Flagler County Home Builders Sue Palm Coast Over Impact Fees, Seeking Immediate Invalidation of Sharp Increases

For the first time in its 26-year history, Palm Coast government faces a lawsuit challenging its recently adopted schedule of development impact fees, the one-time charge levied on builders or developers on new construction to defray the “impact” of new residents on roads, public safety parks and other services. 

The Flagler County Home Builders Association (HBA), five local builders and an individual jointly filed the 69-page, four-count suit in Flagler County Circuit Court late Wednesday afternoon. The suit challenges the City Council’s unanimous adoption last June of sharply higher impact fees for fire services, parks and transportation. 

The lawsuit is not seeking damages, monetary or otherwise. It is seeking the immediate and permanent invalidation of the ordinances that enacted the higher impact fees. It is an extraordinary challenge. It is neither unprecedented nor unheeded, though with extreme rarity. 

The fee increased to $942 for a single-family house, a 117 percent increase. The parks fee increased to $3,164 (73 percent) and the transportation fee to  $7,540 for a typical house, a 115 percent increase. The higher fees went into effect the same day HBA filed the lawsuit. 

The size of the increase exceeded the limit allowed by law within a four-year period as Palm Coast invoked “extraordinary circumstances,” an exception to the law that permits higher fees as long as the city justifies them factually. A consultant’s studies justifying the higher fees found that the city’s population increase continues to outstrip the Florida average and construction costs continue to rise significantly. 

The lawsuit challenges both the size of the impact fee increases and the city’s claim of extraordinary circumstances. HBA Executive Officer Annamaria Long had verbally challenged the increase on both grounds before the council voted on June 17. The challenge was repeated in late August in HBA’s notice of its intent to sue–the advance notice is required by law–in a 19-page brief by Daniel Webster, the Daytona Beach attorney representing HBA and the other parties, so today’s development was expected. Webster filed the lawsuit. 

While there is never an opportune timing for a lawsuit, especially for the defendant, the filing is especially vexing to the city on several grounds: the Council is just now emerging from a year of turbulence and costly litigation, some of it self-inflicted, though the approval of new impact fees was–builders aside–not among the controversies; the Council continues to seek a new city manager as a previous attempt collapsed from the weight of the council’s own strife; and the off-year election season has already begun, with up to three seats on the council certain to tun over (though Council member Dave Sullivan, in a switch, has not entirely ruled out another run).   

“This City Council recognizes that responsible growth and development are essential to maintaining our quality of life, infrastructure integrity, and sustainable economic prosperity for all residents,” Vice Mayor Therea Pontieri, a lawyer, said today in response to the filing. “To ensure new developments contribute their fair share towards the costs of necessary public facilities and services, we instituted impact fees we know are necessary to sustain future growth without sacrificing our quality of life. We engaged in lengthy deliberation and considered many different factors. I stand 100 percent by our decisions and am confident those decisions will be upheld.”

The lawsuit parallels and considerably amplifies the arguments outlined in the August notice. It charges four counts, the first focused on what’s commonly known as Senate Bill 180, the controversial law the legislature adopted last spring that eases regulations on numerous post-storm reconstruction and development activities, but that also bans changes to local government’s growth rules that are burdensome to developers. 

The newly increased impact fees, the suit states, “are more burdensome amendments to the City’s land development regulations in that they prohibit issuance of a building permit for any construction without payment of the substantially increased impact fees.” The HBA is seeking a declaratory judgment that the city violated that section of law. A declaratory judgment is just a court order, not an award of damages or a halt to any activities. 

The count is not the strongest in the lawsuit: the city did not change its land use regulations by adopting higher impact fees, and building permits aren’t issued even if builders don’t pay other, much smaller fees, like inspection fees: no builder would argue that those fee schedules change the land development code. 

The second, third and fourth counts seek a temporary and permanent injunction against the three impact fees’ new schedule as “impermissible and unlawful.” One count claims William Barrick, the resident who joined the plaintiffs as an individual, “will be forced to forfeit contracts previously entered into, resulting in financial loss, which cannot be recouped.” Another claims the ordinances violate state law and the constitution for lacking proof that the higher fees are necessary: the HBA has consistently questioned the validity of the rationales in the studies justifying the city’s new fees. 

The “rational nexus” between the fees and the ned was not shown, the suit charges–a contention the city disputes on its face: if one issue has consistently filled seats and jarred ears at the City Council for the past two years or more, it’s residents’ complaints of excessive growth. The lawsuit charges that the studies omitted from their analyses a series of legal precedents that undermined the city’s rationales.

One such case is the 2021 First District Court of Appeal ruling invalidating the Santa Rosa school district’s new countywide impact fees. The court ruled that “the school district had not geographically identified new growth and generalized the fact that the county was growing. The court also found that they did not analyze the ‘special benefit’ to a fee payor in either section of the county would receive relative to their payment.”  The HBA is making a similar argument in Palm Coast, also claiming that localized data was lacking in the city’s studies (a claim the city would also dispute). 

In short, the HBA is asking the court to “declare that the Ordinances are invalid, unconstitutional and illegal.” 

The organization added a page to its website focused on the lawsuit, where the pleadings and the exhibits are listed and the organization’s arguments outlined in plainer English: “We support growth paying its way— lawfully, transparently, and with up-to-date data.” 

hba-v-palm-coas-2025