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Slow sales may mean high fees

The falling housing market could cause double the impact fees for new roads.

Published April 22, 2007


NEW PORT RICHEY - Don't tell economist Hank Fishkind the housing market is spiraling down.

In January, he predicted a "soft landing" for Pasco's cooling market, estimating permits for new homes would rise to 6,500 in 2007.

In two years, he projected a return to record levels, with about 8,000 permits being pulled. A few years later, 9,200 permits would fly.

County planners and developers gasped - but not out of glee. They did their own math and found Pasco is on pace for 3,000 permits this year, the lowest rate in seven years.

And that's if the market picks up.

"I think we'll hit bottom in '08," Craig Gallagher, president of Lexington Homes, said recently during a meeting of a fact-finding committee that heard Fishkind's report.

The county paid $20,000 to Fishkind, seeking growth projections to solve a budget crunch to build new roads.

But even after they put aside Fishkind's optimistic predictions, county officials ended up picking numbers that are rosier than reality.

County commissioners will be asked Tuesday to raise road impact fees to at least $8,000 per new home, double the current level. Officials have to assume a certain number of homes will be built, in order to estimate how much money they'll have to build roads.

But if the county doesn't raise as much money as it predicts, it can't build as many roads as it plans.

"It is concerning for us when they're putting together those budgets for roads, because if they don't go right, they're going to have to come back and readjust the budget," Commissioner Ted Schrader said.

County officials said they had to estimate housing permits in order to make a recommendation to the commission. And Fishkind's report came with caveats about potential hurdles to growth, such as rising insurance costs and property taxes.

"I don't think the world is so designed to get an answer," County Administrator John Gallagher said of projecting housing growth. "Can anyone with the most intelligent brain in the world tell you what the stock market will do? No."

At first, Gallagher recommended a more conservative prediction. He suggested a baseline of 4,000 permits in 2007 with 3 percent increases each following year. But the members of a fact-finding committee on impact fees decided late in 2006 that he was off, leading them to hire Fishkind.

After dismissing the economist's optimism, the committee settled on estimates by member Pat Gassaway, an engineer and vice president of Heidt & Associates of Tampa. He started with projections based on the 2,000 to 4,000 new home permits given annually from 1997 to 2001 - "a moderated market."

Then he sought advice from homebuilders that employ Heidt.

The answer he and the committee found: An estimate for 2007 permits that is 25 percent above this year's projection.

It also relies on adding 1,000 homes a year until 2010. By 2011 and 2012, it would surpass the boom of 2005, when Pasco issued 7,200 permits.

As the group moved ahead last month, committee member Gallagher, who is not related to the county administrator, said he was pessimistic about the estimates because developers are pulling fewer than 250 permits during all but one of the past six months. Homebuilders say they have a glut of homes on the market.

John Gallagher said there are other options for road revenue if home building falls below predictions. There could be more commercial construction than Fishkind predicted, and they pay road fees, too.

Prices might drop for asphalt, Gallagher said, and the county expects to get more money under a new Florida growth management law that requires developers to pay a proportionate share of project costs.

Neither have been factored into Pasco's road budget planning because county officials say they lack confidence to include them.

All, again, are optimistic.

David DeCamp can be reached at 727 869-6232 or

Fast Facts:


Home-building drops in Pasco

Total annual permits for single family homes issued by Pasco County.

1997: 2,191

1998: 2,504

1999: 3,032

2000: 2,931

2001: 3,860

2002: 4,786

2003: 5,883

2004: 6,300

2005: 7,252

2006: 4,723

2007: 552*

*Through March

[Last modified April 21, 2007, 19:20:00]

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