THE FLORIDA HBA (FHBA) AND THE HBA of metropolitan Orlando filed a class-action lawsuit on April 30 against Osceola County to overturn a measure that more than triples the impact fee for new school construction in this bedroom community just south of Orlando.

The case will be closely watched throughout the state because if the county prevails, home builders fear other county governments will view an Osceola victory as a green light to pass similar impact fee increases.

The new measure, which became effective May 1, increases the school impact fee to $9,708 per purchase of a single-family home, up from $2,828. The lawsuit seeks to roll back the impact fee to $2,828 and refund any monies paid by homeowners since May 1.

Nineteen of the state's 67 counties have educational impact fees. At press time, no court date had been set, but Linda Shelley, the attorney handling the case for the builder trade groups, expects that a hearing will be held this fall.

“We're not alleging that impact fees are illegal,” says Shelley. “But we will prove that the local government has exaggerated the impact of new development, exaggerated the cost of new student stations, and underestimated other sources of revenue available to the school district for school construction.”

Tom Greer, the school board's chairman, says, faced with dwindling resources and overcrowded conditions in which thousands of children start their school careers in portable classrooms, the county had no choice but to raise impact fees.

Figure It Out
The new educational impact fee in Osceola County, Fla., is clearly out of line with what the rest of the state pays. Unless a settlement is reached this summer, expect a trial to go forward in the fall.
County Impact Fee (per home)
Broward $1,543
Citrus $636
Collier $1,778
Hernando $2,400
Hillsborough $348
Lake $3,489
Lee $2,240
Manatee $2,800
Martin $1,006
Miami-Dade $2,500
Orange $2,828
Osceola $9,708
Palm Beach $893
Pasco $2,000
Polk $1,607
St. Johns $729
St. Lucie $3,061
Seminole $1,384
Volusia $1,139
Source: Florida HBA

“We're the fastest-growing school district in the state, growing at about four times the state average,” says Greer, pointing out that the district's student population grew 26 percent over the last five years, with the district adding 3,400 new students and hiring 681 new teachers in the past year.

Greer says tax dollars are thin in a county where 22 percent of the land is set aside by state or local government for conservation and another 60 percent is zoned for agriculture. Greer says landowners pay only 10 percent to 70 percent of the assessed value on agricultural lands. He also points out that Public Education Capital Outlay monies sent from the state from utility taxes have decreased every year. The county only received $3.7 million last year and expects only $3 million this year.

Another revenue source is the $2 per $1,000 assessed valuation that homeowners pay annually for new school construction. But Greer says the county tax only generates $22 million a year, and 73 percent is bonded, which means the school board pays debt on most of that money.

The money available to the school board is far short of the $100 million the district needs annually for the next five years to accommodate 62,600 students by 2010. Greer adds that the district had a shortfall of $470 million before the new impact fee passed and that the new impact fee will cut that number in half over 10 years.

FHBA attorney Shelley says the builders are upset because homeowners get no credits for payments that they're already making to the county, such as the annual assessed valuation fee. “None of the payments homeowners are making are credited to offset the impact fee,” she notes. “Plus there is an automatic escalator; the fees are re-evaluated every year on July 1, and there is no cap.”

Learn more about markets featured in this article: Orlando, FL.