- January 7, 2011
Lower taxes, higher density, less government!
Government by Janet Leiser, senior editor
One influential legislator predicts a steep fall in state revenue as the slump in Florida's housing markets continues. An increase in density will help revenue and affordable housing.
Sen. Mike Bennett places the blame for Florida's lack of affordable housing squarely on the back of government, especially county officials who continue to raise property taxes and hike impact fees while refusing to increase density.
"What we need to do is get local governments, the city governments, to loosen up," Bennett says. "We need them to encourage development. We need them to do something about affordable housing, rather than talk about it."
While calling for a 3% cap on residential and commercial property taxes, Bennett points out that Florida's population has grown by 12% since 2001, compared to an 83% increase in local government spending during the same period.
Not only are government's actions hurting those with limited funds to buy a home, Bennett says it's also harming state coffers as the housing slump worsens. He predicts a drastic drop in taxes collected on the sale of property over the next two years.
"Our [state] budget is going to stink," the two-term senator told the Feb. 1 dinner meeting of REIC Tampa Bay.
"I told my good friend Gov. Crist, don't be promising any more tax cuts," he adds. "We're not going to have any more money, and don't be promising any more money to give away because we're not going to have that kind of money. Our doc stamp revenue is down. Our sales tax revenue is down. The building market is in the tank."
Moving on to growth planning, one of the biggest issues facing Florida, Bennett says there has to be a fundamental shift in how government handles the issue.
"We're trying to get local government to move from a growth management program to a growth planning program," he says.
"Management by definition says we have a problem, how are we going to deal with it?" he says. "Planning says let's avoid the problem. The state of Florida has had a growth management program for years and we have screwed it up for years."
"You've faced some of the trials and tribulations and realize how badly we screwed that up," he says. "I mean that sincerely. We did not necessarily know what we were passing the night that we passed it, and hopefully we'll take the time to try to straighten it out this year."
The next legislative session begins March 6.
He contends one of the most important things to come out of SB 360, which he sponsored, is the Century Commission, the group charged with visualizing what the state should look like in another 100 years.
"That's an extremely difficult concept," he says. "We know what we've got, but when we say, 'How do we want it to look?' That's tough.
"We know that if we don't do some planning, your children and their children and their great-great-grandchildren are never going to have an Everglades, they're never going to have a Charlotte Harbor, an Apalachicola Bay or a Suwannee River."
Florida's natural wonders should be preserved and protected, he says.
"We (the government) will tell us, the developers of this world, from now until the end of time, we're never going to develop in that area because we're going to save that area for your great-great-great grandchildren," he adds. "Once we define that area of the state of Florida that's never going to be developed, then you have to accept the premise that growth will continue to come to the state of Florida. That's the hardest thing for people to accept, especially with the no-growth mentality. But you have to accept it."
For more than 50 years, Florida grew by an average of 1,000 people daily, Bennett says, adding: "Last year, it went down because people are leaving because of taxation and insurance problems."
But he expects the growth to continue.
"You have to plan for it," Bennett says. "Where are they going to live? Then we can start saying, 'By default they have to live here. They don't have any choice. There's no other land left, and they have to be down here.'
"Now we can start laying out roads, we can start planning for schools, we can start planning for water. We can start planning for the future to avoid the problems we have got now."
Bennett says it's ludicrous to think that the Florida Legislature could fix the state's property insurance woes in the recent five-day special session.
"We did put some Band-aids on it," he says. "But we have a long way to go."
Deregulation of the insurance industry would be a big help, he says, adding, "I know, sad to say, I'm probably not going to win that debate. Not that I'll quit trying."
He points to the drastic drop in the cost of telephone service as an example of how well deregulation works.
"It's because we got the government out of it," Bennett says.
The senator has introduced a bill to set up different rules for residential and commercial property insurance to allow investors more leeway in how their policy is written. For example, an investor might opt to have a larger deductible than allowed by current law.
"If you're a commercial investor you should have a better grasp on what it is you truly want to do," he says. "Insurance is not truly a voluntary market."
He's also not optimistic about his odds of getting that changed.
"I hope I get it done, but again, when you mess with that insurance market, you've got the insurance lobbyists on the other side," Bennett says.
Not just sticks and bricks
As for affordable housing problems, they're worsening, not improving, he says, adding, "We know we have a long way to go on affordable housing."
Taxes are part of the problem.
"The only way to get affordable rentals out there is to cap taxes while somehow getting the real estate taxes under control along with the insurance," he says. "Everyone thinks of affordable housing as the sticks and the bricks. The sticks and the bricks are the small part."
He asked the REIC group, how many of them do business in Collier County, which has one of the highest median home prices in Florida.
"Collier County has no affordable housing problem," he says. "Well, the county commissioner came out and said that in the newspaper there."
As the group roared with laughter, Bennett says: "They don't have an affordable housing problem because they don't have affordable housing so they can't have a problem. I think that's what the rationale was."
He explains how a person buying a new house in Collier is out $800 monthly before he even begins to pay for the cost of the house or apartment.
The homeowner would pay about $200 monthly for the $30,000 impact fee (on a 30-year mortgage at 7%), another $200 monthly for property taxes, another $200 monthly for property insurance and another $200 monthly for electricity.
"Before the man ever pays for sticks and bricks, he's upside down $800 a month and you want to know why there's no affordable housing," Bennett says. "The problem with it is the first $600 is all imposed by the government. It's all put out there by the government and we could bring it all under control if we truly cared about workforce housing and affordable housing."
He then refers to a recent meeting in Lee County, part of the area he represents. Officials from the hospital, school district and sheriff's department got together to talk about how difficult it is to hire new teachers, nurses and deputies because of the area's high cost of housing.
"The person from the hospital says they're advertising in Buffalo, N.Y., Grand Rapids, Mich., and somewhere in Ohio," Bennett recalls. "The school people say they're advertising all over the Internet."
Bennett says he doesn't know any home builders that advertise up North for business.
"I turned to the school board and said, 'Excuse me, you're the one that's advertising to get those people to come down here, why don't you pay the damn impact fee?' " Bennett says. "This guy is just building a house. Why is it his responsibility to pay the impact fee for the person you're paying to move down here?"
"Our whole philosophy is wrong," the senator says, expounding on how local government hinders development.
He tells of a five-acre affordable housing development he's trying to build on 15th Street in Manatee County. The area is known for its problems with illegal drugs and prostitution.
"We told the county commission, give us 65 units of affordable housing down here, we'll do it right," he says.
County officials agreed to fast-track the project two years ago, he say, adding, "Now that we're in our second year, they've come back to us and said it's not compatible."
That's extremely frustrating, he says.
"What's happening is the community really doesn't want affordable housing," Bennett says. "They'll talk about it but they don't want it. That's the reason I was giving Collier County hell a minute ago because they're talking about affordable housing, but they don't want affordable housing. They want to talk about it.
"What they really want is, they want that guy to live over in Hendry County. Sarasota wants them to live over in DeSoto. Manatee County, by the way, has an affordable housing program. It's called Hardee County.
"We're truly not planning for the future," he says.
Who. State Sen. Mike Bennett, a developer who represents parts of Sarasota, Manatee, DeSoto, Charlotte and Lee and counties.
Industry. Commercial real estate
Key. Officials should plan growth not manage it after the fact. Bennett says the state can no longer afford to wait for problems to occur.