Tax increase would threaten future of Sumter’s workforce

Cassandra Nelson, service assistant at Pike’s Electric in Wildwood: “This decision would definitely prevent me from ever deciding to purchase in Sumter County, despite that I have been pursuing my career here for over six years.”

Local builders and business leaders say they have been left flat-footed by the Sumter County commission’s decision to reject an offer from The Villages Developer that would have spared them from a potentially crippling tax increase. Newly elected commissioners Craig Estep, Oren Miller and Gary Search have been championing a reversal of the county’s longstanding pro-business strategy, seeking to raise road impact fees on all new homes and businesses countywide by as much as double to triple the current rate. A vote on their proposal — Miller has said he wants a 150% increase, Search has said he wants a 75% increase and Estep has not stated how much higher he wants to go — has been tabled until July. Last week The Villages Developer volunteered as a compromise to pay 40% more in road impact fees on every home it builds in the age-restricted community in exchange for protecting businesses expanding outside the community from the Estep-Miller-Search tax increase for three years.

The three new commissioners voted that offer down Tuesday, disregarding the advice of the county’s own economic development staff.

“The three of us have different ideas,” Search told the Daily Sun. “The plan is to make an equitable revenue source for resident and businesses to pay their fair share so it’s equitable for everybody. It goes back to being equitable so residents are not carrying the burden for infrastructure improvements. I’m not against business or the Developer. I want fair and equitable revenue.”

Yet county data shows The Villages Developer is already paying 10 times the amount of road impact fees — $3.3 million in 2020 — as any other builder. And it paid almost half of all the ad valorem taxes paid by the county’s combined top 10 commercial properties — $860,480 in 2020.

Estep was the first to criticize The Villages Developer’s proposal in Tuesday’s session, but told the Daily Sun on Wednesday that he appreciated the offer. 

“It was very well-positioned, it just wasn’t enough meat on the bone,” he said, adding that he’s “floating in between,” the two commissioners who want a substantial increase and two who want no change.

“I have traveled to over 50 countries and The Villages is the premier retirement community in the world as far as I am concerned,” he added in a written statement. “Rest assured I will continue to work toward the best interests of all of the Sumter County taxpayers.”

Miller, who has repeatedly stated he wants to see even more impact fees imposed on new development beyond the road fee, did not respond to the Daily Sun’s request for comment.

Commission Chairman Garry Breeden also rejected The Villages Developer’s offer in a protest vote against raising any taxes on anyone.

“I’m opposed to any tax increase, whether it be impact fee, ad valorem or fire,” he told the Daily Sun. “When we raised ad valorem (in 2018), we made an agreement with the people that we would not raise taxes for five years. I intend to honor that. I don’t like the idea of raising road impact fees, and there is no precedent to increase the tax on one entity and not everybody.”

Commissioner Doug Gilpin dissented.

“I was very disappointed with how things went Tuesday night,” he told the Daily Sun. “During public comment, there was a lot of misinformation.”

For instance, he noted that a 2018 county road impact fee study never recommended the commission impose 100% of the road impact fees allowed by law. 

“What was recommended was 45%,” he said. “We dropped that down to 40% to remain in a competitive situation, because we have some economic disadvantages. This is a wonderful, beautiful community, but it’s also has the highest median age in the country, which is a challenge when selling the county to businesses thinking about relocating or expanding.”

Sumter’s current rate of 40% of the maximum road impact fees allowed by law is already twice that of neighboring central Lake County. Other Florida counties, such as Flagler, have discontinued road impact fees altogether.

The Villages Developer said its offer was a move to protect that competitive advantage for an area that has become the fastest-growing metropolitan statistical area in America. 

“It’s disappointing that the new commissioners are taking this very successful region down a different and dangerous path,” said Gary Lester, vice president of The Villages for community relations. “Previous county leaders, who came primarily from business backgrounds, did their homework and guided the county based on experience and facts. Their steady leadership made possible 20 years of well-managed growth. Sumter County’s economy has been the envy of the state with tens of thousands of new jobs, low taxes and some of the best service levels — including health care services — in Florida. Villagers in particular enjoyed a retirement lifestyle like no other while seeing their home values steadily rise and the workforce that supports them thrive. All that is at risk now as this new commission reverses direction from this successful course.”

Lester added there is still time to avoid damaging the region’s prosperity. 

“As Developers who have lived and worked here for generations, we remain determined to keep moving our region's reputation forward,” he said. “We remain optimistic that, as these new commissioners gain knowledge and experience, they will adopt a more balanced approach that better represents the interests of all citizens. Then we can partner together, as we have with previous commissions, to preserve our community’s lifestyle and keep Sumter County’s economy strong.”

Estep, Miller and Search defend the tax increase as a campaign promise to roll back a 25% increase in property taxes approved by the previous commission. That increase — the first in 14 years — represented a bump of $348 annually for a home with a taxable value of $255,700 to fund more law enforcement, ambulance services, schools and a future regional road network. 

Officials have projected that investment conservatively will lead to at least $2 billion more in future property taxes over the next 25 years.

But amid public outcry, the previous commission rolled that rate back 4% before leaving office this year without raising road impact fees.

The compromise offered by The Villages Developer was highly unusual, said Orlando economist Hank Fishkind, Ph.D., who consults on numerous master-planned communities throughout the nation.

“It’s rare that the development industry accepts substantial increases in impact fees like this without great resistance,” he said. “I’ve not heard of this approach anywhere else in Florida or the other states in which I work, where a master-planned community volunteers to take on the substantial burden of an impact fee. This was very community-spirited. It recognized the importance of maintaining affordability for the workforce that provides the services that The Villages residents depend upon.”

That workforce was rooting for the compromise to pass, said Matt Gerig, immediate past president of the Sumter County Chamber of Commerce.

"This was an extraordinary act of leadership by the Developer of The Villages, and I was hopeful that the commission would seize on this generous offer as a win-win opportunity,” he said. "While any tax increase on business is a negative, this compromise would have largely allowed growth to continue throughout our county creating jobs, providing opportunities for our youth and bringing residents goods and services like health care that we all want and need.”

UF Health officials have confirmed that the Estep-Miller-Search tax increase may torpedo plans for its new hospital in the south county, part of a 400-acre medical city the previous commission greenlighted in the south county.  

However, some of the loudest voices in opposition to the Estep-Miller-Search tax increase have been those of small business owners throughout the county, many of whom are still reeling from the coronavirus’ catastrophic effects.

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.

“Let’s be reasonable,” said Dominic Calabro, president and CEO of Florida TaxWatch, an independent, nonpartisan, nonprofit, taxpayer research institute and government watchdog. “Is the commission even justifying asking for an increase in impact fees? Has the county commission done its due diligence to ensure their fiduciary responsibility by reviewing expenses to see what they can reprioritize, what they can delete before asking the voters and residents of the community to dig ever deeper into their pockets during the worst pandemic in over a century? This is unbelievable.”

Opponents to the Estep-Miller-Search tax increase also point to the need to incentivize more home building outside The Villages, not less. 

For example, if road impact fees were raised to the maximum Miller is seeking, a single-family age-restricted dwelling in The Villages would cost $1,458 more. But the cost on single-family homes outside The Villages would jump by $3,998. 

Employees with students in The Villages workplace charter school already are living in seven counties amid a lack of affordable homes here. Only a third of those coming in from the tri-county area have found homes in Sumter County, according to Director of Education Randy McDaniel

“Every time you raise impact fees, it makes home ownership further out of reach of the American Dream,” Calabro said. “Homeowners don’t need any help from the government to add to the cost of housing. It’s already going through the roof as it is because of the (pandemic) marketplace. Why add insult to taxpayer injury?”

Steve Munz, a multi-generation Sumter County resident who is president and CEO of Wildwood’s Galaxy Home Solutions, agreed.

“(Tuesday night) The Villages stepped up to the plate to stop the ‘we-they’ attitude,” he said. “This is not the Developer vs. Sumter County. This about retirement communities and single-family and affordable housing.”

 Several of those people working to support the retirement community shared their reactions on the Estep-Miller-Search tax increase with the Daily Sun.

Russell Hogan, R. Hogan Construction

Hogan estimates that he builds five to 10 houses per year, mostly in the south end of Sumter County. When news began to spread about an impact fee increase, his phone started ringing with bad news. “My customers and myself are concerned,” he said. “No matter if anybody wants to admit it or not, impact fees are going to get passed on to customers. I may not be the best at math, but I know if you’re talking about raising the fees 150%, you’re looking at about $4,000 more to build a home. That’s a big chunk of change for some people. What upgrades do you have to give up? Will you be able to get a higher mortgage? My customers already know the tax rate went up. Now you’re talking about increasing impact fees, which are just another tax. So people have concerns, and I can tell you they’re not in favor of paying this on top of everything else.”

Samantha Scott, Connie Mahan Real Estate Group

As a Realtor who primarily sells houses in the southern end of Sumter County, Scott is worried about how an increase in impact fees would hurt younger families. “I have had clients who are actively calculating their building costs,” she said. “If the increase passes, that’s a very real concern to them. This proposal raises impact fees on every single person that plans to build in Sumter County — that’s a fact. Make no mistake, the impact fee increases, along with the rising cost of construction material, will be passed along to a buyer. A recent study found that 206,000 buyers are forced out of the market for every $1,000 that a home’s price is increased. Pricing buyers out of the market will substantially impact my business — as well as the county’s business. Every buyer who is priced out of this market isn’t contributing to property taxes.”

Colby Owen, Mike Scott Plumbing

Owen, who commutes from Citrus County, has been considering moving Sumter County to cut the 90 minutes he spends each day getting to and from the job site. “Gas prices are already going up, so that’s a big deal,” he said. “Higher impact fees would really make me consider looking outside of Sumter County to purchase. There are homes in Lake and Marion counties that would still decrease my drive time and be closer to my price range. I would like to be in Sumter County, but I would rather invest in more house or land than to pay that in impact fees just to build in Sumter.”

Cassandra Nelson, Pike’s Electric 

Nelson currently rents an apartment in Wildwood to be near her job, and is worried an increase in impact fees will make buying a home in Sumter County out of reach. “This decision would definitely prevent me from ever deciding to purchase in Sumter County, despite that I have been pursuing my career here for over six years,” she said. “For others like me who also currently rent, this would have an effect on them as well, as we know rent stays steadily on the rise and most people would prompt them to move. A decision to raise impact fees like this would then affect small businesses and the construction industry that I am a part of.”

Darrell Weicherz, Galaxy Home Solutions

Weicherz has worked as an electrician in Central Florida for more than 30 years. “I have seen a lot of change in Central Florida, and I’ve seen what impact fees can do,” he said. “I know impact fees are derived with the intent to slow progress. I’ve seen it happen in surrounding counties. Lake County raised theirs years ago and it forced me to take more of my business to Orange County. Marion County did it, too. If you look at those counties now, they’ve lowered their fees again because they realized growth had stagnated. Now Lake is experiencing a new boom in areas like Mount Dora and Eustis and in the southern part of the county. Raising the impact fees in Sumter will only force people to look to build in other counties where they have realized that doesn’t work.” 

Mike Miller, Bluefin Grill & Bar 

Mike and his wife, Whitney, are working hard as bartenders at Bluefin Grill & Bar at Brownwood to save for a home in Sumter County. But the Summerfield couple is worried about how an impact fee increase would hurt their family’s ability to secure a mortgage. “We’ve been discussing moving back to Wildwood because we have family there,” Mike said. “Our daughter, Reagan, is a fourth grader at The Villages Charter School. So it would not only be convenient for my wife and I to commute to work to Brownwood from Wildwood, but one day Reagan will be attending the Charter School’s new campus south of State Road 44. People don’t understand that the commission is just passing taxes on to people who create jobs. People also don’t understand that if housing prices go up, the assessed values also are going to go up, and they’re going pay in the long run. They’ll not only have pay more for the house but also higher taxes each year. I worry about the health of this area.”