Impact Fees & Other Discounts

As a follow-up to the hearing held on July 15, the Hernando County Board of County Commissioners has set the date of August 5 to further their discussion of applying for a piece of the $20-million that the State Housing Trust Fund has been allocated to stimulate local economies by reducing impact fees by 25%.

Fishkind & Associates was selected to provide an economic outlook on the prospects of providing housing to first-time homebuyers who may otherwise find it impossible to purchase their own piece of long-term investment – a home. It’s not all about the prospective homebuyer; it’s squarely directed toward boosting the local economy with jobs within the construction industry.

“Experts” will give testimonies that will probably center on presenting facts and figures that fit the mold for people and businesses of interest, namely builders.

In February of this year, at a speech to the Bay Area Real Estate Council, a group of real estate attorneys, Hank Fishkind faithfully stuck by the Federal Reserve’s belief that interest rate cuts would be an affective means to avoid a recession. This has proven to be a misguided approach as the Fed has hinted that a rate hike may be needed in the near future to slow down another negative economic indicator – inflation.

Mr. Fishkind also gave a forecast that claimed Hernando County home sales had already hit bottom and was set to be a bit on the upswing during the last quarter of 2008. The economist also gave the analysis that foreclosures aren’t as alarming as the media portrays because “It’s a thimble in the ocean.” Foreclosures were viewed as having an affect on certain neighborhoods but “not counties as a whole.”

The gentleman made the same promise at the Jully 22 BOCC hearing that the housing market in Hernando County it at it's lowest. Recovery will be a slow road through a three-year period. Ben Barnanke, chairman of the Federal Reserve, has a different outlook that gives the housing market Hernando County a gloomy view. With more foreclosures are in the foreseeable future and with a growing number of Americans experiencing a protracted decline in spendable income, people just won't have the money that banks now require to put down on mortgages.

Positive thinking can be an art but it doesn’t necessarily fit well with the reality of a situation. In this case, in a matter of just a few months, these same purveyors of recovery "just around the corner” are no more convincing than they were the first time around.

Americans have been enticed and dependent upon home quity loans to keep the economy spurring. Without home equity loans to continue to spur the economy, as they had over the past decade, the future looks too frighteningly real. The times are worse in Florida because of the financial handicaps from property taxes and ever-increasing homeowner insurance. These aren't expected to down anytime soon, which indicates a possible further delay in recovery.

Many analysts put the decline of the American economy, and the world at large, to extend into 2011. Even so, prospects of recovery are uncertain, surely to be a very slow process. With a myriad of economic indicators sucking the life out of nearly all financial institutes, everyday people will continue to lose their jobs, their homes and whatever life savings they may have at their disposal. A job loss means their health concerns become a casualty of lost benefits.

There is no doubt that Fishkind & Associates is a respected entity of engineering prowess and serve the interests of a vast variety of businesses. On the company’s website http://www.fishkind.com/ the list of names on Our Client List are nothing but impressive.

Out of nearly one hundred interested parties, a minimum of one-quarter is builders, real estate associations, title companies and land developers. Some are engineering and survey companies specializing in high-end golf course communities and resorts. The firm also represents property appraisers in various Florida counties. Economic development is a priority and, as the site informs, environmental concerns go hand-in-hand with every project.

Fishkind was a prominent advocate on April 26, 2007, for the approval of Sierra Property Inc and its Hickory Hill subdivision in east Hernando County, turning those rolling acres of land into roiling property investments. Fishkind & Associates is expected to fully support the impact fee reductions more for the benefit of builders than the individual who may purchase a home.

…if only there were a second opinion…

In contrast to the expertise of Fishkind, William Fruth of POLICOM Corporation, presents an unbiased “Economic Analysis Everyone Understands”. The website is at http://www.policom.com/.

Mr. Furth takes multiple factors into consideration when developing an economic evaluation/outlook of a selected area. Per capita statistics and overall jobs, earnings and wages are just a part of data sources, then broken down to statistics of individual and per capita indicators.

There is a sector that negatively reflects on a poor economy – an increase in the number of welfare recipients, including Medicaid and Social Security benefits.

Another group includes small business, construction and retail industries. They are considered “reactive” to the spending ability of consumers. Periods of poor economic times tend to be in direct proportion to the negative economic stability of a community.

As with the construction industry, retail jobs might still grow in a declining economy but the overall local job market reflects declining earnings numbers. A business might layoff a number of full time employees and increase part-time workers. Thus, there are a number of temporary new jobs, but both wages and earnings are in decline, showing an unhealthy local economy. More jobs at reduced pay follows suit when the number of jobseekers outnumbers the jobs available.

POLICOM is a member of the Pasco-Hernando Jobs & Education Partnership and Regional Board, Inc. The Career Central program has a stated goal “To serve as a catalyst in the community for promoting self-sufficiency through the development of a quality workforce.” Most of the board members are volunteers from local, private businesses. Resources and services, including training, recruiting, staffing, career fairs and incentive programs highlight the degree of commitment of this non-profit organization.

POLICOM has more than just a local presence. It offers economic development strategies throughout the region but also extends its services from coast to coast - north to south, east to west.

Another local client is Hernando Progress, Inc., an independent, tax-exempt organization. Information at http://www.taxexemptworld.com/ identifies 459 non-profit organizations with its network in Hernando County and over 1.6-million nationwide. The local director is Hernando Today publisher Duane Chichester.

Although the site doesn’t handle the application of new charity enterprises, there are links offering assistance.

POLICOM’s goals are not self-serving and would be a positive option of taking a broader look of Hernando County’s economic future.

…so this is what tomorrow might bring…

When August 5th comes around, the BOCC will host a number of speakers, including residents, workers in the construction business and builders. Much like the Hickory Hill LLC hearings in the spring of 2007, the same aisle that pitted one group against another will once again separate interested groups. You can’t have it both ways. Sierra Properties gained a super-majority of votes from the Commissioners but the fruits of their success won’t be realized for a generation.

Impact fee reductions might be quick in coming but a yeah vote would be felt by more taxpayers over a longer period of time than those who would benefit from the short-term benefits.

And yet, developers, builders and real estate agents are not evil - it’s a small mind that even suggests so. Their past contributions to the economy can’t be denied anymore than those of retail businesses. For now, those glory days are behind the times. One last hurrah would be as hollow as the vacant rooms in a foreclosure home.

The problem centers on the years of poor planning by the Commissioners with their zeal and overkill of unabated approval of rezoning thousands of acres of agricultural land for residential development. Time after time, they have taken the path of least resistance with their acceptance of the recommendations of the Planning & Zoning Commission. Having joint board meetings would have saved time and money.

If a majority of Commissioners vote in favor of reduced impact fees, there will still be a multitude of questions as to the fairness of distribution of profits. If eight applicants qualify as would have been the case in 2007, which builders would be awarded the slim pickin’s? What of real estate agents, title companies and mortgage lenders? Subcontractors?

What about the workers themselves? Will they be given the same pay scale as they have had in the past when jobs were plenty? Or will the paymasters offer less compensation than what would otherwise dictate? The cost of living has gone up as should wages. But supply and demand takes precedence.

Would it be possible to award a single County District the sole rights of constructing with no regard to how profits will constrict the impact of future upgrades on the infrastructure? In any given District, impact fees are restricted for use within that same District. Why not choose the big loser in advance?

Would District 5 please absorb the reduction in impact fees? Your lime rock roads aren’t likely to be paved anytime soon anyway. District 1 is already overbuilt and already has plenty of roads that aren’t getting repaired because of limited funds. Somewhere out there in your vast domain there must be a few tracts of land that are at sufficient distances from unoccupied homes so as not to create animosity for building homes where existing homeowner debts keep building.

…if they really wanted to make their own contributions to the community…

Builders could prove themselves community-minded by taking steps that others have offered in a housing market with thousands of pending sales and foreclosures. They could give the buyer a 10 to 25% discount on the purchase price of the home itself. Pre-qualification of securing a loan would be just one step – obtaining property insurance could be an insurmountable obstacle.

Remember, the purpose of the impact fee reduction is targeted to first time homeowners. When home mortgages have gravitated to only the most credit worthy, lowering the loan amount may give the buyer an edge toward realizing this once-in-a-lifetime dream home in Hernando County… or any other county in Florida that accepts the state funding.