Cape Coral approves steep increase in impact fees for new homes to fund utility projects
Cape Coral approved large impact fee increases for new homes to fund future utility projects despite objection of the local builder's association that wanted more time to review the increases.
"Of course impact fee increases affect our membership by directly increasing the cost of new construction to the consumer," wrote Cape Coral Construction Industry Association President Eric Glocer in an email statement. "The CCCIA recognizes the conflict between the city's need to pay for utility expansion with the sudden and significant slowdown in the housing market."
The Utility Capital Expansion Fees, or impact fees, are one-time fees for new developments to help expand utilities such as water, sewer, and irrigation.
Developers pay impact fees as part of the development approval process, which could affect the cost of new homes by passing them on to the homeowners.
These increases come after a committee of the whole meeting in February where Stantec Consulting informed the council that current rates are impeding their progress with several growth-related projects.
In the next few years, a new single-family home will now have to pay as much as $8,748 for water, irrigation, and sewer. The proposed increase is nearly 30% in some areas.
Construction Industry wanted more time
The Cape Coral Construction Industry Association, an advocate for builders and the construction industry in all things related to construction for more than 50 years, said these changes came too fast with too little time to examine the increases.
"The CCCIA only received the fee study on March 1st and was not provided sufficient time to determine if there is a legitimate need for the increase," wrote Glocer in an email.
He said they were surprised and disappointed that the city did not directly come to the association about increases and requested a two-week delay of the vote, so the organization has time to review Stantec's impact fee study and determine if an increase is legitimately needed.
"Speaking personally, I don't know which side of the conflict should win out, but it seems they are taking a risky path by making significant changes without vetting and feedback from key stakeholders," Glocer wrote.
Kevin Besser, policy director for the Royal Palm Coast Realty Association, spoke during public comment and said that any impact fee increase will affect homeownership affordability in Cape Coral.
Keith Quackenbush, vice president of the CCCIA, called the fee increases a tax increase.
"We've had property increases, we've had insurance increases since Ian, and just the general inflation across the board," Quackenbush said. "I would ask the board to reconsider and not put this impact fee forward."
Phillip Ford, vice president of the Lee Building Industry Association, also wanted a few weeks delay before deciding to oppose or support the increases.
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Why the increases?
Cape Coral has several utility projects, more than $560 million worth, on the horizon that need more funding as current growth is not paying for the cost of the projects.
These include the following:
North Water Reclamation Facility — $250 million, scheduled completion fiscal year 2029.
Non-Assessed Transmission North 1 & North 3 Utilities Extension Project — $181 million, scheduled completion fiscal year 2026 and 2029.
North Reverse Osmosis Water Treatment Plant Expansion & Storage Tank — $46 million, scheduled completion fiscal year 2029.
Raw Water Wells — $42 million, scheduled completion fiscal year 2029.
North Deep Injection Well — $23.5 million, scheduled completion fiscal year 2031.
US 41 Conveyance — $20 million, scheduled completion fiscal year 2027.
Cape Coral staff previously said these projects all will be under construction by 2027.
Additionally, the city's capital expansion fees have seen no major change for 15 years, leaving current customers to make up the difference in monthly water and sewer bills without an increase.
Stantec anticipates an estimated $20 million less revenue in impact fees through the fiscal year 2033 if things continue this way.
What are the fee increases?
The Florida Impact Fee Act limits the increase in each fee to 50%, and any increase between 25% and 50% has to be phased in equally over four years. A 90-day notice before the effective day for the increased fees must be given. Fees may not be increased more than once every four years.
Stantec recommended the city do the increases in phases over four years.
The current single-service potable water fee, no irrigation service, is $2,254. The new rates increase it to $3,027 over four years, a $476 increase.
Most new customers get dual services with current fees of $1,106 for water and $2,254 for irrigation.
Water would see it increase to $1,658 over the next four years, a $552 increase; while irrigation would increase to $2,636 over the next four years, a $382 increase.
Cape Coral splits sewer fees into two districts, with District 2 being anywhere southwest of the Utilities Extension project area and District 1 everything else.
District 1 would see a $912 increase, from $2,406 to $3,318, and District 2 would see a $1,064, from $3,390 to $4,454.
Overall, a new single-family home in District 2 would go from an average cost of $6,750 to $8,748 for water, irrigation, and sewer, nearly a 30% increase.
Stantec also recommends that the city increase the fees again in four years to keep up with future costs.
Council discussion
Cape Coral Councilmember Tom Hayden countered some of the claims and said this topic had been discussed publicly in January during the city's winter retreat and again during a meeting in February.
"I think the transparency has been there; I think the CCCIA has admitted that they dropped the ball on this one and weren't following them until tonight," Hayden said.
Cape Coral City Manager Michael Ilczyszyn said the CCCIA and the city meet quarterly and that the timing was the issue.
Ilczyszyn said the last meeting happened in December before the topic became prevalent.
He confirmed that the CCCIA asked for two weeks to review the material, but he said the fees don't start until June 27.
Councilmember Bill Steinke said the fee increase is not a tax and they are necessary.
"I'm absolutely a proponent of affordable housing," he said. "But there are some hard costs that have to be kept up with, this just happens to be one of them.”
The council passed the fee increases unanimously.Mayor John Gunter agreed with the thoughts of every council member and asked if it would be possible to impose mandatory increases every five years to avoid situations like this.
“If we could put a mechanism in place for future councils and future city management could do that,” Gunter said.
A future committee of the whole meeting will further discuss this option.
Glocer countered some of the city's statements and wrote that despite the fee increases being discussed publicly, the fee study hadn't been available till March 1.
He also said the city rescheduled the CCCIA's early February meeting to Feb. 27, before canceling it, and finally meeting on March 1.
"Failing to provide or post the complete study publicly means that the public had no way to evaluate or make an informed comment," Glocer wrote in an email statement.
Additionally, he said the study does not address the possible result that increasing fees will have on the demand for new construction and that he believes the capital expansion schedule that is driving these increases was advanced because of abnormal growth rates from 2022-2023.
Luis Zambrano is a Watchdog/Cape Coral reporter for The News-Press and the Naples Daily News. You can reach Luis at Lzambrano@gannett.com. Follow him on Twitter @Lz2official.
This article originally appeared on Fort Myers News-Press: Builders wanted a delay in impact fee increases, Cape Coral said no
