City losing millions with its low impact fees

The city of Fernandina Beach could be receiving hundreds of thousands of dollars more annually if the city’s impact fees are set at the maximum allowed by law. The City Commission is now preparing to consider raising those fees.

Impact fees are collected by cities to pay for services that will be required as a result of new development. The city of Fernandina Beach collects impact fees for fire and police protection, parks and recreation, and administration and public facilities.

According to Fernandina Beach Planning Manager Kelly Gibson, collection of impact fees for municipal services are established annually by ordinance in the master fee schedule. Gibson explained that impact fees are paid at the time of new construction and additions to existing construction.

Ordinance 2017-19, adopted Sept. 19, 2017, established the most current impact fees, which total $2.78 per square foot of heated or cooled space for residential development and
$0.83 for non-residential development.

According to the “Nicholas Study,” a document presented to the City Commission in 2015, the maximum rate is $3.952, which represents an increase of more than 42 percent over the current fees.

Using data from the study, the city’s Finance Department calculated that $2,049,103 more in impact fees could have been collected by the city since 2015 if the rate had been at the highest amount allowed. The city’s projections show that $3,513,000 could be collected from the current fiscal year through the
2023-24 fiscal year at the higher rate.

The Nicholas Study can be viewed at http://bit.ly/2RsWk9K.

The study suggested in 2015 that the city should increase its impact fees to the highest rate it could, but that didn’t happen. In a 2015 discussion by the City Commission, then-city manager Joe Gerrity said the city was having trouble finding ways to spend the fees.

“I would be concerned about all that if I saw a rash of buildings going up or construction going on, but I haven’t noticed any of that,” Commissioner Pat Gass said at the time.

However, since 2015, the city has indeed been growing, including a new development at Crane Island which will include 169 homes slated to be completed in 2024, an opportunity for the city to collect impact fees at a higher rate, if that rate is approved by the commission.

Since Crane Island will be annexed into the city, an agreement between the city and Nassau County allows for impact fees, as well as permitting fees and inspections, to come under the purview of the city, Gibson said.

No impact fees have been collected for Crane Island homes yet, she added. 

Building permits for structures such as the entryway have been issued, but none for a heated or cooled building. 

Based on a new 2,000-square-foot house, which Gibson said is on the low end of the scale for new homes in the city, the current impact fee would be $5,560 at $2.78 per square foot. If the homes on Crane Island were 2,000-square-foot buildings – and most will far exceed that, according to plans – the development would put $939,640 in impact fees into the city’s coffers at the current rate.

Another issue that has sparked one city commissioner to rethink impact fees is the need for revenue to pay for conservation land. Commissioner Chip Ross has argued that Parks and Recreation impact fees could be used to purchase land for passive parks, which would add to the land included in the Egans Creek Greenway, thus saving additional land from development.

Vice Mayor Len Kreger questions whether impact fee revenues could legally be used to purchase land for those parks as well as the city’s methodology for determining how to spends impact fee revenue.

“The city’s use of impact funding has been loose, to say the least,” Kreger told the News-Leader.

Kreger said he doubts Parks & Recreation impact fees could be used to add to recreational facilities in the city, such as the Greenway, until the city eliminates the infrastructure inadequacies created by growth for which the fees are collected – for example, by creating new recreation facilities in the south of the city.

Commissioners Phil Chapman and Roy Smith said the idea of raising impact fees had not been floated since they took their seats until Ross brought up the subject. Chapman said he would “look at the numbers and consider it” if the commission considers raising the fees.

The commission discussed the matter at its Nov. 7 meeting, when City Attorney Tammi Bach said she would gather information and bring it back to the commission at either the Dec. 18 meeting or at a meeting in January. Ross said he hopes it will be taken up Dec. 18.

“Will the details and hopefully resolution to increase the impact fees be on the Dec. 18 meeting?” he wrote in an email to the News-Leader. “If not, why not? The city is losing revenue by our inaction.”

News-Leader

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