Impact Fees - The Hidden New Home Killer

In October, the Lake County Capital Facilities Advisory Committee recommended that school impact fees be increased by 100 percent (from $2,573 to $5,146) for a single-family home. Lake County is located next to Orlando and Disney World in Florida.

School Board Member Rosanne Brandeburg, who also serves on the committee, asked for a 300-percent increase in school impact fees (from $2,573 to $10,292). The Lake County Board of County Commissioners ignored the committee’s recommendation and instead voted to increase school impact fees by 200 percent (from $2,573 to $7,719).

Most new homes in Lake County are in the $125-300K range. Retirement pricing

If the 200 percent increase in school impact fees is ultimately adopted, total impact fees for a 2,500-square-foot new home would be $9,112 in north Lake County and $11,716 in south Lake County. This amount includes fees for schools, roads, fire, parks and libraries, but does not include the cost of permitting, which could add another $3,500 to the cost.

With construction and permitting costs, residents in south Lake County will be facing over $15,000 in government fees before the first shovel of dirt is turned to construct a new home.

According to the Orlando Regional REALTOR Association, the median home selling price in Lake County for August was $149,900. Impact fees in the amount of $11,716 would represent more than 8 percent of the total home price. The housing market in Lake County is smothered with a glut of foreclosed homes, and new home appraisals cannot support this whopping increase in school impact fees.

With stubbornly high unemployment, Lake County cannot afford to lose any more jobs. In line with this, an average of 164 individual jobs are created during the construction of just one new home. Raising impact fees by 200 percent will probably cost thousands of construction jobs.

The majority of jurisdictions across America do not have impact fees. These communities rely, instead, on growth and development to fund government. Many will say that school impact fees are necessary to build schools.

On the contrary, it does not work, because increasing impact fees kills housing demand by raising new home prices beyond what the market and appraisals will bear. Schools must be constructed from broad-based taxes, as they are in most communities across America.