tampabay.com

Pasco told fees take too big a bite

A McDonald's official tells the county proposed impact fees could mean no new restaurants.

By CHUIN-WEI YAP
Published November 14, 2006


Its golden arches are among the world's most familiar symbols of economic growth. And in development-heavy Pasco County, McDonald's has become an advance signal for the onslaught of new rooftops and roads.

So it comes as a surprise that the fast-food giant is now threatening to stop opening new restaurants in a growth-driven county.

The reason? Pasco is considering plans that could quadruple its road-building tax on businesses. The new transportation impact fees would be higher than the cost of building one of its restaurants, a McDonald's official said Monday.

Impact fees are a common device used by local governments throughout the Tampa Bay area to raise money for new services, but the rates vary widely depending on the service and how built-out a county is.

In a letter Thursday to county Commissioner Ann Hildebrand, McDonald's Florida Region real estate manager Susan Kurchinski said her expansion plans would hinge on Pasco's impact fees.

"McDonald's would not be able to open any restaurants (in Pasco) unless a landowner was going to devalue his/her land by the amount of the increase in transportation impact fees," she wrote. "I urge you to reject all the proposed new fee schedules."

Kurchinski's letter is the first instance of a major corporation threatening to effectively halt expansion in Pasco because of the tax change.

In a 22-year career as county commissioner, Hildebrand said she cannot remember McDonald's being moved to such threats.

Kurchinski would not disclose how many restaurants it had planned in the year ahead for Pasco.

But in neighboring Polk County, where McDonald's has already made good on a similar threat, it had three restaurants planned next year. Polk recently raised road impact fees from $91,786 to $367,144 per 1,000 square feet.

The proposed rates, if approved, would make Pasco the costliest county for Kurchinski in Florida. She would not say if the chain had a policy on impact fees beyond which it would refuse to open any more stores.

Kurchinski's role is critical because her decision on locating restaurants results in the corporation awarding franchises to owner-operators. In Pasco, there are currently five owner-operators and 13 McDonald's restaurants.

While none plans to close, Pasco stands to lose 50 potential jobs for every restaurant not built. Kurchinski said McDonald's currently accounts for more than 750 jobs in the county.

In McDonald's case, a 3,500-square-foot restaurant would pay $180,000 in Pasco today, real estate agents say. Under the new rules, it could be paying more than $750,000.

Kurchinski would not disclose the average cost of building a McDonald's restaurant, but those in the industry say it takes about $600,000 for a 4,200-square-foot joint, according to Renee Dyer of Trinity's Prudential Tropical Realty.

Other businesses, including Wachovia Bank, have also warned that higher impact fees could affect expansion plans in Pasco, said state Sen. Mike Fasano, R-New Port Richey.

"I'm a little concerned," Fasano said. "I don't want to tell the county what to do, but I hope they will look at what impact these impact fees would have for economic development."

So far, Pasco commissioners are responding to the issue.

Under marching orders from the County Commission, county staff last week set up a private-sector Transportation Impact Fee Fact-Finding Committee, which could effectively rewrite the staff's current proposal.

The committee, dominated by developers, will almost certainly recommend slashing the proposed fee hike and may press the county to raise the gas tax instead, developers told the St. Petersburg Times. "Obviously there is sticker shock to the impact fee price," Hildebrand said.

Chuin-Wei Yap covers growth and development. He can be reached at (813)909-4613 or cyap@sptimes.com.