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Housing Slowdown Slashes Road Funds

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By KEVIN WIATROWSKI

The Tampa Tribune

Published: June 29, 2008

First the bad news: The moribund housing industry has put a major crimp in Pasco County's road-building plans.

Since the budget year began Oct. 1, Pasco County officials have collected about one-third of the road-related impact fees they expected to have by now.

They had anticipated collecting more than $70 million in transportation impact fees this year. Lately, it looks like impact fees will be closer to $26 million, leaving a $43.6 million hole in the developer-paid funds used to widen, lengthen and repave county roads.

The drop in fee income could spell major changes for county-financed road projects - such as the planned widening of Moon Lake Road in New Port Richey - as county officials retool their project list to reflect their financial reality.

But here's the good news: That same deflated housing industry has freed up building materials and contractors, lowering those prices by as much as 20 percent, according to newly released estimates by the Department of Transportation.

At the peak of the homebuilding boom in 2005, a road project that drew more than a handful of bids was rare. Now projects attract a dozen or more bidders, pushing down taxpayers' costs.

The run-up in oil prices has driven up the price of asphalt - which is made with oil - but the overall drop in road-building costs means Pasco County could get more for its sharply curtailed money than originally thought, said Michele Baker, chief assistant county administrator.

After an earlier shakeout of the county's five-year road-building plans, Baker is leading a new round of revisions that may restore some projects that were removed or pushed beyond the five-year horizon. The latest revisions began after the DOT released its new cost estimates this month.

Those revisions were to be released last week, but will be put off until early July so County Administrator John Gallagher can review them, Baker said.

"We identified more questions needing investigation," she said.

The changes are unlikely to affect ongoing projects or those planned for next year. The county had enough money banked to cover the current year and most of the next, Baker said.

"We had enough in savings to get through '08 and practically through '09 even if we didn't collect additional revenue," Baker said.

Where things could change is in the longer term. The county typically waits to start road projects until it has enough money in its reserves to pay for the work.

The dramatic reduction in impact fees this year means less money put aside for road projects in 2010 and beyond.

Impact fees are levied on new construction to account for the added demand on roads, sewer lines and other infrastructure. Transportation fees amount to about half the $26,000 imposed on a single-family home.

County officials began this budget year expecting to collect fees on about 5,000 new homes. Building permits issued since last fall show the number of single-family homes permitted - the dominant category of housing - is less than 900 as of May 31.

"Almost as soon as the ink was dry on the road budget we were seeing the effects of the market downturn," Baker said.

The new impact fee estimates are a dramatic departure from reports earlier this year that showed the county running on average about 50 percent below its projections with the biggest shortfall, about 60 percent, in west Pasco.

The latest tally reveals east Pasco, specifically Wesley Chapel, has produced about a quarter of the anticipated transportation impact fees. Central and west Pasco are running at about one-third of expected.

Home construction in Wesley Chapel ground to a virtual halt last year when builders Lennar Corp. and Pulte Home Corp. walked away from major projects they had planned - Epperson Ranch off Curley Road in the case of Lennar, and Wiregrass Ranch at State Road 56 and Bruce B. Downs Boulevard for Pulte.

Reporter Kevin Wiatrowski can be reached at (813) 948-4201 or kwiatrowski@tampatrib.com.

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