A tax increase proposed by new members of the Sumter County commission will be tabled until July, commissioners voted 3-2 after hundreds of workers, business owners and residents flooded them with opposition. Ex-Democrats Oren Miller and Gary Search are championing reversal of the county’s longstanding pro-business strategy, seeking to raise road impact fees on new homes and businesses countywide by almost double the current rate or more. UF Health officials on Tuesday joined the chorus of community leaders alarmed at the economic fallout of such a move, saying it would jeopardize UF’s new hospital among other amenities. “A tax hike of this magnitude is concerning and would have a substantial financial impact on our system,” said David R. Nelson, president of UF Health, who noted the action comes at a time Sumter residents are clamoring for more healthcare services. “Our resources would have greater impact if focused toward the direct care of the patients who turn to us for help.”UF Health officials confirmed that neither Miller nor Search have consulted with them about how raising the cost of the new hospital by millions of dollars might torpedo the project, part of a 400-acre medical city the previous commission greenlighted in the south county.
“UF Health is one of the nation’s premier academic health systems, with a hometown heart,” Nelson said. “Our goal is to offer our patients caring, compassionate health care with access to the latest scientific advances, right in the communities they live in. That’s a responsibility we take seriously as we work collectively with local leadership to do our fair share on behalf of the region’s citizens.”
Changing that definition of “fair share” was a campaign rallying point for Miller, a retired logistics manager for Caterpillar and failed Democratic candidate for the 2018 House of Representatives race.
Miller and Search, a retired educator who was elected as a Democrat to a small Pennsylvania commission a decade ago, ran on an anti-developer platform and were elected on a promise to roll back a 25% increase in property taxes approved in 2019 by the previous commission.
That property tax increase — the first in 14 years — supported the growing need for more law enforcement, ambulance services and schools as well as a future regional roadway 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, the 25% property tax increase represented a bump of $348 annually for a home with a taxable value of $255,700. But amid outcry from Miller and Search supporters, the previous commission rolled that rate back 4% before leaving office this year.
Rather than continue that promised rollback effort, Miller and Search have spent their first weeks in office pledging to target the builders of new homes and businesses.
Miller said at Tuesday’s commission meeting that he wants a 150% increase in fees from the current 40% of the maximum allowed by law to the full maximum; Search said he wants to nearly double it to 75%.
The 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.”
He added that the proposal rings tone-deaf at a time that most local governments are shoring up support for new businesses to dig out of record unemployment caused by the coronavirus.
“Before raising road impact fees, you have to realize it’s not just the developer who pays,” Calabro said. “They have to pass it on to their commercial customers. They will have to pass it on to the homeowner. It’s economics 101, whether Republican, Democrat or Independent. That’s the way it works. Taking this action at this time is incredibly historic, and doing so with the fragility of the economy with this pandemic is unbelievable.”
A Tax Increase Targeting Businesses Large & Small
Miller, in an interview with the Daily Sun before Tuesday’s meeting, agreed “there is no doubt” the increase would be historic, but said he believes the tax on new homes and businesses has been too low for too long.
“It’s been so lopsided in the developers’ favor for so many years,” he said. “This is not me against The Villages, though they’re a big one; but this applies to all of them.”
A broad panel of nonpartisan economists surveyed by the Daily Sun agreed the effect will indeed be felt on not just large builders such as The Villages Developer or UF Health, but on businesses of all sizes.
“The net impact of impact frees tends to depress nonresidential development activity,” said Hank Fishkind, Ph.D, the economist who designed the population program the Legislature uses to determine state-and-local revenue sharing.
“When demand for housing is strong, the impact fee can be passed along,” he said. “But it has consequential effects.”
Search has falsely insisted to constituents that Miller’s request to take fees from 40% of the maximum allowed to 100% — which he originally supported — does not equate to a 150% increase. But Calabro, Fishkind and others note that .40+.40+.20 = 100, and the retired teacher’s math is wrong.
“New development should be paying for the impact it’s having on the roads,” Search told the Daily Sun before Tuesday’s meeting, dismissing the long-range economic upsides of more new homes and businesses on county coffers. “That should not be the taxpayer’s burden. It should be the developer’s burden.”
That narrow view will likely cost Sumter County its hard-won ranking as the nation’s fastest growing metropolitan statistical area for the past decade, the commission’s own economic development advisers have warned.
They note that Sumter’s current rate of 40% of the maximum road impact fees allowed by law are already more than 2.5 times that of neighboring central Lake County, which assesses a $1,000 road impact fee per single-family home compared to Sumter’s $2,666.
Additional impact fees assessed for other new development services such as public safety and recreation have also begun to hit homeowners in Sumter County locales such as Wildwood.
Under the Miller-Search tax increase, road impact 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.
Meanwhile, other Central Florida counties are adding economic incentives that lure new businesses instead of raising taxes on them.
For example, Orange County has just landed projects that include a 17-mile-wide medical city and 68-acre urban redevelopment project with more than 600 apartments. Osceola County projects include a new medical arts district, hospital expansion and 500-acre manufacturing center along with a $200 million 5-year roadway project.
“My fear is this is going to drive businesses away,” said Matt Gerig, president of the Sumter County Chamber of Commerce, of the Miller-Search tax increase. “A business looks at this a lot closer than a homeowner. Let’s say, if you’re going to increase the cost to bring a manufacturing plant to Sumter, and it’s cheaper to put it in Lake or Citrus County, then everybody loses. You lose property tax revenue from the taxes the business would have generated, and Sumter residents lose jobs.”
‘Citizens Will Be Paying In A Big Way’
The county is already struggling to provide affordable housing for workers here.
For example, families with students in The Villages workplace charter school are currently living in seven different counties, and only a third of those in the tri-county area have found homes in Sumter, according to Director of Education Randy McDaniel.
Republican Gary Breeden, a former public works director of 32 years who serves as commission chairman, said he firmly opposes the Miller-Search tax increase.
“There’s never enough money to bring everything to top of the line, roads or bridges,” he said. “But the philosophy of all the previous boards was to keep Sumter County competitive with residential and commercial development. We wanted to encourage both with a competitive advantage against surrounding counties. If you raise impact fees, you may have businesses looking someplace else.”
Republican commissioner Doug Gilpin, who received advanced county commissioner certification 10 years ago, said his vote on the Miller-Search tax increase will be also be a solid “no.”
The tax increase is shooting at The Villages Developer and hitting everyone else instead, he said.
“I’ve worked my whole life, and my family comes from very meager beginnings,” said the former Marine who still works for T&D Concrete. “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 good, quality jobs here. And we’ve seen over that period more young people getting an education and then coming right back to work in Sumter County.”
He added that “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. We’re in a position in which the housing market is still robust. What we lack is a strong and vibrant commercial community. BJ’s Wholesale Club may reconsider its decision to build in Sumter County. And forget any opportunity for a Costco, Trader Joe’s or Whole Foods Market.”
He said the 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 increase in impact fees would bring that kind of development to a crawl.”
New Republican commissioner Craig Estep, a former Marine, highway patrolman and helicopter pilot, said he has not yet decided where his potential swing vote would land.
“I can’t draw a conclusion until I learn more and hear from people at public hearing,” he said. ““I don’t have a feel on how this is going to affect people. I’m trying to identify revenue streams that lessen the burden on the taxpayer, but my mind is not made up. Just so that everyone understands, everything is on the table. I’m dong my homework.”
‘This Will Just Cripple Business Growth’
Leaders at the local and state level roundly decried the 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 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.”
The Miller-Search tax increase is an assault on that essential industry, he said.
“At a time when construction material costs are skyrocketing due to supply shortages related to the pandemic, this unnecessary burden on Sumter County’s top-employing industry and economic driver could be devastating,” he wrote. “This not only negatively impacts the potential property tax-revenue, it affects the severe shortage of affordable housing we already experience.”
Tax Increase Plan Draws Large Opposition Crowd
Business owners, workers and concerned residents flooded the commission chambers at Tuesday’s meeting to ask the board to reject the Miller-Search tax increase.
More than 200 heavy equipment vehicles representing at least three dozen companies filled the parking lot outside Everglades Regional Recreation Complex, accompanied by another 70 personal pickup trucks.
Anyone arriving an hour before the meeting was forced to walk past rows of concrete mixers, dump trucks, heating and air conditioning service vans and more.
They came straight from their jobs in a massive show of solidarity to fill parking spots that stretched as far as the softball fields. Their vehicles quickly spilled into neighboring Magnolia Plaza, a new business center that some of them are currently constructing.
Donning caps, T-shirts and jackets of their respective employers, they filled the 180-seat room, an overflow room and the lobby.
Young people such as Coby Sharp, of Oxford, were among those who spoke against the tax increase. A recent graduate of The Villages High School, he landed a job with MiCo Customs through the school’s Construction Academy.
“I want to stay in Sumter County,” he told the commission. “But with these high impact fees you’re proposing, it would be hard for me.”
Samantha Scott, a third-generation resident of Bushnell and real estate agent at a private company, urged commissioners to “consider the unintended consequences” on young people who won’t be able to afford increases in home prices in south Sumter County.
Andrew Bilardello, a resident of the Village of Fenney in the growing southern region, said the effect on retirees’ demand for more age-restricted housing shouldn’t be discounted either.
“You are playing a shell game with tax money,” he said. “Either way, you’ve got your hands in our pocket. The cost of the impact free is rarely paid for by the developer. In areas with strong property markets, the fee almost always will be passed on in a higher purchase price or increased rent.”
Steve Munz, a multi-generation Oxford resident and president of Galaxy Home Solutions, said a tax increase would be catastrophic for expanding companies like his.
“You’re going to cause every small business in Sumter County to die on the vine,” he said. “It’s not fair that we paid our impact fees and you’re going to more than double them.”
Don Magruder, CEO of Leesburg-based RoMac Building Supply, shared the negative impact of road impact fees in Lake County, prompting that commission to suspend the fees altogether for a time in 2010.
“Lake County is the best example of the negative effects of high impact fees on business, as it has become a graveyard for locally owned businesses,” said Magruder, former chairman of the Florida Building Material Association. “The large Wall Street-backed builders and businesses have the cash to depreciate large impact fees, while local entrepreneurs do not have the financial wherewithal. The last decade has made it clear to Lake County leaders that high impact fees have failed.”
In other business, the Sumter County Commission:
Voted 3-2 along new commissioner/incumbent commissioner lines to put a proposal to reverse the One Sumter initiative on the 2022 ballot. Reversing the initiative would restrict residents to voting only for the commission race in their district instead of having a vote for all five county commission seats.
Voted 4-1 against an animal control tethering ordinance proposed by Miller that would have resulted in neighbors reporting neighbors for even humane tethering. Miller’s effort to rewrite the proposal also failed.
Managing Editor Curt Hills contributed to this report.
Specialty Editor David R. Corder can be reached at 352-753-1119, ext. 5241, or firstname.lastname@example.org.