Businesses that want to expand in Sumter County must now pay one of the highest tax rates in the state for future road work here, commissioners voted 3-2 on Tuesday.
Newly elected commissioners Craig Estep, Oren Miller and Gary Search ignored the advice of their own economic development staff and raised road impact fees on new homes and businesses countywide by 75%.
The tax will now be assessed at 70% of the maximum allowed by law, up from the current 40%, effective June 28.
Sumter’s road impact fees are now higher than more than three quarters of Florida counties.
Sumter’s rate is now higher than neighboring Lake, Marion, Citrus and Hernando counties, even though Sumter’s population is smaller.
Sumter will now charge businesses wanting to expand here more in road impact fees than the region around Orlando.
The move is a reversal of the county’s long-standing pro-business strategy that had established it as one of Florida’s most steadfast economic engines, and the sixth-fastest growing county in America.
The action comes at a time that the majority of Florida counties have lowered or eliminated road impact fees, especially while working families continue to slog through the pandemic recovery.
“It’s a sad day to see big government coming to Sumter County courtesy of these new commissioners,” said Commissioner Doug Gilpin, who voted in opposition with chairman Garry Breeden.
“The future regional roadway network is ahead of schedule, and the county finances are performing much better than predicted — there is absolutely no need for this tax increase,” Gilpin added. “It’s being done for purely political reasons, just big government greedily sucking more money out of the private sector, away from families and businesses and service providers. I refuse to vote for an unnecessary tax increase that is designed to punish the very people who have helped grow our county just so certain politicians can satisfy a misguided campaign promise.”
The three new commissioners were elected on a pledge to roll back the first property tax increase Sumter homeowners saw in 14 years. However, instead of trimming costs to make that happen, they instead surfaced the higher tax on new business.
This tax-and-spend philosophy has put them at odds with state Republican leaders who are pushing a new law to curb anti-business impact fees statewide.
The trio of new commissioners took office as Republicans. However, Miller is a failed Democratic candidate for the Florida House and Search was elected to his first public office on a Democratic ticket.
Upon learning that the potential law could limit their tax-raising powers, they fast-tracked Tuesday’s vote instead keeping a promise to study the issue until July.
“When I talked to each of them, I asked them what is the plan, why pick a random number, and what is their logic besides that they made campaign promises?” said John Temple, chairman of the Sumter County Republican Executive Committee, after the vote. “They weren’t able to give me any concrete answers. Waiting until the summer would have been a wise decision before making any quick judgments that have long-lasting impact.”
Action Impacts New Business Countywide
Supporters of the Estep-Miller-Search tax increase have urged the trio to wring more money out of The Villages.
“Everyone is a hostage of The Villages Developer,” Sherry Duvall, of the Village of Gilchrist, said at the meeting. “This is a one-time fee, but property taxes will affect us for a lifetime. This is not a level playing field.”
In fact, even though builders of age-restricted homes pay lower impact fees because their occupants use fewer government services, The Villages Developer already contributes 10 times more to county coffers than any other builder. In 2020, that was $3.3 million, county records show.
The Villages Developer also has agreed to pay the up-front costs of the regional roadway network to be reimbursed by the county in 5-15 years without charging interest. And The Villages Developer is contributing all right-of-way access along that network at no cost to the county.
Officials have projected that roadway investment will conservatively earn the county at least $2 billion more in property taxes from future homes and businesses over the next 25 years.
Businesses owned by The Villages Developer also account for almost half of all property taxes collected by the county’s top 10 commercial property owners, according to county records. In 2020, that was $860,480 for services countywide.
“They’re going to learn this increase really doesn’t affect the Developer,” said Fred Briggs, a retired Navy officer and Hacienda of Mission Hills resident who served five terms as president of The Villages Homeowners Advocates. “The Developer is selling as many homes as he’s ever sold. The people who are going to suffer are the people in the rest of the county.”
The Estep-Miller-Search voting bloc on Feb. 15 rejected an offer from The Villages Developer to pay 40% more on new homes it builds in the community in exchange for protecting businesses expanding outside the community for three years.
“The commissioners dropped that ball,” Briggs said. “That was the opportunity they had to be heroes, and they blew it.”
Now, under the Estep-Miller-Search tax increase, a home in The Villages community will cost $729 more to build. But homes elsewhere in the county will cost $1,999 more.
Economists, business owners and residents outside The Villages pleaded with commissioners to leave the road impact fees alone to protect new jobs and homes from moving elsewhere.
Workers here already face a housing shortage: Only 14 homes are listed under $250,000 in south Sumter County, and employees with children in The Villages workplace charter school are driving in from seven different counties.
The heaviest price will be paid by businesses wanting to expand in Sumter County.
A new retail store will now pay $6,605 per 1,000 square feet, up from $3,774. Fast-food restaurants — something residents in the rural areas of the county have been asking for — will now pay $49,689 per 1,000 square feet, up from $28,394.
“Their plan will not help people in the surrounding areas,” said Marlene O’Toole, a retired IBM executive of Village Mira Mesa who represented Sumter County in the Florida House for eight years. “And these are the people who work to support residents like me in The Villages. Who do these commissioners have spite for; who are they trying to hurt? They’re only hurting their neighbors, potentially even family and friends.”
Questions linger as to what impact the commission’s controversial decision will have on UF Health’s intention to build a new hospital in the community.
Officials have told the Daily Sun that property in both Sumter and Lake counties has been under consideration for a 400-acre medical city the hospital might anchor.
Even at the old rate, a 200-bed hospital would have saved at least $1.5 million in road impact fees by building in Lake versus Sumter.
“UF Health is committed to bringing quality health care to The Villages,” Ed Jimenez, chief executive officer for UF Health Shands, has said. “But any additional costs, including higher impact fees, absolutely affect our ability to do so. Higher impact fees mean less money for health care and would definitely be a factor as to if and where a new hospital is built.”
Villager Duvall shrugged the possible loss of the hospital as a “scare tactic.”
“The newspaper makes it sound like we’re all going to die if we don’t get the hospital,” she said.
Debate Draws A Passionate Crowd
The impact fee issue has been hotly debated in the community for months, and the Everglades Regional Recreation Complex reached capacity more than 20 minutes before Tuesday’s meeting’s start.
A couple of golf carts offered free rides for those forced to park farther away.
Commissioners heard comment from both sides for about two hours before voting.
From the pro-business crowd:
“Families will be forced to pay more because you want to stick it to the Developer,” said Webster resident Billy Bowles. “It’s clear to me you care less about the working county resident.”
“This isn’t going to hurt The Villages,” said Darrell Chandler, of Lake Panasoffkee, who operates several small business in the county. “The rest of us in the county will be devastated and the growth will stop. I came here to ask you to consider all of the businesses in Sumter County that will hurt because of your hate for The Villages.”
“Like many of the people here tonight we chose The Villages because it offered more amenities at a reasonable cost than any other retirement community in Florida,” said Dr. Paul Ulrich, of the Village of Bridgeport at Miona Shores. “Many Villagers have expressed the desire to attract premiere businesses such as Costco, Trader Joe’s and others. This can only be possible if locating these businesses in Sumter County is economically attractive. Such a huge increase will make Sumter noncompetitive. Lake County almost went bankrupt from 2008-2011 because of relying on high impact fees instead of growth. History is doomed to repeat itself if we go down this road.”
From the anti-growth crowd:
“We have all the amenities we need,” said Stan Galperin, of the Village of Gilchrist. “We do not need the community to be any larger. When the property taxes went up two years ago, the growth in my eyes is not a benefit. I campaigned for the new commissioners for the repeal of the tax associated with road construction, an additional cost associated with growth. I ask the commissioners to remember why you were elected.”
“Why is it OK to ask me to spend an additional $3,500 over 10 years for things I will hardly ever use, but it’s not OK to ask a new homebuyer to pay an additional $1,500 for roads and things they will always use?” asked Luke Courtemanche of the Haciendas of Mission Hills. “Are we only interested in businesses south of 44 now? It’s all BS and scare tactics. Please, commissioners, help us, the citizens, help us regain control of our county.”
“A lot of people tried to tell you the sky is falling, but I don’t think the sky is falling,” said Roger White of the Village of Buttonwood as the public forum came to an end. “These businesses will eventually come.”
None of the three new commissioners have explained how taxing new businesses for roads will translate to lower taxes for homeowners.
Monies from road impact fees can only be used for roads and not expenditures such as law enforcement, ambulances, government salaries, libraries, parks and animal services.
“They never made it clear to the voters that road impact fees cannot be used to roll back property taxes,” Briggs said. “It doesn’t work that way, and people do not understand that.”
Should property taxes from new business decrease as economists predict, residents will be facing cuts in services or higher property taxes to fill the budget gap.
“When development costs increase, fewer developments will come into the county,” said Patrick Salmon, an attorney with Burr & Forman representing UP Development, which is building single-family rental housing here. “Fewer developments mean less tax revenue, and taxes are far more likely to be increased. The short-term revenue gain from the increase in road impact fees will far be outweighed by the long-term tax consequences residents will be forced to endure.”
The move “will just cripple business growth,” said Scott Renick, The Villages director of commercial development. “From the folks we’re talking with, this could have a phenomenal impact in the face of COVID-19. A lot of our businesses will also be adversely affected by the new minimum wage law, especially restaurants. You’ve already got businesses struggling to make ends meet and meet payroll. Any expansions are because of their ability to aggregate costs across multiple locations. This would take that away.”
Some businesses may be able to pass the increase through to residents, he said, but in most cases, “It’s going to kill deals; it’s not going to happen. Commissioners need to talk to their constituents about how they’ll feel about the goods and services that exist everywhere else in The Villages not being available in new areas.”
New commissioners Defend Tax Increase
Estep said he had in fact spoken with more than 500 constituents and business leaders. He said he “has no issues with The Villages, this is business and we need to do it the best we can.”
He acknowledged that “we can’t touch Marion County” in terms of homes for working families, but insisted that housing is more affordable in Sumter than in the other five contiguous counties.
“I do think we need to do more,” he said. “Our county is split on this issue, it’s strongly split and quite evenly split.”
Miller said simply that “I made a commitment to those voters (who elected him) that I would support them” and motioned to triple the current rate to the full maximum allowable.
His motion died for lack of being seconded.
Search, who made the motion to raise fees to 70% of the maximum allowable, said he had indeed invested countless hours in research. He acknowledged that he had declined media interviews, but faulted the Daily Sun for not agreeing to publish provided statements in full without fact-checking.
“I’m not anti-business,” he said of his vote to tax new business. “What I’m looking for is balance and equitable and fair distribution. Because if the money doesn’t come from impact fees, then it comes from the general fund, and then if there’s not enough in the general fund, we tax the people.”
Chairman Breeden joined Gilpin in questioning why the three new commissioners were raising taxes at all at a time the county already has more revenue than it had budgeted.
“There is no reasonable, prudent or necessary reason for any increase in the impact fee,” Breeden said. “Actually this year, without any increase, I think we’re going to have a surplus of funds in our budget. This is a political decision, not a practical decision.”
Meanwhile, The Villages Developer dismissed taunts from supporters of the Estep-Miller-Search tax increase to move its operation to a more affordable county if it didn’t like the change in policy.
“While we are saddened by this misguided decision, our family and company remain committed to The Villages and our surrounding community,” said Mark Morse, president of The Villages. “We are in our fourth generation here — it’s our home where we live, work, pay taxes, raise our families and educate our children. Together with our residents, and alongside the businesses and workers who serve them, we remain focused on keeping the dream alive, on preserving the lifestyle Villagers enjoy.”
Specialty Editor David R. Corder can be reached at David.Corder@thevillagesmedia.com or 352-743-1119, ext 5241. Specialty Editor Keith Pearlman can be reached at Keith.Pearlman@thevillagesmedia.com or 352-753-1119, ext 5347. Managing Editor Curt Hills can be reached at Curt.Hills@thevillagesmedia.com or 352-753-1119, ext 5287.