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Business Observer Friday, Mar. 1, 2013 5 years ago

Tax Cut

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Lee County commissioners consider suspending taxes on new construction for two years. Business is watching closely.
by: Jean Gruss Contributing Writer

Participants: Lee County Board of County Commissioners

Decision: When Lee County Commissioner John Manning proposed suspending or cutting taxes on new construction nearly two years ago, his proposal fell flat.

What a difference an election makes.

Pro-business candidates Larry Kiker and Cecil Pendergrass won election to the Lee County commission in November, and they could vote to suspend the taxes for two years as early as their next meeting March 12.

It's a decision businesses are watching closely.

Consider McKibbon Hotel Group. The Georgia-based hotel company builds, owns and manages more than 70 hotels in eight states. The company is considering building a $20 million hotel in Lee County.

But Wes Townsend, vice president of acquisitions for McKibbon, says Lee County has some of the highest taxes on new construction of any community he knows. He estimates the cost of such taxes, also known as “impact fees,” to be about $4,000 to $5,000 per room. “It's certainly a game changer,” he says.

Townsend says suspending taxes on new construction would send a powerful message that Lee County is pro-business. The message: “This isn't a market that's sitting on its laurels waiting for the next housing boom,” he says.

While the commissioners debate the issues, Townsend says it's urgent they make a decision soon. That's because McKibbon wants any new hotel to be built in time for the busy winter season starting in 2014. “We need to do that while there's a window of time,” he says.

Homebuilders are watching this controversy too, because homebuyers pay nearly $13,000 in impact fees for a new home. Builders in Lee County pulled fewer permits to build single-family homes in January than they did in December, suggesting buyers are waiting to see the outcome of the vote to suspend impact fees.

Richard Durling, president of Marvin Development in Fort Myers, says he has one buyer waiting for the outcome of the vote to suspend impact fees and he knows of others who are holding off. “We are in our prime season for construction and real estate sales,” Durling says.

Impact fees have been debated for years in Lee County. “This is the best chance that we have ever had to do something significant with impact fees,” he says. “Not only is this long overdue, but it's a good, positive message at the start of the year. The timing is absolutely perfect to do this now.”

Fact is, construction is just emerging from the devastating recession and businesses say they need government to be accommodative so the recovery can gain strength. Anyhow, Lee County only collects $10.4 million annually from impact fees, hardly enough to pay for new roads.

“We're not building many homes,” says Durling, who at the peak was building 165 homes a year and today is building four. “The economy is still on its knees. I'm here to tell you that we're far from coming out of this recession.”

Future: Lee County commissioners will decide whether to suspend impact fees for two years at a meeting March 12. “The climate is conducive to do this,” says Manning.

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