This is a topic that will be coming up a lot in the next few months, it’s been a topic of discussion in the public around the budget council will be adopting on first reading tonight. Consider this post a work in progress. ßeta 2.0 (see new info at bottom). And just to be clear: I’m all for the impact fees being corrected for today’s dollar. I’m just the messenger when I say they’ll have no discernible impact on FY26 and might not have much of one at all in future budgets. And while there’s a lot of blame to go around, the main culprit in preventing this council from fixing it is your state legislature. If you don’t like the steady erosion of home rule, send better people to Tallahassee.

The subject of impact fees and the budget have been going on as long as I’ve been observing council weekly. It’s not a secret they haven’t been updated in forever. Getting the mayor and admin to move the needle however has been a slog. The earliest reference I have documented here is from a February 23, 2023 workshop where they were discussed. In this context it was about the possibility of adding a public safety impact fee, however the statute that governs impact fees is fairly broad costs related to “infrastructure necessitated by new growth”.

Regular disclaimer I am not a lawyer (IANAL) but from reading what’s been going on in surrounding cities and counties like Lakeland and Manatee, I think I have a general understanding. In 2021, the state passed a law that prevents local governments from raising impact fees more than 50% in a 4 year period—split into 4 equal installments—unless you can demonstrate “extraordinary circumstances”.

So if a rate study returns and says the impact fee for a single-family home (SFH) should be $4,694 and we are only charging $1,772 the city has two choices. Go the route of demonstrating extraordinary circumstances which requires another study, public workshops including with the planning commission, and then two hearings for adoption. The other option would be to raise the fee 50%, 12.5% per year, which would bring the fee to $2,658 four years from the adoption. Remember, the fee study says we should be charging $4,694 so we’d still be subsidizing the impact of each SFH at $2,000 each. Even if we were to double the impact fee for a SFH we’d still be well below where we should.

So yes, the path of least resistance is to only raise fees 50% spread out over 4 years, at which point we’d still be at 50% of the true financial impact according to the fee study (and that’s not not adjusting for inflation over the 4 years. Reality is a 50% increase spread over 4 years is really only a 38% increase at 3% inflation). Or, the city slogs it out, dots all of the i’s and cross the t’s to demonstrate extraordinary circumstances to better align the fees with true cost. At which point we wouldn’t see any financial impact on the budget until FY27. The 12.5% per year option could potentially be in place to have nominal impact in FY26. But even then, a November staff report turns into a January agenda item to discuss further turns into March first reading and maybe an April adoption. The state statute then requires a 90 day notice of the fee increase and which point it’s July and the fiscal year ends October 1.

And all of this is early speculation on my part because I have not seen the study nor do I know what the mayor and her administration is working on proposing. What I do know is it’s not as simple as saying, “raise the fees to the current cost estimates” and magically 10s of millions of dollars are rolling in that can be used to fund whatever. That’s what a millage increase is for. These would be funds that could only be used for major CIP projects that can be tied to new development and are generally spent in the part of town the fee was collected.

I’ll note that Manatee County originally went the route of the 12.5% annual increase last summer. That commission was mostly voted out in the fall and the new commission took back up the issue and decided to demonstrate extraordinary circumstances. A 100% increase was approved and is now being challenged by developers in court.

As more information becomes available and the closer I look at this subject, I will update accordingly. To my knowledge there is a tentative agenda presentation coming in November. A lot can happen between now and then.

[UPDATED]

OK, so I just became aware SB1080 added another stipulation that if you haven’t updated your impact fees in 5 years, you can’t use the “extraordinary circumstances” clause. That goes into effect 1/1/26 so council will have no option but to do the smaller incremental 12.5% increase for the next 4 years and maybe then we’ll be able to adjust them more appropriately. I would blame this purely on Republicans but there’s this reporting from May.

“Cities and counties that started the process required in the statute after a 2021 update are still completing the required studies. We need to let them finish the work taxpayers have been paying for based on the rules of the game. At the time we had passed the law in 2021, Tampa just signed contracts with a consulting firm to complete the final study and report needed to comply with the 2021 statutory language, and this will be completed in early 2026. They started this process in 2022. Senate Bill 1080 could force them to start over.”

Rouson filed an amendment addressing the language but ultimately withdrew that and voted for the bill, which must clear the floor before business closes Friday or die. Eight Democrats in total voted against the bill.