Last week I wrote about the proposed Okaloosa County sales tax and its hopeful (by me) impact on transportation facilities. Again, I proved my political sagacity by jumping on a position supported by only a minuscule percent of the voters. I accept the vote, not because I want to, but for the umpteenth time in my life, because I have no choice.
The question that leaves us with, however, is, what now? Real estate and building professionals must deal with the consequences. The Comprehensive Planning Act in the State of Florida requires transportation concurrency. That means that development must not be permitted unless local government can certify that the quality of existing of transportation systems will not be degraded below acceptable standards. If they cannot certify that, the Act provides remedies such as mandatory injunctions of future building.
Local governments have been circling like reluctant scavengers around the dreaded subject of impact fees for years. Other Florida counties charge tens of thousands of dollars in impact fees before construction on a single family house or commercial structure is begun. Yet meaningful impact fees are impossible in a community trying to accommodate “affordable housing”. We have an unspoken duty to the BRAC process to make provisions for affordable housing.
We may have created an insoluble dilemma.
Some likely effects of the lack of sales tax income on the real estate professional are as follows:
- There will come a point, probably soon, at which local governments are required by law to severely restrict large new projects such as subdivisions and commercial developments, particularly where the developments create additional urban sprawl.
- Local governments will scramble for fee income to pay for the public improvements necessary to accommodate additional development, which will make private development more costly, and if significantly more costly, perhaps financially impractical.
- Urban infill and redevelopment of existing residential and commercial properties will become more attractive for developers and builders.
- More permitting coordination and cost allocation between adjacent city and county governments will be required.
- Realtors dealing with either residential or development parcels, whether representing buyer or seller, must advise clients to make all deals contingent upon permitting and must calculate the costs of off-site improvements into the value of the property.
- Contracts regarding development parcels will become more long-term, have more financing and permitting contingencies, and will need more care and attention.
A possible alternative to the above is that counties and cities continue to ignore the Comprehensive Planning Act until either they must declare an absolute moratorium on future development, or some enterprising soul files a petition for injunction against future development in violation of the Act. Our building, banking, and real estate industries cannot afford either of these alternatives, and our duty to the BRAC process cannot be fulfilled if either happens.
Take your closing agent to lunch. Be prepared to speak in a soft, kind voice, and don’t even think about smiling.