A new Lee County Library and Conference Center is currently being built with tax payers’ funding.
LEESBURG — With the country in one-step-forward, two-steps-back mode in its efforts to pull out of the lingering economic recession, potential developers have begun — to use one of Lee County Chamber of Commerce CEO Winston Oxford’s favorite terms — to “kick the tires” again, looking for possible expansion sites.
Oxford and other Lee County leaders say the county has added air to the metaphorical tires by doing away with costly impact fees that were previously used to fund specific budgetary items. But one of the former Lee officials who helped implement those fees said the county will feel their loss if growth resumes at a pace similar to the one in the late 1990s and early 2000s that had Lee listed among the fastest-growing counties in the country.
“I have always felt that commercial and industrial impact fees would do nothing but create barriers, hinder and discourage the badly needed commercial investment desiring to locate in Lee County,” current Lee County Commission Chairman Ed Duffy, a strong proponent of commercial development, said.
“Eliminating commercial and industrial impact fees and acquiring the needed commercial investment in the county increased local option sales tax and eliminated the need to increase property taxes on Lee County residents.”
But businessman Jackie Sizemore, who previously served as chair of the Lee Commission, said the elimination of commercial and industrial impact fees has eliminated a vital source of funding that will be missed once expected growth resumes.
“It doesn’t take a genius to see that as the rate of growth continues to go up in the county, (officials) have to create ways to fund the needed services,” Sizemore said. “After a considerable amount of thought and discussion, we came up with the impact fees as a way to fund those services without raising taxes.
“Once growth in the county resumes, I think they’re going to have a hard time funding some of the items on the budget.”
Duffy led the effort to eliminate impact fees in the county after a number of potential developers balked at paying the one-time fees in addition to the other costs of doing business.
“In August of 2007, Lee County was approached by an industrial prospect who wanted to purchase 22 acres of land in the Lee County Industrial Park on (U.S.) Highway 82,” Duffy said. “The prospect was willing to pay $338,565 for the land, and the cost of the initial structure was $2.2 million. That would equate to $24,000 a year in property taxes, and the prospect would also pay between $150,000 to $170,000 in ad valorem taxes.
“The prospect did not ask for any tax abatement but emphatically stated that they would not pay impact fees to locate in Lee County. They also mentioned that they were offered land for free in a surrounding county. The impact fees were repealed in September, and in October the prospect purchased land in the industrial park.”
Duffy’s not one to drop names, but he adds a sobering statement.
“If we hadn’t eliminated industrial and commercial impact fees in this county, I don’t believe we would have John Deere (Albany Tractor Co.), Publix, Gray Distribution and other developments in the county,” he said.
Impact fees imposed by Lee officials were set on a schedule that took into account the type of business and/or dwelling that would locate in the county. Single-family detached dwellings came with an additional cost of close to $2,500 (since reduced to around $700), while industrial costs ranged from 71 cents per square foot for warehouses to $1.28 for general light industrial.
Motel impact fees came with a price tag of $395.79 per room, business hotels $55.68 per room, and a campground/recreational vehicle park $37.29 per campsite. Golf course impact fees were $136.69 per acre, movie theaters 83 cents per square foot and bowling alleys 56 cents per square foot.
Specialty retail centers were, under the Lee impact fee schedule, charged $1.01 per square foot, a hardware store 54 cents per square foot, quick-lube shops $1,168.73 per service bay and supermarkets 71 cents per square foot.
“Let’s say Publix built a 3,000-square-foot store,” Duffy said. “That’s an additional $210,000 in impact fees. Folks just were not willing to pay that fee.”
THE FINAL STRAW?
Minutes from the Aug. 14, 2007, County Commission work session show that Duffy — shortly after being elected to the board — made a motion to repeal the county’s impact fee ordinance, and Commissioner Dennis Roland — also newly elected — seconded the motion. Former Commissioner Wally Roberts voted with Duffy and Roland, while Jo Ealum, who also is no longer on the board, opposed.
Duffy successfully appealed for the vote to serve as a first reading of a repeal ordinance.
“Here’s what bothered me most about the way they came in and repealed the impact fees,” Sizemore said. “(Duffy and Roland) had just been elected, and they asked for a repeal without even discussing it. We’d spent a lot of time on the issue before implementing the fees, and they came in and wiped them out in no time.
“Believe me, I’m not against developers at all. But some developers in the county put pressure (on the commission), and that’s why the fees went away.”
When the commission met for its Aug. 28, 2007 business session, Roland offered a motion to have the impact fees repealed, and Duffy seconded. Roberts again supported the measure, and Ealum opposed.
In addition to offering his opinion that impact fees do indeed hinder efforts to bring new retailers to Lee County, Oxford shares a story that serves as a cautionary tale in the debate.
“In 2008, a developer optioned 100 acres of property on U.S. 82 and had about a dozen ‘almost commitments’ from high-end retailers that had no presence in Albany, outlets like Bed, Bath & Beyond and Dick’s Sporting Goods,” Oxford said. “Phase 1 of the development was to be 450,000 square feet and Phase 2 500,000 square feet. Phase 1 would have brought $346,000 in ad valorem taxes to the county and Phase 2 another $742,000.
“In addition, the development would have done at least $250 million in sales, which would have brought $7.5 million in 3 percent local option sales tax to the county. Mr. (former County Administrator Alan) Ours, Mr. Duffy and I went to see the developer, and he looked directly at Mr. Duffy and said in no uncertain terms, ‘We don’t pay impact fees.’”
Oxford pauses to let the words sink in.
“Impact fees on that development would have been $800,000,” he said. “And while we’ll never know for sure, (the fees) might have been the straw that broke the camel’s back and kept that development from coming here.”
DID THE RIGHT THING?
Sizemore’s heard those stories, too. But he’s still not convinced the county did the right thing in eliminating the impact fees.
“We came up with the idea for the impact fees for one reason: to make sure the sheriff’s department and fire/EMS had sufficient funding,” he said. “That should be the No. 1 priority of any county government. Now you see what the sheriff has to go through to try and adequately fund his department.
“Everything in this world is going up in price, and the county has eliminated a way to account for rising costs. They keep talking about a balanced budget, but I’m not 100 percent sure that’s what they have. And I know the sheriff and fire/EMS aren’t getting everything they need to protect the citizens.”
Lee County’s impact fees were implemented at a time of phenomenal growth in the county. If, as officials hope, growth resumes in the immediate future, the belief is that increased sales revenue will offset the need for those fees. Lee citizens will, no doubt, watch closely to see who’s right. For they will, ultimately, reap the rewards or pay for the loss.