Economic Snapshot: September Building

What the data shows: Taxable sales in the category of building investment include sales by building contractors, heating and air-conditioning contractors, insulation, well drilling, electrical contractors, interior decorating, paint and wallpaper shops, cabinet and woodworking shops, soil, lumber and roofing contractors.

What it means: Naples and Sarasota, two of the most difficult areas to obtain building permits, saw the biggest drops in building investment in the region in September on an annual percentage-change basis. For example, Collier County has the highest taxes on new construction in the state and has a notoriously anti-business permitting process. Due in part to unfriendly local government, both Naples and Sarasota suffered bigger annual percentage declines in business investment than the state (-20.1%). Meanwhile, Tampa reported the smallest annual percentage decline in business investment in the state.

Forecast: Economic development efforts to lure new business or help expand existing firms with subsidies and other enticements will come to naught if local municipalities continue to maintain barriers to new construction. High taxes on new construction — also known as “impact fees” — and slow permitting departments will hamper any recovery. Of course, weak demand and oversupply will delay a rebound in new construction as well. But the pace of the recovery will depend on a change in attitude toward business by local government.

BUILDING INVESTMENT

($ in millions)
Area Investment Annual chg.
Tampa $185.5 -3.9%
Punta Gorda $10.4 -10.7%
Fort Myers $42.1 -19.4%
Sarasota $38.8 -20.2%
Naples $24.6 -24.0%
Source: Florida Legislature Office of Economic and Demographic Research