A Taxing Situation

If you're a reader of this magazine, chances are you're in the market for a new home. And if you're in the market for a new home, chances are you've experienced a bit of sticker shock-especially if you're a first-timer.

Luckily, Orlando remains one of the more affordable major markets in the country when it comes to housing.

According to the National Association of Home Builders' Housing Affordability Index, more than 75 percent of new homes sold last year in Orlando were affordable for families earning the region's median household income. The number was only 58 percent in Miami.

However, that affordability advantage will begin to erode-and you may be priced out of the market-if some local politicians get their way. Repeating the mantra the "growth must pay its own way," the Orlando" target="_blank">Orange County School Board is proposing that impact fees on new single-family homes be raised from $2,828 to $9,000-a 218 percent increase.

If approved by the Orlando" target="_blank">Orange County Commission, this fee will add $54 per month to a 30-year mortgage and $76 per month to a 15-year mortgage, assuming an interest of 6 percent. The money would be used to build new classrooms-a need made even more urgent by passage last year of a constitutional amendment limiting class size.

The fallacy is, plenty of people who move to Central Florida buy existing homes. So many, in fact, that sales records are falling and inventory is at or near historic lows. There were no impact fees assessed on the $4 billion in home resales notched in 2003, although presumably a large percentage of people buying those homes were newcomers with children in the public school system.

You can argue all day about whether growth does or does not already pay its way. I think it does, considering the economic impact of homebuilding on the local economy ($1.5 billion) and the property taxes now being generated from previously vacant tracts of land. In any case, I think government has a compelling interest in making home ownership more accessible, not less.

But if you're an elected official, sticking it to newcomers is just so darned tempting. After all, if you aren't yet here, then you can't vote. And since impact fees are passed along and rolled into the price of your home, it isn't immediately apparent that you've paid a hefty premium to become a Central Floridian while your neighbor in the resale got a free pass.

One solution to this inequity is a modest transfer fee on all real estate tranactions--commercial and residential, new homes and resales. That spreads the burden and eliminates the need to gouge any particular group.

The Orlando" target="_blank">Orange County Commission considers the impact fee hike later this summer, and some are on record expressing skepticism. Still, my advice is to buy now. That $9,000 is going to look awfully tempting when the roll is called.