Impact Fees: https://www.polk-county.net/building/fees

https://www.nahb.org/-/media/NAHB/advocacy/docs/top-priorities/housing-affordability/case-study-polk-county-fl.pdf *

* POLK COUNTY, FLORIDA

Polk County, Florida, has found that a combination
of strategies is the most effective solution to house
prices that have recently become unaffordable even
for moderate􀈬income households.

One of these strategies is an impact fee waiver.
Although Polk County has used impact fee waivers
to encourage affordable housing for nearly two
decades, growing evidence that moderate􀈬income households also face affordability
problems led Polk County to pass a workforce housing ordinance in the spring of
2007 that provides partial impact fee waivers to moderate􀈬income households.

The new workforce housing ordinance targets those with incomes between 80
percent and 120 percent of area median income (AMI). It waives 50 percent of all
impact fees for workforce housing units as long as the buyer stays in the home at
least seven years. With impact fees in Polk County totaling almost $12,000, the
partial fee waiver means a savings of almost $6,000 for workforce housing units.

Fee waivers 101
The logistics of the fee waiver are complicated. First, the developer pays the full
impact fee when applying for a permit. Upon sale of the house to a qualified
moderate􀈬income buyer, the developer is reimbursed by the county. The impact fee
portion of the price is “paid” by the county, reducing the price to the borrower. To
enforce required repayment of the waived impact fees if the house is sold within
seven years, the county places a lien on the property.

Take, for example, a house purchased by a moderate􀈬income buyer for $150,000.
The buyer is responsible for financing $144,000 of the price ($150,000 minus $6,000 in
waived impact fees); the remaining $6,000 is “paid for” by the county and secured
by the lien. If the owner chooses to sell the house before the end of seven years, he
or she must pay the county back the $6,000. If the owner stays in the house for
seven years, the lien is forgiven, and the owner realizes the additional $6,000 in
equity.
􀀹 Impact fee waivers
and reductions
􀀹 Housing trust funds
􀀹 Workforce housing
􀀹 Expedited permitting
processes
Abt Associates Inc. Financial Strategies for Encouraging Affordable Housing 187

Fee waivers also apply to rental housing, although the administration of the waiver
is slightly different. The fee waiver on rental housing requires an annual
certification of eligibility from the property owner. When the fee waiver is granted,
a percentage of the units are set aside as workforce housing units, to be rented to
families with incomes between 80 percent and 120 percent AMI. For the next seven
years, the owner must certify annually that these units are occupied by households
that were verified to be workforce housing􀈬eligible when they rented the unit. If the
units have been rented to households that are not eligible, the lien on the property is
due to the county.

Impact fee waivers nothing new for Polk County
Polk County first introduced impact fee waivers in 1990, when it passed an
ordinance that waives all impact fees for affordable housing development.
Affordable housing developments that qualify for the waiver must contain units that
are designated for households with incomes at or below 80 percent of AMI. This
ordinance also includes the seven􀈬year provisional period, in which the ownership
and affordability status must be maintained, or the fee applies.

To limit the financial impact that the fee waivers might have on the county budget,
the county sets a maximum annual waiver cap of $250,000 across all projects in the
county. If the cap is reached, a developer may appeal to the appropriate
commission for fee waivers that would exceed the
cap.

Fee waivers granted are funded from general
revenues, gas taxes, and other county sources of
revenue. However, Scott Coulombe of the Polk
County Builders Association believes the revenue
generated from new residents through property taxes and an overall more
diversified and vibrant community will more than offset the impact fee losses. “You
have to look at the big picture. You’ll get 20 times as much as you’re giving up,” he
said.

“You have to look at the big
picture. You’ll get 20 times as
much as you’re giving up.”
􀈬Scott Coulombe
188 Financial Strategies for Encouraging Affordable Housing Abt Associates Inc.
Impact fee waiver has been slow to produce results
Despite the county’s good intentions, only nonprofit organizations including the
Keystone Challenge Fund, Habitat for Humanity, and Rural Development have thus
far taken advantage of the impact fee waiver ordinance.

The impact fee waiver alone is not enough to make
homeownership affordable for _Àä3__nAyØmoderate􀈬income families in
Polk County, according to Jeff Bagwell. Bagwell is director
of the Keystone Challenge Fund, a local affordable housing
nonprofit that provides homebuyer education, constructs
community housing developments, and has helped over
3,000 low to moderate􀈬income households obtain downpayment and closing cost
assistance.

Bagwell notes that despite both the healthy buyer’s market that currently exists in
Polk County and the recently passed impact fee waiver ordinance, qualified buyers
need deeper subsidies to purchase a home. He believes that funding for
downpayment assistance to be used in combination with the waiver would solve the
problem.

“This is the best time in five to six years to buy a home in Florida, but without
downpayment assistance to help them out, the waived impact fees have yet to do
much good,” Bagwell said. “If I [as a nonprofit lender] had both downpayment
assistance and impact fee waivers, I could close loans all day long.”

In addition, Bagwell notes that an impact fee waiver must be well publicized and
fully understood by the building community before a county or other municipality
can expect it to yield results. Up until recently, many of the details about the waiver
had yet to be worked out, which may have kept builders from building homes that
would, with the impact fee waiver, be affordable to moderate􀈬income families.

Abt Associates Inc. Financial Strategies for Encouraging Affordable Housing 189
Florida’s HTF heads list of additional affordable housing strategies
In addition to the impact fee waiver ordinance, Polk County expedites permitting
procedures for affordable housing projects, and is considering adopting voluntary
inclusionary zoning that would include density bonuses.

Bagwell, also the chairman􀈬elect of the Board of the Florida
Affordable Housing Commission, says that the key to
affordable housing production in Polk County and
throughout Florida, however, is the state’s housing trust
fund. The fund generates between $400 and $600 million a year, primarily from
documentary stamp revenue.105 A substantial percentage of the revenue goes
directly into the fund.

HTF money is used to fund the State Housing Initiatives Partnership (SHIP)
Program. SHIP is the nation’s first permanently funded state housing program to
provide funds directly to local governments to produce and preserve affordable
housing opportunities. This is accomplished through the creation of partnerships
between local public and private stakeholders. Using SHIP funds, these
partnerships offer very low􀈬, low􀈬, and moderate􀈬income families with assistance to
purchase a home, funding to repair or replace a home, and other types of housing
assistance.106

Not all money collected for the state’s housing trust fund is dedicated for affordable
housing, however. Substantial portions of the money have been used to pay for
hurricane damage relief in 2002 and to help balance the state’s budget. Currently,
the amount collected by the fund that can be used for affordable housing is capped
at $243 million annually; the remainder has been left unappropriated. Bagwell notes
that were the cap removed, these funds plus the impact fee waiver would provide
more than enough in subsidies (such as downpayment assistance) to generate
significant affordable housing production.

Bagwell has joined others in Polk County in a committee formed in 2006 called Polk
Vision. The committee will re􀈬examine ways to promote and generate affordable
housing for the long term.

190 Financial Strategies for Encouraging Affordable Housing Abt Associates Inc.
In the meantime, Bagwell is optimistic that with the right combination of strategies,
Polk County can increase opportunities for affordable and workforce housing for its
residents.