Compromise nixed; tax increase on tap

Workers in the county’s large construction industry, such as those at MiCo Customs, flooded the commission chambers last month describe how the proposed increase would threaten their livelihood.

Businesses and homebuilders who want to expand throughout Sumter County will not be spared from a potentially crippling tax increase, county commissioners voted Tuesday in rejecting a compromise volunteered by The Villages Developer. Under the compromise, The Villages Developer would have paid 40% more in road impact fees on each home it builds in the age-restricted community in exchange for protecting businesses expanding outside the community for three years. Newly elected members of the commission last month championed a reversal of the county’s longstanding pro-business strategy, seeking to raise road impact fees on all new homes and businesses countywide by almost double to triple the current rate.

Their plan spurred a massive outcry from county residents, builders, business leaders and economists who warned the increase would paralyze economic growth, especially while the region is still reeling from the pandemic’s catastrophic effect on Florida’s workforce.

The proposal has been tabled until July.

Still, The Villages Developer volunteered to take the hit “in the interest of continuing the constructive partnership that exists between our Development and the Sumter County Board of County Commissioners and in support of the continued economic success of Sumter County.”

The proposal further stated that “While any increase in impact fees carries the risk of slowing economic growth which could lead to job loss, higher taxes, etc., we believe this measured approach minimizes that potential and is in the best overall interest of the county. By limiting increases to only age-restricted dwellings in The Villages Development, the commission would hopefully gain additional revenue while not adversely impacting those bringing the goods and services to the community that residents want. In particular, it supports initiatives like the new UF Health Hospital and other medical projects bringing improved and more accessible health care to our area.”

UF Health officials have joined the chorus of community leaders alarmed at the economic fallout of an impact fee hike at a time the state is still reeling from the economic impact of the pandemic, saying the millions of dollars in added costs to a new hospital planned for the south county could torpedo its project.

 UF Health officials confirmed that none of the commissioners who rejected the compromise have reached out to them about the fallout on its planned hospital, part of a 400-acre medical city the previous commission greenlighted in the south county.

“The amount of increase is not enough,” Commissioner Craig Estep said simply, in motioning to reject the compromise. He was joined by commissioners Gary Search, Oren Miller and Garry Breeden. Commissioner Doug Gilpin dissented.

The vote disregards the advice of the county’s own economic development staff.

Estep, a former state trooper who has never held public office before, campaigned on a stick-it-to-The-Villages-Developer platform, with Miller, a failed Democratic candidate for the 2018 House of Representatives race and Search, a retired educator who was elected on the Democratic ticket of a small Pennsylvania commission a decade ago.

The three campaigned on an anti-growth platform that promised to roll back a 25% increase in property taxes approved by the previous commission to fund more law enforcement, ambulance services, schools and a future regional road network. Officials have projected that investment will conservatively lead to at least $2 billion more in future property taxes over the next 25 years.

In terms of dollars per homeowner, that property tax increase — the first in 14 years — represented a bump of $348 annually for a home with a taxable value of $255,700. But amid public outcry, the previous commission rolled that rate back 4% before leaving office this year.

But the Estep-Miller-Search tax increase targets businesses of all sizes throughout the county, not just The Villages Developer, to close the gap.

Under the Estep-Miller-Search tax increase, fees for a business wanting new office space would soar from $2,367 per 1,000 square feet to between $4,379 and $5,918 per 1,000 square feet.

“My fear is this is going to drive business away,” said Matt Gerig, president of the Sumter County Chamber of Commerce. “Everybody loses. You lose property tax revenue from the taxes new business would have generated, and Sumter County residents lose jobs.”

‘Citizens Will Be Paying In A Big Way’

The Estep-Miller-Search tax increase is shooting at The Villages Developer and hitting everyone else instead, Gilpin has said in opposition.

 “What this does will put worry into every family who works in the construction industry, as opposed to the past 15 years in which we’ve had such positive momentum toward families depending on quality jobs here,” said the longtime public official and former Marine who still works for T&D Concrete.

“In an effort to have The Villages Developer pay for everything, and the citizens pay for nothing, the citizens will be paying in a big way,” he continued. “We’re in a position in which the housing market is still robust. What we lack is a strong and vibrant commercial community. Forget about any opportunity for a Costco, Trader Joe’s or Whole Foods Market.”

He said the Estep-Miller-Search tax increase would also hurt smaller developing communities such as Center Hill and Webster.

“We have several projects to bring new services and amenities in that area,” he said. “People in those communities would like a Chick-fil-A or even a McDonald’s. An incurs in impact fees would bring that kind of development to a crawl.”

The Estep-Miller-Search tax increase is a head-scratcher that will slow regional prosperity, said Dominic Calabro, president and CEO of Florida TaxWatch, a nonpartisan consumer advocacy group.

“In all my 40-plus years with TaxWatch, I would say increasing road impact fees to this degree is historic even under the best of circumstances,” he said. “This is a massive tax increase by any standard. And under a pandemic — what are they smoking?”

Search has falsely insisted to constituents that Miller’s request to take fees from 40% of the maximum allowed to 100% — which he also originally supported before surfacing a 75% increase — does not equate to a 150% increase. But the retired teacher’s math is wrong: 40 + .40 + .20 = 100.

“The rate proposed is way too low,” Search said in rejecting the compromise Tuesday.

In fact, Sumter’s current rate of 40% of the maximum road impact fees allowed by law is already twice that of neighboring central Lake County, which assesses a $1,000 road impact fee per single-family home compared to Sumter’s $2,666.

While the Estep-Miller-Seach proposal moves toward a public hearing in July, other Central Florida counties are adding economic incentives that lure new businesses instead of raising taxes on them.

Some counties, such as nearby Flagler County, have abolished road impact fees altogether in an effort to help local businesses recover from the coronavirus impact.

The pandemic already has closed more than half of small businesses in Florida, according to the Florida Small Business Development Center Network.

Nearly a third of those still alive say their operations remain suspended.

Locally, the value of new business permits in Sumter County already has plunged year over year by 2.3%, county data shows.

The Estep-Miller-Search tax increase would kill any hope of expansion as a way to dig out from the pandemic, said Fred Karimipour, president of FMK Restaurant Group.

“I’m so pissed at the new commissioners; they’re out of their minds,” said the restauranteur who has been on the frontline of the pandemic trying to keep his restaurant group that includes Bluefin Grill & Bar, Chop House at Lake Sumter, Evans Prairie Country Club, Orange Blossom Hills Country Club, Belle Glade Country Club, Bonifay Country Club and Scopes Ice Cream Parlor and Restaurant operating.

“My reason is going to be the same as it is in July as it is today,” he said of his opposition to the Estep-Miller-Search tax increase. “We’re looking to expand in Sumter County, but if I open a 5,000-square-foot restaurant, which is a small footprint for me, I’m currently paying $140,970 just to have the pleasure of paying taxes into the local government. What they’re proposing is to take that to $352,425. It’s outrageous.”

‘This Will Just Cripple Business Growth’

Leaders at the local and state level roundly decried the Estep-Miller-Search tax increase.

“This 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. If this is the route commissioners want to go, they 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.”

State Sen. Dennis Baxley, a Republican who represents The Villages, said the Estep-Miller-Search tax increase could halt some statewide projects, such as an alternate route planned for U.S. Highway 301 south of Florida’s Turnpike.

“We need that for transport of materials and projects, and it’s going to put some burden on the local arteries,” he said. “When you’re working out these kinds of challenges, it’s figuring out what’s most workable for the community and the residents.”

The chairman of the Sumter County Republican Executive Committee was pointed in his criticism.

“The quality of life that we enjoy is being threatened by a proposed impact fee hike by Sumter County’s recently elected commissioners,” John Temple wrote in a plea sent to GOP supporters.

“For many years, Sumter County residents have been blessed with economic prosperity due to tremendous growth,” he said. “Our county’s pro-business policies have resulted in substantial commercial investment from hospitals, hotels, grocery stores, and so much more. We also enjoy an unemployment rate well below the statewide rate, largely due to the successful construction industry.”

Tuesday’s meeting also drew opposition from residents, such as Andrew Bilardello, of the Village of Fenney.

“People want to cut the head off the goose that is laying the golden egg,” he said. “The board should accept the offer and reassess later.”

The loudest voices in opposition have been those of small business owners operating outside of The Villages.

“Small businesses are already having to rely on government (pandemic) funds just to get by, and now they want to take that away too with new taxes,” said Robbie Shoemaer, principal broker with Flamingo Real Estate and Management in Wildwood. “I know they call it an ‘imapct fee,’ but it’s really just another tax, and we all know it. Now is not the time to be doing this.”

Don Magruder, CEO of Leesburg-based RoMac Building Supply agreed.

“Dramatically raising impact fees during the worst pandemic in 100 years will cost good jobs, “ he said. “Businesses ad capital will find places where they are welcome. To raise impact fees at this time sends a harsh anti-business message to the rest of the country.”

Specialty Editor David R. Corder can be reached at 352-753-1119, ext. 5241, or david.corder@thevillagesmedia.com.