city’s or a builder’s bottom line (for example, a $906 difference in a $1.37 million calculation, or an $11 difference in a $2.8 million calculation, or even smaller decimal differences). However the main concern, Long’s analysis  stated, is the study’s inclusion of Veranda Bay’s 2,700 homes in its residential projections, though the development is in its earliest beginnings. Long also disputes the study’s methodology in calculating police needs by number of residents, or translating that to the square footage needs of a new police facility. “This is based on the assumption that a little over half a square foot of police facility is needed per resident,” she wrote “I personally cannot figure out why.”

Long sent her analysis to City Manager Dale Martin and the commissioners on Tuesday, encouraging them to have further discussions. “I trust that the Commission will uphold TischlerBise to the quality they promise and the The Flagler HBA will continue to be an active participant in this process,” Long said. 




Impact fees are one-time levies on new construction intended to defray the “impact” of new residents on a city’s or a county’s infrastructure. As such, the revenue is restricted to new or expanding infrastructure. It may not be used for operational costs. It may not be used to repair a roof or an existing building, and it may not be used for anything not directly related to the fee’s purpose: police impact fee revenue may not be used for fire services, water impact fee revenue may not be used for sewer services, and so on. 

The up-front cost of Flagler Beach’s new impact fees would be be more expensive for builders, though they pass those costs to property buyers, while the city will have vast new streams of revenue to underwrite the expansion of existing infrastructure or the building of new infrastructure, as well as the expansion (but not replacement) of the city’s fire and police fleets, or fire and police buildings. 

For example, the inclusion of a new library impact fee implies that the city will either be expanding its existing library or building a new one, in addition to the existing one.  “By adopting these fees, you would be committing in the case of the library to either making an additional expansion to it, not just renovating it within its current square footage,” Bise told commissioners. “It would mean either building another library branch or making an addition to the current library.” 

The same implication applies to the fire services and the police department. “So if the commission feels that we’re not likely to spend money on increasing library square footage, or police square footage, for instance, over the next 10 years,” Bise said, “then you should give some strong consideration to perhaps not implementing those two fees.” 

The ordinance proposing the new fee schedule is scheduled for a first reading at the City Commission’s meeting at 5:30 p.m. Thursday (March 28).